The identification problem in using regression analysis to estimate a demand curve emerges when
A. the demand for the product has been relatively stable over time.
B. factors affecting the demand for the product are highly correlated.
C. the supply of the product has been relatively unstable over time.
D. the demand for the product has not been stable over time.
Answer: D
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Before Walmart's entry into the retail pharmacy business which drove down prices, existing pharmacies
a. were operating efficiently, so this is an example of predatory pricing. b. were colluding on price, so this is an example of a contestable market. c. were not operating as efficiently as afterwards, so this is not a case of predatory pricing. d. did not advertise but were forced to do so by the new competition.
An effluent fee is a
A) subsidy given to the producer of a positive externality. B) charge to a polluter that gives the right to discharge pollution into the air. C) fine imposed on a polluter for dumping illegal pollution. D) charge for a public good.
An allocation satisfies the output efficiency condition if:
A. for every pair of goods, every input's marginal product equals the marginal rate of transformation. B. for every pair of goods, every consumer's marginal rate of substitution equals the marginal rate of transformation. C. only applies for firms that produce the same product. D. only applies for consumers that consume the same goods.
To be considered capital, a factor of production must:
A) have been produced. B) occur naturally. C) be part of a factory or building. D) be a skill or talent possessed by a person.