Question 1

persistently realize economic profits in both the short and long run.

realize economic profits in the long run and normal profits in the short run.

tend to incur persistent losses in both the short and long run.

tend to realize economic profits in the short run and normal profits in the long run.

2 points    

Question 2

continue its efforts to differentiate its product.

raise its price.

lower its price.

do nothing, because it will inevitably experience a decline in profits.

2 points    

Question 3

automobiles

tobacco products

restaurants

farm equipment

2 points    

Question 4

indicates the total profitability among the top four firms in an industry.

is an indicator of the degree of monopolistic competition.

indicates the presence and intensity of an oligopoly market.

is used by the government as a basis for anti-trust cases.

2 points    

Question 5

all firms in an industry are affected by the same macro economic conditions, such as a recession, inflation, interest rates, exchange rates, etc.

the actions of firms are independent of each other.

the actions of one firm in an industry are easily recognized and perhaps copied by others.

monopolists recognize that they must face eventual competition in the long run.

2 points    

Question 6

markets must be capable of being separated.

markets must be interdependent.

different demand price elasticities must exist in different markets.

demand price elasticities must be identical in all markets.

Both markets must be capable of being separated and different demand price elasticities must exist in different markets

2 points    

Question 7

the existence of a small number of firms.

geographic proximity of firms.

homogeneity of the product.

easy entry into the industry.

2 points    

Question 8

determine whether a firm should make or buy a component product.

determine the correct value of a product as it moves from one stage of production to another.

minimize a multinational firm’s tax liabilities.

All of these

2 points    

Question 9

one firm drives the others out of the market.

the dominant firm decides how much each of its competitors can sell.

the dominant firm establishes the price at the quantity where its MR = MC, and permits all other firms to sell all they want to sell at that price.

the dominant firm charges the lowest price in the industry.

2 points    

Question 10

monopoly prices.

competitive prices.

prices under monopolistic competition.

marginal cost.

2 points    

Question 11

all parties to a transaction possess less than full information.

one party in a transaction has more information than the other party.

some information possessed by the parties in a transaction may be false.

a zero-sum game exists.

2 points    

Question 12

the gains of one player are less than the gains of the other player.

the gains of one player are greater than the gains of the other player.

the gains of one player directly reflect the losses of another player.

the gains and losses of players are all expressed in zeros.

2 points    

Question 13

is a way of conveying information to other parties in a transaction where asymmetric information exists.

represents a dominant strategy in a multi-player game.

results in an optimum solution to a beach kiosk scenario.

None of these

2 points    

Question 14

moral hazard.

moral suasion.

adverse selection.

fraud.

2 points    

Question 15

outcome of a Prisoner’s Dilemma.

result of market signaling.

risk associated with a Dutch auction.

risk that one party to a contract may alter its post-contract behavior to the detriment of another party.

2 points    

Question 16

A Brazilian investor buys German government bond.

An American buys a new Swedish car.

An Italian firm builds a plant in Nebraska.

A Canadian investor buys a French equity.

2 points    

Question 17

the number of sellers in the market.

the ease of exit from the market.

the difference in the firm’s profits in the long run.

the degree of product differentiation.

2 points    

Question 18

forward markets

futures markets

currency options

All of these

2 points    

Question 19

highly skilled workers.

highly educated workers.

semi-skilled workers.

low skilled workers.

2 points    

Question 20

high; low

low; high

economic; normal

above-normal; accounting

2 points    

Question 21

a fine imposed on a company that pollutes a stream

the closing of a public library

a sales tax on jewelry

the increase on bridge tolls

2 points    

Question 22

restricts production.

levies a tax for the difference between private costs and social costs.

prohibits production.

All three of these

Both restricts production and levies a tax for the difference between private costs and social costs

2 points    

Question 23

greater than

less than

the same as

greater or less (depending on the market) than

2 points    

Question 24

dumps waste in river upstream from a popular fishing spot.

produces coal that is not in demand in a recession.

underpays its employees.

overworks its employees.

2 points    

Question 25

greater than

less than

the same as

greater or less (depending on the market) than

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