BA4309
Regulation of
Business, FALL 2003 –test 3. Peter
Lewin.
Please read the
following carefully:
Multiple
Choice – 50 questions. Please use a 50 question scantron with a
pencil.
This is a closed book
exam. Cheating will result in a zero (among
other possible sanctions).
Among
the possibilities given in each question select the best
alternative.
Solution and grade distribution at end.
a.
there
are a large number of people affected
b. there are only two people affected
c.
the
damages are small
d. at least one of the parties has no
wealth
e.
a
and d of the above
a.
pollution
is never really a problem
b. there really are no environmental
problems
c.
if
property rights are well defined and negation is possible there is no
environmental problem
d. all environmental problems can be solved
e.
all
of the above
a.
depletion
of resources
b. pollution of the ocean
c.
automobile
emissions
d. endangered species
e.
a
and d of the above
a.
it
must be established that global warming is in fact occurring
b. it must be established that it is
occurring as a result of known and modifiable human behavior
c.
it
must be established that such behavior can be modified and that the cost of
such modification is not greater than the benefit achieved by the slowing of
global warming
d. all of the above
e.
none
of the above.
a.
the
drilling for oil in
b. the classic upstream-downstream problem
c.
wild
life preservation
d. automobile emissions
a.
differences
of opinion as to how resources ought to be used
b. good and evil
c.
whether
one likes the environment or not
d. religion
a.
the
cattle farmer should be liable for the damage to the corn farmer
b. the corn farmer should be responsible
for solving the problem
c.
either
of the above will work
d. none of the above will work
8.
History
teaches us
a.
that
free markets alone are sufficient to bring prosperity
b.
that
free markets alone are not sufficient to bring prosperity
c.
that
a stable and reliable legal structure that enforces property is necessary for
the emergence of prosperity
d.
b
and c of the above
9.
Some
inequality
a.
is
always the result of economic progress
b.
is
not necessarily the result of economic progress
c.
is
only sometimes the result of economic progress
d.
is
never the result of economic progress
a.
firms
will be segregated into those employing only men or only women
b. only firms employing men will survive
c.
only
firms employing women will survive
d. segregated and mixed firms may survive
and men and women will be paid the same
e.
segregated
and mixed firms may survive and women will be paid less than men according to
the degree of prejudice
a.
increase
b.
decrease
c.
remain
the same
a.
firms
will be segregated into those employing only men or only women
b. only firms employing men will survive
c.
only
firms employing women will survive
d. segregated and mixed firms may survive
and men and women will be paid the same
e.
segregated
and mixed firms may survive and women will be paid less than men according to
the degree of prejudice
a.
increase
b. decrease
c.
remain
the same
a.
there
are no losers from free trade
b. free trade always leads immediately to
the most efficient methods of production
c.
both
of the above
d. none of the above
18. Consider the previous question and the conditions necessary for the Coase theorem. It is easier to obtain a restriction on the free importation of foreign goods than it is to get such restrictions removed. This is most easily explained by the
a.
large
number of producers
b. large number of consumers
c.
large
number of consumers compared to the relatively small number of producers
d. stupidity of government officials
b.
marginal
revenue equals the marginal cost; lower quantity and a higher price
c.
marginal
revenue is greater than the marginal cost: lower quantity and a higher price
d.
marginal
revenue is greater than the marginal cost; higher quantity and a lower price
31.
Applying
the Coase Theorem to the question of drilling for oil in an Alaskan wildlife
preserve it would be appropriate to
a.
pass
a law requiring drilling to occur
b.
pass
a law prohibiting drilling
c.
award
an environmental organization title to the wildlife preserve
d.
nationalize
the preserve
32.
Which
of the following most closely resembles a market solution to the problem of air
pollution?
a.
the
establishment and sale of pollution rights
b.
the
imposition of separate pollution limits on each business
c.
nationalizing
the air
d.
rewarding
businesses with tax-payer money for reducing pollution
33. The imposition of a minimum wage below
the (free) market wage will
a. increase unemployment
b. decrease unemployment
c. have no effect
d. first increase then decrease unemployment
34. Under perfectly discriminating monopoly
a.
every
customer would be charged the same price
b.
every
customer would be charged a different price
c.
every
customer would be charged the maximum price he/she is prepared to pay
d.
none
of the above
35. Rising marginal cost gives rise to
a.
economies
of scale
b.
economies
of scope
c.
barriers
to entry
d.
none
of the above
36.
Perfect
competition is considered to be the most efficient possible outcome, this is
because
a.
it
encourages technological progress
b.
it
encourages the greatest degree of producer response to differing customer needs
c.
it
ensures that the product is produced and sold at the lowest possible cost under
a given technology
d.
all
of the above
37. If the Food and Drug Administration
slowed down the drug approval process for pharmaceutical drugs it would risk
the occurrence of more
a. type I errors
b. type II errors
c. both of the above
d. none of the above
a.
marginal
benefit minus marginal cost equals zero
b.
marginal
cost equals marginal benefit
c.
marginal
cost is at a minimum
d.
average
cost is at a minimum
e.
a
and b of the above
a.
a lower average price of housing
b.
lower mortgage rates for housing
c.
higher mortgage rates for housing
d.
a lower rate of return for landlords
a.
reducing the level of maintenance
b.
increasing the level of maintenance
c.
postponing interest payments
d.
none of the above
41.
The
problem of deciding how much air safety is enough or how much air safety is
optimal is complicated by
a.
incentive
problems
b. knowledge problems
c.
both
of the above
d. none of the above
a.
a
decrease the demand
b.
an
increase the supply
c.
either
of both of the above
d.
none
or the above will work
a.
decrease
b.
increase
c.
make
no difference to
d.
none
of the above
44.
Which
of the following is likely to be the most stable monopoly?
a.
Microsoft
b. The
c.
General
Electric
d. IBM
45.
Free
markets work because they
a.
economize
on information
b. provide incentives to people to do their
best
c.
encourage
a division of labor
d. all of the above
GRADE DISTRIBUTION:
If you total score (all three tests) is
greater than or equal
to: your grade is
90 A+
80 A
77 A-
75 B+
65 B
62 B-
60 C+
ELSE C
Solution:
1. e
2. c
3. e
4. d
5. d
6. a
7. c
8. d
9. a
10. e
11. b
12. d
13. c
14. d
15. b
16. a
17. c
18. c
19. e
20. b
21. c
22. b
23. a
24. b
25. d
26. b
27. d
28. b
29. a
30. a
31. c
32. a
33. c
34. c
35. d
36. c
37. b
38. e
39. d
40. a
41. c
42. c
43. b
44. b
45. d
46. c
47. a
48. c
49. a
50. b