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Economic
Q:
An increase in consumer income willA) shift the budget constraint and increase its slope.B) reduce consumption of all normal goods.C) pivot the budget constraint on the axis with the good that has the higher price.D) shift out the budget constraint and increase the consumption of both goods, if they are normal goods.
Q:
Carol is very hungry. She has just sat down to eat. Her first bite gives her a certain level of utility. Her second bite increases her utility by more than the first bite. Her third bite increases her utility by more than the second bite. Carol has 40 bites left before she finishes. Which of the following statements is true about Carol?A) Carol is being inconsistent with the law of diminishing marginal utility. B) Carolʹs total utility decreases with each bite.C) Carolʹs marginal utility will be negative when she takes her last bite.D) Carol will eventually experience diminishing marginal utility by the time she finishes eating, if her marginal utility begins to decline.
Q:
PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. Suppose the price of X increases from $10 to $12. What is the cross price elasticity of demand between X and Z?A) +0.292 B) +7.06 C) -7.06 D) -0.292
Q:
The absolute price elasticity of demand for good X is 1.2 when price is measured in dollars. If price were measured in cents, the price elasticity elasticity of demand would equalA) 1200 B) 12 C) 1.2 D) 0.012
Q:
Suppose people value clean air more as their incomes increase. What would happen to the optimal amount of clean air as a country develops economically? Is there an economic prediction we can make from this?
Q:
Which of the following is considered a ʺthird partyʺ within the medical services industry?A) The patient B) The private insurance companyC) The for-profit hospital D) The medical provider, i.e. physician
Q:
A monopsonistic employer will pay a wage rateA) less than the laborʹs MRP. B) greater than the laborʹs MRP. C) equal to the laborʹs MRP. D) equal to MFC.
Q:
The Service Employees International Union is an example of a(n)A) guild. B) craft union.C) industrial union. D) public-sector union.
Q:
If the price elasticity of demand is greater than 1, then consumer demand isA) unrelated to the elasticity of demand. B) inelastic.C) elastic. D) unitary elastic.
Q:
The Federal Trade Commission Act, as amended, prohibits
A) horizontal mergers.
B) price-fixing agreements.
C) unfair competitive practices and deceptive acts.
D) price discrimination.
Q:
For which market structure do economists have the least precise model of price determination?A) Perfect competition in the short run B) Perfect competition in the long runC) Oligopoly D) Monopoly
Q:
Suppose a ten firm industry has total sales of $35 million per year. The largest firm have sales of $10 million, the third largest firm has sales of $4 million, and the fourth largest firm has sales of $2 million. If fifth through tenth largest firms combined have annual sales of $12 million, the four-firm concentration ratio for this industry isA) 45.7 percent. B) 80 percent.C) 65.7 percent. D) none fo the above.
Q:
For a monopolistic competitive firm, which of the following is true in the long run?A) ATC is minimized. B) Economic profit is zero.C) P = MC. D) All of the above.
Q:
Refer to the above figure. The profit-maximizing price and output for this monopolist areA) a price of P1 and output of Q1. B) a price of P4 and output of O1.C) a price of P2 and output of Q2. D) a price of P3 and output of Q3.
Q:
Which of the following is NOT correct concerning perfectly competitive firms in the long run?
A) Long-run economic profits are zero.
B) Price equals minimum long-run average cost.
C) Entrepreneurs earn the opportunity cost of their investment.
D) The opportunity cost of capital is zero.
Q:
The marginal revenue curve of a perfectly competitive firmA) has a vertical intercept equal to exactly one -half of the vertical intercept for the demand curve.B) lies below the demand curve and above the average revenue curve.C) intersects the average revenue curve from above at the maximum point of the average revenue curve.D) is also the demand curve faced by the firm.
Q:
OutputFixed CostsVariable CostsTotal CostsAverage Total CostsAverage Marginal Variable Costs Costs0 $0$100 1 30 2 50 3 60 4 120 5 200 In the above table, what is the marginal cost to produce the 5th unit of output?A) $80 B) $60 C) $55 D) $20
Q:
For a hotdog vender, the hotdog buns represents hisA) fixed input. B) variable input.C) sunk cost. D) none of the above.
Q:
An important problem with corporations isA) the inability of the government to control and tax the firms.B) the possibility of large liabilities for the owners. C) the separation of ownership and control.D) the difficulties with raising financial capital.
Q:
Which of the following shows the feasible combinations of two goods that a consumer could afford given her money income?A) The budget constraint B) The indifference mapC) The income consumption curve D) The price consumption curve
Q:
On a hot summer day, a construction worker enters a McDonaldʹs fast -food restaurant. He orders the first Big Mac. He consumes it within 3 minutes. He then orders a second Big Mac and consumes it in 10 minutes. He eats only half of the third one in 18 minutes and throws away the rest. The store manager offers him the fourth for free. The construction worker says: ʺNo thanks.ʺ For the construction worker described above, we can say thatA) diminishing marginal utility set in only after he had consumed the second Big Mac.B) diminishing marginal utility began as soon as he had eaten the first Big Mac. C) diminishing marginal utility did not occur, he simply wanted to quit eating. D) the law of diminishing marginal utility only applies to durable goods.
Q:
PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. Suppose the price of Y rises from $18 to $20. What is the cross price elasticity of demand between Y and Z?A) -1.7273 B) -1.1176 C) -0.8947 D) +1.7273
Q:
The actual value of price elasticity of demandA) measures the relative change in quantity demanded when there is a change in price. B) will change when the units good is measured in changes.C) varies with changes in supply. D) is always negative.
Q:
ʺThe optimal level of pollution is zero.ʺ Do you agree or disagree? Why?
Q:
Describe four of the five major income maintenance programs in the United States that were discussed in the text.
Q:
Which of the following is the BEST example of a monopsonist?A) a household hiring a gardenerB) a turnip farmer hiring seasonal helpC) Hersheyʹs Chocolate Factory in Hershey, PA D) Vinaka Coffee Shop in Carlsbad, CA
Q:
The United Steelworkers is an example of a(n)A) craft union. B) industrial union.C) public-sector union. D) guild.
Q:
The more inelastic the consumer demand for the final product, theA) greater will be the economic profit in a competitive market.B) greater the impact on employment from a change in the wage rate. C) more inelastic the demand for labor producing the product.D) more responsive the output demand to a change in the price of labor.
Q:
The Federal Trade Commission Act was designed to
A) prohibit bundling.
B) increase foreign trade.
C) prohibit cutthroat pricing.
D) limit company profits from foreign sales.
Q:
A market situation in which there are very few sellers isA) oligopoly. B) perfect competition.C) monopoly.D) monopolistic competition.
Q:
Suppose an industry has total sales of $25 million per year. The two largest firms have sales of $6 million each, the third largest firm has sales of $2 million, and the fourth largest firm has sales of $1 million. The four-firm concentration ratio for this industry isA) 36 percent. B) 60 percent. C) 50 percent. D) 25 percent.
Q:
The demand curve faced by a monopolistically competitive firm isA) horizontal. B) vertical.C) downward sloping. D) upward sloping.
Q:
Refer to the above figure. Profits for this firm areA) zero.B) negative. C) positive.D) undetermined without more information.
Q:
Which of the following is NOT true for a perfectly competitive firm in the long run?A) MR = MC B) MC > LAC C) Price = MC D) SAC = LAC
Q:
For a firm in a perfectly competitive industryA) the demand curve is unitary elastic throughout.B) marginal revenue and product price are equal at every level of output. C) the price elasticity of demand is zero.D) more output can be sold only if the firm unilaterally lowers its product price.
Q:
OutputFixed CostsVariable CostsTotal CostsAverage Total CostsAverage Marginal Variable Costs Costs0 $0$100 1 30 2 50 3 60 4 120 5 200 In the above table, what are the total fixed costs for an output of 4?A) $0 B) $120 C) $100 D) $220
Q:
For a hotdog vender, the hotdog stand represents hisA) fixed input. B) variable input.C) diseconomies of scale. D) none of the above.
Q:
Which of the following statements about business organizations is TRUE?A) Partnerships are more common than proprietorships and are responsible for a larger percentage of business receipts.B) Proprietorships are more common than either partnerships or corporations but are responsible for the smallest share of total business receipts.C) Corporations are larger in number than either proprietorships or partnerships and also receive a larger percentage of total business receipts.D) Partnerships are larger than both proprietorships and corporations but are less numerous than corporations.
Q:
The budget constraint shows thatA) the consumer faces a trade-off in the consumption of goods. B) the consumer can have as many goods as he wants.C) as consumers spend more on one good, they spend more on others.D) total income equals total spending on one good.
Q:
On a hot summer day, a construction worker enters a McDonaldʹs fast -food restaurant. He orders the first Big Mac. He consumes it within 3 minutes. He then orders a second Big Mac and consumes it in 10 minutes. He eats only half of the third one in 18 minutes and throws away the rest. The store manager offers him the fourth for free. The construction worker says: ʺNo thanks.ʺ Why?A) For the construction worker, total utility increased at an increasing rate.B) Marginal utility increased at an increasing rate.C) Marginal utility declined as he consumed additional Big Macs.D) The law of diminishing marginal utility does not apply to consumption of Big Macs.
Q:
PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. Suppose the price of Y rises from $18 to $20. What is the cross price elasticity of demand between X and Y?A) -2 B) -1 C) 0 D) +1
Q:
Relative percentage changes are used in measuring price elasticity of demand, so thatA) it does not matter whether price increases or decreases when calculating the elasticity. B) it does not matter what units are used to measure prices or quantities.C) we always obtain a positive number.D) larger numbers indicate greater responsiveness.
Q:
Explain how the optimal quantity of air pollution is determined.
Q:
How can absolute poverty be eliminated? How can relative poverty be eliminated? Does the elimination of one lead to the elimination of the other? Explain.
Q:
In the above figure, what is the quantity of workers that would be hired in a perfectly competitive market?A) Q1 B) Q2 C) Q3 D) Q4
Q:
The CIO was formed as a(n)A) closed shop. B) association of industrial unions.C) union shop. D) bilateral monopoly.
Q:
Suppose a new technology allows firms to substitute mechanical tomato pickers for farm laborers. As a result, the demand curve for farm laborers willA) become less elastic. B) become more elastic. C) shift to the right. D) not be affected.
Q:
The Federal Trade Commission regulates which of the following?A) Unfair trade practices by businesses B) Financial marketsC) Trade with third world countries D) The banking industry
Q:
A market situation in which there are a few firms that recognize their mutual interdependence isA) monopolistic competition. B) oligopoly.C) monopoly. D) regulated monopoly.
Q:
IndustryRatio (percent)W72X30Y84Z55The most oligopolistic industry of those presented in the above table is likely to be industryA) W. B) X. C) Y. D) Z.
Q:
In the short run, the profit-maximizing monopolistically competitive firm will produce the rate of output at whichA) P = MC. B) MR = MC. C) P = ATC. D) MR = ATC.
Q:
Refer to the above figure. The profit-maximizing price for this firm isA) P1. B) P2.C) P3. D) P4.
Q:
In the long run in a perfectly competitive industry, A) opportunity costs are negligible.B) economic profits will be zero.C) some firms will be experiencing economic losses.D) only entrepreneurs will earn more than their opportunity costs.
Q:
Suppose that at the current level of output, price = $10, MC = $10, AVC = $7, and ATC = $9.Which of the following is true?A) The firm should decrease output.B) The firm should shut down.C) The firm should increase output.D) The firm should maintain the current level of output.
Q:
A firm has average fixed costs of $0.20 and average variable costs of $2.50 at an output of 500 units. The firmʹs total costs are thereforeA) $1,250. B) $1,350. C) $1,150. D) $1,500.
Q:
During the short run, a firm cannotA) increase its use of labor. B) change its plant size.C) purchase more raw materials. D) change its variable costs.
Q:
Dividends are
A) the portion of a corporationʹs profits that are distributed to stockholders.
B) the portion of a corporationʹs revenues that are distributed to bondholders.
C) bonuses given to managers of corporations, to ensure that the managers perform in the way that stockholders want.
D) taxes on the profits of corporations.
Q:
If incomes fall, thenA) the budget constraint shifts inward.B) the budget constraint shifts out.C) there is no change in the budget constraint.D) there is no relationship between the budget constraint and income.
Q:
Olga buys a bag of potato chips every day after her economics class. The first potato chip always tastes wonderful. The second does not taste quite as good as the first. The third does not taste quite as good as the second. Olga is experiencingA) irrational behavior. B) the law of diminishing marginal utility.C) the income effect. D) the substitution effect.
Q:
PxQxPyQyPzQz$10100$2050$25200109018602522510701590252751250151002529015251512025320Refer to the above table. Based on the information in the table, we can say thatA) all three goods are substitutes for each other. B) all three goods are complements.C) X and Y are substitutes, Y and Z are complements, and X and Z are substitutes.D) X and Y are complements, Y and Z are substitutes, and X and Z are complements.
Q:
Wheat is sold in world markets, usually priced in terms of bushels. In the market for wheat, the price elasticity of demand for wheat would be expressed asA) the number of bushels of wheat sold.B) the number of whatever currency is used in purchasing the wheat.C) the number of dollars spent on wheat. D) a unitless number.
Q:
The marginal benefit of pollution abatement is the
A) additional cost to clean up an additional unit of pollution.
B) additional benefit from cleaning up an additional unit of pollution.
C) total social costs of pollution clean-up divided by total social benefits.
D) total social costs of pollution clean-up divided by the total units of clean -up.
Q:
Some economists argue that the official poverty figures overstate poverty in this country. Why?
Q:
In the above figure, what is the quantity of workers that would be hired by a monopsonist?A) Q1 B) Q2 C) Q3 D) Q4
Q:
A labor union that consists of workers from a particular industry is a(n) A) closed shop. B) industrial union.C) union shop. D) bilateral monopoly.
Q:
As new substitutes for office productivity software are developed, the demand for workers in office productivity software production shouldA) become more elastic. B) become less elastic.C) be unchanged. D) change in an undetermined way.
Q:
Which of the following would most likely promote competitive pricing of products?A) Robinson-Patman Act B) Wheeler-Lea ActC) Federal Trade Commission Act D) Clayton Act
Q:
Interdependence is the key characteristic ofA) perfect competition. B) monopolistic competition.C) oligopoly. D) monopoly.
Q:
IndustryRatio (percent)W72X30Y84Z55The most competitive industry of those presented in the above table is likely to be industryA) W. B) X. C) Y. D) Z.
Q:
The above figure shows the situations of a monopolistic competitor in the short run. To maximize profits, the firm should produceA) 10,000 units. B) 12,000 units. C) 13,000 unit.D) somewhere between 10,000 and 12,000 units.
Q:
Refer to the above figure. The profit maximizing quantity for this firm isA) zero. B) Q1. C) Q2. D) Q3.
Q:
Which of the following is true in perfect competition at long-run equilibrium?A) P = ATC = MC = MR B) ATC is minimizedC) economic profit is $0 D) all of the above
Q:
Suppose that at the current level of output, price = $10, MC = $14, AVC = $7, and ATC = $9.Which of the following is true?A) The firm should decrease output. B) The firm should shut down.C) The firm should increase output.D) The firm should maintain the current level of output.
Q:
At an output at which ATC is greater than MC,A) the ATC curve is downward sloping. B) the ATC curve is upward sloping.C) the AFC curve is upward sloping. D) the AVC curve is upward sloping.
Q:
A basic distinction between the long run and the short run is thatA) if a firm produces no output in the long run, it still incurs a cost.B) the opportunity costs of production are lower in the short run than in the long run. C) in the long run, some inputs are fixed, while in the short run, all inputs are variable.D) in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted.
Q:
Limited liability exists whenA) the liability of owners is limited to the value of the shares in the firm they own. B) the liability of owners is limited to the share of the debt they personally took on.C) partners specialize and each partner is responsible for the debts of his or her specialized area.D) bondholders must receive their payments before stockholders can earn any money.
Q:
The possible combinations of goods that can be purchased with a specific income are called theA) budget constraint. B) indifference map.C) marginal rate of substitution.D) income-consumption curve.
Q:
Increases in total utility from the consumption of a good decrease as more is consumed. This statement isA) the law of diminishing marginal utility. B) the law of average utility. C) the consumer optimum. D) false.
Q:
Julie always purchases the soda with the lowest price. For Julie, the cross price elasticity of demand for brand X and brand Y will beA) equal to 0. B) negative. C) positive.D) impossible to determine without more information.
Q:
The less sensitive quantity demanded is to a change in price, theA) smaller a change in price must be to induce a certain change in quantity demanded.B) greater the absolute price elasticity of demand. C) smaller the absolute price elasticity of demand.D) closer the absolute price elasticity of demand is to one.