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Which of the follow is not a barrier that limits the entry of potential competitors into a market?
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an elastic demand for a product
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The two conflicting tendencies that a firm has in an oligopolistic industry are the incentive to
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cooperate to maximize joint profits and the incentive to cheat on the agreement in order to increase then firm's share of the profits
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Creative destruction refers to the process where
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new products and methods of production are continuously replacing old ones
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A firm that uses price discrimination to enhance its net revenues will
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charge a lower price to consumers with a more elastic demand for the firm's products
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When a firm is a price searcher, its marginal revenue is
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equal to price because the firm's demand curve is perfectly elastic
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What price should a competitive price searcher firm with the cost and demand conditions depicted in figure 10-4 charge if it wants to maximize profit?
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$10
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What is the maximum economic profit this firm depicted in figure 10-4 will be able to earn in the short run?
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zero profit
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The price taker firm should discontinue production immediately if
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the market price is less than the firm's average variable costs
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Which of the following is the best example of a business firm operating in a competitive price taker market?
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A Kansas wheat farmer that grows and sells wheat
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What rule should both price takers and price searchers always follow when it comes to choosing the quantity of goods they should produce to maximize profits?
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always produce up to the point where marginal revenue equals marginal costs
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Refer to figure 9-18. At the profit maximizing level of output, the firm will earn an economic (Hint: areas in the exhibit are referenced by the four letters on the corners of the respective area)
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profit of CBIF
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Refer to figure 9-18. Given the current market conditions, in the long run,
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new firms will enter the industry and market price will fall
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Which of the following decisions most clearly reflects A LACK OF UNDERSTANDING of the economic way of thinking concerning sunk costs?
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Your friend is having a huge party this Saturday that you really want to go more than the concert for which you have already bought tickets. So even though you want to go to the party more, you decide to go ahead to the concert since you have already paid for the tickets.
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The relationship between average and marginal variables can be stated as follows: if the marginal is greater than the average,
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the total is decreasing
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Local electric and natural gas companies wants to raise revenues by increasing its electricity and natural gas. The price rise will increase revenues if the elasticity of demand for electricity and natural gas is
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inelastic
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An improved production process has made sunglasses cheaper and easier to produce. At the same time, sunny weather and the upcoming spring break season has increased people's desire to have sunglasses. Given these two effects, what will happen to the current equilibrium quantity and price of sunglasses?
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equilibrium quantity will increase; the effect on price is ambiguous
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Which of the following occurs when there is excess supply in a free and unregulated market for a good?
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quantity supplied exceeds quantity demanded and the price falls, which encourages more consumption and less production
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Refer to table 3-2. If the market price is $1,000, the producer surplus in the market is
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$750
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Which of the following is true regarding the market for steak as shown in figure 3-1?
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if the price of steak were $3 per pound, producers would want to supply the same amount of steak that consumers would want to buy
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Thousands of people work together every day so that fresh steak gets to people in Riverside, California as cheaply as possible so that you can buy it if you so choose. Many of the people involved in this process don't know or even care about the people living in Riverside. Which of the following does this best reflect?
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the invisible hand principles
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Refer to figure 3-17. When the price is P1, consumer surplus is
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A+B+C
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Which of the following is true?
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All of the above are true
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If Donald Trump's income increases from $200,000 to $400,000 and his tax liability increases from $50,000 to $80,000, which of the following is true?
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his average tax rate is 20 percent at his new income level of $400,000
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Refer to figure 4-11. On the Laffer Curve shown, tax revenue could be increased by
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decreasing the marginal tax rates if we were currently at point C
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The federal government currently levies a 15.3 percent payroll tax (7.65 percent on both the employer and employee) on the wages of all workers. If the supply of labor is relatively elastic when compared to the inelastic demand for labor, the burden of this tax will
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be divided equally between employees and employers
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Please evaluate the following statements and determine which ones are true?
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both statements are false
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A subsidy is defined as
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a payment to either the buyer or seller of a good or service from the government when a good or service is purchased
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Joab loves to eat at the Golden Coral all you can eat buffet where you pay $14 and eat as much as you want. If Joab celebrates the end of the quarter by eating at the Golden Coral, which of the following will most likely be true?
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the law of diminishing marginal utility will ensure that Joab's utility from each additional plate of food will eventually decline all the way down to zero, at which point Joab will stop eating.
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In figure 2-5, which of the following is true?
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Point B is efficient
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A production possibilities curve indicates that when resources are being used efficiently,
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you can only produce more of one good only if you produce less of another good
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If Jose trades two candy bars to Cheng in exchange for one baseball card,
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both a and b are correct, c is incorrect
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Lebron James is extremely tall and athletic and therefore, can clean his house faster than any other one person.
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the law of comparative advantage
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When private ownership of a resource is clearly defined and enforced, the private owner
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has a strong incentive to use the resource wisely
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"After every fall election, the weather starts to turn cold, therefore elections cause cold weather". This statement
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fails to recognize that association is not causation
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The opportiunity cost of going to college is
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the value of the best opportunity a student gives up to attend college
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You want to travel to Las Vegas to celebrate spring break
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$100 an hour
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Legislation to protect red cockaded woodpeckers created incentives that resulted in premature harvesting of trees the woodpeckers like to nest in. This is an example of which of the following
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good intentions do not always lead to desirable outcomes
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To say people make marginal decisions means that
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they weigh additional costs and additional benefits of various activities before they make a decision
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Which of the following represents a positive statement?
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a higher income tax rate will reduce the amount of time that people spend working
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The most fundamental concept in economics is that
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changes in incentives influence behavior in a predictable way--people will be less likely to choose an option as it becomes more expensive.
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According to the economic way of thinking, when would an economist consider a theory to be valid?
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only after carefully testing the theory using real world data or empirical evidence
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When economists say goods are scarce, they mean
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the desire for goods and services exceeds our ability to produce them with the limited resources available