Define the following terms and explain their importance to the study of economics:
a. antitrust policy
b. economies of scale
c. economies of scope
a. Antitrust policy is designed to prevent the acquisition of monopoly power and to ban certain monopolistic practices.
b. Economies of scale are cost savings that are acquired through increases in quantities produced. If a firm has large economies of scale, it may be a natural monopoly. Natural monopoly is one justification for regulation.
c. Economies of scope are cost savings that are acquired through simultaneous production of many different products. If a firm has economies of scope, it may be a natural monopoly in the provision of those products, and a candidate for regulation.
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A Swiss consumer wants to buy an American car. The exchange rate is 1USD=0.89CHF (Swiss Francs). The car costs $10,000 . How much would the car cost him in Swiss Francs?
a. 12,000 Francs b. 11,600Francs c. 8,900 Francs d. 7,500 Francs
When economists refer to the economy's self-correcting mechanism, they are referring to the fact that the
a. economy will react automatically to a recessionary gap through inflation. b. economy will react automatically to an inflationary gap through deflation. c. economy will react automatically to an inflationary gap through inflation. d. simple multiplier is greater than the complex multiplier.
In Econland total output is $8 billion, population equals 500,000 people, and, of these, 400,000 are employed workers. Output per person in Econland equals ________ and average labor productivity equals ________.
A. $20,000; $20,000 B. $16,000; $20,000 C. $20,000; $16,000 D. $16,000; $16,000
Opportunity wage refers to the
A. Income an individual loses when he or she quits a job. B. Value of goods and services that could be purchased with a certain individual's income. C. Highest wage an individual would earn in his or her best alternative job. D. Income equivalent of a volunteer worker.