Question

90

A negative externality is something outside the free market system. Which item or items below represent a negative externality?

Multiple Choice

• When the state government gives grant money to a city to build a new bridge

• A 9.8 earthquake that destroys a city

• The K-12 school system inside a city

• When the government opens up a new and beautiful city park

92

The concentration ratio used by the government’s Anti-Trust Department is designed to measure the market share within the Oligopoly market structure.    

Multiple Choice

• This statement is false.

• This statement is wrong – it is used to measure firms in monopolist competition

• This is a true statement

• The statement is wrong – this measures the balance sheet of a firm

93

Amazon is not always nice to the vendors who sell on its website. Amazon has been known to buy items in bulk and then sell the items at a loss in order to force the vendors to offer the lowest possible prices. What kind of a market structure is Amazon creating with this activity?

Multiple Choice

• They are creating the conditions for an almost near perfectly competitive market since they are squeezing vendor profits to the absolute minimum.

• They are creating a cartel situation.

• This represents a monopolistic market situation.   

• They are creating a monopoly market situation.

Answer 1

90 A 9.8 earth quake that destroys a city

( Earthquake may be caused by a number of factors , but will be harmful to everyone in the city. Other options are positive externalities.)

92 The statement is true.

(Anti trust Department makes use of four firm concentration ratio . It is used to indicate the degree to which industry is oligopolistic and the extent of market control held by the four largest firms in the industry.)

93 They are creating a monopoly market situation.

Amazon is using predatory pricing to build it's cutomer base . Their policies squeeze the sellers.It's quest to achieve dominance mirrors a monopoly market situation.