🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
Economics
8
answers
0
watching
49
views
13 Dec 2019

Question 2

Not yet answered

Marked out of 2.00

Flag question

Question text

Some firms find conglomerate mergers advantageous since they permit firms to:

Select one:

a. take advantage of economies of scope.

b. take advantage of economies of scale.

c. pool cash flows resulting from products with low and high periods.

d. reduce input costs.

Watch
8
answers
0
watching
49
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Unlock all answers

Get 1 free homework help answer.
Get unlimited access
Already have an account? Log in
Share
Get unlimited access
Already have an account? Log in
Share
Get unlimited access
Already have an account? Log in
Share
Get unlimited access
Already have an account? Log in
Share
Get unlimited access
Already have an account? Log in
Share
Get unlimited access
Already have an account? Log in
Share
Get unlimited access
Already have an account? Log in
Share
Jamar Ferry
Jamar FerryLv2
17 Dec 2019
Get unlimited access
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

Question 11 One potential remedy to the tragedy of the commons is to: never allow a single individual to consume more than one percent of the common resource. criminalize the usage of common resources. allow individuals to use a common resource as long as they receive some benefit from doing so. place a common resource under private ownership. 4 points Question 12 As a result of a positional externality: contestants have a tendency to invest in a series of mutually offsetting investments in performance enhancement. there is generally an underinvestment in performance enhancement. the market price of performance enhancement materials is too high. the quality of performance in competitive situations is lower than the socially optimal level. 4 points Question 13 Which of the following statements is true regarding health insurance? Economics shows that all health related procedures should be free to individuals because the health of an individual is priceless. Total economic surplus would be larger if individuals faced an incentive to only use services when the benefit exceeds their costs. Health maintenance organizations provide an incentive for doctors to prescribe expensive nonessential services. First dollar insurance coverage has likely had very little to do with rising healthcare expenditures since World War II. 4 points Question 14 A strategy that yields a higher payoff no matter what the other players in the game choose is known as a: prisoner's strategy. dominated strategy. dominant strategy. Nash strategy. 4 points Question 15 Based on the diagram below, if the costs of hospital care are constant at $200 per day, and the individual does not incur any cost for each day for hospital care, then: the individual will stay 7 days and there will be no loss in economic surplus. the individual will stay 3 days and there will be no loss in economic surplus. the individual will stay 7 days and there will be lost economic surplus. the individual will stay 3 days and there will be lost economic surplus. 4 points Question 16 Economic research by Manning and colleagues suggests that people with deductible health insurance policies: spend substantially less on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. spend substantially more on health care and have substantially better health outcomes compared to people with first-dollar insurance coverage. spend basically the same amount on health care and have substantially worse health outcomes compared to people with first-dollar insurance coverage. spend substantially less on health care and have no measurable difference in health outcomes compared to people with first-dollar insurance coverage. 4 points Question 17 An efficient program for reducing pollution is one for which: all polluters incur the same total costs of abatement. all polluters pay the same amount in taxes to the government. all polluters have the same marginal costs of abatement. all polluters reduce their emissions by the same amount. 4 points Question 18 Given the information on pollution abatement costs of the two firms shown below, which of the following is an efficient combination of pollution reduction? Quantity of pollution abatement Firm A's MC of abatement Firm B's MC of abatement 1 $30 $25 2 $35 $30 3 $40 $35 4 $45 $40 Firm A reduces by 1 ton and Firm B reduces by 1 ton. Firm A reduces by 2 tons and Firm B reduces by 3 tons. Firm A reduces by 4 tons and Firm B reduces by 1 ton. Firm A reduces by 3 tons and Firm B reduces by 2 tons. 4 points Question 19 All of the following are characteristics of perfectly competitive markets except: there are a large number of firms. productive resources are mobile. all firms produce a differentiated product. buyers and sellers are well informed. 4 points Question 20 An advantage of the auction method to pollution abatement is that: it is very expensive to firms. regulators can achieve a desired abatement target without having detailed knowledge of the abatement technologies available to polluters. it requires all firms to reduce by exactly the same amount. it assures that eventually society will reach a level of zero pollution emissions. 4 points Question 21 There are 2 firms each emitting 200 tons of a pollutant. Firm A's abatement costs are constant at $20/ton, and Firm B's abatement costs are constant at $40/ton. The government's goal is to reduce pollution by half. If the government auctions 200 one ton permits to the highest bidder: Firm A will purchase all 200 permits. Firm B will purchase all 200 permits. each firm will buy 100 tons. there is no way to know who the highest bidder for any permit would equal. 4 points Question 22 As a result of economies of scale, as output expands: fixed costs are decreasing. average total costs are decreasing. marginal costs are increasing. total costs are decreasing. 4 points Question 23 Generally, when countries open their borders to free trade: both domestic producers and consumers of imported goods gain. both domestic producers and consumers of exported goods gain. domestic producers of imported goods and domestic consumers of exported goods gain. domestic producers of exported goods and domestic consumers of imported goods gain. 4 points Question 24 Which of the following is the best example of a tariff? South Korea bans imports of U.S. beef because of safety concerns. The U.S. requires toys imported from China to undergo testing for lead content. The U.S. imposes a tax on sugar imported from Brazil. The U.S. restricts the quantity of cars imported from Japan. 4 points Question 25 A means-tested program is a benefit program: in which benefits decline as a recipient's earned income increases. in which all individuals must undergo health screening to be eligible for benefits. in which all recipients exclusively receive benefits through in-kind transfers. that only affects the average income of a specific segment of the population. 4 points Save and Submit Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Question 1

Which compensation method helps to explain the large difference between the salaries of top-level managers and mid-level managers in a firm?

A.

Tournaments
B.

New blood
C.

Piece rate
D.

Backloaded compensation

3 points

Question 2

Please consider the information provided under Question 19 in Chapter 3 (page 54). Based on the stated information, the optimal number of bees kept if the externality is ignored by Yung is 5,000. Is the socially optimal number of bees higher or lower than 5,000?

A.

We do not have enough information to answer this question
B.

Same
C.

Lower
D.

Higher

3 points

Question 3

Which of the following factors contribute to the existence of firms?

A.

All of these factors contribute to firm existence
B.

Risks associated with specialization
C.

Incomplete contracts
D.

Willingness of some people to take on risk in exchange for residual income

3 points

Question 4

Public goods are often subject to free-rider problems because these goods are:

A.

Non-rival and non-excludable
B.

Rival and non-excludable
C.

Non-rival and excludable
D.

Rival and excludable

3 points

Question 5

Which of the following is the most efficient mechanism for allocating scarce goods?

A.

Government allocation system
B.

First-come-first-served system
C.

Market system
D.

Random allocation system

3 points

Question 6

Many years ago, most of the major Hollywood movie studios also owned chains of local movie theaters across the US. Today, most of the local movie theaters are owned by other companies. What has happened to the degree of integration in the movie industry over time?

A.

Less horizontally integrated
B.

Less vertically integrated
C.

More horizontally integrated
D.

More vertically integrated

3 points

Question 7

Your firm produces replacement parts for the nuclear submarines operated by the US Navy. Which one of Porter's Five Forces will be most prominent in determining your strategies and profitability?

A.

Bargaining Power of Suppliers
B.

Bargaining Power of Customers
C.

Threat of New Entrants
D.

Threat of Substitutes

3 points

Question 8

Which of the following statements is NOT true?

A.

The market mechanism for allocating resources is most efficient due to the incentives it creates.
B.

Markets are always the most efficient way to allocate goods, even if the market is not perfectly competitive.
C.

The random allocation mechanism provides no incentives at all.
D.

The government allocation mechanism provides no incentive for the economy to grow.

3 points

Question 9

Suppose a firm's cost structure exhibits economies of scope. Which of the following actions is compatible with this cost structure?

A.

Diversify into other product lines
B.

Focus on core competencies and reduce production
C.

Focus on core competencies and maintain constant production
D.

Focus on core competencies and expand production

Question 10

Please refer to Table 8.3 on page 132 in the book. Suppose we change the payoffs in the "low price, low price" cell to 0, 25 from 0, 0. Does this change the Nash equilibrium for the game, and is the game still a Prisoner's Dilemma?

A.

Equilibrium changes, still a Prisoner's Dilemma
B.

Equilibrium changes, no longer a Prisoner's Dilemma
C.

Same equilibrium, no longer a Prisoner's Dilemma
D.

Same equilibrium, still a Prisoner's Dilemma

3 points

Question 11

Which of the following statements about restricting entry to markets is NOT true?

A.

Brand identity and logos are expensive to establish, and entrants may find it very expensive to establish comparable position in the market.
B.

Predatory pricing is illegal but very difficult to prove in court
C.

Branded products tend to have more elastic demand, which makes it more difficult for entrants to charge high prices and they must stay out of the market.
D.

A low-quality seller cannot effectively use a warranty program to keep other firms out of its market

3 points

Question 12

Your firm earns $2 million per quarter in total revenue, and your accounting profits are $100,000 per quarter. You do not charge the firm for the use of an old building that you own because it is 50 years old and fully depreciated. However, another firm has offered you $200,000 per quarter to use the facility, and this is the market rental rate for similar facilities. In this case, we know that your:

A.

Opportunity costs are positive and economic profits are negative
B.

Opportunity costs and economic profits are positive
C.

Opportunity costs are negative and economic profits are positive
D.

Opportunity costs and economic profits are negative

3 points

Question 13

Please refer to Question 13 in Chapter 1 (page 17). What is the marginal cost of reducing global warming by 0.017 degrees?

A.

MC = 60
B.

MC = 5
C.

We do not have enough information to answer this question
D.

MC = 50

3 points

Question 14

In Chapter 6, Boyes focuses on negative externalities such as the various types of pollution. However, as we discussed during our online session, we can also observe positive externalities in which external benefits are generated for people. Which of the following is NOT an example of a positive externality?

A.

Workers can help one another to "cover the phones" and make sure that someone is always available to help clients
B.

Workers can provide ideas to one another about how to solve problems
C.

All of these cases are examples of positive externalities
D.

Workers can form carpools and use other means to reduce commuting costs

3 points

Question 15

Common property resources are:

A.

Non-rival and non-excludable
B.

Non-rival and excludable
C.

Rival and non-excludable
D.

Rival and excludable

3 points

Question 16

The free-rider problem arises in markets for common property resources.

A.

False
B.

True

3 points

Question 17

Firms that set their product price below the actual cost of production may be engaging in:

A.

Predatory pricing
B.

Monopoly pricing
C.

Moral hazard
D.

Dollar-cost averaging

3 points

Question 18

Under a cap-and-trade mechanism to control air pollution, what happens to the price of pollution rights if the supply of righs is reduced (i.e., the supply of rights is reduced)?

A.

Increases
B.

Decreases
C.

No change

Question 19

The key method for a manufacturing firm to avoid hold-up problems is to have another source of inputs.

A.

False
B.

True

3 points

Question 20

Your firm sells luxury autos, and you have asked the marketing department to develop and stronger brand identity through a new ad campaign. After the campaign has run for 6 months, you hire an economic consultant to study the impact of the campaign on the demand for your autos. The consultant reports that the demand for your cars is now more elastic than it was 6 months ago. Was the new ad campaign successful?

A.

Yes
B.

No

Read The Economist's articles, "The return of economic nationalism," "The battle of Smoot-Hawley," and Business Week's article, "Jobs and Protectionism in the Stimulus Package."

Do you believe the provision of "Buy America" placed in the $787 billion stimulus package by Congress was necessary during the recession to ensure American jobs and strengthen the American Economy?

Or was this Congressional provision a form of protectionism similar to the Smoot-Hawley bill passed in 1930?

The world economy

The return of economic nationalism

Feb 5th 2009

From

The Economist

print edition

A spectre is rising. To bury it again, Barack Obama needs

to take the lead

Illustration by Jon Berkeley

MANAGING a crisis as complex as this one has so far called for nuance and pragmatism

rather than stridency and principle. Should governments prop up credit markets

by offering

guarantees or creating bad banks? Probably both. What package of fiscal stimulus would be

most effective? It varies from one country to the next. Should banks be nationalised? Yes,

in some circumstances. Only the foolish and the partisan have r

ejected (or embraced) any

solutions categorically.

But the re

-

emergence of a spectre from the darkest period of modern history argues for a

different, indeed strident, response. Economic nationalism

—

the urge to keep jobs and

capital at home

—

is both turnin

g the economic crisis into a political one and threatening the

world with depression. If it is not buried again forthwith, the consequences will be dire.

Devil take the hindmost

Trade encourages specialisation, which brings prosperity; global capital marke

ts, for all their

problems, allocate money more efficiently than local ones; economic co

-

operation

encourages confidence and enhances security. Yet despite its obvious benefits, the

globalised economy is under threat.

Congress is arguing about a clause in the $800 billion

-

plus stimulus package that in its most

extreme form would press for the use of American materials in public works. Earlier, Tim

Geith

ner, the new treasury secretary, accused China of “manipulating” its currency,

prompting snarls from Beijing. Around the world, carmakers have lobbied for support (see

article

), and some have got it. A host of industries, in countries from India to Ecuador, want

help from their governments.

The grip of nationalism is tightest in banking (see

article

). In France and Britain, politicians

pouring taxpayers’ money into ailing banks are demanding that the cash be lent at home.

Since banks are reducing overall lending, that means repatriating cash. Regulators are

thinking nationally too. Switzer

land now favours domestic loans by ignoring them in one

measure of the capital its banks need to hold; foreign loans count in full.

Governments protect goods and capital largely in order to protect jobs. Around the world,

workers are demanding help from t

he state with increasing panic. British strikers, quoting

Gordon Brown’s ill

-

chosen words back at him, are demanding that he provide “British jobs

for British workers” (see

article

). In France more than 1m people stayed away from work on

January 29th, marching for jobs and wages. In Greece police used tear gas to control

farmers calling for even more subsidies.

Three arguments are raised in defence of economic nationalism: t

hat it is justified

commercially; that it is justified politically; and that it won’t get very far. On the first point,

some damaged banks may feel safer retreating to their home markets, where they

understand the risks and benefit from scale; but that is

a trend which governments should

seek to counteract, not to encourage. On the second point, it is reasonable for politicians to

want to spend taxpayers’ money at home

—

so long as the costs of doing so are not

unacceptably high.

In this case, however, the c

osts could be enormous. For the third argument

—

that

protectionism will not get very far

—

is dangerously complacent. True, everybody sensible

scoffs at Reed Smoot and Willis Hawley, the lawmakers who in 1930 exacerbated the

Depression by raising American tar

iffs. But reasonable people opposed them at the time,

and failed to stop them: 1,028 economists petitioned against their bill. Certainly, global

supply

-

chains are more complex and harder to pick apart than in those days. But when

nationalism is on the marc

h, even commercial logic gets trampled underfoot.

The links that bind countries’ economies together are under strain. World trade may well

shrink this year for the first time since 1982. Net private

-

sector capital flows to the

emerging markets are likely t

o fall to $165 billion, from a peak of $929 billion in 2007. Even

if there were no policies to undermine it, globalisation is suffering its biggest reversal in the

modern era.

Politicians know that, with support for open markets low and falling, they must

be seen to

do something; and policies designed to put something right at home can inadvertently eat

away at the global system. An attempt to prop up Ireland’s banks last year sucked deposits

out of Britain’s. American plans to monitor domestic bank lending

month by month will

encourage lending at home rather than abroad. As countries try to save themselves they

endanger each other.

The big question is what America will do. At some moments in this crisis it has shown the

way

—

by agreeing to supply dollars to

countries that needed them, and by guaranteeing the

contracts of European banks when it rescued a big insurer. But the “Buy American”

provisions in the stimulus bill are alarmingly nationalistic. They would not even boost

American employment in the short r

un, because

—

just as with Smoot

-

Hawley

—

the inevitable

retaliation would destroy more jobs at exporting firms. And the political consequences would

Protectionism

The battle of Smoot

-

Hawley

Dec 18th 2008

From

The Economist

print edition

A cautionary tale about how a protectionist

measure opposed by all right

-

thinking people

was passed

Library of Congress

Hawley and Smoot, the bogeymen of trade

EVEN when desperate, Wall Street bankers are not given to grovelling. But in June

1930 Thomas Lamont, a partner at J.P. Morga

n, came close. “I almost went down

on my knees to beg Herbert Hoover to veto the asinine Hawley

-

Smoot Tariff,” he

recalled. “That Act intensified nationalism all over the world.”

According to David Kennedy, an historian, Lamont was “usually an influential

economic adviser” to the American president. Not this time. Hoover signed the bill

on June 17th: “the tragic

-

comic finale”, said that week’s

Economist

, “to one of the

most amazing chapters in world tariff history...one that Protectionist enthusiasts the

worl

d over would do well to study.”

The Tariff Act of 1930, which increased nearly 900 American import duties, was

debated, passed and signed as the world was tumbling into the Depression. Its

sponsors

—

Willis Hawley, a congressman from Oregon, and Reed Smo

ot, a senator

from Utah

—

have come to personify the economic isolationism of the era. Sixty

-

three years later, in a television debate on the North American Free

-

Trade

Agreement, Al Gore, then vice

-

president, even presented his unamused anti

-

NAFTA

opponent,

Ross Perot, with a framed photograph of the pair. Now, with the world

economy in perhaps its worst pickle since the Depression, the names of Hawley and

Smoot are cropping up again.

In fact, few economists think the Smoot

-

Hawley tariff (as it is most often

known)

was one of the principal causes of the Depression. Worse mistakes were made,

largely out of a misplaced faith in the gold standard and balanced budgets.

America’s tariffs were already high, and some other countries were already

increasing their own.

Nevertheless, the act added poison to the emptying well of global trade (see chart).

The worldwide protection of the 1930s took decades to dismantle. And bad

monetary and fiscal policies were at least based on the economic orthodoxy of the

day: economists

would tear each other apart over the heresies of John Maynard

Keynes. On protection, there was no such division. More than a thousand

economists petitioned Hoover not to sign the Smoot

-

Hawley bill. Bankers like

Lamont sided with them; so did editorialists

by the score.

The “asinine” bill began as a much smaller beast: the plan was to help American

agriculture, which had slumped in the early 1920s. Congress passed sev

eral bills to

support prices and subsidise exports, but all were vetoed by Calvin Coolidge,

Hoover’s predecessor. With no obvious logic

—

most American farmers faced little

competition from imports

—

attention shifted to securing for agriculture the same

sort

of protection as for manufacturing, where tariffs were on average twice as

high. To many of its supporters, “tariff equality” meant reducing industrial duties as

well as raising those on farm goods. “But so soon as ever the tariff schedules were

Jobs and Protectionism in the Stimulus

Package

President Obama's spending bill promotes the use of

American goods and labor. Despite foreign and domestic

protests, the language is mainly rhetorical

Members of the Senate and the House hash out differences between the two versions of the

economic stimulus legislation at the U.S. Capitol on Feb. 1

1

Chip Somodevilla/Getty Images

By

Moira Herbst

The $787 billion spending legislation being signed on Feb. 17 by President Barack Obama is

designed to jolt some life into a moribund economy. Already, though, provisions to use the

mo

ney to "buy American"

—

whether that means American iron, steel, or labor

—

is sparking a

debate about whether such rules in a global economy amount to protectionism.

Organized labor and small U.S. manufacturers won an amendment to the stimulus bill to ensure

that more materials used on construction and infrastructure are made in the U.S. Critics of the H

-

1B visa program won tougher rules governing when banks that are bailed out by the Troubled

Assets Relief Program (TARP) can fill jobs with skilled immigrants

.

The final language drew criticism from abroad, where editorials and government officials

warned it could run afoul of trade agreements. But both provisions are less stringent than earlier

versions had been, and neither is likely to have a radical effect

on how stimulus spending takes

shape.

Opposition from Exporters

The clearest attempt to wall off foreign companies from U.S. spending came in a "Buy

American" provision. That rule requires that only U.S. iron, steel, and other manufactured goods

be used

for public buildings and public works funded under the bill. However, it comes with

several key caveats.

For one, the language states that the Buy American po

licy must not violate

U.S. obligations under existing international trade agreements. Nor does the rule apply if

American goods aren't available in sufficient quantities or if they'll increase the cost of the

overall project by more than 25%. Federal highw

ay, transit, and airport projects are already

covered by similar Buy American requirements.

The battle over the provision had been contentious. On Feb. 3, 100 business groups and

companies

—

including the U.S. Chamber of Commerce, General Electric (

GE

), Caterpillar

(

CAT

), and other major construction, defense, and

high

-

tech companies

—

wrote a letter to Senate

leaders warning that a far

-

reaching Buy American rule "will harm American workers and

companies across the entire U.S. economy, undermine U.S. global engagement, and result in

mirror

-

image trade restrictions abr

oad that would put at risk huge amounts of American exports."

But advocates of the provision

—

including the Alliance for American Manufacturing, a

partnership of manufacturing companies and the United Steelworkers union

—

said

such rules are

needed

to stem the tide of layoffs in the U.S. construction and manufacturing sectors.

Coalition Claims 'Major Victory'

In negotiations, the Obama Administration sought to r

econcile the opposing sides. White House

spokesman Robert Gibbs told reporters on Feb. 12 that the final bill achieves this. "I think where

we ended up with the Buy America provision is the right compromise that respects the Buy

America laws that we've had

on our books for many, many years while also ensuring that the

language doesn't create unnecessary trade disagreements in a time of economic crisis," Gibbs

said.

Scott Paul, executive director of AAM, said in a prepared statement that the resulting langu

age

was "a major victory for American manufacturers and workers." He said: "Buy America is good

news for laid

-

off workers in construction and manufacturing, and good news for the global

economy by helping to spur U.S. growth."

That's not how it was receive

d overseas, however. Robert Zoellick, president of the World Bank,

told

The New York Times

that

it was crucial to avoid the protectionist policies of the 1930s. "The

Buy Ame

rican provision is very dangerous," he said. At the Group of Seven meeting of world

financial leaders in Rome last week, U.S. Treasury Secretary Timothy Geithner was pressed to

assure other countries that the Obama Administration would remain committed to

free trade.

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in