Question

1. In an ideal competitive market,
   a.   there are no depleteable goods.
   b.   social surplus is maximized.
   c.   excludable goods are minimized.
   d.   external benefits are maximized.

2. In an ideal competitive market,
   a.   there are no depleteable goods.
   b.   social surplus is maximized.
   c.   excludable goods are minimized.
   d.   external benefits are maximized.

3. Economists consider environmental pollution to be a(n)
   a.   public interest outcome.
   b.   allocatively efficient outcome.
   c.   externality.
   d.   pure public good.

4. The effectiveness of direct controls on pollution depends on: (i) the budgets and enthusiasm of the regulatory bodies; (ii) sufficiently strong statutory penalties.
   a.     ii but not i
   b.   i but not ii
   c.   neither i nor ii
   d.   i and ii

5. Which of the following events would increase the four-firm concentration ratio in a milk industry with six firms?
   a.   The largest milk producer lures customers away from the second largest producer.
   b.   The four largest milk producers collusively fix prices.
   c.   The largest milk producer buys an ice cream-making plant.
   d.   The two largest milk producers merge.

6. The federal government has the power to investigate and to try to block
   a.   only voluntary mergers between firms.
   b.   only hostile takeovers.
   c.   any combination of the ownership of previously independent firms that increases concentration.
   d.   only friendly takeovers.

Answer 1