1.A creative response to regulations can be described as

Select one:

a. totally conforming to the law.

b. completely ignoring the law.

c. none of the above.

d. conforming to the letter of the law but undermining its spirit.

2.A regulated natural monopolist allowed to earn a "fair" rate of return would produce to the point at which

Select one:

a. the marginal revenue curve meets the long-run marginal cost curve.

b. the price per unit equals its marginal revenue.

c. the price per unit equals the long-run average cost.

d. the marginal revenue curve meets the long-run average cost curve.

3.Commonwealth Edison is the only provider of electricity to many households in the Chicago area. Commonwealth Edison is regulated by the government. This type of regulation is known as

Select one:

a. social regulation.

b. economic regulation.

c. the Federal Register.

d. the market share test.

4.Compared to perfect competition, a monopoly will produce ________ output, and charge a ________ price.

Select one:

a. more; lower

b. less; higher

c. more; higher

d. less; lower

5.Credit card companies that operate as intermediary firms between credit card holders and business vendors are best described as

Select one:

a. platforms in a shared-input market.

b. end users in a shared-input market.

c. platforms in a transaction-based market.

d. end users in a transaction-based market.

6.For years, your parents claimed they had no desire to join a social web site. Recently, however, they joined one and said they did so because all their relatives have joined the same site with them. Your parents' behavior is an example of

Select one:

a. the impact of positive market feedback.

b. a network effect.

c. the impact of negative market feedback.

d. a switching cost.

7.In which industry structure is advertising and sales promotion likely to be most important?

Select one:

a. perfect competition

b. monopolistic competition

c. monopoly

d. All of the above are equally reliant on effective advertising and promotion.

8.The act of offering two or more products for sale as a set is called

Select one:

a. branding.

b. tie-in sales.

c. bundling.

d. versioning.

9.The ATC curve for a firm that produces an information product

Select one:

a. slopes upward, because AFC is constant, AVC slopes upward, and ATC = AFC + AVC.

b. slopes downward, because MC slopes downward, AVC is constant, and ATC = AVC +MC.

c. slopes downward, because AVC is constant, AFC slopes downward, and ATC = AVC + AFC.

d. is U-shaped, because AVC is U-shaped, AFC slopes downward, and ATC = AVC + AFC.

10.The main objective of the members of a cartel is to

Select one:

a. make the industry more competitive.

b. earn economic profits.

c. obtain a patent.

d. produce efficiently.

11.The problem of asymmetric information that brings about a general decline in product quality in an industry is

Select one:

a. creative response.

b. the result of government regulation.

c. the lemons problem.

d. a market failure.

12.Commonwealth Edison is the only provider of electricity to many households in the Chicago area. Commonwealth Edison is regulated by the government. This type of regulation is known as

Select one:

a. social regulation.

b. economic regulation.

c. the Federal Register.

d. the market share test.