Q&A Hero

Q: The addition to total costs associated with the production of one more unit of output is referred to asA) average cost. B) marginal cost. C) opportunity cost. D) overhead cost.

Q: The theory that there are no predictable trends in securities prices that can be used to ʺget rich quickʺ is theA) dartboard theory. B) random walk theory.C) Wall Street theory. D) inefficient market hypothesis.

Q: A business owned by two or more joint owners, or partners, who share the responsibilities and the profits of the firm and are individually liable for all the debts is a(n)A) corporation. B) entrepreneur. C) proprietorship. D) partnership.

Q: An indifference map showsA) that money income is constant, but product prices may change.B) that utility is at a maximum at the origin.C) that curves closer to the origin represent higher levels of utility.D) that curves further from the origin represent higher levels of utility.

Q: As an individual consumes more of a particular commodity, the total level of utility derived from that consumption usuallyA) increases at a constant rate. B) increases at an increasing rate. C) increases at a decreasing rate. D) decreases at an increasing rate.

Q: When the price of chicken is $2.00 per pound, consumers buy 50 pounds of hamburger. When the price of chicken rises to $3.00 per pound, 60 pounds of hamburger are purchased. The cross price elasticity of demand between chicken and hamburger is approximately equal toA) +0.04. B) -0.45. C) +2.20. D) +0.45.

Q: The word best associated with price elasticity of demand isA) relative. B) total. C) absolute. D) cumulative.

Q: According to economic analysis, the optimal quantity of pollution exists at the point at which the A) total benefit of pollution control is equal to the total cost. B) marginal benefit of pollution control is equal to the marginal cost. C) level of pollution is at zero. D) level of pollution is acceptable to the society.

Q: Which of the following groups of U.S. residents would likely qualify for SSI benefits?A) college students B) incarcerated murderersC) the disabled D) new federal retirees

Q: In a bilateral monopoly, the wage rate that is determined in the marketA) is equal to MFC. B) is equal to MRP. C) is indeterminate.D) is the same as in a perfectly competitive market.

Q: Collective bargaining in the United States typically involves negotiations betweenA) the government and management over the minimum wage law.B) the management of a company and the leaders of the union over the wages and fringe benefits to be offered.C) an individual and her boss over the appropriate salary level. D) union and nonunion employees regarding work rules.

Q: Suppose that in a computer factory, if there is 1 worker, 80 computers are produced per week.If there are 2 workers, 150 computers are produced per week. If there are 3 workers, 210 computers are produced per week. Given this information and the fact that the firm receives $200 per computer, the marginal revenue product of the third worker isA) $4,200. B) $12,000. C) $10,000. D) $14,000.

Q: Suppose OSHA requires a factory to install specific safety equipment to reduce the number of injuries in the factory. Would the number of accidents necessarily decline? Why or why not?

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. A possible outcome of the dominant strategy is:A) Both firm X and firm Y choose product format A. B) Both firm X and firm Y choose product format B.C) Firm X would be willing to choose product format A as long as firm Y simultaneously would be willing to choose format A.D) Firm X would be willing to choose product format A, while firm Y simultaneously would be willing to choose format B.

Q: Which of the following is NOT a common characteristic of oligopoly? A) strategic dependence among firms in the industry B) product differentiation C) barriers to entry D) marginal cost pricing.

Q: Advertising is used by firms in a monopolistic competitive industry to A) differentiate their product from those of competitors. B) increase brand loyalty. C) increase demands for their individual products. D) all of the above

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 is the profit -maximizing price for this monopolist?A) $13 B) $12 C) $11 D) $10

Q: If a firm is earning short-run economic profits shown in the above figure, in the long runA) firms exit the industry, the market supply curve shifts rightward, and the market price falls.B) firms enter the industry, the market supply curve shifts rightward, and the market price falls.C) firms exit the industry, the market supply curve shifts leftward, and the market price falls.D) firms enter the industry, the market supply curve shifts rightward, and the market price rises.

Q: Which of the following is true for the perfectly competitive firm?A) Price and MR are always equal. B) AR is less than price.C) AR is more than price. D) Price elasticity of demand is equal to 1.

Q: As a firm continues to produce additional output, which of the following will continue to decline as output expands?A) average total costs B) marginal costsC) average fixed costs D) opportunity costs

Q: Efficient markets theory suggests that purchasing the published reports of financial analystsA) is likely to increase oneʹs returns by an average of 5 percent.B) is likely to increase oneʹs returns by an average of about 3 to 5 percent.C) is not likely to increase financial returns.D) will increase financial returns in the first year but not in following years.

Q: The most likely source of investment funds for a proprietorship isA) sales of stocks. B) sales of bonds.C) loans from banks. D) the personal funds of the owner.

Q: In a map showing three indifference curves a consumer is most well off onA) the curve which is closest to the origin of the coordinate axes.B) the curve which is most farther away from the coordinate axes. C) The curve that is in the middle.D) none of the above

Q: If marginal utility is negative,A) total utility increases at a decreasing rate.B) the consumer considers extra units of the commodity to be a ʺbad.ʺC) the consumer will want to consume the unit only if it is free.D) the consumer likes the commodity, but not as much as he or she once did.

Q: If personal computer prices rise by 1 percent, we would expect the number of color printers purchased toA) increase. B) decrease.C) be equal to ten. D) be equal to one.

Q: The responsiveness of quantity demanded of a good to changes in its price is the A) cross elasticity of demand. B) price elasticity of supply. C) income elasticity. D) price elasticity of demand.

Q: In the above figure, if a firm is cleaning up Q3 units of pollution, it is anA) efficient solution because marginal social benefits are greater than marginal social costs.B) efficient solution because marginal social benefits are equal to marginal social costs.C) inefficient solution because marginal social benefits are greater than marginal social costs.D) inefficient solution because marginal social costs are greater than marginal social benefits.

Q: The USDA threshold income level was originally based on the cost ofA) housing. B) transportation.C) basic clothing. D) a nutritionally adequate food plan.

Q: The MFC curveA) lies below the labor supply curve, when the labor supply curve is upward sloping.B) lies above the labor supply curve, when the labor supply curve is upward sloping. C) is the labor supply curve.D) is parallel to the labor supply curve, when the labor supply curve is downward sloping.

Q: According to the text, private sector union membership has fallen toA) about 8 percent of the private -sector labor force. B) zero.C) about 25 percent of all U.S. workers.D) about 12 percent of the entire workforce.

Q: Suppose that in a computer factory, if there is 1 worker, 80 computers are produced per week.If there are 2 workers, 150 computers are produced per week. If there are 3 workers, 210 computers are produced per week. Given this information, the marginal product of the third worker isA) 210 computers per week. B) 70 computers per week. C) 60 computers per week. D) 50 computers per week.

Q: How does social regulation differ from economic regulation?

Q: An industry battle between incompatible product formats can occur if competing firms selling compatible products A) take into account network effects. B) fail to take into account network effects. C) take into account economies of scale. D) fail to take into account economies of scale.

Q: An oligopoly is a market situation in whichA) there are many firms producing differentiated products.B) there is a single firm producing several varieties of a product. C) all the sellers act independently of the others.D) there are very few sellers and they recognize their strategic dependence on one another.

Q: When Crest claims that its toothpaste product whitens teeth more than the products of its competitors, Crest is practicingA) product differentiation. B) libel.C) marginal revenue pricing. D) marginal cost pricing.

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 is the profit maximizing quantity for this monopolist?A) 15 B) 20 C) 25 D) 30

Q: The motive that drives firms to enter or exit an industry isA) utility. B) governmental.C) economic profit. D) accounting costs.

Q: The perfectly competitive, profit-maximizing rate of productionA) occurs at the point at which marginal revenue is equal to marginal cost.B) occurs at the point at which the difference between marginal revenue and marginal cost is maximized.C) is not measurable for a perfectly competitive firm.D) ignores the relation of total revenues and total costs.

Q: The ratio of total costs to the quantity produced is referred to asA) average fixed costs. B) average variable costs. C) marginal costs. D) average total costs.

Q: Which of the following statements about stock market brokers and dealers is TRUE?A) Brokers earn commissions from trading stocks but dealers try to profit from trading stocks.B) Brokers try to profit from trading stocks but dealers earn commissions from trading stocks. C) Both brokers and dealers earn commissions from trading stocks.D) Both brokers and dealers try to profit from trading stocks.

Q: Unlimited liability exists whenA) the profits of the firm are taxed once. B) a firm dissolves when the owner dies. C) a corporation exists.D) the personal assets of the owner of a firm can be seized to pay off the firmʹs debts.

Q: What is the marginal rate of substitution between two goods and how is it related to the indifference curve?

Q: A rational individual will never consume a unit of a good if itsA) marginal utility is diminishing.B) marginal utility is less than average utility.C) marginal utility is increasing. D) marginal utility is negative.

Q: If goods are completely unrelated, their cross price elasticity willA) be greater than one. B) be less than one. C) be equal to zero. D) be negative.

Q: The price elasticity of demand measuresA) the responsiveness of quantity demanded to a change in price.B) the responsiveness of price to a change in competition.C) the change in quantity demanded due to a change in price of a substitute good.D) the change in price due to a change in demand.

Q: In the above figure, if a firm is cleaning up Q2 units of pollution, it is anA) efficient solution, because marginal social benefits are greater than marginal social costs. B) efficient solution, because marginal social benefits are equal to marginal social costs.C) inefficient solution, because marginal social benefits are greater than marginal social costs. D) inefficient solution, because marginal social costs are greater than marginal social benefits.

Q: In an attempt to reduce the poverty rate, there has recently been a movement away from income maintenance programs toA) Supplemental Security Income programs. B) reducing the age a person can retire at.C) encouraging people to get jobs.D) incorporating the Lorenz policy in decisions.

Q: The labor market in professional baseball is an example ofA) a bilateral monopoly. B) a monopsonistic labor market.C) a monopolistic labor market. D) a perfectly competitive labor market.

Q: Deregulation has contributed toA) an increase in union membership. B) declines in union membership.C) higher wages in unions. D) an increase in union power.

Q: Suppose that in a computer factory, if there is 1 worker, 80 computers are produced per week.If there are 2 workers, 150 computers are produced per week. If there are 3 workers, 210 computers are produced per week. Given this information, thereA) is diminishing marginal product. B) are too many workers.C) are not enough workers. D) is increasing marginal product.

Q: The total cost of federal regulation includesA) the funding of government agencies overseeing compliance, the compliance cost for the regulated firms, and the opportunity cost of regulation for the firms.B) the funding of government agencies overseeing compliance less the compliance cost for the regulated firms and the opportunity cost of regulation for the firms.C) only the cost of compliance by the regulated firms.D) only the funding of the regulatory agencies.

Q: By reducing the product compatibility of iPod, Apple can lower the price elasticities of demand forA) Apple products that are complementary to the iPod. B) Apple products that are substitutable to the iPod.C) products by other firms that have a positive network effects. D) products that are not related to the iPod.

Q: In an oligopolistic market, each firmA) has a constant marginal cost.B) faces a perfectly elastic demand function.C) must consider the reaction of rival firms when making a pricing or output decision. D) produces at minimum average cost in the long run.

Q: A monopolistic competitor would face a demand curve with aA) positive slope. B) negative slope.C) constant slope. D) slope equal to 0.

Q: PQTC$1310$15$1214$25$1119$45$1025$75$930$115$835$165Refer to the above table. Given the demand and cost schedules, what are the maximum economic profits for this monopolist?A) $155 B) $143 C) $175 D) $164

Q: When a perfectly competitive firm experiences zero economic profits, A) the high barriers to entry prevent further competition.B) existing firms exit the industry.C) additional firms enter the industry.D) firms have no incentive to exit or enter the industry.

Q: Which is always true at a firmʹs profit -maximizing rate of production?A) Total Revenue = Total CostsB) The total revenue curve lies below the total cost curve.C) Marginal Revenue > Marginal CostD) Marginal Revenue = Marginal Cost

Q: Marginal cost is equal to average variable costA) when average variable cost is at its minimum value.B) when marginal cost is at its minimum value. C) when average variable cost is getting smaller. D) when average variable cost is getting larger.

Q: The theory that there is no way to ʺget rich quickʺ in securities due to a lack of predictable trends isA) no-win theory. B) market trend analysis. C) random walk theory. D) trading.

Q: Which of the following is not a disadvantage of a proprietorship? A) How profits are taxed B) Ability to raise capital C) Unlimited liability D) The disposition of the firm when the owner dies

Q: Mathematically the marginal rate of substitution isA) always a negative number. B) always a positive number. C) is equal to 1.D) sometimes a positive and sometimes a negative number.

Q: Regretting a last unit of consumption of cake implies thatA) the total utility from eating cake was negative. B) cake is an inferior good.C) the marginal utility of the last unit of cake consumed was negative. D) the demand curve for cake is horizontal.

Q: A positive cross price elasticity of demand between two goods suggests that the goods areA) not related. B) complements.C) substitutes. D) both of unitary elasticity.

Q: According to the above table, what is the absolute price elasticity of demand when price rises from $5.50 to $6?A) 4.00 B) 2.23 C) 1.21 D) 0.50

Q: In the above figure, if a firm is cleaning up Q4 units of pollution, it is anA) efficient solution, because marginal social benefits are greater than marginal social costs. B) efficient solution, because marginal social benefits are equal to marginal social costs.C) inefficient solution, because marginal social benefits are greater than marginal social costs. D) inefficient solution, because marginal social costs are greater than marginal social benefits.

Q: Since the War on Poverty was started in 1965, the United States has spent more than $12 trillion on income maintenance programs. The effect has been toA) reduce poverty levels substantially. B) reduce poverty levels moderately.C) have virtually no effect on poverty levels.D) increase poverty substantially.

Q: The MFC can be calculated by theA) change in total wages/change in labor. B) total wages/total labor.C) change in labor/change in total wages. D) total wages/change in labor.

Q: Union membership, in terms of percentage of the U.S. civilian labor force, A) has increased steadily since the passage of the Wagner Act.B) peaked about 1960 and has since declined. C) was over 50 percent in 1987.D) has increased dramatically since 1970.

Q: The individual demand curve for an input such as labor to a firm would be the downward sloping portion of the firmʹsA) marginal physical product curve. B) marginal revenue product curve. C) marginal revenue curve. D) total revenue curve.

Q: Regarding the costs of regulation, which is a FALSE statement? A) Airline safety standards have increased the price of air travel. B) Automobile safety standards raise the price of cars. C) Regulatory spending by federal agencies has decreased since 1970. D) Pharmaceutical manufacturing safety standards raise the price of drugs.

Q: If the product of one firm is complementary to another product of another firm, then the two productsA) are compatible. B) are substitutable.C) have a zero network effect. D) have a negative network effect.

Q: Managers in oligopoly firms mustA) eliminate any barriers to entry if they hope to make short -run profits. B) advertise heavily in order to differentiate their product.C) anticipate the reaction of rival firms.D) establish many varieties of their products to cover the spectrum of consumer tastes.

Q: The two economists associated with the development of the theory of monopolistic competition wereA) Joan Robinson and Edward Chamberlin. B) David Hume and Adam Smith.C) John Neville Keynes and John Maynard Keynes.D) Carl Menger and Eugen Von Bohm-Bawerk.

Q: PQTC$1310$15$1214$25$1119$45$1025$75$930$115$835$165Refer to the above table. Given the demand and cost schedules, what is the profit -maximizing price for this monopolist?A) $9 B) $12 C) $11 D) $10

Q: In the long run when a perfectly competitive firm experiences negative economic profits, A) the high barriers to entry prevent further competition.B) existing firms exit the industry.C) additional firms enter the industry.D) firms have no incentive to exit or enter the industry.

Q: ʺA perfect competitor should maximize total revenues.ʺ Do you agree or disagree? Explain.

Q: Total OutputTotal Costs0$101182213234245266297338389441051In the above table, the marginal cost of the seventh unit isA) $4.00. B) $5.00. C) $3.00. D) $33.00.

Q: ʺStocks and bondsʺ are collectively known asA) securities. B) equities. C) real property. D) shares.

Q: Which of the following is NOT an advantage of a proprietorship?A) They are easy to form and dissolve.B) Decision-making resides with one person-the owner. C) Liability of the owner is unlimited.D) Profits are only taxed once.

Q: The marginal rate of substitution measuresA) the impact of product substitution.B) the changes in marginal utility along the indifference curve.C) the consumerʹs willingness to substitute one product for another so that total utility will remain unchanged.D) the consumerʹs willingness to substitute one product for another so that marginal utility will remain unchanged.