INDUSTRIAL ECONOMIC

MULTIPLE CHOICE QUESTIONS

QUESTION 20

ABC Pty (Ltd) invests in capital worth $ 40 000 in January 2020. In December 2020 this capital will be worth $ 12 000. ABC receives worth

$ 45 000; wages paid to ABC employees is $ 5000, and the opportunity cost of the time to do business is $ 8 000.

Given the following above, what is ABC's realized rate of return?

Select one:

A.4

B.1.11

C.0.1

D.2.25

E.0.88

Possible formula: realized rate of return or rrr = (Revenues - other costs - Economic depreciation) / Investment

QUESTION 23

The concept of NEIO (New empirical industrial organization) is based on theorical models of oligopoly, and this allows for explicit hypothesis testing of the degree of market power in a particular industry.

True or False ?

QUESTION 24

In the SCP (Structure Conduct Performance), the gain from market power may not necessarily accrue to the firm; instead, unions can capture it.

TRUE or FALSE?

QUESTION 26

When practicing third-degree price discrimination, the monopolist can discriminate according to economic status.

TRUE or FALSE

QUESTION 27

Double marginalization can only occur when the manufacturer is a price-take and the retailer is monopolistic

TRUE or FALSE

QUESTION 28

Global warranties is a mechanism a monopolistic can use to capture more consumer surplus.

TRUE or FALSE

QUESTION 29

An example of horizontal merger is MTN merging with Vodacom

TRUE or FALSE

QUESTION 30

In vertical separation, the downstream firm usually makes more profit than the upstream firm does.

TRUE or FALSE

QUESTION 31

A monopoly faces an inverse demand curve given by P = 100 - Q and its marginal cost is MC = 20. If the monopoly exercises first degree price discrimination, the last consumer to purchase the good will pay 60.

TRUE or FALSE