The U.S. beer industry is characterized by market power for only a few firms, with the largest firm enjoying a 50% market share. One reason for this is economies of scale. Economies of scale means that:
a. as beer production increases, costs increase significantly.
b. patents have allowed beer producers to have low costs of production.
c. as beer production increases, the average total cost of production falls.
d. if the industry were made perfectly competitive, the costs of production would fall.
Ans: c. as beer production increases, the average total cost of production falls.
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The output gap can best be described as:
A) the percentage difference between GDP and its potential B) the difference between GDP in the current year compared to the previous year C) the difference between a nation's GDP and that of the nation with the highest GDP D) the difference between GDP and its forecasted level
The figure below shows the retail demand for running shoes. If the distributor (the retailer) is a monopoly and the marginal cost of distributing the shoes is $20 per pair, the manufacturer's wholesale demand curve lies
A) $20 below the retail demand curve, D.
B) $20 below the retail marginal revenue curve, MR.
C) $20 above the retail demand curve, D.
D) $20 above the retail marginal revenue curve, MR.
In order to understand when a model may not be accurate, which is not an important action to take?
A. Identify what important details were omitted when developing a model. B. Make sure assumptions made in the model are clear and accurate. C. Test the model for accuracy. D. Make sure the model all includes all possible details.
The real value of any variable is its nominal value:
A. adjusted for inflation. B. holding the base constant. C. holding the basket constant. D. adjusting for income.