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Q:
Long-run equilibrium is characterized by zero profits in
A) monopolistic competition only.
B) perfect competition only.
C) both perfect competition and monopolistic competition.
D) market structures in which there are barriers to entry.
Q:
To maximize profits, the monopolist should produce at whichA) MR = MC. B) MC intersects the demand curve. C) total revenue is maximized. D) total costs are minimized.
Q:
Economic efficiency is indicated byA) P = AVC. B) MR = MC. C) P = MR. D) P = MC.
Q:
Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $8.00; AVC = $5.00; MC = $8.00; MR = $9.00. The firm shouldA) decrease output. B) increase output.C) increase price. D) continue to produce its current output.
Q:
When the marginal physical product is falling,A) marginal cost is rising. B) average fixed costs are rising.C) total costs are falling. D) average variable costs are falling.
Q:
ʺIn economics, the short run commonly refers to a period within one year and the long run is a period longer than one year.ʺ Do you agree or disagree? Explain your answer.
Q:
Accounting profits are typicallyA) greater than economic profits because accounting profits do not include explicit costs. B) greater than economic profits because accounting profits do not include implicit costs. C) smaller than economic profits because accounting profits do not include explicit costs. D) equal to economic profits in the long run.
Q:
Use the above figure. The optimal position for the consumer is atA) J or L B) M C) K D) N
Q:
Quantity of PizzaMarginal UtilityQuantity of BeerMarginal Utility1451402402403303354154105-550In the above table, how much beer and pizza will Bob consume if the price of a piece of pizza is $2.00 and the price of a beer is $2.00?A) 1 piece of pizza and 3 beers B) 2 pieces of pizza and 2 beersC) 2 pieces of pizza and 3 beers D) 3 pieces of pizza and 1 beer
Q:
Which of the following goods is likely to have the highest income elasticity?A) A designer blouse B) Tomato soupC) Hamburger D) Can of tuna
Q:
If the absolute value of the price elasticity of demand for a product is 1.5, and the price of a product increased 30 percent, then the quantity demanded will decline byA) 45 percent. B) 20 percent. C) 5 percent. D) 10 percent.
Q:
Buffalo in the United States almost became extinct while cattle, an animal that provides similar products, never has been close to extinction. The difference is due to
A) the greater marginal value of a head of cattle relative to buffalo, leading to over -hunting of buffalo.
B) the greater marginal value of a buffalo relative to a steer, leading to the overharvesting of buffalo.
C) cattle existing in Europe also while buffalo were specific to North America.
D) the use of private property rights on cattle and common property rights on buffalo.
Q:
Currently less than of all health care spending is paid by individuals.A) 60 percent. B) 35 percent. C) 20 percent. D) 5 percent.
Q:
Some economists criticize the Lorenz curve because itA) includes too many things in measuring income, such as food stamps, housing aid, and other government programs.B) does not account for the effect of age on a familyʹs income.C) measures unreported income earned in the underground economy.D) uses after-tax income when pre-tax income is more appropriate.
Q:
The other name for the National Labor Relations Act of 1935 isA) the Wagner Act. B) the Taft-Hartley Act. C) the Clayton Act. D) the Wheeler-Lea Act.
Q:
The demand for an input will be more inelastic whenA) the demand for the product being produced is elastic.B) the cost of the input is a relatively large percentage of total production costs.C) the time period being considered is relatively long. D) it is difficult to substitute other inputs for this input.
Q:
In a court decision in June 2001, the Federal District Count of Appeals in Washington, D.C. found that Microsoft had violated theA) Clayton Act. B) Robinson-Patman Act. C) Sherman Act. D) Celler-Kefauver Act.
Q:
A local utility is an example ofA) perfect competition. B) oligopoly.C) monopoly. D) monopolistic competition.
Q:
A concentration ratio measuresA) the average size of the firms in the industry.B) the sales of the three largest firms in the industry minus the costs of these three largest firms in the industry.C) the share of industry sales accounted for by the largest firms in the industry.D) the excess capacity found in a particular oligopolistic industry.
Q:
The long-run equilibrium of a monopolistically competitive firm is characterized by
A) a tangency of the average total cost curve with the firmʹs demand curve.
B) price equal to marginal cost.
C) production at the minimum point of the firmʹs average total cost curve.
D) production at the minimum point of the firmʹs average variable cost curve.
Q:
In the above figure, the break-even output and price isA) $9 and 14. B) $13 and 14. C) $11 and 16. D) $10 and 17.
Q:
Suppose the perfectly competitive equilibrium occurs such that too many units of the good are produced. This is an example ofA) marginal cost pricing. B) market failure.C) firms have not yet exited the industry.D) greedy business people behaving in an inappropriate manner.
Q:
Suppose a perfectly competitive firm faces the following cost and revenue conditions: ATC = $25.00; AVC = $20.00; MC = $25.00; MR = $28.00. The firm shouldA) decrease output. B) increase output.C) shut down.D) continue to produce its current output.
Q:
When the marginal physical product is rising,A) total cost is falling. B) average total cost is increasing.C) marginal cost is falling. D) marginal cost is rising.
Q:
ʺIn the short run, a firm cannot change any of its inputs.ʺ Do you agree or disagree? Explain.
Q:
Joanne left her last job, in which she was earning $50,000, in order to form her own consulting business. Her revenues for the first year of consulting were $210,000. During that year, she hired two assistants for $25,000 each and spent $25,000 on office equipment. In addition, she incurred $75,000 in miscellaneous expenses. Her accounting profit that first year wasA) $10,000. B) $60,000. C) $210,000. D) $50,000.
Q:
Refer to the above figure. Given the indifference map and budget constraint represented above, what would make all possible points attainable for the individual to consume?A) An increase in the price of Good X. B) A decrease in income.C) An increase in the price of Good Y. D) A decrease in the price of Good X.
Q:
Quantity of PizzaMarginal UtilityQuantity of BeerMarginal Utility1451402402403303354154105-550According to the above table, how much total utility does Bob get from 3 pieces of pizza?A) 30 utils B) 85 utils C) 115 utils D) 130 utils
Q:
If an individualʹs income rises 40 percent and his clothing purchases increase 50 percent in response, the income elasticity for clothing by the individual isA) -0.8. B) 0.8. C) 1.25. D) -1.25.
Q:
At a price of $10, quantity demanded is 30 units. When the price rises to $11, quantity demanded is 24 units. What is the absolute price elasticity of demand?A) 0.5 B) 0.43 C) 2.33 D) 6.0
Q:
Joe has broken the mirror of my car. I have legal recourse to sue for damages because ofA) social costs. B) transactions costs.C) common property rights. D) private property rights.
Q:
In the year 2010, the United States spent aboutA) 16 percent of GDP on health care. B) 100 percent of GDP on health care.C) 6 percent of GDP on health care. D) 2 percent of GDP on health care.
Q:
In calculating income for the Lorenz curve, one factor that is omitted, isA) capital gains income.B) dividend payments.C) in-kind transfer payments from the government. D) pure economic rent.
Q:
The founder of the American Federation of Labor wasA) John L. Lewis. B) Samuel Gompers.C) Walter Reuther. D) Ralph Nader.
Q:
The price elasticity of demand for a variable input will be more elastic in all the following cases EXCEPTA) the greater the price elasticity of demand for the final product.B) the easier it is for a particular variable input to be substituted for by other inputs.C) the larger the proportion of total costs accounted for by a particular variable input. D) the shorter the time period being considered.
Q:
The statement ʺEvery contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce . . .ʺ is found in theA) Sherman Antitrust Act. B) Clayton Antitrust Act.C) Robinson-Patman Act. D) Interstate Commerce Commission Act.
Q:
The college textbooks market is an example ofA) perfect competition. B) oligopoly.C) monopoly. D) monopolistic competition.
Q:
The joining of a firm with another to which it sells an output or from which it buys an input is known asA) a conglomerate merger. B) a horizontal merger. C) a vertical merger. D) economies to scale.
Q:
In the long run, firms in a monopolistically competitive marketA) usually earn positive economic profits. B) always earn monopoly profits. C) usually earn economic losses. D) earn zero economic profits.
Q:
In the above figure, what is total profit at the profit-maximizing point?A) $14 B) $56 C) $42 D) $70
Q:
Perfectly competitive markets are efficient becauseA) they always reach equilibrium.B) firms in the market are price takers.C) the cost to society for producing the goods is exactly equal to the value that society places on the good.D) the long run equilibrium assures that the prices of resources will not increase.
Q:
Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $7.00; AVC = $5.00; MC = $6.50; MR = $6.50. The firm shouldA) increase output. B) decrease output. C) continue to produce its current output. D) shut down.
Q:
The law of diminishing marginal product is NOT responsible for the shape ofA) the total cost curve. B) the average variable cost curve. C) total fixed cost curve. D) marginal cost curve.
Q:
What is the difference between the short run and the long run? What is the appropriate time dimension of the long run?
Q:
Joanne left her last job, in which she was earning $50,000, in order to form her own consulting business. Her revenues for the first year of consulting were $200,000. During that year, she hired two assistants for $25,000 each and spent $25,000 on office equipment. In addition, she incurred $75,000 in miscellaneous expenses. Her economic profit that first year wasA) $0. B) $50,000. C) $200,000. D) $75,000.
Q:
Refer to the above figure. Given the indifference map and budget constraint represented above, what are all possible points at which that the individual can consume?A) Points A and C only B) Point B onlyC) Point D only D) Points A, B and C only
Q:
Quantity of PizzaMarginal UtilityQuantity of BeerMarginal Utility1451402402403303354154105-550In the above table, how much total utility does Bob get from consuming 4 beers?A) 10 utils B) 45 utils C) 125 utils D) 115 utils
Q:
If oneʹs demand for peanut butter decreases as income rises, the income elasticity of demand for the product isA) elastic. B) inelastic. C) unit elastic. D) negative.
Q:
If the price of corn chips increases from $2.00 per bag to $3.00 per bag and the quantity demanded goes down from 100 million bags per week to 50 million bags per week, the absolute value of price elasticity of demand in that price range isA) 0.50. B) 1.67. C) 0.93. D) 2.33.
Q:
In general, pollution exists in situations in whichA) people are selfish.B) people refuse to take social responsibility seriously. C) there are poorly defined private property rights.D) there exists public property.
Q:
The twin economic problems of the U.S. health care industry are the
A) rising health care costs and the declining quality of health care services.
B) rising health care costs and the rising malpractice insurance costs.
C) rising health care costs and the moral hazard problem in health care services.
D) declining rate of immunization rates and the rising malpractice insurance costs.
Q:
Which of the following is NOT a correct criticism of the Lorenz curve?A) It does not include payments in kind.B) It does not deal with differences in family size.C) It ignores the impact of age distribution on income distribution. D) It refers to money income after taxes.
Q:
The American Federation of Labor was formed in 1886 as a dissident group from theA) Knights of Labor. B) Knights of Pythias.C) Masonic Lodge. D) Knights of Columbus.
Q:
The greater the elasticity of demand for a final product, we find the demand for the factor inputs.A) the greater will be B) the lower will beC) that it will not impact D) The answer cannot be determined.
Q:
There are many exemptions from antitrust laws. Which of the following is NOT one of them?A) labor unions B) public utilities C) hospitals D) publishers
Q:
Agriculture is an example ofA) perfect competition. B) oligopoly.C) monopoly. D) monopolistic competition.
Q:
The joining of firms that are producing or selling a similar product is known asA) a conglomerate merger. B) a horizontal merger.C) a vertical merger. D) economies to scale.
Q:
If firms in a monopolistically competitive industry are operating with positive economic profit, over time we would see
A) firms alter their advertising rates until they made at least normal profits.
B) some firms entering the industry, causing the market supply curve to shift to the right, lowering price.
C) some firms entering the industry, causing the demand curves of the existing firms to shift to the left.
D) some firms entering the industry, causing the demand curves of the existing firms to shift to the right.
Q:
In the above figure, what is total cost at the profit -maximizing point?A) $182 B) $126 C) $112 D) $170
Q:
If markets are perfectly competitive, then the production of goodsA) will use the least costly combination of resources.B) will occur at an average total cost value that is above the minimum. C) will require government intervention.D) will always lead to business failures.
Q:
Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $12.00; AVC = $8.00; MC = $12.00; MR = $10.00. The firm shouldA) decrease output. B) increase output. C) increase price. D) change nothing.
Q:
As a firmʹs production increases in the short run, the average total cost curve eventually slopes upward becauseA) marginal physical product eventually declines as output increases. B) marginal cost eventually declines as output increases.C) average fixed cost declines with increases in output.D) average physical product rises with increases in output.
Q:
If a farmer seeks to buy one-hundred more acres for her kiwi fruit farm, she is making aA) long-run decision. B) short-run decision.C) immediate-run decision. D) variable-input decision.
Q:
In analyzing the operation of a firm, an economist assumes the firm wants toA) maximize total sales. B) maximize total revenue.C) maximize total production. D) maximize total profits.
Q:
Refer to the above figure. Given the indifference map and budget constraint represented above the consumer will maximize utility when she consumes atA) point A. B) point B.C) point C. D) either points A or B.
Q:
Quantity of PizzaMarginal UtilityQuantity of BeerMarginal Utility1451402402403303354154105-550In the above table, Bob experiences diminishing marginal utility after consuming how many beers?A) 1 B) 2 C) 3 D) 4
Q:
Income elasticity of demand is defined asA) the change in quantity demanded divided by the change in income.B) the change in quantity demanded divided by the change in market price.C) the percentage change in income divided by the percentage change in quantity demanded. D) the percentage change in demand divided by the percentage change in income.
Q:
If the price of gasoline increases from $2.50 per gallon to $3.00 per gallon and the quantity demanded goes down from 120 million gallons per week to 115 million gallons per week, the absolute value of price elasticity of demand in that price range is approximatelyA) 0.23. B) 4.35. C) 0.93. D) 2.34.
Q:
Common property is
A) a resource that everyone is free to use as much as they want.
B) property that belongs to both spouses in a marriage.
C) property owned by a group such as a club or a church.
D) generic property as opposed to specific property.
Q:
The idea that some people engage in risky behavior due to the fact that they have good health care is known asA) moral hazard. B) risk aversion.C) zero-sum game. D) risk-taking behavior.
Q:
One reason some economists are critical of the Lorenz curve is becauseA) it reflects income before taxes.B) it reflects income after taxes.C) it reflects only the top bracket of taxpayers.D) it reflects only the poor in the country.
Q:
The U.S. labor movement started withA) aerospace workers unions. B) industrial unions.C) craft unions. D) depression unions.
Q:
The price elasticity of demand for labor will be smaller, theA) greater is the price elasticity of demand for the final product.B) easier it is to employ substitute inputs in production.C) smaller is the proportion of wage costs in the total cost of production.D) longer is the time period under examination.
Q:
The first antitrust law in the United States was theA) Glass-Steagall Act. B) Robinson-Patman Act. C) Clayton Act. D) Sherman Act.
Q:
Retail trade is an example ofA) perfect competition. B) oligopoly.C) monopoly. D) monopolistic competition.
Q:
Which of the following is an example of a horizontal merger?A) Northeastern Illinois University merging with McDonaldʹs.B) Northeastern Illinois University merging with a training academy for new professors. C) Northeastern Illinois University merging with Roosevelt University.D) Northeastern Illinois University going from a public to a private university.
Q:
If firms in a monopolistically competitive industry are operating with economic losses, over time we would seeA) firms alter their advertising rates until they made at least normal profits.B) some firms exiting the industry, causing the market supply curve to shift to the left, raising price.C) some firms exiting the industry, causing the demand curves of the remaining firms to shift to the right.D) the firms working together to increase price and everyoneʹs profitability.
Q:
In the above figure, what is total revenue at the profit -maximizing point?A) $182 B) $126 C) $170 D) $176
Q:
The value of total output decreases when labor leaves one industry and goes to another and capital leaves the second industry and goes to the first. This indicates thatA) the first situation was not efficient. B) the second situation is efficient.C) price is greater than marginal cost.D) it would be efficient to return to the first situation.
Q:
A firm in a competitive industry faces the following short-run cost and revenue conditions: ATC = $8; AVC = $4; and MR = MC = $6. This firm shouldA) expand production and keep price constant. B) decrease production and raise its price.C) shut down.D) continue to operate at the same price and output level in the short run.