Almost all recessions identified by the NBER are characterized by:
A. durations exceeding two years.
B. declining real GDP.
C. higher rates of inflation.
D. higher interest rates.
Answer: B
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In perfect competition, if the market price of the product is initially higher than the minimum average total cost faced by the firms, then
A. other firms will enter the industry and the industry supply will decrease. B. other firms will enter the industry and the industry supply will increase. C. some firms will exit the industry and the industry supply will decrease. D. some firms will exit the industry and the industry supply will increase.
The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended
that the railroad's revenues would fall because of the rate hike. It can be concluded that: A. both groups felt that the demand was elastic but for different reasons. B. both groups felt that the demand was inelastic but for different reasons. C. the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt it was elastic. D. the railroad felt that the demand for passenger service was elastic and opponents of the rate increase felt it was inelastic.
Recall the Application about the price competition between satellite and cable TV services to answer the following question(s).Recall the Application. In most cases where satellite TV service is introduced in an area with cable TV service, if the quality of cable TV service increases, then consumer surplus (in the cable TV market):
A. increases. B. decreases. C. drops to zero. D. becomes negative.
An example of a market failure is
A) a firm is dumping toxic waste that is making people sick. B) when not everyone who wants to see a major league football game can. C) when there is an increase in gasoline demand and a shortage develops. D) when the market prices of some vehicles are too high for some buyers.