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ECON312N Principles of Economics Week 4 Homework

ECON312N Principles of Economics Week 4 Homework

ECON312N Principles of Economics

Week 4 Homework

Question 1

Consider the market for running shoes shown above. Before a tariff is imposed, if the United States trades with the world, then the United States produces ________ running shoes at a price of ________.

5 million; $40

3 million; $80

5 million; $80

3 million; $40

1 million; $40

Question 2

Which of the following is NOT a characteristic of monopolistic competition?

few firms compete

easy entry and exit

small market share

no barriers to entry or exit

differentiated product

 

Question 3

According to the above table, the country will import the good if the world price is less than ________ and will export the good if the world price is more than ________.

$4; $4

$4; $8

$10; $10

$6; $6

$8; $4

 

Question 4

What is the Herfindahl-Hirschman Index if the four firms in an industry account have market shares of 62 percent, 15 percent, 15 percent, and 8 percent?

100

4,358

6,200

2,822

111,600

 

Question 5

During the 1980s, Harley-Davidson, the American motorcycle maker, asked Congress for tariff protection from large motorcycles imported from Japan. Harley-Davidson argued that their company needed protection so the company could reorganize and, after some time had passed, could become more competitive. Harley-Davidson’s argument is similar to the ________ argument for protection.

anti-dumping

save domestic jobs

infant-industry

bring diversity and stability

national security

 

Question 6

The table above shows the payoff matrix offered to two suspected criminals, Bonnie and Clyde. The payoffs are the years they will spend in prison. The suspected criminals are not allowed to communicate. Given the information in the payoff matrix, the Nash equilibrium is that Bonnie ________ and Clyde ________.

confesses; denies

denies; denies

confesses; confesses

denies; either confess or denies, either outcome is consistent with the Nash equilibrium

denies; confesses

Question 7

A tariff is

any non-tax action used to restrict trade.

a tax imposed on exports.

a tax imposed on imports.

any non-subsidy used to increase trade.

a subsidy granted to imports.

Question 8

In the 1980s, the U.S. government forced Japanese automakers to limit their exports to the United States. The union representing the autoworkers (UAW), argued that otherwise the U.S. auto industry would have contracted. The UAW’s argument is the ________ argument for protection.

bringing diversity and stability

infant-industry

save domestic jobs

national security

anti-dumping

 

Question 9

The table above has the domestic demand and domestic supply schedules for a good. According to the table, the no-trade price of the good is

$6.

$8.

$10.

$2.

$4.

 

Question 10

The figure above shows the U.S. demand and U.S. supply curves for cherries. In the absence of international trade, how many pounds of cherries would U.S. farmers produce?

800,000 pounds

600,000 pounds

0 pounds

200,000 pounds

400,000 pounds

 

Question 11

If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,

they will agree to lower the price of oil in order to increase their profits.

they will try to operate as a large, monopolistically competitive firm.

they would like the price of oil to be the same as if the market were perfectly competitive.

game theory does not apply to their actions because they are nations, not firms.

they are forming a cartel.

 

Question 12

The above figure shows a restaurant engaged in monopolistic competition with other restaurants. The equilibrium price at this restaurant is ________ per meal.

$50

$30

more than $50

$20

less than $20

Question 13

Consider the market for running shoes shown above. As a result of the tariff imposed, ________ collect(s) tariff revenue of ________.

firms; $80 million

the government; $80 million

the government; $40 million

firms; $40 million

the government; $120 million

 

Question 14

Price

(dollars per haircut)        Quantity demanded

(haircuts per day)

5              50

10           40

15           30

20           20

25           10

30           0

 

Christy’s Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy’s marginal revenue from the 25th haircut?

zero

$5.00

$17.50

$50.00

 

Question 15

The above figure shows the U.S. market for flip-flops. With no international trade, the price in the United States for flip-flops is ________. With international trade, the price in the United States for flip-flops is ________.

$700; $300

$500; $300

$14; $12

$12; $14

$500; $700

 

Question 16

 

One of the major reasons why the United States exports jet airplanes is because Boeing faces ________ opportunity cost compared with firms in other nations in the production of such aircraft.

a higher

an unrelated

a nonexistent

an identical

a lower

 

Question 17

The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC) is the sole provider of cable television to the residents of this Central Florida community. If TWC operated under an average cost pricing rule, how many households in Oakland are served?

 

30,000

40,000

50,000

20,000

None of the above answers is correct.

 

Question 18

Suppose the grocery store market in Kansas City is perfectly competitive. Then one store buys all the others and becomes a single-price monopoly. The figure above shows the relevant demand and cost curves. When the market is perfectly competitive, the price of a pound of steak is ________ and when it is a monopoly, the price of a pound of steak is ________.

$4; $12

$4; $8

$8; $12

$8; $4

$4; $20

 

Question 19

The figure above shows the U.S. demand and U.S. supply curves for cherries. At a world price of $2 per pound once international trade occurs, the total exports of cherries from the United States to other nations equals

200,000 pounds.

0 pounds.

800,000 pounds.

600,000 pounds.

400,000 pounds.

 

Question 20

The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC) is the sole provider of cable television to the residents of this Central Florida community. If TWC is left unregulated, how many households in Oakland are served?

20,000

30,000

40,000

10,000

50,000

 

Question 21

Excess capacity is the amount by which the? _____ exceeds the quantity that the firm produces.

profit maximizing quantity

mark up

cost minimizing quantity

efficient scale

 

Question 22

Game theory is the tool that economists use to analyze strategic behavior, which is behavior that takes into account the ________ behavior of others and the mutual recognition of ________.

unexpected; interdependence

unexpected; independence

random; profit

expected; independence

expected; interdependence

 

Question 23

A firm in monopolistic competition is

efficient because it produces at the minimum average total cost.

efficient because in the long run it earns zero economic profit.

efficient because of the ease of entry.

efficient because it produces where MR = MC.

inefficient because price exceeds marginal cost.

 

Question 24

The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC) is the sole provider of cable television to the residents of this Central Florida community. If TWC operated under a marginal cost pricing rule, how many households in Oakland are served?

30,000

50,000

20,000

10,000

40,000

 

Question 25

To maximize its profit, a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________.

MR = MC; MR = MC

MR > MC; MR > MC

P = ATC; P = ATC

MR > MC; MR = MC

MR = MC; MR > MC

 

Question 26

Which of the following firms produce at the efficient scale?

Dell produces 100 computers a week at which its average total cost is minimized.

Toyota produces 20 cars a day at its Texas plant at which its profit is maximized.

?Starbucks’ makes 1000 chai lattes each day at which is total revenue is maximized.

A Gap outlet in Chicago sells 500 jackets a day and lowers its average variable cost.

 

Question 27

The imposition of tariffs on Korean steel has led to ________ in imports of Korean steel to the United States and ________ the price of steel in the United States.

an increase; raised

a decrease; no change in

a decrease; raised

no change; raised

an increase; lowered

 

Question 28

The above figure shows the U.S. market for flip-flops. With international trade, the United States imports ________ flip-flops.

300,000

700,000

500,000

0 flip-flops because the United States exports

400,000

 

Question 29

If the U.S. government imposes a tariff on imported steel, who else besides U.S. steel producers gains from the tariff?

U.S. steel consumers

the foreign government

the U.S. government

foreign exporters of steel

U.S. importers of steel

 

Question 30

The fundamental force that generates international trade is

the need for more goods and services.

absolute advantage.

the sea rule.

comparative advantage.

the existence of tariffs.

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