Suppose that Industry X has two firms with equal market shares, and Industry Y has three firms with 65 percent, 30 percent, and 5 percent market shares, respectively. Which of the following is TRUE?
A) The HHI for Industry X is 50 higher than the HHI for Industry Y.
B) The HHI for Industry X is 150 lower than the HHI for Industry Y.
C) The HHI for Industry X is 100 higher than the HHI for Industry Y.
D) The HHI is the same between Industry X and Industry Y.
Ques. 2If a new unit excise tax is levied on bottles of wine, the
A) demand for wine shifts to the left.
B) demand for wine shifts to the right.
C) supply of wine shifts to the right.
D) supply of wine shifts to the left.
Ques. 3What does the demand curve for money look like? Why?
What will be an ideal response?
Ques. 4If the economy is experiencing an inflationary gap in the short run, an increase in the budget surplus
A) will reduce the size of the inflationary gap.
B) will increase the size of the inflationary gap.
C) will cause an increase in inflation and increase aggregate supply.
D) will increase aggregate demand and will increase the price level.
Ques. 5All of the following are characteristics of public goods EXCEPT
A) Public goods can be used by more people at no additional cost.
B) The good can be consumed by everyone at the same time without reducing what is available for anyone else.
C) the exclusion principle
D) The goods are perfectly divisible.
Ques. 6The model of perfect competition and the model of monopolistic competition differ in that
A) perfect competition assumes many buyers and sellers while monopolistic competition assumes many buyers but few sellers.
B) perfect competition assumes easy entry of new firms while there are more significant barriers to entry in monopolistic competition.
C) perfect competition assumes firms make zero profits in the long run and monopolistic competition assumes firms make positive profits.
D) perfect competition assumes the product is homogeneous and monopolistic competition assumes the product is differentiated.
Ques. 7If a state government wants to collect the maximum tax revenue from a unit excise tax, which of the following would they tax?
A) cigarettes
B) beef hamburgers
C) luxury cars
D) concert t-shirts
Ques. 8In the above figure, the production of 25 guitars and 25 ukuleles is
A) efficient production.
B) inefficient production.
C) impossible production.
D) not possible since production always occurs along the PPC.
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