When a U.S. oil company purchases oil from Saudi Arabia and the Saudi Arabian firm uses the proceeds from the sale to buy transportation services from the U.S., U.S. net exports ________ and the capital inflow to the United States ________.
A. are negative; is negative
B. are unchanged; is unchanged
C. are negative; is positive
D. are positive; is negative
Answer: B
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The supply of sand is perfectly inelastic and the demand curve for sand is downward sloping. Hence, if a tax on sand is imposed,
A) sand buyers pay the entire tax. B) sand sellers pay the entire tax. C) the tax is split evenly between the buyers and sellers. D) the government pays the entire tax. E) the government collects no tax revenue because the supply is perfectly inelastic.
In the long run, monopolistically competitive firms are ________ to perfectly competitive firms because ________
A) similar; both firms produce at the minimum ATC B) similar; both firms make zero economic profit C) not similar; monopolistically competitive firms set P = MC to maximize profits D) not similar; monopolistically competitive firms can make an economic profit and perfectly competitive firms cannot
The Coase theorem says that, if the appropriate property right is assigned to __________, an efficient solution to an externality problem will be achieved
a. the party causing the externality b. the victim of the externality c. the party that can avoid the externality at the higher cost d. the party that can avoid the externality at the lower cost e. either one of the parties involved
Which of the following most clearly indicates why the franchiser of a product has a strong incentive to monitor the quality of the product among all of the franchised sellers?
a. The franchiser has a monopoly on the sale of products in his industry. b. If quality is not maintained, the franchiser will be limited in his ability to sell other franchises and collect franchise fees. c. If quality is not maintained, the government will prohibit future sales of the franchises. d. Franchisers do not gain financially by maintaining quality, but they generally maintain quality anyway because they are consumers as well as producers.