Public goods legislation involves
a. widespread benefits and concentrated costs
b. widespread benefits and widespread costs
c. concentrated benefits and widespread costs
d. concentrated benefits and costs
e. regulating natural monopolies to avoid price gouging
QUESTION 2Two heavy equipment manufacturers might collude in an effort to do all of the following except one. Which is the exception?
a. determine a more advantageous price and quantity
b. prevent new entry into the market
c. take advantage of the legal benefits that U.S. cartels receive
d. increase their combined profits
e. predict the behavior of other competitors in the heavy equipment market with greater certainty
QUESTION 3A tax on productive activity tends to
a. increase formal market activity because it decreases prices
b. decrease formal market activity because it increases work incentives
c. decrease formal market activity because it lowers the return on such activity
d. decrease activity in the underground economy because people are afraid of being connected with tax fraud
e. increase activity in the underground economy because people are afraid of being connected with tax fraud
QUESTION 4If a cartel can earn a profit, it will increase production as long as
a. MR > MC
b. MR > ATC
c. MC > MR
d. MR < AR
e. MR > AVC
QUESTION 5Officials have estimated the size of the U.S. underground economy to be approximately
a. 6 to 8 percent of GDP
b. about 5 trillion
c. 50 percent of GDP
d. 60-80 billion
e. about 1 trillion
QUESTION 6The incentives for oligopolists to cheat on collusive agreements are strongest during periods of increasing industry sales.
a. True
b. False
QUESTION 7Suppose a carpenter builds a bookcase for an attorney in exchange for legal services. This transaction is
a. a means of tax avoidance
b. likely to be taxed
c. not part of the economy's total production
d. a means of tax evasion
e. likely to result in double taxation
QUESTION 8An oligopolist that cheats on a collusive agreement by reducing price will quickly be forced out of the industry by its competitors.
a. True
b. False
Quick Reply
