ECON 201 Lecture 7: Lesson 7- Firms, Investors & Capital Markets - MICRO 201

1. A reason why there is more competition in the restaurant industry than in the music streaming industry is that restaurants

A.unlike music streaming? companies, have to abide by government sanitation rules.

B.have to cater to a variety of consumer tastes while music streaming companies do not.

C.have more elastic demand for their product compared to music streaming companies.

D.unlike music streaming? companies, do not have significant economies of scale.

2. Why would a government use a patent to block entry to some markets if this hinders competition especially when governments generally promote? competition?

A.Patents are justified because they are an important means for creating network externalities.

B.Patents encourage firms to spend money on research necessary to create new products.

C.Politicians sometimes succumb to pressure from lobbyists to grant favors to businesses for political reasons.

D.Patents are an important source of government revenue.

3.Suppose we can divide all the goods produced by an economy into two? types: consumption goods and capital goods. Capital? goods, such as? machinery, equipment, and? computers, are goods used to produce other goods.

Suppose a technological advance occurs that affects the production of consumption goods but not capital goods.

If a technological advance occurs that affects the production of consumption goods but not capital?goods, then the production possibilities frontier will

A.remain unchanged.

B.shift outward along the consumption goods axis.

C. shift outward along the capital goods axis.

D. shift outward along both axes.

The new production possibilities frontier will indicate that with the technological? advance, more (CAPITAL GOODS /// CONSUMPTION GOODS /// OF BOTH GOODS) can be produced.

4. Market failure is best described as

A.All of the above.

B.when consumption occurs at low social benefit.

C.when the market fails to produce the efficient level of output.

D.when the market fails to produce deadweight loss.

E.when production occurs at high social cost.

The market will fail when which of the following? happen????(Check all that? apply.)

A.When property rights are incomplete.

B.When there is a market surplus.

C.When there is scarcity.

D.When it is difficult to enforce property rights.

E.When there is a market shortage

5.In which of the following market structures is price discrimination? possible?

??????a. perfect competition

??????b. monopoly

??????c. oligopoly

??????d. monopolistic competition

A.?b, c, and d only

B.?a, b,? c, and d

C.c and d only

D.b and c only

6. How do market economies ultimately determine what goods and services are? produced, how the goods and services will be? produced, and who will receive the goods and? services?

A.The government determines what goods and services are? produced, how to produce? them, and who will receive them.

B.Firms determine what goods and services are produced and how to produce? them, and markets determine who will receive them.

C.Consumers determine what goods and services are? produced, firms determine how to produce? them, and equity determines who will receive them.

D.Consumers determine what goods and services are? produced, firms determine how to produce? them, and markets determine who will receive them.

E.Firms determine what goods and services are? produced,technology determines how to produce? them, and consumers determine who will receive them.

7. For monopolistically competitive firms is it always likely in the? long-run to have? zero-economic profit?

Monopolistically competitive firms in the? long-run

A.may continue to earn profit by convincing consumers their products are differentconvincing consumers their products are different.

B.will not continue to earn profit because the cost of production will rise as new firms enter the market.

C.will not continue to earn profit because monopolistically competitive firms produce identical products.

D.will continue to earn profit due to barriers to new firms entering the market.

E.may continue to earn profit by instead beginning to produce a product identical to competitors.

8. In monopolistically competitive? markets, what is a factor under a? firm's control that determines whether it will be? successful?

A. Upper A firm's ability to differentiate its productA firm's ability to differentiate its product.

B.Consumer preferences.

C.Factors that affect all firms in a market.

D.Chance events.

E.Both a and b.

9. From the list? below, select the necessary condition in order to achieve successsful price discrimination.

A. The seller must possess market power.

B. Buyers must have identical inelastic demands.

C. Transactions costs must be zero.

D.The buyer must possess market power.??

10.Suppose Dell is currently selling 3,000,000 computers per year. However, managers at Dell are considering whether to increase production by 300,000 computers. One manager explains that after increasing production by this? amount, total profit would be? $100 million. Given this? information, should Dell increase production by 300,000 computers??

A.?Yes, because Dell would earn a profit.

B.Information about the additional cost incurred from producing 300,000additional computers is required to answer this question.

C.?No, because increasing production by 300,000 computers would decrease the price of computers.

D.Information about the additional revenue earned and the additional cost incurred from producing 300,000 additional computers is required to answer this question.

E. Information about the total revenue earned and the total cost incurred from producing 3,300,000 computers is required to answer this question.

11. The Majestic box office sells tickets for the same play at different? prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the? front, around the stage. Which of the following statements is? true?

A. This is an example of product differentiation not price discrimination.

B. The theatre practices first degree price discrimination by setting prices based on willingness to pay.

C. Charging two different prices is an effective way to avoid an excess demand for play? tickets; the higher price lowers quantity demanded to some extent.

D. Since the cost of producing the play does not change with the seating? configuration, this is evidence of price discrimination based on market segmentation.

Answer the following questions: (Do not attempt if you cannot answer all)

1) Which of the following is true?

Select one:

A. Financial intermediaries transform claims in the process of channeling funds.

B. Securities firms transfer, but do not transform, claims in the process of channeling funds.

C. Both of the above.

D. None of the above.

2) A large domestic bank with headquarters in New York City that provides international lending and payment services to large, multinational business firms is most likely to be a:

Select one:

A. Money Center Bank

B. Regional Bank

C. Mid-Market Bank

D. Community Bank

3) Which of the following is true regarding bank charters?

Select one:

A. All U.S. commercial banks must be chartered in order to operate.

B. All U.S. banks must be federally chartered.

C. National banks are chartered by the Federal Reserve.

D. All of the above.

4) Which of the following is characteristic of fractional reserve banking?

Select one:

A. Restricting the access of depositors to money in their passbook savings accounts.

B. Maintaining sufficient bank reserves to cover all outstanding loans.

C. Making only long-term loans to both consumers and businesses.

D. None of the above.

5) When an investment bank underwrites a new security offering it

Select one:

A. makes a loan to the issuing firm.

B. sells securities to a company in need of capital.

C. transforms the claims of the issuing firm.

D. purchases the new securities and resells them to investors.

6) Which of the following is true of securities dealers?

Select one:

a. They are active in the secondary market, buying and selling previously issued securities.

b. They may own securities, which they inventory prior to selling to investors.

c. They may be involved in the distribution process for a new securities issue.

d. All of the above.

7) Which of the following statements is true regarding credit unions?

I. Credit unions specialize in making home mortgage and auto loans
II. Credit unions are tax-exempt institutions
III. Credit unions do not offer any insurance protection against the loss of member deposits

Select one:

a. I only

b. I and II only

c. I and III only

d. II and III only

8) The two broadest groups of financial institutions in the U.S. can be classified as

Select one:

a. financial intermediaries and securities firms.

b. depository and non-depository intermediaries.

c. commercial banks and thrift institutions.

d. money market firms and capital market firms.

1. Which of the following groups of countries are all advanced economies?

QUESTION 2

1. The most people live in ________ economies and the fewest people live in ________ economies.

QUESTION 3

1. Households and firms in the U.S. economy interact with those in the rest of the world in the ________ market and the ________ market.

QUESTION 4

1. As a factor of production, oil reserves are counted as

QUESTION 5

1. ________ the owners of the factors of production, while ________ what amounts of those factors to hire.

QUESTION 6

1. The emerging market economies are

QUESTION 7

1. In the United States, the productive factor that, as a group, receives the largest fraction of the nation's total income was

QUESTION 8

1. Items bought by individuals to provide personal enjoyment are termed

QUESTION 9

1. In the advanced economies, ________ of the factories use advanced capital equipment and in the developing economies ________ of the factories use advanced capital equipment

QUESTION 10

1. The productive resource that includes all the "gifts of nature" is called

QUESTION 11

1. What would be an example of government good?

QUESTION 12

1. The world population is approximately ________ people.

QUESTION 13

1. Computers and insurance coverage produced in the United States and sold to people in other nations are categorized as

QUESTION 14

1. Of the following, the federal government obtains most revenue from

QUESTION 15

1. Items bought by businesses to help produce other goods and services are called

QUESTION 16

1. The majority of the income earned in the United States is paid in

QUESTION 17

1. Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market

QUESTION 18

1. The United States possesses a large amount of human capital. As a result of this fact, in the United States, there is a

QUESTION 19

1. Which of the following correctly lists the categories of factors of production?

QUESTION 20

1. Which of the following correctly lists the categories of factors of production?

QUESTION 21

1. In the United States, the poorest 20 percent of households receive roughly ________ percent of total income.

QUESTION 22

1. What would be an example of a consumption service?

QUESTION 23

1. The total value of capital in the United States is around

QUESTION 24

1. An export good is a good produced

QUESTION 25

1. ________ paid for the use of land; ________ paid for the services of labor; and ________ paid for the use of capital.