KEY973S - BUSINESS 702 MANAGERIAL ECONOMICS THIRD EXAM KEY...

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BUSINESS 702 THIRD EXAM KEY SPRING 1997 MANAGERIAL ECONOMICS MULTIPLE CHOICE QUESTIONS (40 points) 1. Perfect competition is inconsistent with: A. economic profits. B. economic losses. C. barriers to exit. > D. hard-to-measure product quality. 2. Economic profit: A. cannot be negative. > B. can exceed the risk-adjusted normal rate of return. C. is less than the risk-adjusted normal rate of return. D. does not reflect the cost of owner-supplied inputs. 3. Any limit on asset redeployment from one line of business or industry to another is called a: A. barrier to mobility. B. barrier to entry. > C. barrier to exit. D. capacity constraint. 4. A market with one buyer is called: > A. monopsony. B. monopoly. C. perfect competition. D. oligopsony. 5. The labor market confrontation between Major League Baseball and the Players Association is an example of: A. natural monopoly. > B. countervailing power. C. price takers. D. market structure. 6. Within a single market the cross-price elasticity of demand is: > A. positive. B. negative. C. zero. D. irrelevant. 7. The four-firm concentration ratio will rise following: A. a rise in imports. B. a fall in imports. > C. a merger between the two largest firms in the industry. D. small firm entry. 8. A kinked demand curve results from: > A. different competitor reactions . B. competitor price reactions. C. an absence of competitor price reactions. D. supply imbalance.
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9. A covert, informal agreement among firms in an industry to fix prices and output levels is called: A. a cartel. B. oligopoly. C. monopolistic competition. > D. collusion. 10. A perfectly functioning cartel results in: A. oligopoly. > B. monopoly. C. perfect competition. D. monopolistic competition. 11. If the optimal markup on price is 50%, the optimal markup on cost is: > A. 100%. B. 75%. C. 50%. D. 25%. 12. If the optimal markup on cost is 25%, the optimal markup on price is: > A. 20%. B. 25%. C. 50%. D. 100%. 13. If MC = $4 and e P = -2, the optimal markup on price is: A. $8. > B. $4. C. $2. D. 33%. 14. Price discrimination exists when: A. prices are set according to the price elasticity of demand. > B. markups differ. C. prices differ. D. costs differ. 15. With price discrimination, lower prices are charged when: > A. the price elasticity of demand is high. B. the price elasticity of demand is low. C. the cross-price elasticity of demand is high. D. the cross-price elasticity of demand is low. 16. Consumer sovereignty reflects: > A. buyer power. B. failure by market structure. C. failure by incentive. D. externalities. 17. Regulatory costs are borne by workers when: A. demand is perfectly inelastic. > B. demand is perfectly elastic. C. supply is perfectly inelastic. D.
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This note was uploaded on 07/31/2011 for the course ECON 1201 taught by Professor Smith during the Spring '11 term at Waseda University.

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KEY973S - BUSINESS 702 MANAGERIAL ECONOMICS THIRD EXAM KEY...

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