WGU- C211 Exam CH 7, 9, 10, 11, 21, 23 with Complete Solutions

The opportunity cost of one good relative to another reflects: - ANSWER The slope of the budget constraint. Assume that an individual's budget decreases and that prices remain constant. What would happen to his/her bu ...

The opportunity cost of one good relative to another reflects: - ANSWER The slope of the budget constraint. Assume that an individual's budget decreases and that prices remain constant. What would happen to his/her budget constraint? The budget constraint line would - ANSWER Shift inward in a parallel manner Observing an individual's indifference curve demonstrates his/her - ANSWER Preferences Assume that Bob's income increases following a promotion at work, but prices do not change. What will happen to Bob's budget constraint? - ANSWER It will shift outward, parallel to its initial position. How will an increase in income affect the budget constraint, assuming that prices remain the same? - ANSWER Shift outward. What is a good called that consumers buy less of when their income increases? - ANSWER Inferior good. What is true of indifference curves? - ANSWER The consumer's preferences are represented with indifference curves. Suppose that the United States imposes a tariff on avocados imported from Mexico. What impact will this have on the price paid for avocados by United States citizens? - ANSWER The price will increase. Which of the following is a consequence of a country imposing a tariff on imported goods? - ANSWER The demand for foreign produced goods decreases. Suppose that the United States imposes a tariff on salt. What impact might this tariff have on the price for domestic consumers? - ANSWER Consumers will pay a higher price. Applying a tariff to coconuts will have the following effect: - ANSWER Increase the domestic price of coconuts. Which of the following is NOT a restriction to trade? - ANSWER Free trade areas. What is the significant difference between an import quota and a tariff? - ANSWER A tariff raises revenue for the government and an import quota creates surplus for those who obtain licenses to import. Suppose that the price of a good increases (all else held constant). Which of the following would happen along with the change in price? - ANSWER Consumer surplus would decrease. Suppose that Bob goes to the market and is willing to pay $500 for a new chainsaw. Bob is able to find the chainsaw for only $400. Which of the following follows from Bob's circumstance? - ANSWER His consumer surplus is $100 Which statement is true of consumer surplus? - ANSWER Consumer surplus represents value to buyers in excess of the price paid for the product. Which statement is true of producer surplus? - ANSWER Low cost suppliers garner the most producer surplus. Which statement is true? - ANSWER Total surplus is the sum of consumer and producer surplus and is graphically represented as the area between the supply and demand curves up to the equilibrium quantity. Suppose that Bob lives in the United States, but has been working in Mexico for the last 5 years. Where is the value of Bob's production counted during the last 5 years? - ANSWER U.S. GNP and Mexico's GDP. Which of the following statements describes gross domestic product (GDP)? - ANSWER GDP is the most used measure of a country's economic wellbeing. Which of the following is an investment included in the gross domestic product (GDP) measure? - ANSWER Spending on new residential construction. Gross Domestic Product (GDP) measures which of the following? - ANSWER Market value of final goods and services produced within a country in a given period of time. Which item is NOT part of GDP? - ANSWER Purchasing a used hairdryer. What is the key distinction between real and nominal GDP? - ANSWER Real GDP measures production not affected by changes in prices while nominal GDP measures production measured at current prices. Beyond the enforcement of antitrust laws, collusion often fails because: - ANSWER it has incentive problems associated with the "prisoners' dilemma." Which of the following are example(s) of explicit collusion? - ANSWER Creating a cartel and directly negotiating an agreement to fix prices. Price setting by a monopolist at a level higher than the competitive price level is: - ANSWER collusive price setting. Facing strong competition from MNE cosmetics firms, an Israeli firm focused on products with unique components extracted from the Dead Sea that couldn't be found in other parts of the world. This is an example of: - ANSWER defender strategy. Which of the following industry characteristic makes collusion difficult? - ANSWER Low entry barriers Which of the following statement(s) about dumping are correct? - ANSWER Exporter sells below cost abroad and exporter plans to raises prices after eliminating local competitors. Which of the following situation represents the LOWEST intensity of rivalry between two companies? - ANSWER Low resource similarity and high market commonality Local firms, in emerging economies, use a dodger strategy to respond to MNEs entry when: - ANSWER industry pressures to globalize are high and assets are customized to home markets. If Google and Microsoft were to propose a joint venture to develop a new internet search engine, the US government would block them based on: - ANSWER Antitrust law. When firms indirectly coordinate actions by signaling their intentions, often in an attempt to reduce output and maintain pricing above competitive levels, they are engaging in: - ANSWER tacit collusion. Which of the following is NOT one of the factors that make an industry particularly conducive to collusion? - ANSWER Many firms in the industry Firms in a multimarket competitive situation might want to avoid engaging in cross-market retaliation because: - ANSWER a price war may be too costly for all involved. If a country's competition and antitrust policies are pro-incumbent and pro-producer, which of the following is a likely outcome? - ANSWER Domestic consumers will most likely pay high prices. Imagine that an electronics manufacturer introduces a new smart phone in its home market at an extremely low cost. Its intention is to eliminate its domestic rivals, after which it plans to significantly raise its prices. The firm is engaging in: - ANSWER predatory pricing.