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: > 5. The labor market confrontation between Major League Baseball and the Players Association is an example of: > 6. Within a single market the cross-price elasticity of demand is: > 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: >
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2 9. A covert, informal agreement among firms in an industry to fix prices and output levels is called: > 10. A perfectly functioning cartel results in: > 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: > 13. If MC = $4 and e P = -2, the optimal markup on price is: > 14. Price discrimination exists when: > 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: >
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