Pollution arises because
a. the atmosphere is a nonrenewable resource
b. the atmosphere is a renewable resource
c. of enforceable property rights
d. the atmosphere is an open-access resource
e. there is no supply of pollution curve
QUESTION 2A group of firms that agree to coordinate their production and pricing decisions to reap monopoly profit is called an oligopoly.
a. True
b. False
QUESTION 3An individual who drives a car without a muffler in an attempt to increase fuel economy is creating
a. a positive externality
b. a public good
c. a negative externality
d. a winner's curse
e. vertical inequity
QUESTION 4A unique feature of oligopoly markets is
a. market power
b. mutual interdependence
c. barriers to entry
d. product heterogeneity
e. pricing power
QUESTION 5The most likely reason why Los Angeles has so much smog is that residents
a. do not have strong, enforceable property rights to rapid transit
b. do not have strong, enforceable property rights to clean air
c. prefer dirty air to the inconvenience of rapid transit
d. prefer dirty air to the inconvenience of carpools
e. prefer dirty air to the inconvenience of eliminating smog
QUESTION 6Zara is the largest fashion retailer in Europe. Which of the following would not a barrier to entry that protects Zara's market power?
a. two weeks to develop and deliver a new item, as opposed to an industry average of nine months
b. 10,000 new designs a year
c. stores can restock in a few days
d. little advertising
e. new fashions distributed twice a week, as opposed to twice a season
QUESTION 7A person can cause a negative externality by
a. becoming immunized
b. talking loudly in a restaurant
c. landscaping her lawn
d. paying taxes
e. attending school
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