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Economic
Q:
What is the most important characteristic of monopolistic competition? How do firms behave differently from perfect competitors?
Q:
If a monopolist is producing the quantity at which marginal revenue equals 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) increase price and keep output unchanged if it wants to maximize profits. D) increase output if it wants to maximize profits.
Q:
ʺBecause a firmʹs supply curve slopes upward, the long-run supply curve of an industry must also slope upward.ʺ Do you agree or disagree? Explain.
Q:
For a perfectly competitive firm, profit maximization occurs whenA) marginal revenue equals average total cost.B) marginal revenue equals marginal cost.C) marginal cost is equal to average total cost.D) average total cost is at its minimum.
Q:
Which of the following would be an example of a fixed cost?A) the electric and gas billsB) wages paid to temporary workersC) property insurance premiumsD) expenditures on imported raw materials
Q:
The stock market showed a PE for BluarCo equal to 17. What does PE mean?A) price-earnings ratio B) profit-earnings ratioC) perfect-earnings ratio D) price-equity ratio
Q:
The owner(s) of a corporationA) is the entrepreneur. B) are the shareholders. C) are the bondholders. D) is the CEO.
Q:
Basket of goods A is on an indifference curve that lies further from the origin than basket B. From this we know thatA) the prices of the goods in A are more 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 more than the marginal utility from consuming B.D) all other consumers would also rank B above A.
Q:
QuantityTotal Utility00110225345460568672Refer to the above table. At what quantity does diminishing marginal utility set in?A) After 3. B) After 2. C) After 10. D) After 15.
Q:
MonthPXQXPYQYPZQZJan$10100$2050$25200Feb1090186025225Mar1070159025275Apr12501510025290May15251512025320In the above table, the cross price elasticity of demand for good Z with good Y when P Y rises from $15 to $18 isA) -2.20. B) +2.20. C) +1.10. D) -1.10.
Q:
A 6 percent increase in the price of neckties leads to a 3 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand isA) 3. B) 0.33. C) 0.5. D) 2.
Q:
Voluntary agreements about cleaning up pollution attempt toA) internalize externalities. B) internalize private costs.C) externalize social costs. D) externalize private costs.
Q:
All of the following are governmental efforts to decrease poverty EXCEPTA) Supplemental Security Income B) the earned income program.C) transfer payments. D) tariffs.
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, what is the marginal factor cost of the 6th worker?A) $30 B) $18 C) $120 D) $20
Q:
The first labor unions in the United States wereA) public-sector unions. B) industrial unions. C) guilds. D) craft unions.
Q:
If the demand for hamburgers increases, it is likely that the demand for fast -food employees willA) increase. B) decrease.C) stay the same. D) increase at first but then fall rapidly.
Q:
ʺRegulations do not always have the intended result.ʺ Do you agree or disagree? Why?
Q:
A Tweedle Dee-Tweedle Dum game situation occurs when
A) two firms choose incompatible product formats.
B) two firms choose compatible product formats.
C) two firms produces products that are complementary to each otherʹs products.
D) the game is a positive sum.
Q:
Oligopolies can result from any of the following EXCEPTA) economies of scale. B) vertical mergers.C) government regulation. D) diseconomies of scale.
Q:
Compared with a monopolist, the demand curve faced by a monopolistically competitive firm isA) more elastic. B) more inelastic.C) perfectly elastic. D) perfectly inelastic.
Q:
PQMRMC$720$12$2$621$14$5$522$16$10$423$18$15$324$20$20$225$22$26If a monopolist is producing the quantity at which price equals 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:
The long-run industry supply curve in a decreasing-cost, perfectly competitive industry isA) negatively sloped. B) perfectly elastic.C) positively sloped. D) perfectly inelastic.
Q:
A perfectly competitive firm will maximize profits whenA) average cost is greater than marginal revenue.B) marginal cost is greater than marginal revenue. C) marginal cost is equal to marginal revenue.D) average cost is equal to average revenue.
Q:
Total fixed cost isA) the cost of buying and installing new machinery.B) the cost that does not change as output changes. C) the expenditure on imported raw materials.D) the wages paid to consultants.
Q:
The price of the stock divided by the profits per share of stock is known as theA) price-earnings ratio. B) dividend.C) yield in percent per year.D) number of shares traded during the day.
Q:
An advantage of a partnership over a proprietorship isA) limited liability.B) that profits are not taxed twice.C) the ability to take advantage of greater specialization. D) that it is easier to dissolve.
Q:
A set of indifference curves on a graph is calledA) a difference map. B) an indifference map.C) a budget map. D) a cluster.
Q:
QuantityTotal Utility00110225335442547649Refer to the above table. At what quantity does diminishing marginal utility set in?A) After 0. B) After 1. C) After 2. D) After 10.
Q:
MonthPXQXPYQYPZQZJan$10100$2050$25200Feb1090186025225Mar1070159025275Apr12501510025290May15251512025320In the above table, the cross price elasticity of demand for good Y with good X when P X rises from $10 to $12 isA) +0.29. B) +1.83. C) +0.58. D) -0.58.
Q:
A 3 percent increase in the price of neckties leads to a 3 percent decrease in the quantity demanded of neckties. The absolute price elasticity of demand isA) 3. B) 0.3. C) 1.0. D) 0.01.
Q:
The marginal benefit of the pollution abatement curveA) has a zero slope. B) has a positive slope. C) slopes upward. D) slopes downward.
Q:
In a growing economy, it is possible to eliminateA) absolute poverty. B) relative poverty.C) both absolute and relative poverty. D) either absolute nor relative poverty.
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, what is the marginal factor cost of the 5th worker?A) $22 B) $18 C) $90 D) $26
Q:
A craft labor union is made up ofA) groups of workers in an individual trade.B) all the workers in a firm such as General Motors.C) firms that employ similar labor skills.D) an organization that controls the labor market in a particular industry.
Q:
Number of WorkersTotal OutputNumber of WorkersTotal Output0065401100760022208650332096904400107005475 According to the above table, if the wage rate is $400 a week and the price of the good produced is $5, the perfectly competitive firm should hireA) 3 workers. B) 4 workers. C) 5 workers. D) 6 workers.
Q:
A common feature of regulated industries is cross-subsidization, which is a situation when one group of customers pays prices above costs while another group of customers pays prices below costs. The one group is subsidizing the other group. Is this practice more consistent with the capture hypothesis or the share-the-gains, share-the-pains theory? Explain.
Q:
Which of the following is the reason why the product incompatibility strategy worked for Appleʹs iPod in the media industry but did not work for Sonyʹs Beta videocassettes in the videocassette industry?A) Both media and videocassette industries were subject to positive market feedback.B) Both media and videocassette industries were subject to negative market feedback.C) The media industry was subject to positive feedback but the videocassette industry was subject to negative market feedback.D) The media industry was subject to negative market feedback but the videocassette industry was subject to positive market feedback.
Q:
Monopolies and oligopolies both erect barriers to entry through the use ofA) price cutting. B) patents. C) franchising. D) advertising.
Q:
The demand curve for the product of a monopolistic competitorA) is the same as the market demand curve. B) is horizontal.C) is vertical.D) slopes downward.
Q:
PQMRMC$720$12$2$621$14$5$522$16$10$423$18$15$324$20$20$225$22$26Refer to the above table. Given the demand and cost schedules, what is the profit -maximizing price for this monopolist?A) $3 B) $4 C) $6 D) $7
Q:
The long-run supply curve in a constant-cost, perfectly competitive industry isA) perfectly inelastic. B) upward sloping.C) downward sloping. D) perfectly elastic.
Q:
A firm seeking to maximize economic profits should produce at the output at whichA) total revenue equals total cost.B) marginal revenue equals marginal cost. C) average revenue equals average cost.D) marginal revenue equals average revenue.
Q:
Which of the following is NOT correct?A) MC = change in TC/change in Q B) ATC = TC/QC) AVC = TVC/Q D) ATC + AVC = AFC
Q:
According to efficient market theory, which of the following can best predict the stock price of a particular company tomorrow?
A) a finance professor who knows a lot of investment theory
B) a stock trader who has traded stocks for more than 10 years
C) that companyʹs employee who has inside information about the company
D) none of the above: Everyone has an equal chance of predicting future stock prices
Q:
Which of the following is not an advantage of a partnership?
A) Limited liability
B) Easy to form
C) Profits are subject to only personal taxation
D) Permits more effective specialization in occupations
Q:
If an individualʹs total utility from consuming two goods decreases, then there must beA) a downward rotation of the individualʹs indifference curve.B) an inward rotation of the individualʹs indifference curve. C) an outward shift of the individualʹs indifference curve.D) an inward shift of the individualʹs indifference curve.
Q:
QuantityTotal Utility00115235355475585690Refer to the above table. At what quantity does diminishing marginal utility set in?A) 1st. B) After 4. C) After 5. D) After 6.
Q:
MonthPXQXPYQYPZQZJan$10100$2050$25200Feb1090186025225Mar1070159025275Apr12501510025290May15251512025320In the above table, the cross price elasticity of demand for good X with good Y when P Y falls from $20 to $18 isA) -2. B) 0. C) +1. D) -1.
Q:
The actual value of the price elasticity of demand is alwaysA) positive because of the law of demand.B) negative because of the law of demand.C) positive because of diminishing marginal utility.D) negative because percentages can only be negative.
Q:
The idea that it takes 90 percent of your time to clean up the last 10 percent of your house illustrates thatA) the marginal cost of cleaning up slopes downward. B) the marginal cost of cleaning up slopes upward.C) the marginal benefit of cleaning up is constant.D) the marginal benefit of cleaning up slopes upward.
Q:
Which of the following statements is FALSE regarding the definition of poverty?A) A threshold income level is used to define poverty.B) Adjustments to the poverty level are made on the basis of changes in the Consumer Price Index.C) Real incomes in the United States have been growing at a compounded annual rate of almost 2 percent per capita.D) Poverty cannot be defined in relative terms.
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, what is the marginal factor cost of the 2nd worker?A) $24 B) $14 C) $64 D) $12
Q:
For the past several decades, union membership in the United States has been declining. What has been happening in the rest of the world?A) Union membership has been increasing in almost every other country. B) In almost every other nation, union membership has held constant.C) In most cases, union membership in other nations has also been falling. D) We do not know because other nations do not keep these statistics.
Q:
Number of WorkersTotal OutputNumber of WorkersTotal Output0065401100760022208650332096904400107005475 According to the above table, if the price of the good produced is $5 and the wage rate is $400, then the marginal revenue product of the 7th worker isA) $300. B) $60. C) $12. D) $400.
Q:
Explain the capture hypothesis.
Q:
Which of the following would NOT be an adequate description of the relationship between Blu-Ray discs and Blu-Ray disc players?A) They are compatible. B) They are complementary.C) They involve network effects. D) They are substitutable.
Q:
The most common reason for the existence of oligopolies isA) ease of entry. B) economies of scale. C) diseconomies of scale. D) advertising.
Q:
The demand curve for the product of a monopolistically competitive firm slopes downward becauseA) products are perceived by consumers as different. B) products are homogeneous.C) people only care about price when they buy a good. D) the firmʹs goal is to maximize profits.
Q:
PQMRMC$720$12$2$621$14$5$522$16$10$423$18$15$324$20$20$225$22$26Refer to the above table. Given the demand and cost schedules, what is the profit maximizing quantity for this monopolist?A) 23 B) 21 C) 20 D) 24
Q:
If the costs of production do not increase as output increases in the long run in a perfectly competitive industry, then this is aA) constant-return-to-scale industry. B) constant-competitive industry. C) constant-cost industry. D) constant-price industry.
Q:
When MR < MC for a firm, the firm shouldA) reduce its level of output. B) stay at the same level of output.C) stop producing. D) increase output, unless P < AVC.
Q:
The marginal cost curve always intersects the average total cost curve at the point at which the average total cost curveA) is zero. B) is at its minimum. C) is at its maximum. D) has a vertical slope.
Q:
ʺInside informationʺ is the use of informationA) by those who read the companiesʹ annual reports.B) by those who write the companiesʹ annual reports. C) by stockbrokers at the largest brokerage firms.D) that is not available to the public.
Q:
In a partnership, debts accumulated by one partner areA) the responsibility of that partner only.B) the responsibility of that partner plus any partners who are actively involved in running the partnership.C) the responsibility of all of the other partners for the full amount of the debt. D) the responsibility of all of the other partners, up to the total value of the firm.
Q:
If an individualʹs total utility from consuming two goods increases, then there must beA) a downward rotation of the individualʹs indifference curve. B) an inward rotation of the individualʹs indifference curve.C) an outward shift of the individualʹs indifference curve. D) an inward shift of the individualʹs indifference curve.
Q:
Which economic principle accounts for the fact that all-you-can-eat buffet restaurants can be profitable?A) The law of demandB) The principle of diminishing marginal utility C) The principle of diminishing marginal product D) The law of supply
Q:
The cross price elasticity of demand is measured by theA) percentage change in the quantity demanded of one good divided by the percentage change in quantity demanded of another good.B) percentage change in the price of one good divided by the percentage change in price of another good.C) percentage change in the demand for one good divided by the percentage change in price of another good.D) percentage change in the price of one good divided by the percentage change in the demand for another good.
Q:
The price elasticity of demand is measured by theA) percentage change in quantity demanded divided by the percentage change in price.B) percentage change in price divided by the percentage change in quantity demanded. C) change in quantity demanded divided by the change in price.D) change in price divided by the change in quantity demanded.
Q:
PollutionA) creates a negative externality.B) is increased when property rights are defined. C) is the result of capitalism.D) exists because air and water are privately owned resources.
Q:
The program was created in 1975 to provide rebates of Social Security taxes to low-income workers.A) food stamp B) SSI C) TANF D) EITC
Q:
Quantity of LaborHourly Wage RateTotal Marginal Wage Bill Factor Cost0-- -1$10 212 314 416 518 620 In the above table, what is the marginal factor cost of the 4th worker?A) $16 B) $30 C) $64 D) $22
Q:
Which of these nations has the highest rate of union membership (as a share of total employment)?A) India B) The United StatesC) Japan D) Sweden
Q:
Number of WorkersTotal OutputNumber of WorkersTotal Output0065401100760022208650332096904400107005475 Refer to the above table. If the price of the good produced is $10 and the wage rate is $500, then the marginal revenue product of the 5th worker is .A) $10 B) $50 C) $750 D) $4,750
Q:
Explain the share-the-gains, share-the-pains theory. How does it differ from the capture hypothesis?
Q:
Refer to the above payoff matrix for the profits (in $ millions) of two firms (X and Y) and two product formats (A and B) in an industry. The game with the dominant strategy is also called:A) the prisonersʹ dilemma. B) Tweedle Dee-Tweedle Dum. C) Battle of the Sexes. D) Tit-for-Tat.
Q:
If a firm is an oligopolist, which is NOT true?A) It must pay attention to other firmsʹ prices.B) It is one of a relatively small number of firms dominating its industry. C) It can sell all the units it wants at the going market price.D) It is engaged in a strategic game.
Q:
Because there are low barriers to entry in a monopolistically competitive market,A) there are many firms in the industry. B) they produce a homogeneous product.C) the firms are price takers. D) there is no non-price competition.
Q:
PQTC$1310$8$1215$30$1120$68$1025$128$930$208$835$308Refer to the above table. Given the demand and cost schedules, what are the maximized economic profits for this monopolist?A) $122 B) $152 C) $220 D) $150
Q:
Which of the following is the best example of a decreasing-cost industry?
A) the health care industry B) the personal computer industry
C) the college-education industry D) the oil industry
Q:
The profit-maximizing output for the perfectly competitive firm occurs at the point at whichA) TR - MR is at a maximum.B) TR - TC is at a minimum.C) MR = MC. D) TR - ATC is at a maximum.