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Economic
Q:
Which of the following is not a legal organization of a firm?A) Corporation B) PartnershipC) Entrepreneurship D) Proprietorship
Q:
Refer to the above figures. Which panel best represents an indifference curve?A) Panel A. B) Panel B. C) Panel C. D) Panel D.
Q:
Slices of PizzaTotal UtilityMarginal Utility150 290 3120 4130 5137 6120 In the above table, what is the marginal utility of the second slice of pizza consumed?A) 10 B) 90 C) 30 D) 40
Q:
Which of the following is more likely to have perfectly elastic or nearly perfectly elastic demand?
A) a textbook required for an economics course
B) the guitar produced by a master craftsman
C) milk produced by a Wisconsin dairy farmer
D) the services offered by the only allergist in the community
Q:
If the absolute price elasticity of demand for good Y is 0.75, when there is a 30 percent increase in price, we can conclude that quantity demandedA) has fallen by 35.0 percent. B) has fallen by 10.4 percent. C) has fallen by 22.5 percent. D) has fallen by 40.0 percent.
Q:
In economic analysis, the optimal level of pollution
A) is always zero.
B) arises at the point at which the marginal benefit from further reduction equals the marginal cost of further reduction.
C) occurs at the point at which demand crosses the private cost supply curve.
D) should be determined by the private market without any government intervention.
Q:
Under the Social Security program currently in existence, A) benefits are based on need.B) benefits are determined by whether or not one contributed to the system.C) benefits are provided to everyone who contributed to the system EXCEPT those under private retirement programs that provide an annual income in excess of $13,500.D) benefits are guaranteed to be no lower for future retirees than for current retirees.
Q:
Which of the following is FALSE regarding a monopsonist?A) The monopsonist is the only buyer in a market.B) The monopsonist faces an upward sloping labor supply curve.C) The monopsonist faces an upward sloping labor demand curve. D) The monopsonist faces the entire market labor supply curve.
Q:
If a firm is a union shop, thenA) a worker may elect to either join or not join the union.B) only workers who have been union members for two years may be employed. C) only union members may be employed by the firm.D) a non-union worker may be hired but must join the union within a certain time period.
Q:
Derived demand isA) a derivative of the demand curve.B) the demand for goods and services produced by companies using scarce resources.C) the demand for advertising to increase the sales of the product.D) the demand for the factors of production that are used to produce goods and services.
Q:
Refer to the above table. The table represents information on the costs for Ajax Corporation.Ajax operates in a perfectly competitive market and the price of the product is $7. What will be the value of total revenue when quantity sold equals 2?A) $7 B) $14 C) $21 D) $16
Q:
Use the above figure. The AFC at output level 20 isA) $10.00. B) $0.50. C) $3.00. D) $1.00.
Q:
Suppose a firm wanted to go out of business. The firm sells all its assets and pays off everything it owes to creditors. The stockholders would receive
A) nothing.
B) their annual dividend payment.
C) one half of the funds; the other half of the funds goes to bondholders.
D) the rest of the funds, after everyone who has a claim against the firm is paid.
Q:
The higher are a firmʹs risk-corrected returns, A) the lower are its labor costs.B) the higher are its opportunity costs.C) the more advantage it has in obtaining investor financing.D) the more difficulty it will have financing its expansion plans.
Q:
Assume that good X and good Y each have diminishing marginal utility for a consumer. In this case,A) an indifference curve linking the two goods will have a constant slope. B) an indifference curve will be convex to the origin.C) the demand curves for these goods will be positively sloped. D) the demand curves for these goods will be horizontal.
Q:
If marginal utility is zero,A) total utility increases at a decreasing rate.B) total utility increases at an increasing rate. C) total utility is at a maximum.D) people will not consume the good even if the price is zero.
Q:
If the absolute price elasticity of demand is equal to 1 in the short run, then in the long run, other things being equal, the absolute price elasticity of demand will beA) less than one. B) less than zero. C) greater than one. D) equal to zero.
Q:
Which of the following statements about demand and price elasticity of demand is TRUE?A) As the demand curve has a positive slope, the price elasticity of demand is positive.B) As the demand curve has a negative slope, the price elasticity of demand is negative. C) As the demand curve has a positive slope, the price elasticity of demand is negative. D) As the demand curve has a negative slope, the price elasticity of demand is positive.
Q:
The total benefits to society from pollution abatementA) increase at an increasing rate with the increase of pollution abatement. B) increase at a decreasing rate with the increase of pollution abatement. C) decrease at an increasing rate with the increase of pollution abatement. D) decrease at a decreasing rate with the increase of pollution abatement.
Q:
Which of the following statements about the Earned Income Tax Credit Program (EITC) program is FALSE?A) On net the EITC discourages work by low - or moderate- income earners more than it rewards work.B) It provides rebates of Social Security taxes to low -income workers.C) Recipients who receive benefit payments under Social Security are also eligible for SSI.D) It is the largest poverty reduction program in the U.S..
Q:
Monopsonistic exploitation isA) measured by the area above the supply curve but below the wage paid.B) the difference between the marginal revenue product of a worker and the wage received by the worker.C) measured by the height of the supply curve of labor. D) the cost to society from unions.
Q:
The United Steel Workers Union is an example ofA) a craft union. B) an auto union.C) an industrial union. D) a blue collar union.
Q:
The MRP isA) the supply curve of labor for an individual firm.B) the demand curve for labor for an individual firm.C) the demand curve for labor for the entire market. D) the supply curve of labor for the entire market.
Q:
Suppose technical change permits cable television companies to provide their services at lower rates. The share-the-gains, share-the-pains theory would predict that the regulators wouldA) permit the firms to keep the savings and would lower prices only if the firms were pressured to do so.B) force the firms to pass all the savings on to consumers in the form of lower prices. C) force the firms to pass the savings on to consumers in the form of better service.D) force the firms to pass some of the savings on to consumers and to permit the firms to keep some of the savings themselves.
Q:
Which of the following is NOT subject to a network effect?
A) the layout of the keys on your keyboard
B) rotating your tires every six months
C) using a fax machine
D) purchasing a new high-definition DVD player
Q:
The first unit of an information product is produced at a high fixed cost. Producing additional units entails relatively lowA) total costs. B) marginal and average variable cost. C) external cost. D) social cost.
Q:
Which of the following is NOT a feature of a monopolistically competitive market?A) numerous buyers and sellers B) differentiated productsC) advertising D) a homogeneous product
Q:
In the above figure, the total cost of producing the profit maximizing level of output is shown by rectangleA) 0P1AQ1.B) 0P5EQ5. C) 0P4HQ4. D) 0P2BQ1.
Q:
Which of the following would tell us that resources are not flowing to their highest valued uses?A) Short-run economic profits B) Short-run economic lossesC) Long-run economic profits D) Some firms are just breaking even.
Q:
Refer to the above table. The table represents information on the costs for Ajax Corporation.Ajax operates in a perfectly competitive market and the price of the product is $9. What will be the value of total revenue when quantity sold equals 3?A) $27 B) $21 C) $3 D) $9
Q:
Use the above figure. The TFC at output level 10 isA) $10. B) $3. C) $2. D) $1.
Q:
If you want to vote for the management of the corporation, you should buyA) common stock. B) preferred stock.C) bonds. D) either common stock or preferred stock.
Q:
The most commonly accepted objective for a firm isA) to stay in business at all cost. B) to maximize total revenue.C) to maximize economic profit. D) to minimize the variable cost outlay.
Q:
Indifference curvesA) are vertical. B) are horizontal.C) slope upward. D) slope downward.
Q:
Which of the following statements is not true about marginal utility when total utility is at its maximum point?A) Marginal utility is zero.B) Marginal utility is decreasing.C) A rational consumer will not consume additional units beyond this point.D) Marginal utility is undefined.
Q:
Other things being equal, the longer a price change persists, A) the less is the elasticity of demand.B) the less chance a consumer will be able to adjust. C) the more the consumer will be willing to pay.D) the greater is the elasticity of demand.
Q:
A goodʹs price elasticity of demand can be calculated by using the formula ofA) percentage change in price divided by percentage change in quantity demanded. B) percentage change in quantity demanded divided by percentage change in price. C) percentage change in price divided by percentage change in income.D) absolute change in quantity demanded divided by absolute change in price.
Q:
The marginal benefit from pollution abatement
A) increases as pollution abatement increases because people learn to want an even cleaner environment as the environment gets cleaner.
B) decreases as pollution abatement increases because of the law of diminishing marginal product.
C) is constant as pollution abatement increases because pollution abatement is valued for its own sake and not for the utility it provides.
D) decreases as pollution abatement increases because of the law of diminishing marginal utility.
Q:
Which of the following statements about the Supplemental Security Income (SSI) program is FALSE?A) It is designed to establish nationwide minimum incomes for the aged, the blind, and the disabledB) Benefits are based on need.C) Recipients who receive benefit payments under Social Security are also eligible for SSI. D) It covers children and individuals with mental disabilities, including drug addicts and alcoholics.
Q:
Refer to the above figure. The monopsonistic exploitation isA) W2-W5. B) W1-W5. C) W2-W4. D) W2-W3.
Q:
Which of the following types of unions did the CIO promote?A) Craft unions B) Public sector unionsC) Industrial unions D) Military unions
Q:
All of the following statements regarding the marginal revenue product (MRP) curve and the demand for labor are true EXCEPTA) an individual firmʹs demand for labor is its MRP curve.B) under conditions of perfect competition, MRP equals marginal physical product multiplied by the productʹs price.C) an increase in the market demand for a given product decreases the productʹs price. D) the demand for labor is a derived demand.
Q:
Suppose technical change makes it cheaper for cable television suppliers to supply their service.The capture theory would predict that the regulators wouldA) allow the firms to capture the savings and would lower price only if the firms asked them to.B) force the firms to pass the savings on to consumers in the form of lower prices.C) force the firms to pass the savings on to consumers in the form of better service.D) force the firms to pass some of the savings on to consumers and permit them to keep some of the savings for themselves.
Q:
Peopleʹs willingness to buy the PC or Mac format of computer software depends on how popular the software format is among other consumers. This is an example ofA) a cartel. B) an opportunity cost.C) a network effect. D) the prisonersʹ dilemma.
Q:
Which of the following statements is INCORRECT regarding the model for information products?A) Average total costs slope downward, because average variable cost is constant, average fixed cost slopes downward.B) The firm maximizes profit by setting the price of its product equal to marginal cost. C) Marginal cost equals average variable cost.D) In the long run, accounting profit is positive.
Q:
Firms in a monopolistically competitive market will advertise because
A) they want to differentiate their products.
B) they want to increase the elasticity of the demand curve.
C) of the significant differences in their product over their competitors.
D) the elasticity for their product is inelastic.
Q:
In the above figure, marginal cost and marginal revenue are equal at outputA) Q5. B) Q1. C) Q3. D) Q2.
Q:
Refer to the above figure. Which panel represents the long-run supply curve for a decreasing cost industry?A) Panel A. B) Panel B. C) Panel C. D) Panel D.
Q:
Refer to the above table. The table represents information on the costs for Ajax Corporation. Ajax operates in a perfectly competitive market and the price of the product is $9. What does total revenue equal when quantity equals 4?A) $4 B) $9 C) $30 D) $36
Q:
Which equation is used by a manager when considering total cost?A) total costs (TC) = consumption (C) + investment (I) + government (G) B) total costs (TC) = average fixed costs (AFC) + number of workersC) total costs (TC) = average total costs (ATC)D) total costs (TC) = total fixed costs (TFC) + total variable costs (TVC)
Q:
A legal claim entitling the owner of the claim to fixed annual payments and a lump -sum payment is called a(n)A) equity share. B) bond. C) stock. D) debit.
Q:
Economists assume that the goal of a firm is toA) maximize economic profits. B) sell as many units as possible.C) maximize gross revenues. D) be the largest firm in its industry.
Q:
Which of the following is NOT true about indifference curves?A) Indifference curves slope downward.B) Indifference curves show equally preferred combinations of two goods.C) Indifference curves are not straight lines because the marginal rate of substitution falls. D) Indifference curves shift when prices change.
Q:
Refer to the above figures. Amyʹs total utility for chocolate chip cookies reaches a maximum at 4 cookies. Which panel best represents marginal utility?A) Panel A B) Panel B C) Panel C D) Panel D
Q:
The absolute price elasticity of demand for a product that has many good substitutes is probablyA) less than 1. B) greater than 1. C) equal to 1. D) infinity.
Q:
The price elasticity of demand measuresA) the consumersʹ sensitivity to a price change. B) the producersʹ sensitivity to a price change.C) how much the market price changes in response to a change in demand. D) how much the demand changes in response to a change in income.
Q:
In general, we would expect the marginal cost of pollution abatement to beA) zero.B) decreasing. C) increasing. D) constant.
Q:
Which of the following statements about Social Security is FALSE?A) Social Security is an intergenerational transfer where the benefits paid are only roughly related to past earnings.B) Over 90 percent of all employed workers in the United States are covered by Social Security.C) Benefit payments under Social Security are based on the recipientʹs need.D) Benefit payments under Social Security redistribute income from young to old.
Q:
Refer to the above figure. The wage rate under perfect competition isA) W2. B) W3. C) W4. D) W5.
Q:
The United Auto Workers is an example ofA) a public-sector union. B) a craft union.C) an industrial union. D) a socialist union.
Q:
The additional output from one more worker is known asA) marginal revenue product. B) marginal physical product.C) marginal factor cost. D) marginal wage.
Q:
The ʺprimary motiveʺ of regulators, according to the share -the-gains, share-the-pains theory, is toA) maximize their income through accepting monetary payoffs from groups. B) ensure that every group gets what it wants.C) ensure that all customers share the benefits of regulation, and not just the wealthiest consumers.D) keep their jobs.
Q:
The idea that if enough consumers cut back on their use of a product it induces other consumers to do the same is referred to asA) positive market feedback. B) non-dynamic market feedback. C) negative market feedback. D) elicit market feedback.
Q:
Which of the following statements is INCORRECT regarding the properties of information products?A) Providing an information product entails incurring relatively high fixed costs.B) The average total cost curve for a firm that sells an information product slopes upward.C) The firm experiences economies of operation in the short run.D) In the long run, the producer earns sufficient revenue to cover the opportunity cost of capital.
Q:
A monopolistic competitor behaving in a profit -maximizing way willA) not advertise.B) advertise as much as it can in order to increase its sales.C) advertise to the point where the additional sales from advertising equal the additional marginal costs of the product.D) advertise to the point where the additional revenue from one more dollar of advertising just equals the extra dollar cost of advertising.
Q:
In the above figure, at the firmʹs profit maximizing output, total revenue is rectangleA) 0P1AQ1. B) 0P3FQ3. C) 0P5EQ5. D) 0P2BQ1.
Q:
Refer to the above figure. Which panel represents the long-run supply curve for an increasing cost industry?A) Panel A. B) Panel B. C) Panel C. D) Panel D.
Q:
Total revenue divided by quantity isA) average revenue. B) marginal revenue. C) quantity revenue D) price revenue.
Q:
Which of the following would be an example of a fixed cost to a firm?A) rent for the building it occupies B) wages for the laborersC) the cost of raw materials D) electricity and other fuel costs
Q:
A company raises funds by selling 5 million shares of common stock to 5,000 shareholders and $1 million bonds to 1,000 bondholders. The number of individuals who vote for the companyʹs board of directors isA) 6,000. B) 5,000. C) 1,000. D) 5,000,000.
Q:
A basic tenet of the theory of the firm is that the firmʹs primary objective is toA) stay out of debt.B) produce a given level of output at a specified cost. C) maximize economic profits.D) operate for the benefit of society.
Q:
If the marginal utility of each good is constant as consumption increases, the indifference curves areA) horizontal. B) vertical.C) straight lines. D) positively sloped.
Q:
Refer to the above figures. Which panel best represents marginal utility?A) Panel A. B) Panel B. C) Panel C. D) Panel D.
Q:
The absolute price elasticity of demand for a product for which annual expenditures make up a very small share of a typical consumerʹs budget is probablyA) less than 1. B) equal to 1. C) greater than 1. D) infinity.
Q:
Suppose that when the price of a soft drink rises 10%, the quantity demanded of the soft drink falls 5%. Based on this information, what is the approximate absolute price elasticity of demand for soft drink?A) 0.05 B) 0.2 C) 0.5 D) 2.0
Q:
In the process of reducing pollutants in our environment, we areA) achieving a cleaner environment at no real cost. B) causing higher levels of unemployment.C) reallocating resources in an inefficient manner.D) trading off less of other goods and services for a cleaner environment.
Q:
Which of the following statements is an accurate statement about the Social Security (OASDI) program?A) The program is financed by voluntary contributions. B) Only 50 percent of workers are covered by OASDI.C) Benefits are based on financial need.D) The program transfers income from those who work to those who do not work.
Q:
Refer to the above figure. Under monopsony, the wage rate will beA) W1. B) W2. C) W3. D) W5.
Q:
Which of the following is a correct statement about unions in the United States?A) The trend away from manufacturing and the deregulation of certain industries has promoted unionization of the U.S. workforce.B) Half of the top ten U.S. unions now have members who work in service and government occupations.C) Since the 1960s, there has been a gradual increase in the proportion of U.S. workers who are members of unions.D) Half of all U.S. workers are union members.
Q:
The additional revenue a firm obtains when it hires an additional worker (holding other inputs constant) is theA) marginal revenue product (MRP) of labor. B) total factor cost (TFC) per worker.C) general rule for hiring.D) marginal physical product (MPP) of labor.