Question 1 solution
Question:
Concentration increases in an industry
Group of answer choices
if innovation increases plant size of some firms and lowers their cost.
All of the above are correct.
if the larger firms gain control of important resources, squeezing out smaller firms.
if some firms become technologically superior over time.
Answer
- All of the above are correct.
Explanation:
industrial concentration refers to the extent to which production is concentrated amongst firms in an industry. If the industry has a large number of firms, there is less concentration in the market. Concentration increases when few large firms control specific resources in the production process. It can also happen when barriers to entry of new firms are more and if a few firms generate innovative mechanisms giving them a monopoly power over the industry.
When the bank of Canada makes an open market purchase its assets _____ and its liabilities ___________
Answer
- C) increase; Decrease
Explanation:
Central Bank assets are the financial instruments that the bank is holding such as securities. Liabilities are what the bank owes to others. The dollar bills become the Fed liabilities whenever the Fed puts them in circulation by purchasing assets. So, in open market operations, purchase of government securities increases central bank’s liabilities while increasing its assets.
Question:
Suppose that the economy of Dustland is operating where aggregate output is greater than the full employment output. Which policy would be best to the central bank to implement?
a.) expansionary monetary policy
b.) expansionary fiscal policy
c.) contractionary monetary policy
d.) contractionary fiscal policy
Answer
- c.) contractionary monetary policy
Explanation:
If the aggregate output of Dustland is greater than full employment output, the country is experiencing a boom. Booms implies that the economy is experiencing inflationary pressures. The aim of the central bank is to ensure the economy does not enter into inflation, which is achieved by contractionary monetary policy like increase in interest rates. When central bank increases interest rates, it becomes expensive to borrow and causes many to save instead of investing more, which in turn reduces money supply in the economy reducing inflationary pressures.
Question:
What is Monopolistic Market Structure?
Answer
- It is a market structure occurs when one supplier provides a particular good or service to many consumers, with the power to set price for the products.
Explanation:
There is only one seller in the market and many buyers which gives the supplier the power to fix prices for goods and services. Such a market is characterized by high barriers to entry including ownership of raw materials to the production, government restrictions, economies of scale among other barriers. The monopoly can also lower its prices to discourage new entrants.
Question:
What is the “law of diminishing marginal utility” give an example
Answer
- The law of diminishing marginal utility states that the marginal utility of a good or service decreases as more of the good is consumed or as its supply increases. Example, as you consume a slice of bread every minute, it gets to a point where an additional slice of bread generates less satisfaction compared to the first slice consumed.
Explanation:
When more of a good is consumed, the consumer generates less and less satisfaction from the additional unit until the marginal satisfaction becomes negligible. This follows all goods and services that are consumed in units, such that when more of the good or service is made available, less extra satisfaction is generated for the last unit consumed.
_____results when an economy experiences high unemployment and high inflation at the same time
Answer
- A. Stagflation
Explanation:
When an economy experiences high unemployment and high inflation rates, the condition is called stagflation. This creates a slow economic growth and rising prices. It is mostly caused by conflicting contractionary and expansionary fiscal policies by the central bank. For example, when the government prints currency.
Question:
What is the definition of undue influence?
Answer
- Undue influence is an equitable doctrine that involves one person taking advantage of a position of power over another person. This occurs when an individual uses his/her relationship between the two parties to persuade another’s decision.
Explanation:
If one party takes advantage of another person by using his/her position and relationship with the other party, this is described as undue influence. Such a relationship that can put one under undue influence is a relationship between the doctor and a patient, or between a parent and a child. Someone can leverage information from another individual, to induce a sale or purchase.
Which of the following best explains why the aggregate demand curve slopes downward
Answer
- If the central bank observes a high rate of inflation, the monetary policy dictates an increase in real interest rates. The high interest rate reduced output by reducing investment demand in the economy
Explanation:
A downward sloping aggregate demand curve indicates that as the price level drops, quantity of output demanded increases which results to an increase in national income. for any amount of money, a lower price provides more purchasing power, inducing more consumer spending. Secondly, high price level requires large amount of currency to make a purchase, which means the consumer will demand more currency. When price level drops, consumers require less amount of currency to make purchases, which increasing bank savings, increasing available loans, and eventually decreasing interest rates. Therefore, a low price level induces consumers to save which ends up causing a decrease in interest rates. And as interest rates decrease, people invest more and hence high aggregate demand. The opposite is also true. If the central bank see a possible inflation, it increases interest rates, decreasing borrowing and decreasing investment. This decreases aggregate demand and hence lowering real GDP.
Question:
he law of diminishing returns states that at some point as:
a. more of a resource is devoted to production, holding the quantity of other inputs constant, at some point output will begin to decrease.b. less of a resource are devoted to production, holding the quantity of other inputs constant, the output will decrease, but at an increasing rate.c. more of a resource is devoted to production, holding the quantity of other inputs constant, the output will increase, but at a decreasing rate.
Answer
- c. more of a resource is devoted to production, holding the quantity of other inputs constant, the output will increase, but at a decreasing rate.
Explanation:
The law of diminishing returns states that as more units of input are added to the production process, there is smaller increases in output. This law implies that there is always an optimal level of inputs in any production process, beyond which additional inputs result to less output changes. Examples, when a company employs workers in production process, it gets to an optimal level after which further addition of workers beyond this optimal level result in less efficient operations.
Question:
Samantha has a budget of $40 and buys beef jerky and fried pork rinds. Her budget does not change and the price of both beef jerky and fried pork rinds increases. As a result,
Samantha’s budget line shifts inward.
Samantha’s consumption possibilities have decreased.
Samantha can still buy the combination of beef jerky and fried pork rinds she was initially consuming because her budget did not change.
Answers A and B are correct.
Answers A and C are correct.
Answer
- Answers A and B are correct.
- Samantha’s budget line shifts inward.
- Samantha’s consumption possibilities have decreased.
Explanation:
When price of both Beef jerky and fried pork increases, this implies that the budget can purchase less amount of both goods than before. Any increase in prices acts as a decrease in budget such that if prices of both goods doubled, the this would be the same as dividing the budget by two which is shown by an inward shift in the budget line. When the budget line shifts inward, it means that Samantha has less consumption possibilities than before.
