Figure 8.7 shows the market for a successful price-fixing arrangement (cartel) between two identical firms. When the two firms act like one and charge the same price, the market price will be ________ and each firm will produce and sell a quantity of ________.
A. $10; 200
B. $10; 100
C. $5; 500
D. $5; 250
Answer: B
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Suppose that a firm spends $200,000 to build a factory in 2012 that is expected to have a life of 10 years. As a result, GDP in 2012 will increase by:
a. $20,000 b. $200,000 c. You need to know the selling price of the factory to answer this question. d. It depends upon the tax law regarding depreciation.
People who use drive-through windows at restaurants and eat while on the road tend to
a. have a low opportunity cost of time b. have a high opportunity cost of time c. not maximize their utility d. act irrationally e. value their money more than their time
GDP includes:
a. the negative attributes from erosion and deforested landscape. b. all quality improvements resulting from higher quality goods replacing inferior goods. c. the cleaning-up expenses associated with pollution. d. the value of leisure time. e. the illegal activities related to the underground economy.
The free rider problem
a. Exists in the case of public goods b. Exists in the case of common property resources c. Is worse the larger the number of people involved for either public goods or common property resources d. All of the above are true