Refer to the information provided in Figure 34.1 below to answer the question(s) that follow.
Figure 34.1Refer to Figure 34.1. If the economy is open and the government increases spending by 15, the new equilibrium output is
A. 81.25.
B. 100.
C. 112.50.
D. 125.
Answer: A
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How do economies of scale contribute to the development of an oligopoly?
A) Economies of scale make it legally difficult for new firms to enter. B) Economies of scale make small-scale producers inefficient. C) Economies of scale are based on control of a key resource, without which other firms cannot enter an industry. D) Economies of scale are guaranteed when a patent is granted.
There are six firms in the cresset industry. The market shares of the four largest firms are 50 percent, 20 percent, 10 percent, and 7 percent. The Herfindahl index is
a. 87 b. 4,149 c. 10,000 d. 3,081 e. impossible to calculate because data for the fifth and sixth firms are not given
A farmer has 500 acres on which he has previously grown corn. His yield per acre is 100 bushels of corn. If his production flexibility contract payment is $21,250, then what is the corn payment rate?
A) $0.45 B) $0.67 C) $0.50 D) $0.10 E) There is not enough information to answer the question.
Which of the following statements is true about profits in a monopolistically competitive market?
(A) Monopolistically competitive firms are as profitable as monopoly firms. (B) Profits are rare in monopolistically competitive markets. (C) Most firms will earn substantial profits from year to year. (D) Many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term.