Suppose the government of the oil rich country of

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11. Suppose the government of the oil-rich country of Oiland sets gasoline prices at $0.25 per gallon, when the market price is $1.50. The Oiland government's actions will: A) improve equality between rich and poor since the poor can now afford gasoline. B) cause gasoline shortages even in an oil-rich country. C) improve efficiency since the low prices will force producers to find cheaper production methods. D) result in gasoline surpluses even in an oil-rich country. 12. One government policy for dealing with a natural monopoly is to: 13. The excess capacity in monopolistic competition may be viewed as: 14. The market for breakfast cereal contains hundreds of similar products, such as Fruit Loops, Corn Flakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:
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ECON 2106 Shelby Frost Final Exam 11:00am TR Fall 2007 Version A Page 6 Use the following to answer question 15: Coffee and Salmon Production Possibilities Coffee Salmon Brazil 40 20 Alaska 10 10 15. (Table: Coffee and Salmon Production Possibilities) This table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good. Brazil has an absolute advantage in producing: A) salmon only. C) coffee only. B) both coffee and salmon. D) none of the above. 16. Gary's Gas and Frank's Fuel are the only two providers of gasoline in Smalltown. Gary summarizes his pricing strategy as: "I'll do to Frank what Frank did to me last time." This is an example of: 17. Prof. Dumbledorr has a monopoly on magic hats. The large barriers to entry in the magic hat industry is the reason why Dumbledorr's monopoly: 18. If the market produces an efficient level of a good, then we know that the good must be _____ and _____ in consumption.
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