In exchange for a share of the revenues earned on campus, State U has granted CheapFizz the exclusive right to sell soft drinks in the student union and in vending machines on campus. Prior to the deal, three soft drink companies sold beverages on campus; now no other soft drink company is allowed to sell its products on campus. CheapFizz now has market power due to:
A. network economies in the consumption of soda.
B. its exclusive ownership of an input.
C. its exclusive license to sell soda.
D. economies of scale in the production of soda.
Answer: C
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An economist claims that "the evidence suggests that high rates of inflation are associated with slow long-term economic growth." This is an example of
a. positive economics b. normative economics c. negative economics d. a simplifying assumption e. microeconomic analysis
If the Federal Reserve conducts an open market purchase, the:
A. interest rate will not change. B. interest rate will increase. C. interest rate will decrease. D. money supply is decreased.
An adverse supply shock, such as a reduced supply of raw materials, would
A. decrease the marginal product of labor. B. decrease the marginal product of capital, but have no effect on the marginal product of labor. C. increase the marginal product of labor. D. not affect the marginal product of labor.
The graph illustrates the market for bottled water. When the price exceeds the equilibrium price, the quantity demanded is ________ the quantity supplied and the price of the good will ________
A) less then; fall B) greater than; fall C) equal to; fall D) less than; rise E) greater than; rise