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Economic
Q:
An organization that brings together the factors of production is called A) an industry. B) a conglomerate. C) a plant. D) a firm.
Q:
In the above figure, budget line DF would swivel in to the left ifA) the price of bagels increased. B) the price of bagels decreased. C) the price of coffee increased. D) the price of coffee decreased.
Q:
In order to maximize utility, a consumer should allocate money income so thatA) the marginal utility of the last unit of each product consumed is greater than the total utility of each product consumed.B) the total utility derived from each product consumed is the same.C) the marginal utility obtained from the last dollar spent on each product is the same.D) the elasticity of demand on all products purchased is the same.
Q:
What would you expect the cross price elasticity of iPods and online music downloads? Explain your answer.
Q:
If the price of oil goes up by 50 % and the quantity demanded goes down by 25%, the absolute value of the price elasticity of demand isA) 0.25. B) 0.50. C) 0.75. D) 1.00.
Q:
Exclusive rights of ownership that allow the use, transfer, and exchange of property are calledA) common property rights. B) nonexclusive property rights.C) private property rights. D) public property rights.
Q:
Health care costs have been rising due toA) an aging population. B) new technologies.C) third-party financing. D) All of the above are correct.
Q:
The more bowed the Lorenz curve, theA) richer the society.B) more unequal the distribution of money income.C) poorer the society.D) more equal the distribution of income.
Q:
In 2005, which union organization was formed out of the AFL -CIO membership?A) National Brotherhood of Teamsters B) Service Employees International UnionC) American Federation of Workers D) Change to Win
Q:
We would expect unions to have a more difficult time negotiating higher wages for their members whenA) labor represents a small portion of total costs.B) the product produced makes up a small portion of familiesʹ budgets. C) the product produced has several close substitutes.D) there are not good substitutes for labor in the production process.
Q:
ʺUnfair or deceptive acts or practices in commerceʺ were prohibited by theA) Clayton Act.B) Clayton Act as amended by the Robinson -Patman Act. C) Federal Trade Commission Act.D) 1938 amendment to the Federal Trade Commission Act.
Q:
A market with one seller, considerable influence over price, high barriers to entry, a homogeneous product, and non -price competition to allow for price discrimination is known asA) perfect competition. B) monopolistic competition.C) oligopoly. D) monopoly.
Q:
Horizontal merger occurs whenA) two firms merge where one had sold its output to the other as an input.B) the merger moves the combined firm onto the horizontal portion of its long -run average cost curve.C) two firms merge where each is about the same size.D) two firms producing a similar product merge.
Q:
In the long run, the monopolistically competitive firmʹs demand curve will
A) intersect the ATC at its minimum point.
B) intersect the ATC curve somewhere past the minimum point.
C) become tangent to the ATC curve at its minimum point.
D) become tangent to the ATC curve somewhere to the left of its minimum point.
Q:
If a monopolist is producing at an output rate at which P = ATC, thenA) its economic profit will be zero. B) its economic profit will be positive.C) it is maximizing its profits. D) it is minimizing its losses.
Q:
When marginal cost pricing occurs,A) price equals the additional cost society incurs in producing the next unit of an item.B) the firm can only break even if it does not set price to marginal cost. C) price equals average variable cost but exceeds average total cost.D) the firm is at the shutdown point.
Q:
The loss-minimizing output for the perfectly competitive firm occurs at the point at whichA) TR - MR = minimum. B) TR - TC = maximum. C) MR = MC. D) TC - ATC = maximum.
Q:
Marginal cost begins to rise whenA) diminishing marginal product begins. B) diminishing marginal product ends.C) average total cost falls. D) fixed cost falls.
Q:
In the long run, a firm can changeA) nothing. B) only one input, such as plant size.C) all inputs. D) None of the above are correct.
Q:
A disadvantage of corporations over a proprietorship or partnership is in theA) legal liability. B) ability to raise funds.C) taxation system. D) future of the firm when an owner dies.
Q:
In the above figure, point C isA) preferred to points G, A, and B. B) preferred to points A and B. C) less preferred than point G. D) less preferred than point H.
Q:
Jill likes lobsters but she does not eat lobsters in every meal. How can utility theory explain this?
Q:
If the price of wireless phone service decreases and the demand for wired phone services decreases, then wired and wireless phone services areA) substitutes. B) complements. C) inferior goods. D) elastic goods.
Q:
Consider the following data:The absolute value of the price elasticity of demand for product A isA) 0.44. B) 1.80. C) 0.56. D) 2.25.
Q:
Changing the ownership of the ocean from common property to private property wouldA) ensure that this resource would be allocated in a more efficient manner.B) ensure that this resource would be allocated in a less efficient manner than under common property rights.C) not be economically desirable.D) result in no appreciable change in efficiency of utilization of this resource.
Q:
The above figure supports all of the following statements regarding health care EXCEPTA) the demand for health care is insensitive to price changes; as the price goes up, so does the quantity demanded.B) if all medical expenses were paid for by third parties, the quantity demanded would increase tremendously.C) due to third party payments, patients demand a higher quantity of health care services per year.D) the lower the deductible, the greater is the quantity demanded of health care services per year.
Q:
The Lorenz curve is a geometric representation ofA) the profile of earnings for a ʺtypicalʺ family over time.B) the standard of living experienced by the poor in a country.C) the difference between pre-tax and post-tax income. D) the distribution of income.
Q:
Which of the following has been the largest organized group of U.S. unions during the past 50 years?A) AFL-CIO B) AFL C) CIO D) Change to Win
Q:
Suppose there are four industries. Labor costs are 20 percent of total costs in A, 40 percent in B, 60 percent in C, and 80 percent in D. A ten percent increase in the price of labor will cause industry to reduce quantity demanded of labor by the largest proportion.A) A B) B C) C D) D
Q:
The ʺChain Store Actʺ is a name given to theA) Clayton Act. B) Federal Trade Commission Act.C) Robinson-Patman Act. D) Sherman Antitrust Act.
Q:
A market with few sellers, some influence over price, high barriers to entry, a differentiated product, and non-price competition is known asA) perfect competition. B) monopolistic competition.C) oligopoly. D) monopoly.
Q:
Which of the following is NOTa reason why some industries are oligopolies?A) Economies of scale B) Barriers to entryC) Strategic independence D) Mergers
Q:
In the long run in a monopolistically competitive market, a firm will, in theory, A) earn economic profits. B) suffer losses.C) break even. D) earn zero accounting profits.
Q:
For a monopoly earning positive economic profits at the profit -maximizing output level, all of the following are true EXCEPTA) P > ATC. B) P > MR. C) P > MC. D) P = MR.
Q:
With marginal cost pricing,A) marginal benefits are usually less than marginal cost.B) all opportunity costs will be covered in the short run.C) the price charged is equal to the opportunity cost to society of producing one more unit of the good.D) there cannot be any short-run economic profit.
Q:
Under what condition are profits maximized?A) at the rate of output at which marginal revenue equals marginal costB) at the output rate where marginal cost is greater than marginal revenueC) at the point at which the difference between total revenues and total costs is negativeD) at the point at which the difference between price and quantity demanded is greatest
Q:
ʺAll average costs have a U-shaped curve.ʺ Do you agree or disagree? Explain why?
Q:
When El Torito Restaurant is deciding how many waiters to hire for a holiday weekend, it is making a decision.A) plant-size B) long-run C) short-run D) fixed-input
Q:
A firm that is not maximizing profits
A) would never be able to operate in the United States.
B) must not be owned by stockholders.
C) may find it difficult to raise financial capital from external capital markets.
D) is likely to face legal prosecution from the Department of Commerce.
Q:
In the above figure, if the budget line is originally line DE and the price of coffee decreases, the consumer willA) drink less coffee and increase bagel consumption slightly. B) drink more coffee and increase bagel consumption slightly. C) drink more coffee and decrease bagel consumption slightly. D) leave consumption of both coffee and bagels unchanged.
Q:
Restaurants that allow customers to eat as much as they want for a fixed price must make money or they would not remain in business. How can they earn profits when people can always eat more so that the restaurantʹs costs keep getting higher? What practice that regular restaurants use will not be used by all-you-can-eat places?
Q:
Use the above figure. Which graph depicts substitute goods?A) A B) BC) C D) D
Q:
If the absolute price elasticity of demand is 0.2, a 10 percent increase in the price will causeA) the quantity demanded to decrease by 2 percent.B) the quantity demanded to decrease by 20 percent. C) the quantity demanded to decrease by 5 percent. D) the quantity demanded to decrease by 0.2 percent.
Q:
The crux of the problem of pollution isA) a poorly run Environmental Protection Agency. B) greed on the part of consumers.C) greed on the part of producers.D) poorly defined property rights are expensive to enforce.
Q:
The percentage of total national income spent on health care in the United States hasA) declined rapidly since 1965.B) remained below the level of inflation.C) risen steadily since 1965.D) remained constant over the last few years.
Q:
The more bowed (skewed) the Lorenz curve,A) the more equal the distribution of income.B) the greater the number of households in the society. C) the more unequal the distribution of money income. D) the greater the total income of the society.
Q:
Since the 1970s, union membership in the U.S. has beenA) rising. B) remaining constant.C) declining. D) erratic.
Q:
Coal is required to make steel. Hence, the price elasticity of demand for coal by steel manufacturers will beA) unit elastic. B) inelastic.C) elastic. D) perfectly elastic.
Q:
It is illegal to price discriminate except in cases in which the price differences are due to actual cost differences. This situation is due to which antitrust act?A) Clayton Act B) Contestable Market ActC) Federal Trade Commission Act D) Sherman Antitrust Act
Q:
A market with many sellers, some influence over price, low barriers to entry, a differentiated product, and non-price competition often taking the form of advertising is known asA) perfect competition. B) monopolistic competition.C) oligopoly. D) monopoly.
Q:
The existence of economies of scale is one reason oligopolies exist becauseA) a firm is able to increase price leading to increased profits. B) the marginal cost decreases as output increases.C) of strategic dependence.D) as output increases average total cost decreases leading to large -scale firms.
Q:
In the long run, in a monopolistically competitive market, price will beA) equal to MR. B) equal to MC. C) greater ATC. D) equal to ATC.
Q:
Which of the following is true of a perfectly competitive firm and a monopoly in the long run?A) P = MC B) P = ATC C) MR = MC D) P = MR
Q:
Economic efficiency meansA) the same as technical efficiency.B) that all firms within a single competitive industry are producing at the same level of output.C) that it is impossible to increase the output of any good without lowering the total value of the output of the economy.D) that high-tech methods of production are the most efficient.
Q:
Marginal revenueA) cannot be used to determine the profit-maximizing rate of production. B) is the change in total revenues resulting from a change in output.C) is a change in revenue that is immeasurable and non -quantifiable.D) cannot be effectively utilized when analyzing the perfect competitor.
Q:
What are the relationships between the marginal cost curve and the average cost curves?
Explain in words.
Q:
For an economist, the short run means a time periodA) during which new firms are prohibited from entering the industry.B) during which firms are not allowed to change the amount of imported resources they use. C) that is between one and five years.D) during which the firm is unable to change its plant size.
Q:
The goal of the firm, according to economists, is to
A) stay in business for as long as possible.
B) sell as many units of the good it produces as possible.
C) grow as large as possible.
D) make as much economic profit as is possible.
Q:
In the above figure, the budget line will change from line DE to line DF whenA) income rises. B) the price of bagels increases.C) the price of coffee increases. D) the price of coffee decreases.
Q:
What is the principle of diminishing marginal utility?
Q:
Use the above figure. Which graph depicts complementary goods?A) A B) B C) C D) D
Q:
If the absolute price elasticity of demand is 2, a 10 percent increase in the price will causeA) the quantity demanded to decrease by 2 percent. B) the quantity demanded to decrease by 20 percent. C) the quantity demanded to decrease by 5 percent. D) the quantity demanded to decrease by 0.2 percent.
Q:
In general, pollution exists ifA) people are unconcerned about the hazards associated with pollution. B) there are poorly defined private property rights.C) there are poorly defined common property rights.D) profit-making activity is taken to an extreme.
Q:
A benefit of deductibles and health savings accounts is that theyA) reduce the moral hazard problem associated with third -party payers. B) increase the quality of health care.C) reduce the use of expensive techniques for hopeless cases. D) reduce the incomes of physicians.
Q:
A straight-line Lorenz curve showsA) an equal distribution of money income.B) a greater than proportionate share of income going to middle -income households. C) a high incidence of absolute poverty.D) a highly unequal distribution of income.
Q:
Which statement concerning powers granted the President of the United States by the Taft-Hartley Act is true?A) The President can obtain an injunction that will stop a strike, if the strike involves government workers only.B) The President can require management to negotiate with a union and if the firmʹs management refuses, the President can appoint an arbitrator to resolve the conflict.C) The President can obtain an injunction that will stop a strike for an eighty -day ʺcooling offʺ period if the strike is expected to imperil national safety or health.D) The President can obtain an injunction that will stop a strike indefinitely.
Q:
The elasticity of demand for labor will be less theA) longer the time period.B) easier it is to substitute one input for another.C) less the demand elasticity for the final product.D) larger the share of total costs accounted for by labor.
Q:
What is the relationship between the Sherman Antitrust Act and the Clayton Act?A) The Clayton Act was the first act passed and the Sherman Antitrust Act was the second.B) The Sherman Antitrust Act encouraged competition among firms in the U.S. while the Clayton Act encouraged competition among foreign firms.C) The Clayton Act strengthened the Sherman Antitrust Act by limiting some very specific business practices.D) Both Acts deal with issues of setting price and quantity for regulated industries.
Q:
A market with many sellers, no influence over price, no barriers to entry, a homogeneous product, and an absence of non -price competition is known asA) perfect competition. B) monopolistic competition.C) oligopoly. D) monopoly.
Q:
All of the following are reasons for an oligopoly to occur EXCEPTA) economies to scale. B) barriers to entry.C) independence among firms. D) merger.
Q:
In the short run, a monopolistically competitive firm
A) always earns positive economic profits.
B) never earns positive economic profits.
C) can earn positive, negative, or zero economic profits.
D) always earns positive accounting profits.
Q:
In the long run, all of the following are true for a monopolist EXCEPTA) P > ATC. B) P = MC. C) MR = MC.D) P > AVC.
Q:
ʺIn the long run, a perfectly competitive firmʹs average total cost is always below the market clearing price.ʺ Agree or disagree? Why?
Q:
The profit-maximizing level of output for a firm occurs at the point at whichA) P = ATC. B) P = AVC. C) MR = MC. D) MR = ATC.
Q:
What is the difference between average variable costs and average total costs?
Q:
The short run isA) a period of time during which at least one input cannot be changed. B) a period of time during which no inputs can be changed.C) a period of time during which all inputs can be changed. D) a period of time shorter than one year.
Q:
A firm is making zero economic profits. From this, we know thatA) the firm is going to go out of business. B) implicit costs are zero.C) the firm is going to stay in business, but will not be able to attract new financial capital. D) the firm will stay in business since it is covering all relevant opportunity costs.
Q:
In the above figure, if the budget line is the line DF, the consumer will maximize utility at pointA) A. B) B. C) C. D) G.
Q:
Why does total utility rise at a decreasing rate as an individualʹs consumption of an item increases?
Q:
If the price of apples went up by 25 percent, which of the following values of the cross price elasticity for cars would be most reasonable to anticipate?A) 0.0 B) 1.2 C) -2.5 D) -1.0