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1. Some Italian factories bring Chinese workers and raw materials to Italy, where these resources are used to make products sold under the label, "Made in Italy". This is an example of:
 
A. Unfettered market
B. Tax avoidance
C. Labor differential
D. Specialization
E. Human trafficking
 
2. In 1900 about ___ of all Americans worked in farming or ranching; today less than ___ of the population is involved in these industries.
 
A. 50%; 5%
B. 50%; 2%
C. 60%; 10%
D. 80%; 20%
E. 75%; 10%
 
3. True or false? One of the guiding principles of economics is that people try to make themselves as well off as possible.
 
4. True or false? Because there are few substitutes for insulin, we expect the price
the elasticity of demand for insulin to be fairly elastic.
 
5. True or false? If consumers have a long time period in which they can shop for a good, then the demand for that good will be more elastic than if they had only a short time to shop.
 
6. Demand provides a great deal of information to a business. A business can learn about the demand for its products by comparing:
 
A. Levels of income
B. Number of customers
C. Prices and quantities at different times
D. Prices and quantities of different products
E. All of these
 
7. Which of the following does NOT refer to diminishing marginal returns?
 
A. Closing part of a restaurant because of a lack of servers
B. The application of increasing amounts of fertilizer to a field of corn
C. Increasing numbers of seat belts in an automobile
D. Increasing the number of assistant Vice Presidents as the size of the firm increases
E. Increasing the number of students in one classroom
 


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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

I have the following questions for my Managerial Economics course.

1.

A principal-agent problems occur when managerial decisions are not consistent with the firm's shareholders' interests.

A) True
B) False

2.

A firm making more than a normal profit may still be experiencing an economic loss.

A) True
B) False

3.

An inferior good is a good whose demand decreases as its prices decreases.

A) True
B) False

4.

Assuming that crude oil is an input to automobile tires as well as to gasoline, a reduction in the tariff on imported crude oil would likely result in an increase in the number of tires sold but tire prices may increase or decrease.

A) True
B) False

5.

Other things remaining unchanged, advertisement would likely make demand for a good more price elastic.

A) True
B) False

6.

The cross price elasticity demand for a good with respect to the price of a complementary good is negative.

A) True
B) False

7.

When the marginal product of labor is smaller than its average product, marginal cost will be smaller than average variable cost.

A) True
B) False

8.

With capital measured along the vertical axis and labor along the horizontal axis the slope of an isoquant is equal to the ratio between the price of capital over the price of labor.

A) True
B) False

9.

If the ratio between the price of labor and the price of capital (w/r) is smaller than the ration between the marginal product of labor and the marginal product of capital, the firm should hire more capital.

A) True
B) False

10.

Normally the ratio between the price of a variable input and the marginal product of that input is equal to marginal cost.

A) True
B) False

11.

When labor is a variable input the product of wage and marginal product of labor is equal to the profit-maximizing price.

A) True
B) False

12.

If the price falls below the average total cost the firm may not shut down in the short run.

A) True
B) False

13.

When a perfectly competitive firm is producing at its profit maximizing level of output, its MR is equal to price and its MC while it may or may not be making an economic profit.

A) True
B) False

14.

The price a profit maximizing monopoly charges is always greater than its marginal cost as well as it MR while it may not be greater than its ATC.

A) True
B) False

15.

As new firms enter a monopolistically competitive market, the demand faced by each competing firm becomes more inelastic.

A) True
B) False

16.

The long-run equilibrium of a monopoly is characterized by its price being equal to its MR but always greater than its ATC.

A) True
B) False

17.

A monopolistically competitive firm sets its price equal to its MR, while keeping it above MC.

A) True
B) False

18.

We say that the long-run equilibrium of a monopolistically competitive firm reflects excess capacity because its MC is not equal to its ATC.

A) True
B) False

19.

In a duopoly with a zero marginal cost, according to the Cournot model, at equilibrium the sum of the two firms' output would be more than 50 percent of the market demand at a zero price.

A) True
B) False

20.

In the kinked demand curve model it is assumed that the demand faced by an oligopoly is less elastic when it lowers the price but more elastic when it raises the price.

A) True
B) False

21.

A distinguishing characteristic of monopolistically competitive market is price discrimination.

A) True
B) False

22.

The general explanation for the relative price stability in an oligopolistic market is the existence of some degree of decision interdependency among the firms in the market.

A) True
B) False

1. In the market structure called monopolistic competition (Points : 1.25)
a) Very little advertising will occur
b) There are only a few companies in the industry
c) These industries offer only few products
d) None of the above
Question 2.2. In a purely competitive industry (Points : 1.25)
a) Products are differentiated
b) A large amount of advertising occurs
c) Price will be higher than in other market structure
d) None of the above
Question 3.3. A used lawn mower is an example of (Points : 1.25)
a) a search good
b) an experience good
c) a homogenous good
d) None of the above
Question 4.4. The problem of asymmetric can be overcome by (Points : 1.25)
a) Reputation
b) Brand name
c) Warranties
d) All of the above
e) None of the above
Question 5.5. A monopolist will always charge a higher price than a purely competitive industry (Points : 1.25)
True
False
Question 6.6. Given TC = 10 + 5Q, Ed = -2, what price will be a monopolist charge? (Points : 1.25)
a) 5
b) 12
c) 8
d) 10
e) None of the above
Question 7.7. The monopolist determines optimal output the same way as does a purely competitive industry (Points : 1.25)
True
False
Question 8.8. Given a company with some monopoly power and Ed=3, the optimal markup is (Points : 1.25)
a) 33%
b) 50%
c) 72%
d) None of the above
Question 9.9. Given the information given in 8 above and MC=6, gross margin is (Points : 1.25)
a) 50%
b) 42%
c) 33%
d) 38%
e) None of the above
Question 10.10. You would expect gross margin in a store brand to be higher than gross margin in a brand name product (Points : 1.25)
True
False
Question 11.11. You expect products that are less price elastic to have lower gross margins than products with greater price elasticity (Points : 1.25)
True
False
Question 12.12. A company with large gross margins will have large profits (Points : 1.25)
True
False
Question 13.13. If a company is incurring losses, it should stop operating (Points : 1.25)
a) Yes
b) No
c) Not enough information
Question 14.14. A monopolist may not charge the highest price they could get (at MR=MC) in the short run (Points : 1.25)
True
False
Question 15.15. All price discrimination is illegal (Points : 1.25)
True
False
Question 16.16. A company that faces different levels of demand (different price elasticities) (Points : 1.25)
a) Must charge the same price to all customers
b) is violating the law
c) Can charge different price to customers
Question 17.17. Patents allow a company the exclusive right to act as a monopolist (Points : 1.25)
a) This is not justified economically
b) It is justified economically
Question 18.18. The kinked demand curve model was developed to help explain: (Points : 1.25)
a) fluctuations of prices in pure competition
b) rigidities observed in prices in oligopolistic industries
c) fluctuations observed in prices in oligopolistic industries
d) all of the above
e) none of the above
Question 19.19. If a cartel seeks to maximize profits, the market share (or quota) for each firm should be set at a level such that the _____ of all firms is identical. (Points : 1.25)
a) average total cost
b) average profit
c) marginal profit
d) marginal cost
e)marginal revenue
Question 20.20. Factors that affect the ability of oligopolistic firms to successfully engage in cooperation include_________________. (Points : 1.25)
a) number and size distribution of sellers
b) size and frequency of orders
c) product heterogeneity
d) a and b only
e) a, b, and c

Please respond to my post and let me know what you think.

Q: Assume that you recently made a purchase on Amazon.com. The next time you go to purchase this item, let’s say you find out that the price has increased by X dollars. How would you respond to this price increase? Would you say this item is Relatively Elastic, Relatively Inelastic, or Unitary Elastic? Explain using the Determinants of thePrice Elasticity of Demand (see page 83). Think about how the increasing popularity of shopping online impacts your response.

A: I recently purchased supplies for my job, and I only purchased these items because of the prices that were offered and speed of delivery. The items I purchased are elastic and can be substituted, were complementary toward the first good purchased. I would almost guarantee that 90% of Amazon items are elastic. Only because people purchase from Amazon due to price shopping, whether it is savings on shipping, savings on speed of delivery, saving on gas to purchase online, savings on time spent shopping and more. We would want to think people online are comparing prices to other online retailers and if the same item is sold at a different online retailer they would make a wise choice to purchase that item there. I believe online shopping has became a shopping choice due to easier shopping, and comparing prices to get the best deal. So, if I shop online and its so easy to compare prices, and I noticed the price increased I would look into a substitution. Most items are in multiple brands, colors, etc. that would help customers have more choices. More choice the more elastic. Items such as gas, water or medicine are more inelastic. These necessities are important to the consumer that if the price went up, we will still consume it. I do agree that income does make a difference, because someone who wants to spend high dollar on an item they can get cheaper or substitute makes that item less elastic. So there are multiple determinants that can effect the elasticity.

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