A breakthrough in technology is most likely to:
a. reduce the labor needed to produce a given amount of output.
b. decrease the demand for all goods and services in a country.
c. increase the cost of production for a firm.
d. reduce the availability of skilled workers.
e. lower the standard of living in a country in the long run.
QUESTION 2If regulation imposes marginal cost pricing on a natural monopoly, then the monopoly will:
a. suffer persistent economic losses.
b. earn a fair, but not excessive, return on its assets.
c. produce too little output to achieve efficiency.
d. experience diseconomies of scale.
QUESTION 3Before the 1970s, bankers were happy with interest-rate ceilings because those ceilings:
a. reduced interest-rate competition for deposits among banks.
b. guaranteed them high profits.
c. guaranteed them a minimum profit.
d. enabled them to expand into other lines of commerce.
e. allowed them to hold corporate stock.
QUESTION 4Empirical evidence suggests that:
a. technological change leads to higher unemployment rates.
b. the unemployment rate in the U.S. in the late 1990s was lower than that in the 1970s.
c. the unemployment rate in the U.S. in the late 1990s was higher than that in the 1970s.
d. changes in the growth rate of population lead to higher unemployment rates.
e. increase in government regulation leads to higher unemployment rates.
QUESTION 5Consider a regulated natural monopoly. If the regulatory commission wants to establish a fair-return price, then it should set a price ceiling where the demand curve crosses the monopoly's long-run:
a. marginal revenue curve.
b. average revenue curve.
c. marginal cost curve.
d. average cost curve.
QUESTION 6Interest-rate ceilings on deposits:
a. meant banks were guaranteed cheap money from depositors.
b. were imposed because without them, as was the case in the 1970s, banks couldn't be profitable.
c. led to banks losing deposits whenever market rates went above the ceiling rates.
d. are only effective when market rates are below the ceiling rates.
e. were developed by money market mutual funds as a marketing device.
QUESTION 7_____ can temporarily create dislocations as displaced workers try to find jobs elsewhere and, at the same time, make existing products more affordable.
a. Technological change
b. Changes in the rate of interest
c. Population changes
d. Changes in the price level
e. An increase in public expenditure
QUESTION 8Regulatory commissions may focus on establishing a fair-return price to be charged by a monopolist. Under this policy, the monopolist would earn:
a. positive economic profits.
b. zero economic profits.
c. negative economic profits.
d. monopoly profits.
QUESTION 9One purpose of interest-rate ceilings was to:
a. establish a ceiling on bank profits.
b. establish a floor on bank profits.
c. encourage competition in other areas.
d. eliminate the need for the FDIC.
e. reduce the chance of bank failures.
Quick Reply
