The requirement that New York City taxi drivers own a medallion in order to operate a taxi in the city reduces competition and raises the fares that customers pay.
a. True
b. False
QUESTION 2When an industry supply curve increases enough to erase economic profits,
a. weaker firms exit the industry
b. quantity demanded decreases, but only slightly
c. all firms in the industry incur economic losses
d. entry of new firms and expansion of existing firms stop
e. marginal revenue increases
QUESTION 3When firms differentiate their products, they
a. provide information to consumers with no additional use of productive resources
b. always increase their profits
c. always create real differences among products
d. frequently create artificial or superficial differences among products, thus raising production costs
e. usually strain the physical capacity of their plants
QUESTION 4One of the remedies that has been used in the case of antitrust violations is the award of treble damages to the party that has been harmed.
a. True
b. False
QUESTION 5Whether the firm produces or shuts down in the short run, fixed cost is equal to
a. average variable cost
b. total cost
c. sunk cost
d. price
e. marginal cost
QUESTION 6Economic analysis of product differentiation leads to all of the following conclusions except one. Which is the exception?
a. Product differentiation makes it harder for firms to collude.
b. Product differentiation makes price leadership harder to maintain.
c. Product differentiation sometimes contributes to wasteful allocation of resources.
d. Product differentiation must be based on real, substantive differences among products.
e. There is a tradeoff between using resources efficiently and providing consumers with wide choices.
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