Why does a sports car cost more than a mountain bike?
A) because sports car manufacturers are greedier than mountain bike manufacturers
B) because sports cars are priced higher in order to make them attractive as status symbols
C) because more scarce resources are required to produce a sports car than to produce a mountain bike
D) because mountain bike manufacturers know that their customers have relatively low incomes
Ques. 2In oligopoly, any action by one firm to change price, output, or quality causes
A) a reaction by other firms.
B) no reaction from the other firms.
C) a profit gain for the other firms.
D) loss of market share by the acting firm.
Ques. 3When the economy moves from point A to B in the above table, the opportunity cost of a computer in terms of televisions is
A) 10.
B) 2.5.
C) 2.
D) 0.5.
Ques. 4Refer to the above figures. Which panel represents the expected relationship between tax revenue and the sales tax rate if dynamic tax analysis is used?
A) Panel 1
B) Panel 2
C) Panel 3
D) Panel 4
Ques. 5Which of the following is NOT an alleged unrealistic assumption that proponents of behavioral economics suggest are commonly utilized in traditional economic models based on the rationality assumption?
A) unbounded selfishness
B) unbounded rationality
C) unbounded will power
D) unbounded resources
Ques. 6What is market failure? How can the government correct market failure?
What will be an ideal response?
Ques. 7Strategic behavior and game theory are features of which market structure?
A) perfect competition
B) monopoly
C) monopolistic competition
D) oligopoly
Ques. 8What would happen in the market for bread if its demand increased but the price was NOT allowed to change?
A) There would be a surplus of bread.
B) There would be a shortage of bread.
C) The supply of bread would increase.
D) The supply of bread would decrease.
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