Question 1

In a market with positive externalities,

Accepted Answer

A) the efficient level of production is less than what competition will obtain. 
B) the efficient level of production is equal to what competition will obtain. 
C) the efficient level of production is more than what competition will obtain. 
D) there cannot be an efficient level of production. 
A) the efficient level of production is less than what competition will obtain. 
B) the efficient level of production is equal to what competition will obtain. 
C) the efficient level of production is more than what competition will obtain. 
D) there cannot be an efficient level of production. C

Question 2

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, the optimal level of trash in the park can be achieved if

Accepted Answer

A) someone is assigned property rights to the park. 
B) government limits the use of the park. 
C) nobody catches Al leaving the trash. 
D) Bert moves. 
A) someone is assigned property rights to the park. 
B) government limits the use of the park. 
C) nobody catches Al leaving the trash. 
D) Bert moves. A

Question 3

In the U.S., one example of a cartel that is legal is

Accepted Answer

A) the railroads, including Union Pacific. 
B) the oil industry. 
C) Major League Baseball. 
D) None, all cartels are prohibited. 
A) the railroads, including Union Pacific. 
B) the oil industry. 
C) Major League Baseball. 
D) None, all cartels are prohibited. C

Question 4

According to the U.S. Robinson-Patman Act of 1936, price discrimination

Accepted Answer

A) is always illegal. 
B) is legal unless it harms competition. 
C) may be used to drive rivals out of business. 
D) can only be justified if the price discrimination is due to actual cost differences. 
A) is always illegal. 
B) is legal unless it harms competition. 
C) may be used to drive rivals out of business. 
D) can only be justified if the price discrimination is due to actual cost differences.

Question 5

In order to regulate a monopoly's price, the government

Accepted Answer

A) needs to hire former executives from the monopoly. 
B) should rely on industry experts for information. 
C) needs accurate information on the monopoly's demand and cost curves. 
D) needs to know the monopoly's supply curve. 
A) needs to hire former executives from the monopoly. 
B) should rely on industry experts for information. 
C) needs accurate information on the monopoly's demand and cost curves. 
D) needs to know the monopoly's supply curve.

Question 6

Patents

Accepted Answer

A) always increase total welfare. 
B) create monopoly power. 
C) reduce deadweight loss. 
D) are a form of trade secret. 
A) always increase total welfare. 
B) create monopoly power. 
C) reduce deadweight loss. 
D) are a form of trade secret.

Question 7

Mergers may result in

Accepted Answer

A) anticompetitive behavior. 
B) more efficient production. 
C) fewer firms in a market. 
D) All of the above. 
A) anticompetitive behavior. 
B) more efficient production. 
C) fewer firms in a market. 
D) All of the above.

Question 8

The song "Stairway to Heaven" is likely protected

Accepted Answer

A) as a trade secret. 
B) with a patent. 
C) under copyright law. 
D) in a trust. 
A) as a trade secret. 
B) with a patent. 
C) under copyright law. 
D) in a trust.

Question 9

According to the cost-benefit principle, if a change generates $50,000 in gains and $45,000 in losses,

Accepted Answer

A) it is desirable. 
B) the gain is not large enough to justify the change. 
C) the desirability depends on who gains and who loses. 
D) it is a Pareto improvement. 
A) it is desirable. 
B) the gain is not large enough to justify the change. 
C) the desirability depends on who gains and who loses. 
D) it is a Pareto improvement.

Question 10

What is one problem with trying to regulate a monopoly's price?

Accepted Answer

A) The government needs information on the monopoly's marginal cost. 
B) The government needs information on the maximum quantity the monopoly can supply. 
C) The government needs to identify which firm is a monopolist. 
D) Anything that the government does is problematic. 
A) The government needs information on the monopoly's marginal cost. 
B) The government needs information on the maximum quantity the monopoly can supply. 
C) The government needs to identify which firm is a monopolist. 
D) Anything that the government does is problematic.

Question 11

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, one way to alleviate the externality is that

Accepted Answer

A) Al is fined by the government. 
B) Al has the right to leave trash and Bert cannot do anything about it. 
C) Bert has the right to a clean park and Al cannot leave trash. 
D) Either Al or Bert owns the park. 
A) Al is fined by the government. 
B) Al has the right to leave trash and Bert cannot do anything about it. 
C) Bert has the right to a clean park and Al cannot leave trash. 
D) Either Al or Bert owns the park.

Question 12

A firm's private costs

Accepted Answer

A) include only its direct costs. 
B) are the private profit minus the producer surplus. 
C) include both direct and indirect costs. 
D) exclude the taxes on any externalities generated. 
A) include only its direct costs. 
B) are the private profit minus the producer surplus. 
C) include both direct and indirect costs. 
D) exclude the taxes on any externalities generated.

Question 13

One way to avoid the free rider problem is

Accepted Answer

A) through mandates. 
B) for the government to provide the good or service. 
C) to use social pressure. 
D) All of the above. 
A) through mandates. 
B) for the government to provide the good or service. 
C) to use social pressure. 
D) All of the above.

Question 14

Laws that are used to prevent firms from colluding and setting high prices are called

Accepted Answer

A) anti-trust laws. 
B) price ceiling laws. 
C) anti-cartel laws. 
D) anti-competition policies. 
A) anti-trust laws. 
B) price ceiling laws. 
C) anti-cartel laws. 
D) anti-competition policies.

Question 15

If children go to school and become productive members of society,

Accepted Answer

A) a negative externality is created by the schools. 
B) a positive externality is created by the schools. 
C) no externality is created by the schools. 
D) an externality is created that may be positive or negative. 
A) a negative externality is created by the schools. 
B) a positive externality is created by the schools. 
C) no externality is created by the schools. 
D) an externality is created that may be positive or negative.

Question 16

Who said "If it moves, tax it. If it still moves, regulate it. If it stops moving, subsidize it."?

Accepted Answer

A) Barack Obama 
B) Ronald Reagan 
C) Vilfredo Pareto 
D) Adam Smith 
A) Barack Obama 
B) Ronald Reagan 
C) Vilfredo Pareto 
D) Adam Smith

Question 17

If a dominant firm is charged with refusal to deal under antitrust law, it is being charged because

Accepted Answer

A) the firm will not set its price at the regulated rate. 
B) it is refusing to sell a key input to downstream rivals, thereby reducing or destroying competition. 
C) it is refusing to cooperate with antitrust authorities, such as the Department of Justice. 
D) it will sell its products only to people who agree to buy only from it and not from rival firms. 
A) the firm will not set its price at the regulated rate. 
B) it is refusing to sell a key input to downstream rivals, thereby reducing or destroying competition. 
C) it is refusing to cooperate with antitrust authorities, such as the Department of Justice. 
D) it will sell its products only to people who agree to buy only from it and not from rival firms.

Question 18

Consider a housing development built near an existing airport. After the houses are occupied, homeowners complain that the airport imposes a negative externality on them and it should be moved or otherwise limited. Is the airport a negative externality?

Accepted Answer

A) No, the airport was there first. 
B) No, if the original property values reflect the costs imposed by the airport. 
C) No, airports are government entities and therefore don't impose costs on individuals. 
D) Yes, the airport's noise should be curtailed for the well-being of the homeowners. 
A) No, the airport was there first. 
B) No, if the original property values reflect the costs imposed by the airport. 
C) No, airports are government entities and therefore don't impose costs on individuals. 
D) Yes, the airport's noise should be curtailed for the well-being of the homeowners.

Question 19

Market failures ________ and generate ________.

Accepted Answer

A) compel the government to act; regulations 
B) create monopolies or oligopolies; deadweight loss 
C) reduce economic efficiency; deadweight loss 
D) create deadweight loss; externalities 
A) compel the government to act; regulations 
B) create monopolies or oligopolies; deadweight loss 
C) reduce economic efficiency; deadweight loss 
D) create deadweight loss; externalities

Question 20

The price of pie increases. Some people who purchased pie before the price increase no longer purchase pie. This is

Accepted Answer

A) a positive externality. 
B) a negative externality. 
C) a positive externality for some consumers and a negative externality for others. 
D) not an externality. 
A) a positive externality. 
B) a negative externality. 
C) a positive externality for some consumers and a negative externality for others. 
D) not an externality.

In a market with positive externalities,

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, the optimal level of trash in the park can be achieved if

In the U.S., one example of a cartel that is legal is

According to the U.S. Robinson-Patman Act of 1936, price discrimination

In order to regulate a monopoly's price, the government

Patents

Mergers may result in

The song "Stairway to Heaven" is likely protected

According to the cost-benefit principle, if a change generates $50,000 in gains and $45,000 in losses,

What is one problem with trying to regulate a monopoly's price?

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, one way to alleviate the externality is that

A firm's private costs

One way to avoid the free rider problem is

Laws that are used to prevent firms from colluding and setting high prices are called

If children go to school and become productive members of society,

Who said "If it moves, tax it. If it still moves, regulate it. If it stops moving, subsidize it."?

If a dominant firm is charged with refusal to deal under antitrust law, it is being charged because

Consider a housing development built near an existing airport. After the houses are occupied, homeowners complain that the airport imposes a negative externality on them and it should be moved or otherwise limited. Is the airport a negative externality?

Market failures and generate .

The price of pie increases. Some people who purchased pie before the price increase no longer purchase pie. This is

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Global Business

Filters

Exam 16: Government and Business

In a market with positive externalities,

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, the optimal level of trash in the park can be achieved if

In the U.S., one example of a cartel that is legal is

According to the U.S. Robinson-Patman Act of 1936, price discrimination

In order to regulate a monopoly's price, the government

Patents

Mergers may result in

The song "Stairway to Heaven" is likely protected

According to the cost-benefit principle, if a change generates $50,000 in gains and $45,000 in losses,

What is one problem with trying to regulate a monopoly's price?

Suppose two neighbors share a park. One neighbor, Al, leaves trash in the park. This bothers the other neighbor, Bert. According to Coase's Theorem, one way to alleviate the externality is that

A firm's private costs

One way to avoid the free rider problem is

Laws that are used to prevent firms from colluding and setting high prices are called

If children go to school and become productive members of society,

Who said "If it moves, tax it. If it still moves, regulate it. If it stops moving, subsidize it."?

If a dominant firm is charged with refusal to deal under antitrust law, it is being charged because

Consider a housing development built near an existing airport. After the houses are occupied, homeowners complain that the airport imposes a negative externality on them and it should be moved or otherwise limited. Is the airport a negative externality?

Market failures ________ and generate ________.

The price of pie increases. Some people who purchased pie before the price increase no longer purchase pie. This is

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Global Business

Filters

Market failures and generate .