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Economic
Q:
The principle of diminishing marginal utility suggests thatA) total utility falls with additional consumption.B) total utility is usually negative.C) the consumer will never tire of additional units of a good.D) the rate at which utility increases diminishes as more of a good is consumed.
Q:
If the cross price elasticity of demand between two goods is positive, then the two goods areA) substitutes. B) complements. C) independent. D) unrelated.
Q:
According to the above table, what is the absolute price elasticity of demand if price falls from $8.00 to $7.50?A) 4.00 B) 2.82 C) 1.80 D) 1.21
Q:
In the above figure, the optimal level of pollution cleanup isA) Q1. B) Q2. C) Q3. D) Q4.
Q:
The program that was created to provide rebates of Social Security taxes to low -income workers isA) Supplemental Security Income. B) Food Stamps. C) Earned Income Tax Credit Program. D) TANF.
Q:
A bilateral monopoly exists when there is aA) single buyer and many sellers in the market. B) single seller and many buyers in the market.C) large number of buyers and sellers in the market. D) single buyer and a single seller in the market.
Q:
Which of the following is legal under the Taft-Hartley Act?A) Closed shops B) Collective bargainingC) Secondary boycotts D) Sympathy strikes
Q:
In the above figure, the marginal revenue product is represented by lineA) ʺa.ʺ B) ʺb.ʺ C) ʺc.ʺ D) ʺd.ʺ
Q:
The cost of complying with regulation
A) shifts the ATC curve upward.
B) shifts the MC curve downward.
C) shifts the demand curve to the right.
D) increases the productsʹ price elasticity of demand.
Q:
If two goods are complementary, then they have aA) low degree of product compatibility. B) high degree of product compatibility. C) high degree of negative network effect. D) low degree of negative network effect.
Q:
Which of the following is NOT a necessary condition for oligopoly?
A) Barriers to entry
B) Strategic dependence of firms
C) Differentiated products
D) Either a small number of firms or market dominance by a small number of firms
Q:
Which is NOT a characteristic of monopolistic competition?A) small share of market to each firm B) lack of collusion among firmsC) few firms in the industry D) independence of each firmʹs decisions
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 quantity for this monopolist?A) 14 B) 19 C) 25 D) 30
Q:
When a perfectly competitive firm experiences positive 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:
The rate of production that maximizes the positive difference between total revenues and total costs is theA) profit-maximizing rate of production.B) rate of production at which marginal revenue equals marginal product.C) rate of production at which marginal revenue equals average revenue. D) rate of production at which average revenue equals average total cost.
Q:
Total OutputTotal Costs0$101182213234245266297338389441051In the above table, the marginal cost of the fourth unit isA) $1.00. B) $2.00. C) $6.00. D) $24.00.
Q:
Inside information
A) applies to proprietorships only.
B) applies to proprietorships and partnerships only.
C) applies to corporations only.
D) applies to all forms of business.
Q:
All of the following are characteristics of a proprietorship EXCEPT A) the business is owned by one individual.B) one person is responsible for all the debts of the firm. C) one person gets all of the profits.D) the firm can form a corporation to protect itself against the debts.
Q:
The change in the consumption of one good that just offsets a one -unit change in the consumption of another good is theA) marginal utility. B) marginal rate of consumption. C) marginal rate of substitution. D) marginal rate of satisfaction.
Q:
Typically, an individual takes only one newspaper from the bin becauseA) of the low marginal utility of additional newspapers.B) total utility will rise with consumption of more than one newspaper.C) marginal utility increases with the first consumption of newspapers. D) there are limited amounts of newspapers in the bin.
Q:
If the cross price elasticity of demand between two goods is negative, then the two goods areA) substitutes. B) complements. C) unrelated. D) independent.
Q:
When price is $5 per unit, quantity demanded is 12 units. When price is $6 per unit, quantity demanded is 8 units. The value of the absolute price elasticity of demand is approximatelyA) 2.20. B) 4.00. C) 1.82. D) 0.36.
Q:
Why is the optimal quantity of pollution not less than the point at which the marginal benefit equals the marginal cost?A) The point of intersection occurs at a low level of pollution. B) There are no external costs below that level.C) Below that point firms will have to reduce the quantity that they are currently producing and lower the price.D) Below that point the value that people place on less pollution is less than the cost of reducing the pollution.
Q:
Which income maintenance program was started to support the nationʹs farmers?A) Supplemental Security Income B) Food StampsC) Earned Income Tax Credit Program D) AFDC
Q:
A bilateral monopoly meansA) that a monopsonistic employer bargains with two unions.B) that a monopsonistic employer bargains with both an industrial and a craft union. C) that a monopsonistic employer bargains with a monopoly.D) that an industrial union bargains with a two -firm oligopoly.
Q:
The president of the United States can obtain a court injunction that will stop a strike for an80-day ʺcooling-offʺperiod if the strike is expected to imperil national safety or health. This power is granted in theA) Wagner Act. B) Landrum-Griffin Act. C) National Industrial Recovery Act. D) Taft-Hartley Act.
Q:
If laborers become more efficient over time, and if the Ajax Company would want to expand production, they wouldA) substitute capital for labor. B) hire more laborers.C) hire fewer laborers. D) produce less product.
Q:
When a regulator is concerned about pleasing different groups in order to keep employed, this is known as theA) share-the-gains, share-the-pains theory. B) regulatory hypothesis.C) capture hypothesis. D) creative theory.
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 calledA) the prisonersʹ dilemma. B) Tweedle Dee-Tweedle Dum. C) Pure Coordination Game. D) Tit-for-Tat.
Q:
Which of the following is most likely to be sold in an oligopoly market?A) Pizza B) Cell phone serviceC) Electricity D) Computer software
Q:
Considering the relevant market structures, which is an INCORRECT statement?A) In a perfectly competitive situation, there is an extremely large number of firms. B) In pure monopoly, there is only one firm.C) In monopolistic competition, there is a large number of firms.D) In any market situation, the number of firms is not very important.
Q:
A monopolist maximizes profits by findingA) the rate of output where marginal revenue equals marginal cost. B) the rate of output where price equals marginal cost.C) the price where price exceeds marginal revenue by that largest amount. D) the price where average revenue and marginal cost are equal.
Q:
A perfectly competitive firm will not earn an economic profit in the long run, because
A) it is a ʺprice-maker.ʺ
B) it faces a perfectly inelastic demand curve.
C) there are no barriers to entry into the industry.
D) it produces differentiated products.
Q:
The vertical distance between the horizontal axis and any point on a perfect competitorʹs demand curve measuresA) total cost.B) total revenues.C) product price, marginal revenue, and average revenue.D) supply curve for the product.
Q:
Total OutputTotal Costs0$101182213234245266297338389441051In the above table, the marginal cost of the ninth unit isA) $4.00. B) $5.00. C) $6.00. D) $7.00.
Q:
Information that is not available to the general public about what is happening in a corporation isA) opportunity benefit. B) limited liability.C) economic rent. D) inside information.
Q:
Proprietorships areA) the most common form of business organization in the country. B) responsible for most of the profits in the country.C) generally large relative to other business organizations. D) easy to form but difficult to dissolve.
Q:
Along an indifference curve, as the consumer reduces the quantity of Good A in favor of moreGood B the marginal rate of substitution of Good A for Good B willA) fall. B) rise.C) stay the same. D) fall and eventually turn negative.
Q:
The law of diminishing marginal utility implies that the marginal utility for a particular productA) remains constant, regardless of how much of the product is consumed.B) remains constant as long as the product is still considered useful. C) decreases as more of the product is consumed.D) increases as more of the product is consumed.
Q:
Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand isA) zero. B) positive.C) negative. D) either positive or negative.
Q:
If the price of good A increases from $15 to $20 per unit and quantity demanded falls from 1500 to 1000 units, then by using the method of average values, we can calculate the absolute price elasticity of demand to beA) 2.6. B) 0.75. C) 1.4. D) 2.4.
Q:
Which of the following statements is true about the optimal quantity of pollution?
A) It equals zero.
B) Pollution abatement should continue up to the point where marginal cost equals the average total cost.
C) Trade-offs exist between producing a cleaner environment and producing other goods and services.
D) Firms should be allowed to determine the profit -maximizing amount of pollution abatement.
Q:
The government program that provides aid to families in need is
A) TANF.
B) Social Security program.
C) Supplemental Security Income program.
D) Earned Income Tax Credit.
Q:
Which of the following is FALSE regarding bilateral monopoly?A) Bilateral monopoly is a market structure consisting of a monopolist and a monopsonist.B) Bilateral monopoly is defined as a market structure in which a single buyer faces a single seller.C) An example of bilateral monopoly is a state education employer facing a single teachersʹ union in the labor market.D) The price outcome is easily determined.
Q:
A union is striking a steel company, and then, to put more pressure on the steel company, also promotes a boycott against an auto company that buys steel from the steel company. This latter action isA) a sympathy strike, and is illegal under the Taft -Hartley Act.B) a secondary boycott, and is legal under the Landrum -Griffin Act. C) a secondary boycott, and is illegal under the Taft -Hartley Act.D) a sympathy strike, and is legal under the Wagner Act.
Q:
If workers in an industry become less productive, we would expect theA) supply of workers to increase. B) supply of workers to decrease.C) demand for workers to decrease. D) demand for workers to increase.
Q:
When the fox is guarding the henhouse, that is an example of theA) share-the-gains, share-the-pains theory. B) regulatory hypothesis.C) capture hypothesis.D) creative theory.
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) Battle of the Sexes. B) the prisonersʹ dilemma.C) Tit-for-Tat. D) Tweedle Dee-Tweedle Dum.
Q:
Which one of the following industries could be classified as an oligopoly?A) Tobacco production B) RetailingC) Farming D) Fast food restaurants
Q:
Which of the following is NOT a feature of monopolistic competition?
A) significant numbers of sellers in a highly competitive market
B) differentiated products
C) sales promotion and advertising
D) inability of firms to enter or exit the market
Q:
A firm that must determine the price-output combination that maximizes profit because it faces a downward-sloped demand curveA) has a perfectly elastic demand curve. B) has a perfectly inelastic demand curve. C) is a price-taker. D) is a price searcher.
Q:
A constant-cost industry will have
A) a perfectly elastic long-run supply curve.
B) a perfectly inelastic long-run supply curve.
C) an upward sloping demand curve in the long run.
D) an upward sloping supply curve in the long run.
Q:
The goal of the perfectly competitive firm is toA) maximize total revenue. B) maximize total profits.C) minimize AFC. D) minimize ATC.
Q:
Total OutputTotal Costs0$101182213234245266297338389441051In the above table, when output is 8 units, average total costs areA) $4.75. B) $3.50. C) $38. D) $28.
Q:
Which of the following is a TRUE statement about stock markets?A) Economists can make above-average profits in the stock market because of their specialized knowledge of economics.B) It is always better to buy growth stocks than the older and more stable blue -chip stocks.C) The stock market on average over time is random and totally unrelated to the performance of the economy.D) It is illegal for a friend of a corporate executive to make large profits in the stock market by using his inside information.
Q:
An accountant shows an invoice for a resource to the manager of the firm. They are discussingA) explicit costs. B) implicit costs.C) economic profits.D) either explicit costs or implicit costs, but we canʹt tell without more information.
Q:
CombinationGood AGood BA174B135C106D87Refer to the above table. The table gives the various combinations of Good A and Good B along Janeʹs indifference curve. The marginal rate of substitution when Jane goes from combination C to combination D isA) 4:1. B) 3:1.C) 2:1. D) 0.
Q:
If someone complains that she doesnʹt feel very well because she ate too much pizza, we would conclude that the marginal utility of the last piece of pizza eaten wasA) positive. B) zero. C) very large. D) negative.
Q:
Suppose that the cross price elasticity of demand between bagels and cream cheese is -1.45. This indicates that the two goods are
A) substitutes.
B) complements.
C) both inferior.
D) completely unrelated in the minds of consumers.
Q:
Suppose that the price of eggs increases from 75 cents to $1.00 per dozen and as a result a typical farmer experiences a decrease in egg sales from 300 to 200 dozen per week. Using the method of average values, the absolute price elasticity of demand isA) 1.4. B) 0.8. C) 3.0. D) 1.75.
Q:
The optimal amount of air pollution isA) found by equating the marginal benefits from reducing pollution by one more unit with the marginal costs of reducing pollution by an additional unit.B) found by equating the total benefits from reducing pollution by one more unit with the total costs of reducing pollution by an additional unit.C) found by setting the marginal benefits from reducing pollution by one more unit equal to zero.D) a meaningless concept since we cannot monetize the environment.
Q:
Which program provides assistance to the aged, blind and disabled?A) Social Security ProgramB) Supplemental Security Income programC) TANF D) Earned Income Tax Credit
Q:
If a single supplier of labor, such as a union, were supplying labor to a single monopsonistic employer, this is referred to as a(n)A) bilateral monopoly. B) trilateral monopoly. C) total monopsony. D) collective monopoly.
Q:
A right-to-work state is one in whichA) unions are illegal.B) there is guaranteed employment for all citizens. C) the union shop is prohibited.D) the closed shop is permitted.
Q:
If the demand for online banking increases, we would expect to see theA) supply of workers that produce online-banking services to increase. B) supply of workers that produce online-banking services to decrease.C) demand for workers that produce online -banking services to decrease. D) demand for workers that produce online -banking services to increase.
Q:
The theory that regulatorsʹ behavior will eventually be compromised by the special interests they regulate is known as theA) capitulation hypothesis. B) creative hypothesis. C) captive hypothesis. D) capture hypothesis.
Q:
Which of the following is NOT a characteristic of oligopoly firms?
A) Strategic dependence
B) Product differentiation
C) Non-price competition, such as advertising and promotions
D) Perfectly elastic demand curves
Q:
In the 1920s and 1930s, economists became increasingly aware that there were industries that did not fit the model of perfect competition or pure monopoly. Two separate theories of monopolistic competition resulted. Edward Chamberlin of Harvard published the Theory of Monopolistic Competition in 1933. Chamberlin defined monopolistic competition asA) a relatively large number of producers offering similar but differentiated products. B) a relatively small number of producers offering similar but differentiated products. C) a market situation in which a large number of firms produce identical products.D) a market situation in which a small number of firms produce similar products.
Q:
The monopolist is aA) price taker who tries to find the profit-maximizing rate of output. B) price taker who tries to find the profit-maximizing price.C) price searcher who tries to find the profit-maximizing price-output combination. D) price searcher who tries to find the rate of output that maximizes price.
Q:
If an industryʹs long-run supply curve slopes downward, then the industry isA) a fixed-cost industry. B) a constant-cost industry.C) an increasing-cost industry. D) a decreasing-cost industry.
Q:
The perfectly competitive firmʹs total revenue curveA) is linear and upward sloping. B) has a constant slope. C) has a positive slope. D) all of the above
Q:
Total OutputTotal Costs0$101182213234245266297338389441051In the above table, when output is 8 units, average variable costs areA) $4.75. B) $3.50. C) $1.25. D) $4.50.
Q:
The theory that there is no predictable trends in securities prices is theA) opportunity cost of capital. B) random walk theory. C) capital reinvestment. D) present value.
Q:
Mary and Jane are partners in a business. Their business is growing but has not yet reached the point where they can afford a new delivery truck. Jane owns an old truck that she has not been using. She decides to donate it to their business for free.
A) This transaction (donation) involves no economic cost.
B) This transaction involves both economic cost and accounting cost.
C) This transaction involves economic cost but no accounting cost.
D) This transaction involves no economic cost and no accounting cost.
Q:
CombinationGood AGood BA174B135C106D87Refer to the above table. The table gives the various combinations of Good A and Good B along Janeʹs indifference curve. The marginal rate of substitution when Jane goes from combination B to combination C isA) 4:1. B) 3:1. C) 2:1. D) 0.
Q:
If a person claims, ʺI wouldnʹt eat liver if you paid me,ʺ we can assume that his marginal utility of liver isA) positive. B) positive, but decreasing. C) zero. D) negative.
Q:
If the cross price elasticity of demand between Los Angeles Lakers professional basketball tickets and Los Angeles Dodgers professional baseball tickets is positive, then the two goods areA) substitutes. B) unrelated. C) complements. D) not related.
Q:
The quantity of raspberries sold at a local store increases from 100 pints to 1,500 pints when the price is reduced from $4.00 to $1.00. In this situation, the absolute price elasticity of demand for raspberries is approximatelyA) 0.69.B) 6.7. C) 1.46.D) 4.3.
Q:
The marginal cost curve of pollution abatementA) slopes upward because of the law of diminishing product. B) slopes upward because firms will maximize profits.C) slopes downward because of the law of diminishing marginal utility. D) slopes downward because of the law of diminishing returns.
Q:
The income transfers that a person receives from Social SecurityA) is not related to the amount that they have contributed. B) is a yearly proportion of the amount contributed.C) is the same for everyone whether they contributed to the system or not. D) depends entirely on the amount received from private pensions.