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Economic
Q:
Monopolies misallocate resources becauseA) price does not equal marginal cost.B) price does not equal average variable cost.C) marginal cost does not equal average total cost. D) profits are usually positive.
Q:
If a firm sells 10 units of output at $100 per unit and 11 units of output when price is reduced to $99, its marginal revenue for the last unit sold isA) $11. B) $99. C) $109. D) $89.
Q:
The break-even price for a perfectly competitive firm is the price that is equal toA) AVC. B) ATC. C) MC. D) MR
Q:
When there are large numbers of buyers and sellers, then
A) the products sold must look identical.
B) firms will move labor and capital in pursuit of profit-making opportunities to whatever business venture gives them the highest return on their investment.
C) no one buyer or seller has any influence on price.
D) consumers are able to find out about lower prices charged by other firms.
Q:
Quantity of WorkersTotal ProductAverage Physical ProductMarginal Physical Product00 13 27 312 416 518 618 In the above table, the law of diminishing marginal product sets in after the worker.A) first B) sixth C) third D) fourth
Q:
The present value of $100 to be received one year from nowA) is $100.B) is $110. C) is $90.D) cannot be determined without knowing the interest rate.
Q:
Which of the following participants in the working of a firm are referred to as residual claimants?A) Workers B) ManagersC) Entrepreneurs D) All of the above
Q:
A consumer has been buying 5 magazines and 2 books a month for many months. The price of books then increases. To attain a new optimum, the consumer willA) buy more magazines because they are now relatively more valuable than they were before, while continuing to buy the same number of books.B) buy more books because they are now relatively more valuable than they were before. C) buy the same number of books and magazines as before because they provide different types of utility.D) buy fewer books than before because they are relatively more expensive than they were before.
Q:
When the total utility from consuming one good is maximized, marginal utility isA) maximized. B) minimized. C) zero. D) positive.
Q:
If demand is unit-elastic throughout the demand curve, then total revenues areA) greater the higher the price.B) lower the higher the price.C) maximized at the midpoint of the demand curve.D) the same for any price the firm charges.
Q:
Which of the following is the main reason for externalities?A) The full cost of a transaction is not borne by the buyer/seller of the product.B) Police enforcement of scalping is not uniformly enforced. C) the lack of organized exchanges for all goods and services D) The production of public goods uses up scarce resources.
Q:
Economic discrimination against minorities exists when
A) minorities have less education and training than whites.
B) minorities are paid less than whites on average.
C) minorities are paid less than whites with the same education, experience, and training.
D) minorities are in different occupations than whites.
Q:
Which is NOT one of the potential benefits of labor unions?A) Unionism raises social efficiency.B) Unions appear to reduce wage inequality. C) Unions may reduce a companyʹs profits.D) Unions may have contributed to safer working conditions.
Q:
A rule of thumb in the employment of resources is to setA) marginal revenue product (MRP) equal to marginal factor cost (MFC). B) marginal revenue (MR) equal to marginal cost (MC).C) marginal physical product equal to marginal resource cost. D) none of the above
Q:
Refer to the above table. If the price of the good produced is $8, the marginal revenue product of the 12th worker isA) $720 B) $800 C) $5520 D) $560
Q:
Using the figure as a guide, which of the following is FALSE with respect to profit maximization and the monopolist?A) A monopolist (like any other firm) will select an output rate at which marginal revenue is equal to marginal cost, at the intersection of the marginal revenue curve and the marginal cost curve.B) The monopolist will produce quantity Qm and charge a price of Pm.C) When compared to a competitive situation, consumers pay a higher price to the monopolist, and consequently are forced to purchase more of a product as price varies directly with quantity demanded.D) Profits are the positive difference between total revenues and total costs.
Q:
A game in which any gains one player makes are offset by equal losses by another player is known as aA) zero-sum game. B) positive-sum game. C) negative-sum game. D) cooperative game.
Q:
Judy has just looked through her favorite catalog that came in the mail and has placed an order.The catalog is an example ofA) mass marketing. B) direct marketing.C) indirect marketing. D) interactive marketing.
Q:
Monopolies are inefficient becauseA) they price discriminate.B) they want to maximize profits.C) they always make above -normal profits. D) price exceeds marginal cost.
Q:
For a monopolist, the marginal revenue gained when one more unit of output is sold isA) the price at which the extra unit is sold minus the loss in revenue that results from cuttingthe price on units sold previously. B) equal to the price of the product.C) negative if price is above the midpoint of the demand curve. D) the average revenue created by the increased sales.
Q:
A firmʹs total explicit costs are $1,000. Its total implicit costs are $500, and it has a total revenue of $900. This firm receivesA) an accounting profit only. B) an economic profit only.C) both an economic profit and an accounting profit.D) neither an economic profit nor an accounting profit.
Q:
All of the following are characteristics of a perfectly competitive industry EXCEPT A) the product sold is homogeneous.B) firms in the industry are price takers.C) buyers and sellers have equal access to information.D) there are a large number of buyers and sellers with only a few being able to influence the market price.
Q:
Suppose the total output curve increases at an increasing rate for workers 1 -50, increases at a decreasing rate from workers 51 -101, and decreases beyond 101 workers. We would know thatA) marginal product is increasing from workers 1-50 and then becomes negative after worker 51.B) marginal product is increasing from workers 1-50, decreasing after 51 workers, and becomes negative after the 101st worker.C) marginal product is decreasing from workers 1 -101, becoming negative at the 102nd worker.D) marginal product is increasing from workers 1-50, constant from workers 51 to 101, and is decreasing after that.
Q:
What is the present value of $100 three years from now at an interest rate of 6%?A) $83.96 B) $82 C) $94.34 D) $119.10
Q:
Accounting profit can be calculated asA) total revenue - explicit costs. B) total revenue - implicit costs.C) total revenue - explicit costs - implicit costs. D) total revenue - fixed costs.
Q:
Initially, a consumer is at an optimum. Then the price of X increases. Consequently, A) MUX/PX < MUY/PY. B) MUX/PX > MUY/PY.C) MUX/PX = MUY/PY. D) MUX > MUY. Answer: A
Q:
Quantityper WeekTotal UtilityMichelleRobertDavidLauren000001501000606029919001201303147270018022041943400240310524040003004256285450036057573294900420900837252004801275941454005401770According to the above table, what is Davidʹs marginal utility of the 7th unit?A) 420 B) 400 C) 120 D) 60
Q:
Total revenues reach a maximum whenA) demand is elastic. B) demand is inelastic.C) demand is unit-elastic. D) price elasticity is at a minimum.
Q:
All of the following are examples of goods for which external costs commonly exist EXCEPT A) cigarettes. B) automobiles.C) vaccinations. D) oil transportation.
Q:
Economic discrimination exists whenA) there is an unequal distribution of income in a country.B) both income and wealth are unequally distributed in a country. C) there is unequal access to education.D) workers with the same marginal revenue products are paid different wages.
Q:
We observe that union workers are earning more than similarly qualified nonunion workers. From this we can conclude thatA) unemployment of union workers must have increased.B) unemployment of nonunion workers must have increased.C) productivity of union workers must be greater than the productivity of nonunion workers.D) Any of the above are possible and we cannot tell which without having more information.
Q:
A profit maximizing monopolist will hire labor up to the point whereA) marginal revenue product equals the price of the product.B) marginal revenue product is greater than the wage rate. C) marginal revenue product equals than the wage rate.D) marginal revenue product is less than the wage rate.
Q:
Refer to the above table. What does the marginal physical product equal when the amount of labor goes from 11 to 12 units?A) 600 B) 90 C) 100 D) 690
Q:
Regulation of a natural monopoly that forces it to price and produce as if it were a competitive firm results inA) the market being instantly competitive. B) higher profits for the monopoly. C) economic losses for the monopoly. D) a highly unstable marketplace.
Q:
When Goodyear increases its production when Michelin reduces its production, Goodyear is playing aA) negative-sum game. B) cooperative game.C) non-cooperative game. D) reaction function game.
Q:
Jim has just researched and purchased a computer through the Internet as a result of responding directly to a pop-up ad. The pop-up ad is an example ofA) mass marketing. B) direct marketing.C) indirect marketing. D) interactive marketing.
Q:
Which of the following statements is true about the price that a monopolist charges?A) The price is the same as the price that would be charged if there was perfect competition. B) The difference between the price charged by a monopolist and a perfect competitor is due to differences in costs.C) The value that society places on the last unit produced in a monopoly is greater than its cost.D) Too much of the good is being produced in a competitive market and not enough is being produced in a monopoly. Due to the way that prices are set.
Q:
A monopolistʹs marginal revenue curve isA) the same as a perfectly competitive firmʹs marginal revenue curve.B) higher than the monopolistʹs demand curve. C) below the firmʹs demand curve.D) a horizontal line at the market price.
Q:
A firmʹs total explicit costs are $1,000. Its total implicit costs are $500, and it has a total revenue of $1500. This firm receivesA) an accounting profit only. B) an economic profit only.C) both an economic profit and an accounting profit.D) neither an economic profit nor an accounting profit.
Q:
In a perfectly competitive market, which of the following is the main factor that affects consumersʹ decisions on which firm to purchase a good from?A) Quality B) Customer serviceC) Reputation D) Price
Q:
Total product will start to decreaseA) at the quantity where the law of diminishing returns starts.B) when average physical product decreases. C) when marginal physical product increases.D) when marginal physical product becomes negative.
Q:
What is the present value of $100 three years from now at an interest rate of 5%?A) $85 B) $115.76 C) $90.70 D) $86.38
Q:
Economic profit can be calculated asA) total revenue - explicit costs. B) total revenue - implicit costs.C) total revenue - explicit costs - implicit costs.D) total revenue - fixed costs.
Q:
Initially, a consumer is at an optimum. Then the price of X decreases. Consequently, A) MUX/PX < MUY/PY. B) MUX/PX > MUY/PY.C) MUX/PX = MUY/PY. D) MUX > MUY.
Q:
Quantityper WeekTotal UtilityMichelleRobertDavidLauren000001501000606029919001201303147270018022041943400240310524040003004256285450036057573294900420900837252004801275941454005401770According to the above table, what is Robertʹs marginal utility of the 5th unit?A) 60 B) 4500 C) 600 D) 500
Q:
If the bus fare of a city increases from $1.00 to $1.25 per ride and as a result total revenue increases, then we know thatA) percentage change in fare is less than percentage change in number of rides.B) percentage change in fare is greater than percentage change in number of rides. C) percentage change in fare is equal to the percentage change in number of rides. D) it is impossible to tell.
Q:
A large farm uses fertilizer that nearby landowners complain may contaminate their water. Tests are conducted and contaminants are found. The costs resulting from this decision are referred to asA) implicit costs. B) factor costs.C) external costs. D) opportunity costs.
Q:
Inheritance is responsible for about percent of the income inequality in the United States.A) 10 B) 25 C) 40 D) 60
Q:
How can restricting entry into a union help boost membersʹ wages without the union specifically setting wages?
Q:
A monopolist will hire an additional unit of labor as long asA) the additional cost of the worker is outweighed by the additional revenues made from selling the output of theses workers.B) the marginal revenue curve is above the demand curve.C) the marginal revenue product is larger than the marginal factor cost. D) the marginal revenue product is less than the marginal factor cost.
Q:
Refer to the above table. If the price of the good produced is $7, the marginal revenue product of the 11th worker isA) $700 B) $4200 C) $630 D) $3500
Q:
The following table depicts the cost and demand structure a natural monopoly faces. Provided that the firm operates as a monopolist, what is the price charged and quantity produced in order to maximize profits? Quantity
Price ($)
Total Revenue
Marginal Revenue
Total Cost
Marginal Cost 0
1,000
0
0
0
0 1
900
900
900
800
800 2
800
1,600
700
1,400
600 3
700
2,100
500
1,900
500 4
600
2,400
300
2,400
500 5
500
2,500
100
2,800
400 6
400
2,400
100
3,200
400 A) price charged of $900 and quantity produced of 1
B) price charged of $800 and quantity produced of 2
C) price charged of $700 and quantity produced of 3
D) price charged of $600 and quantity produced of 4
Q:
When OPEC meets to set production levels, this organization is playing aA) negative sum game. B) cooperative game.C) non-cooperative game.D) reaction function game.
Q:
All of the following are advertisement methods EXCEPTA) direct marketing. B) mass marketing.C) indirect marketing. D) interactive marketing.
Q:
Refer to the above figure. Which of the following statements is true?A) Under perfect competition, the efficient price is charged, which is the lowest price possible (P1) while under monopoly output is too large (Q4) and price is too high (P4).B) Under perfect competition price equals marginal cost (P3) while under monopoly price (P4) is greater than marginal cost (P1).C) The rate of output is the same under both monopoly and perfect competition ( Q1), but price is higher under monopoly (P4 rather than P1).D) Price equals marginal cost under both monopoly and perfect competition, but output is too low under monopoly (Q1 instead of Q2).
Q:
To sell more units, a monopolistA) simply moves across its horizontal demand curve to a larger quantity.B) moves down its demand curve to a lower price that will increase quantity demand.C) can continue to receive the same price it always has as long as it has its customersʹ goodwill.D) must be willing to lower the barriers to entry that have protected it.
Q:
A firmʹs total explicit costs are $1,000. Its total implicit costs are $500, and it has a total revenue of $2000. This firm receivesA) an accounting profit only. B) an economic profit only.C) both an economic profit and an accounting profit.D) neither an economic profit nor an accounting profit.
Q:
When considering perfect competition the absence of entry barriers implies thatA) no firm can enter the industry.B) firms can enter but cannot get out of the industry easily. C) all firms will earn economic profit.D) firms can enter and leave the industry without serious impediments.
Q:
If marginal product is zero, we know thatA) total product is also zero. B) average product is also zero.C) total output is maximized. D) average product is constant.
Q:
What is the present value of $100 two years from now at an interest rate of 6%?A) $6 B) $89 C) $94.34 D) $106
Q:
Which of the following is the most common form of business organization in the United States?A) ProprietorshipB) Partnership C) Corporation D) S-corporation
Q:
A higher price for a good implies thatA) the marginal utility of the good has declined.B) the total value of the good to the consumer has increased. C) the sacrifice of utility of another good has increased.D) the marginal utility of another good has decreased.
Q:
Quantityper WeekTotal UtilityMichelleRobertDavidLauren000001501000606029919001201303147270018022041943400240310524040003004256285450036057573294900420900837252004801275941454005401770According to the above table, what is Michelleʹs marginal utility of the 8th unit?A) 372 B) 43 C) 42 D) 44
Q:
If total revenues rise when the market price increases, then we know thatA) demand is inelastic. B) demand is elastic.C) demand is unit-elastic. D) its demand has zero elasticity.
Q:
A good that has external benefits associated with its production will be A) produced at the optimal level. B) underproduced. C) overproduced. D) not produced.
Q:
When measuring the benefits from investing in human capitalA) the only benefits come from the increase in salary because of going to school.B) in addition to the monetary benefits, the benefit from expanding horizons should be included.C) we must include the costs of tuition and books but not the money made from part -time jobs.D) we must include the foregone earnings in the benefit calculation.
Q:
Why might a union find that attaining the goal of employing all its members and the goal of maximizing total union wage receipts to be incompatible objectives?
Q:
Compared to the perfectly competitive firm , the monopolistʹs input demand curve isA) more elastic.B) more inelastic.C) due to a constant per-unit price of the product. D) marginal factor cost.
Q:
Refer to the above table. What does the marginal physical product equal when the amount of labor goes from 10 to 11 units?A) 600 B) 500 C) 100 D) 54.5
Q:
When a regulator allows a monopolist to set its price equal to long -run average cost, the regulator is practicingA) marginal cost pricing. B) operating cost pricing. C) average cost pricing. D) optimal cost pricing.
Q:
The way in which an oligopolist acts in response to a price change by a competitor is known as aA) zero-sum game. B) positive-sum game. C) reaction function. D) cooperative game.
Q:
The advertisement approach that allows a consumer to follow up directly to an advertising message is known asA) direct marketing. B) mass marketing.C) indirect marketing. D) interactive marketing.
Q:
Refer to the above figure. What is the socially optimal point of production?A) P1 and Q1. B) P4 and Q1. C) P1 and Q4. D) P3 and Q2.
Q:
To sell more units, a monopolist mustA) merely produce more units. B) advertise more.C) produce the profit maximizing rate of production. D) lower price.
Q:
Suppose a perfectly competitive firm can produce 20,000 bushels of corn a year at an output at which marginal cost equals marginal revenue. The market price of corn per bushel is $2.00. The firmʹs total costs per year are $50,000 and fixed costs per year are $25,000. In the short run, this firm should
A) shut down.
B) continue producing until the price of corn increases.
C) produce 20,000 bushels of corn because, although they are losing money, they are losing less than if they shut down.
D) produce 40,000 bushels to try to increase economic profit.
Q:
Which of the following is NOT a characteristic of perfect competition?
A) There are large numbers of buyers and sellers.
B) The firms in an industry produce goods that are different from each other.
C) Any firm can easily enter or leave the industry.
D) Both buyers and sellers have equally good information.
Q:
As long as marginal product of labor exceeds the average product of labor, then average product of laborA) must fall. B) must rise.C) will stay unchanged. D) will be at its maximum value.
Q:
What is the present value of $100 two years from now at an interest rate of 5%?A) $105 B) $95.24C) $90.70 D) $5
Q:
Which of the following is a disadvantage of the corporate form of business organization?A) Limited liability B) Limited financingC) Double taxation D) Unlimited liability
Q:
If a consumer is at an optimum, consuming X and Y, and the price of X decreases, then to get to a new equilibrium the consumer mustA) purchase less X. B) purchase less of both X and Y. C) purchase more X. D) purchase more of both X and Y.