Exhibit 5-1 Demand curve
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In Exhibit 5-1, the demand curve between points a and b is:
A. elastic.
B. inelastic.
C. unit elastic.
D. perfectly elastic.
Answer: C
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Which of the following is generally not considered to be government regulation of the private sector:
a. price controls b. requiring a permit to do business c. laws that state the rights of parties to a contract dispute d. restrictions on how companies hire and fire labor e. all of the above are considered regulation
Which of the following is a property of a forward contract?
a. In a forward contract cash is traded for immediate delivery. b. The buyer of a forward contract is "short" while the seller of the contract is "long". c. In a forward contract, the seller must own the commodity which is being traded. d. The value of future delivery depends on the market price of the commodity.
A firm will shut down in the short run if
a. P < AVC. b. P > AVC. c. AVC > AFC. d. TR > TC.
When an industry is characterized by technology spillover, what should the government do to ensure that the market equilibrium equals the socially optimal equilibrium?
a. Impose a tax greater than the value of the technology spillover. b. Not allow production of any product that causes a technology spillover. c. Provide a subsidy equal to the value of the technology spillover. d. Require producers to "clean up" any spillover that results from their production process.