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Economic
Q:
What is marginal factor cost? How is it related to the supply curve of an input?
Q:
One weakness of the Sherman Act is that
A) it fails to clearly define restraint of trade.
B) it applies only to foreign monopolies.
C) it applies only to the steel and railroad industries.
D) none of the above
Q:
In industries in which strong network effects exist, which industry structure is likely to emerge?A) Perfect competition B) MonopolyC) Monopolistic competition D) Oligopoly
Q:
The combining of First Union National Bank and The National Bank of Memphis is an example ofA) a vertical merger. B) a horizontal merger.C) a downstream formation. D) a conglomerate merger.
Q:
In the above figure, the profit-maximizing output and price for this monopolistically competitive firm areA) 10,000 units at a price of $10 per unit. B) 10,000 units at a price of $5 per unit. C) 13,000 units at a price of $7 per unit. D) 12,000 units at a price of $8 per unit.
Q:
The monopolist determines the price and quantity combination that maximizes short -run profits byA) finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.B) determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.C) finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.D) finding the quantity at which average revenue and average total cost are furthest apart.
Q:
If a perfectly competitive firm has economic profits greater than zero, then we know thatA) the firmʹs industry is not in long-run equilibrium. B) the firmʹs industry is in long-run equilibrium.C) the firm is producing at the bottom of the average total cost curve.D) the firm will reduce output.
Q:
If a firm is producing an output rate at which marginal cost is equal price, the firmA) is maximizing profits. B) should increase its output level. C) should reduce its output level. D) will not be covering its fixed cost.
Q:
Using the above table, the TVC, the TC, and MC when output is 3 units areA) $45, $50, and $15, respectively. B) $15, $20, and $15, respectively.C) $45, $18, and $15, respectively. D) $15, $45, and $15, respectively.
Q:
Economists generally define the short run as beingA) that period of time in which at least one of the firmʹs inputs, usually plant size, is fixed.B) that period of time in which all inputs are variable. C) any period of time less than one year.D) any period of time less than six months.
Q:
A difference between a proprietorship and a partnership is thatA) a proprietorship is easy to form while a partnership is hard to form.B) a proprietorship has only one owner while a partnership has only two owners.C) a partnership allows for specialization while a proprietorship does not.D) the profits in a proprietorship are taxed only once while in a partnership they are taxed twice.
Q:
Refer to the above figure. Which point represents the second highest level of utility?A) Point A B) Point B C) Point C D) Point D
Q:
QuantityPer WeekTotal UtilityAmyRobertDavidMichelle0000015.01006006029.91901200130314.72701800220419.43402400310524.04003000425628.54503600575732.94904200900837.252048001275941.451054001770Refer to the above table. Davidʹs utility schedule is characterized byA) diminishing marginal utility. B) increasing marginal utility.C) constant marginal utility. D) decreasing marginal utility.
Q:
The percentage change in the demand for one good divided by the percentage change in the price of a related good is theA) price elasticity of demand. B) price elasticity of supply. C) cross price elasticity of demand. D) income elasticity.
Q:
A value of the absolute price elasticity of demand equal to 2.5 indicates thatA) a 5% decrease in price leads to a 2% increase in quantity demanded.B) a 2% decrease in price leads to a 25% increase in quantity demanded. C) a 1% decrease in price leads to a 2.5% increase in quantity demanded. D) a 0.25% decrease in price leads to a 1% increase in quantity.
Q:
In the above figure,A) the optimal degree of air cleanliness is less than 100 percent.B) the marginal cost curve slopes up because of the law of diminishing returns. C) Neither A nor B are correct.D) Both A and B are correct.
Q:
Official poverty rates in the last 40 years haveA) fallen dramatically. B) risen dramatically.C) stayed roughly the same. D) been eliminated.
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, if the marginal revenue product is $22, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?A) 5; $18 B) 3; $14 C) 4; $22 D) 4; $16
Q:
Negotiations between the management of a company and the management of a union for the purpose of setting a mutually agreeable contract on wages, fringe benefits and working conditions for all employees in a union is know asA) a closed shop. B) a union shop.C) collective bargaining. D) an industrial union.
Q:
What is the marginal revenue product of labor (MRP)? What shape does the MRP curve have?
Why?
Q:
Which of the following is NOT an antitrust law?A) The Robinson-Patman Act B) The Smoot-Hawley ActC) The FTC Act D) The Sherman Act
Q:
A market situation in which there are a few large firms is calledA) monopolistic competition. B) imperfect competition.C) oligopoly. D) monopoly.
Q:
In general, horizontal mergers willA) increase the number of firms in an industry.B) decrease the number of firms in an industry. C) increase competition in an industry.D) reduce economic profits in an industry.
Q:
In the short run, a monopolistically competitive firm can earnA) positive profits only. B) zero profits only.C) zero or positive profits only. D) zero, positive or negative profits.
Q:
A monopolist who is maximizing profits produces to the point at whichA) marginal cost and average total cost are equal.B) price, marginal cost and average variable cost are equal.C) price is greater than marginal cost.D) price is greater than average total cost.
Q:
Explain what happens to the long-run supply curve of an industry when firm entry raises the price of inputs used in the industry.
Q:
If a firm is producing an output rate at which marginal cost is greater than price, the firm A) is sustaining economic loss. B) should increase its output level. C) should reduce its output level. D) will not be covering its fixed cost.
Q:
Using the above table, the TC, the AFC, and the TVC when output is 2 units areA) $20, $2.50, and $15, respectively. B) $35, $2.50, and $30, respectively. C) $30, $2.50, and $40, respectively. D) $35, $2.50, and $20, respectively.
Q:
How can one ʺbeat the market?ʺ
Q:
In a partnership,
A) each partnerʹs liability is limited to their investment in the company.
B) profits are taxed at both the corporate rate and the personal income tax rate.
C) upon the death of a partner it may be necessary to sell the business.
D) there is a separation of ownership and management like in a corporation.
Q:
Refer to the above figure. Which point(s) represents the lowest level of utility?A) Points A & C B) Point B C) Point C only D) Point D
Q:
QuantityPer WeekTotal UtilityAmyRobertDavidMichelle0000015.01006006029.91901200130314.72701800220419.43402400310524.04003000425628.54503600575732.94904200900837.252048001275941.451054001770Refer to the above table. Robertʹs utility schedule showsA) diminishing marginal utility throughout the entire schedule.B) initially increasing marginal utility and then decreasing marginal utility.C) initially decreasing marginal utility and then increasing marginal utility. D) increasing marginal utility throughout the entire schedule.
Q:
The cross elasticity of demand isA) the percentage change in the demand divided by the percentage change in price of another good.B) the change in the price of one good divided by the change of quantity demanded of another good.C) the percentage change in the quantity demanded of one good divided by the percentage change in the quantity demanded of another good.D) the percentage change in the price of one good divided by the percentage change in the price of another good.
Q:
A value of the absolute price elasticity of demand equal to 0.6 indicates thatA) a 6 percent increase in price leads to a 10 percent decrease in quantity demanded.B) a 10 percent increase in price leads to a 6 percent decrease in quantity demanded. C) a 0.6 percent increase in price leads to a 1 percent decrease in quantity demanded. D) a 1 percent increase in price leads to a 6 percent decrease in quantity demanded.
Q:
The level of pollution at which the marginal benefits equal the marginal cost of cleaning up is alwaysA) the zero pollution level. B) the optimal quantity of pollution. C) the pollution maximum. D) the pollution minimum.
Q:
Which of the following is NOT a program designed to attack poverty?A) Supplementary Security Income B) food stampsC) Social Security D) federal corporate income tax
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, if the marginal revenue product is $18, how many workers will the profit maximizing monopsonist hire and what wage will they pay each worker?A) 5; $18 B) 3; $14 C) 3; $18 D) 4; $16
Q:
A labor union is likely to seek all of the following EXCEPT A) economic improvements for their members.B) safer working conditions.C) increased competitiveness in the labor market.D) increased job security for its members.
Q:
ʺA firm should continue to hire more workers as long as wages are low.ʺ Do you agree or disagree? Why?
Q:
The first major law created to control the growth of monopoly power was theA) Sherman Act. B) Clayton Act.C) FTC Act. D) Robinson-Patman Act.
Q:
According to the textbook, what is the reason for the success of Appleʹs strategy of opting for product incompatibility for its iPod but the failure of Sonyʹs same strategy for its Beta videocassettes?
Q:
Which of the following combinations would constitute a vertical merger?
A) General Motors and Bridgestone Tire Company
B) General Motors and Ford Motor Company
C) Philip Morris and RJ Reynolds
D) Philip Morris and Barnes & Nobles Booksellers
Q:
Why do firms in a monopolistically competitive industry advertise?
Q:
A monopolist finds the output (Q*) rate that maximizes profit. It finds the price byA) taking the height of the marginal revenue curve at output rate Q*. B) taking the height of the marginal cost curve at output rate Q*.C) taking the height of the demand curve at output rate Q*.D) setting price equal to marginal cost.
Q:
What determines whether the industry long-run supply curve is upward sloping or horizontal?
Q:
When price is greater than both marginal cost and average variable cost, the perfectly competitive firmA) is maximizing economic profit. B) should increase its level of output. C) should reduce its level of output. D) should stop production.
Q:
Using the above table, the AFC, the AVC, and the ATC when output is 1 unit areA) $10, $10, and $20, respectively. B) $5, $10, and $15, respectively.C) $0, $10, and $10, respectively. D) $5, $10, and $5, respectively.
Q:
If the random walk theory is correct, then is there any way to ʺbeat the marketʺ?
Q:
Which of the following is not an advantage of a partnership?
A) The taxation of profits
B) The issue of liability
C) The legal paperwork needed to form a partnership
D) Separation of partnerʹs duties
Q:
Refer to the above figure. Which point represents the highest level of utility?A) Point A B) Point B C) Point C D) Point D
Q:
QuantityPer WeekTotal UtilityAmyRobertDavidMichelle0000015.01006006029.91901200130314.72701800220419.43402400310524.04003000425628.54503600575732.94904200900837.252048001275941.451054001770Refer to the above table. Amyʹs utility schedule showsA) diminishing marginal utility throughout the entire schedule.B) initially increasing marginal utility and then decreasing marginal utility.C) initially decreasing marginal utility and then increasing marginal utility. D) increasing marginal utility throughout the entire schedule.
Q:
When the price of a video rental was $2.00, ticket sales at the local movie theatre averaged 180 admissions per night. Then the video store reduced the price of a video rental to $1, and the theatre manager reported that ticket sales had fallen to 126 per night. What is the approximate value of the cross price elasticity of demand between video rentals and theatre tickets?A) -0.53 B) +0.30 C) +0.53 D) +1.67
Q:
A 2 percent increase in the price of neckties leads to a 5 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand isA) 2.5. B) 1. C) 0.4. D) 0.2.
Q:
Generally, as levels of pollution are reduced,
A) marginal benefits from the reduction increase.
B) marginal costs from the reduction increase.
C) marginal costs from the reduction stay the same.
D) marginal costs from the reduction decrease.
Q:
The poverty income threshold in the United States was originally calculated byA) multiplying a nutritionally adequate food plan for emergency use by 4. B) multiplying a nutritionally adequate food plan for emergency use by 2. C) multiplying a nutritionally adequate food plan for emergency use by 3. D) multiplying a nutritionally adequate food plan for emergency use by 5.
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, if the marginal revenue product is $14, how many workers will the profit maximizing monopsonist hire?A) 2 B) 3 C) 4 D) 5
Q:
A primary objective of labor unions is toA) secure equal pay for its members.B) have equal power with their employer.C) seek better pay and improved work conditions.D) all of the aboveE) none of the above
Q:
Which of the following is FALSE regarding the general rule for hiring?A) Virtually every optimizing rule in economics involves comparing marginal benefits with marginal cost.B) The benefit from added workers is extra output and consequently more revenues.C) The firm hires workers up to the point at which the additional cost associated with hiring the last worker is equal to the additional revenue generated by that worker.D) If any firm hired fewer workers over time, profits would definitely increase at that firm.
Q:
Government policy that attempts to prevent collusion among the sellers of a product and attempts to prevent restraint of trade is known asA) social policy. B) antitrust policy. C) inherent policy. D) goodwill policy.
Q:
ʺA firm should always make complementary products incompatible with those of other firms.ʺ
Do you agree or disagree? Why?
Q:
If Ford Motor Company and General Motors Corporation were to merge, this would representA) a vertical merger. B) a horizontal merger.C) a cartel. D) an up-and-down merger.
Q:
What are the implications of there being a large number of firms in a monopolistically competitive market?
Q:
If a monopolist is producing the quantity at which marginal revenue exceeds marginal cost, it shouldA) continue to produce this amount if it wants to maximize profits.B) reduce output if it wants to maximize profits.C) reduce price and keep output unchanged if it wants to maximize profits.D) increase output if it wants to maximize profits.
Q:
What are signals? How do profits function as signals?
Q:
When price and marginal cost are equal for a perfectly competitive firm, the firm isA) minimizing average total cost. B) maximizing total revenue.C) maximizing economic profit. D) earning negative economic profit.
Q:
The average fixed cost curveA) is parallel to the x-axis.B) is the distance between the TC and TVC curves.C) slopes downward as output increases. D) increases as the cost of inputs rise.
Q:
What is the random walk theory?
Q:
Compared to a proprietorship, a disadvantage of a partnership isA) that profits are taxed twice.B) that it is harder to keep the firm going after the death of an owner. C) unlimited liability.D) that potential liability to each partner is greater.
Q:
Basket of goods A is on an indifference curve that lies closer to the origin than basket B. From this we know thatA) the prices of the goods in A are less than the prices of the goods in B.B) the satisfaction from consuming A is more than the satisfaction from consuming B. C) the marginal utility from consuming A is less than the marginal utility from consuming B.D) the satisfaction from consuming A is less than the satisfaction from consuming B.
Q:
QuantityPer WeekTotal UtilityAmyRobertDavidMichelle0000015.01006006029.91901200130314.72701800220419.43402400310524.04003000425628.54503600575732.94904200900837.252048001275941.451054001770Refer to the above table. Which of the four people have utility schedules characterized by the law of diminishing marginal utility?A) Amy, Robert, and David only B) Michelle onlyC) Michelle and David only D) Amy and Robert only
Q:
MonthPXQXPYQYPZQZJan$10100$2050$25200Feb1090186025225Mar1070159025275Apr12501510025290May15251512025320In the above table, the cross price elasticity of demand (using averages) for Z with good X, when PX increases from $12 to $15, is approximately equal toA) +1.03 B) +2.26. C) +0.44. D) -0.44.
Q:
A 3 percent increase in the price of neckties leads to a 6 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand isA) 3. B) 2. C) 0.5. D) 0.33.
Q:
Generally, as levels of pollution are reduced,A) marginal benefits from the reduction decrease.B) marginal benefits from the reduction increase. C) marginal costs from the reduction decrease.D) marginal cost from the reduction are constant.
Q:
The official poverty rate in the United States includesA) less than 5 percent of the population.B) between 10 and 15 percent of the population.C) between 20 to 25 percent of the population. D) over 35 percent of the population.
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, if the marginal revenue product is $18, how many workers will the profit maximizing monopsonist hire?A) 2 B) 3 C) 4 D) 5
Q:
Labor unions are organizations thatA) try to secure more opportunities for more workers in the economy. B) try to secure economic improvements for all workers.C) try to secure economic improvements for their members. D) try to make labor markets more competitive.
Q:
Suppose the MRP of the 49th worker at a firm is $25 and that the market wage rate is $15. We know that if this firm operates in perfectly competitive product and labor markets,A) the firm is paying wages above the minimum wages.B) the firmʹs profits would increase if it fired some workers.C) the firm would be more profitable if it hired more workers.D) the firm should use more capital.
Q:
ʺAs compared to the benefits of economic and social regulation, the costs are minimal.ʺ Do you agree or disagree? Why?
Q:
Which of the following provides firms incentives to work together to develop one common product format?A) a Tweedle Dee-Tweedle Dum game B) a Battle of the Sexes gameC) prisonersʹ dilemma D) none of the above
Q:
When U.S. Steel, a steel producer, bought control of iron ore companies at the beginning of the 20th century, the company was initiatingA) a horizontal merger. B) a vertical merger.C) a cartel. D) an expropriation.