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Economic
Q:
Quantityper WeekTotal UtilityMichelleRobertDavidLauren000001501000606029919001201303147270018022041943400240310524040003004256285450036057573294900420900837252004801275941454005401770According to the above table, what is Laurenʹs marginal utility of the 4th unit?A) 90 B) 220 C) 310 D) 115
Q:
If total revenues decline when the market clearing price increases, then we know thatA) demand is inelastic. B) demand is elastic.C) demand is unit-elastic. D) demand has zero elasticity.
Q:
An externality occurs whenever
A) private costs are the same as social costs.
B) private costs are the same as internal costs.
C) private costs diverge from social costs.
D) private costs plus internal costs equal social costs.
Q:
The main cost of a college education isA) tuition if one goes to a private college and room and board if one goes to a public college. B) dependent upon whether oneʹs parents pay for the college or not.C) the lack of practical experience from spending time in college. D) the opportunity cost of not working.
Q:
What can a union do in order to raise the wages of its members ?
Q:
The monopolistʹs input demand curve is theA) marginal revenue curve. B) marginal revenue product curve. C) marginal physical product curve. D) marginal factor cost.
Q:
The marginal physical product of labor for the most recent worker hired by Ajax is 286. If Ajax were to hire an additional worker we would expect the marginal physical product of labor toA) remain at 286. B) be below 286.C) be above 286 by a small amount. D) be above 286 by a large amount.
Q:
If a regulator forced a natural monopolist to set P = MC, A) the monopolist would earn economic profits.B) the monopolist would suffer economic losses. C) the monopolist would break even.D) the monopolist would earn monopolistic profits.
Q:
In game theory, behavior that results in cooperation as long as the other players continue to cooperate, is referred to asA) nice behavior. B) tit-for-tat strategic behavior. C) simple behavior. D) opportunistic behavior.
Q:
Advertisement in which firms aim messages to as many customers as possible via media is known asA) direct marketing. B) mass marketing.C) indirect marketing. D) interactive marketing.
Q:
Refer to the above figure. Suppose this industry was perfectly competitive and then merged into one monopolistic firm. The monopoly wouldA) raise price from P1 to P2.B) reduce output from Q3 to Q1.C) reduce output from Q2 to Q1 and raise price from P3 to P4. D) raise price from P1 to P4.
Q:
An important difference between a perfectly competitive firm and a monopolist isA) the size of the industry.B) the primary objective of the firms.C) a monopolist only produces in the long run, while a perfect competitor only produces in the short run.D) the price it charges to sell additional units of a good.
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 $1.00. The firmʹs total costs per year are $50,000 and fixed costs per year are $25,000. In the short run, this firm shouldA) 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:
A price taker is a firm thatA) seeks to maximize revenue rather than profit. B) cannot influence the market price.C) searches for the best price and then takes the highest profits possible. D) buys inputs for firms.
Q:
Quantity of LaborTotal ProductAverage ProductMarginal Product122222225226303812729410025195115231561262111Refer to the above table. At what quantity of labor does it become obvious that the law of diminishing marginal product has set in?A) worker number 3 B) worker number 4C) worker number 21 D) worker number 5
Q:
What is the present value of $100 one -year from now at an interest rate of 6%?A) $160 B) $106 C) $94.34 D) $6
Q:
A business which is owned by two or more people is called aA) proprietorship. B) partnership.C) corporation. D) none of the above.
Q:
If a consumer is at an optimum, consuming X and Y, and the price of X increases, then to get to a new equilibrium the consumer mustA) purchase less X. B) purchase less Y.C) purchase more X. D) purchase more of both X and Y.
Q:
The total utility from consuming 8 units of a good is 155. The marginal utility of the 8th unit is 7 and the marginal utility of the 7th unit is 11. The total utility from consuming 6 units of the good isA) 173. B) 144. C) 137. D) 130.
Q:
Over the inelastic range of a demand curve, there isA) a positive relationship between a given percentage change in price and a change in total revenues.B) a negative relationship between a given percentage change in price and a change in total revenues.C) an increase in total revenues regardless of an increase or decrease in price. D) no relationship between changes in price and changes in total revenues.
Q:
In the above figure, S1 represents the supply curve which includes private costs, and S2 is the supply curve which includes social costs. If the firm is producing a product that has external costs that the firm does have to pay, what will be the equilibrium price and quantity?A) P1, Q4 B) P2, Q3 C) P4, Q1 D) P3, Q2
Q:
The return on human capitalA) tends to be much greater than the return on physical capital.B) tends to be much lower than the return on physical capital. C) is similar to the return on physical capital.D) cannot be related to the return on physical capital since human capital and physical capital are so different.
Q:
A union can be viewed as a monopoly seller of a service. What are the three wage and employment strategies the union might use?
Q:
The demand curve for labor of a monopolistA) is horizontal even though the demand curve for labor for a competitive firm is downward sloping.B) slopes down for the same reason as the demand curve for labor of a perfectly competitive firm.C) slopes down because of the law of diminishing marginal product and because the monopolist must lower prices to sell additional units of the good.D) slopes upward because monopolists use more capital than do perfectly competitive firms.
Q:
As a firm hires more workers, holding capital and other factors constant, the marginal physical product of labor declines becauseA) there are diseconomies of scale.B) less efficient workers are hired as the number of workers increase.C) workers donʹt perform well in teams.D) the amount of other inputs each worker has to work with declines as the number of workers increases.
Q:
Which of the following is the BEST example of a natural monopoly?A) book publisher B) electric utilityC) tobacco products company D) airline
Q:
In game theory, actions such as cheating that focus solely on short -run gains are referred to asA) territorial behavior. B) tit-for-tat strategic behavior. C) predatory behavior. D) opportunistic behavior.
Q:
Interactive marketing isA) advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders.B) advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio. C) advertising targeted at specific consumers.D) advertising intended to reach as many consumers as possible.
Q:
Refer to the above figure. What price-output combination would apply under perfect competition?A) P4 and Q1 B) P3 and Q2 C) P2 and Q3 D) P1 and Q1
Q:
An important difference between a perfectly competitive firm and a monopolist isA) the size of the firms.B) the shape of the demand curve each faces. C) the goals of the owners of the firms.D) a monopolist normally produces a service, while a perfect competitor normally produces a good.
Q:
Suppose the price of an item in a perfectly competitive market is $3. For a firm in this market, MC = MR at an output of 100 units. The average total cost at this output level is $4 per unit, and TVC is $80. We may conclude thatA) the firm should shut down because TC > TR.B) the firm should continue to produce because P>AVC.C) the firm should shut down because its TFC is $320 and its TC is $400.D) the firm should shut down because other firms will enter the industry as the market is perfectly competitive.
Q:
Under perfect competition, a firm that sets its price slightly above the market price wouldA) make lower profits than the other firms, but the amount would depend on the elasticity of demand.B) make a normal rate of return, but on reduced revenues.C) lose all of its customers.D) earn higher profits as long as the other firms continued to charge the market price.
Q:
Quantity of LaborTotal ProductAverage ProductMarginal Product122222225226303812729410025195115231561262111Refer to the above table. At what quantity of labor is the average product of labor maximized?A) 1 unit. B) 2 units. C) 3 units. D) 6 units.
Q:
What is the present value of $100 one year from now at an interest rate of 5%?A) $5 B) $95.24 C) $100 D) $105
Q:
The fundamental goal of a firm or a business is toA) produce the largest number of output units possible.B) employ labor in the most socially responsible manner possible. C) organize the factors of production and take risks.D) earn the highest possible returns.
Q:
If a consumer is initially at an optimum, and then the price of Y increases, then A) MUX/PX < MUY/PY. B) MUX/PX > MUY/PY. C) MUX/PX = MUY/PY. D) MUX/MUY > PY/PX.
Q:
Quantity of MoviesTotal Utility MaryTotal Utility John31001904140250517030061903407200370821039092104051020041511190420Refer to the above table. What is the marginal utility for the 10th unit for Mary and for John?A) Mary: -10; John: 10 B) Mary: 10; John 10C) Mary: 220; John 450 D) Mary: 0; John: 0
Q:
In the above figure, along which range would total revenue remain unchanged by raising prices?A) Between point a and point b B) Between point c and point dC) Between point d and point e D) Below point e and above point a.
Q:
In the above figure, S1 represents the supply curve which includes private costs, and S2 is the supply curve which includes social costs. If the firm is producing a product that has external costs that the firm does NOT have to pay, what will be the equilibrium price and quantity?A) P1, Q4 B) P2, Q3 C) P4, Q1 D) P3, Q2
Q:
Which of the following sources of productivity is the most difficult to acquire?A) education B) experience C) talent D) training
Q:
What is the purpose of a strike? What are the costs to workers and to management?
Q:
If a monopolist has an output price of $10, marginal revenue equal to $4, and faces a fixed wage of $6, he or she should hire labor until the marginal revenue product is equal toA) $10. B) $4. C) $6. D) $2.
Q:
Other things held constant, after some point hiring additional units of labor will cause the marginal physical product of labor to decline becauseA) the firm is a price taker.B) the wage rate increases when additional workers are hired. C) of the law of diminishing marginal product.D) the supply of labor is perfectly elastic.
Q:
Natural monopoliesA) have one lowest-cost producer in an industry. B) are not regulated.C) have long-run average costs equal to zero. D) do not experience economies of scale.
Q:
The payoff matrix shows all of the following EXCEPTA) if both oligopolists choose a high price, each makes $6 million. B) if they both choose a low price, each makes $4 million.C) if one chooses a low price and the other doesnʹt, the low priced firm will make $8 million. D) if one oligopolist chooses a high price and the other doesnʹt, the high -priced firm makes $8 million.
Q:
Mass marketing is
A) advertising that permits a consumer to follow up directly by searching for more information and placing direct product orders.
B) advertising that targets a specific audience and allows the consumer to follow up directly by placing direct product orders usually through television or radio.
C) advertising targeted at specific consumers.
D) advertising intended to reach as many consumers as possible.
Q:
Which of the following is a TRUE statement about monopoly and perfect competition?A) Price is always higher and output higher under monopoly than under perfect competition.B) Because costs do not depend on market structure, price is usually higher and output is always lower under monopoly than perfect competition.C) If there are substantial economies of scale, price may be lower and output greater under monopoly than under perfect competition.D) If there are substantial economies of scale, price may be lower and output greater under monopoly than under perfect competition, and price may be below marginal cost instead of equal to marginal cost.
Q:
The demand curve a monopolist faces isA) horizontal. B) the industry demand curve. C) vertical. D) inelastic at all points.
Q:
If a firm shuts down in the short run,A) it will lose its operating costs. B) its losses will be equal to zero.C) it will incur its fixed costs. D) it will incur only its explicit costs.
Q:
A firm in a perfectly competitive industry is aA) price taker. B) quantity taker. C) quality maker. D) price maker.
Q:
Quantity of LaborTotal ProductAverage ProductMarginal Product122222225226303812729410025195115231561262111Refer to the above table. At what quantity of labor does the law of diminishing marginal product set in?A) After 1 unit. B) After 2 units. C) After 3 units. D) After 6 units.
Q:
The most that someone would pay today to receive a certain sum at some point in the future is known asA) the interest rate. B) present value.C) future value. D) economic profit.
Q:
ʺEconomic rent reflects a waste of resources.ʺ Do you agree or disagree? Explain.
Q:
If a consumer is initially at an optimum, and then the price of Y falls, thenA) MUX/PX < MUY/PY. B) MUX/PX > MUY/PY. C) MUX/PX = MUY/PY. D) MUX/MUY > PY/PX.
Q:
Quantity of MoviesTotal Utility MaryTotal Utility John31001904140250517030061903407200370821039092104051020041511190420According to the above table, Maryʹs marginal utility from watching the 4th movie isA) 140 units of utility. B) 40 units of utility.C) 60 units of utility. D) 30 units of utility.
Q:
In the above figure, along which range would total revenue rise by raising prices?A) Between point a and point b B) Between point c and point dC) Between point d and point e D) Above point a
Q:
A good that has external costs associated with its production will beA) produced at the optimal level. B) underproduced.C) overproduced. D) not produced.
Q:
Which of the following is not a determinant of an individualʹs marginal product?A) talent B) money incomeC) experience D) educational level
Q:
A union could raise wages without causing unemployment of union members if it can increase demand for union labor. How might this goal be achieved?
Q:
A firm wanting to maximize profits should operate in such a way thatA) the MRP of each input is equal to or greater than its MFC.B) MRP equal MFC in the input market but MC must exceed MR in the output market.C) marginal revenue must be equal to the marginal revenue product. D) none of the above
Q:
As a firm hires more workers, holding the amounts of capital and other inputs constant, A) output increases at a decreasing rate.B) output increases at a constant rate.C) output increases for a while and then decreases.D) output increases, but we canʹt be certain whether output increases at an increasing or a decreasing rate.
Q:
In the above figure, what will be the output level produced if average cost pricing is used?A) 1,200 B) 900C) 700 D) somewhere between 900 and 1,200
Q:
Decision makers in oligopolistic firms must devise a strategy. One that yields the highest benefit, regardless of what the other players do is aA) pricing strategy. B) coherent strategy. C) dominant strategy. D) revenue strategy.
Q:
When a firm relies on radio and TV ads to reach potential customers, the firm is engaging inA) direct marketing. B) mass marketing. C) interactive marketing. D) none of the above.
Q:
The conclusion that a monopoly results in lower output and higher prices than perfect competition relies on the assumption that
A) the demand curve for a monopoly is horizontal.
B) consumers are ignorant of the effects of monopoly.
C) the costs of production are the same whether the industry is perfectly competitive or a monopoly.
D) elasticity of demand varies along the market demand curve.
Q:
A monopolist faces a demand curve thatA) is perfectly horizontal at the market price.B) is below the marginal revenue curve. C) is downward sloping.D) coincides with the industry supply.
Q:
The short-run break-even price is
A) the price at which a firmʹs total revenues exceed total costs.
B) the point at which the firmʹs total costs are maximized.
C) the price at which a firmʹs total revenues equal its total costs.
D) the point at which the firmʹs implicit costs are maximized.
Q:
A market structure in which the decisions of individual buyers and sellers have no effect on market price isA) monopoly. B) monopolistic competition. C) perfect competition. D) oligopoly.
Q:
What happens at a firmʹs point of saturation?A) For the first time, hiring an additional worker decreases total product.B) Workers cannot take on any additional tasks without working overtime hours. C) The market for a firmʹs output has been saturated and sales fall to zero.D) The firmʹs total costs exceed its revenues.
Q:
The value of a future amount expressed in todayʹs dollars isA) the interest rate. B) present value.C) the discount rate. D) the inflation rate.
Q:
Consider an NBA superstar Kobe Bryant and one of your economics professors. Who is likely to receive more economic rent in his/her job? Explain your answer.
Q:
The price of a large pepperoni pizza used to be $14, but this week the price rose to $18. With a budget of just $30, you canʹt afford as many pizzas at the higher price. This change in consumer behavior reflects theA) real income effect. B) substitution effect.C) nominal income effect. D) concept of diminishing marginal utility.
Q:
Quantity of MoviesTotal Utility MaryTotal Utility John31001904140250517030061903407200370821039092104051020041511190420According to the above table, Johnʹs marginal utility from watching the 9th movie isA) 405 units of utility. B) 0 units of utility. C) 15 units of utility. D) 10 units of utility.
Q:
In the above figure, along which range would total revenue rise by lowering prices?A) Between point a and point b B) Between point c and point dC) Between point d and point e D) Below point e
Q:
When the private costs and the social costs are NOT the same, there is a(n)A) externality. B) internality. C) public good. D) monopoly.
Q:
In a competitive economy, workers will be paid according to theirA) status. B) age.C) marginal productivity. D) need.
Q:
Suppose a union negotiates for its members a wage that is above the market -clearing wage.
What problems does the union have to solve now? Explain.
Q:
If a firm sells its product in a monopolistic market, even though the firm operates in a perfectly competitive labor market, the firm will employ workers up to the point whereA) TR = TC.B) the MRP = the wage rate.C) the MRP = the marginal physical product of labor. D) the MRP = the output price.
Q:
The marginal physical product of labor is
A) the output of the firm divided by the number of workers.
B) the change in total revenues resulting from the addition of one more worker, while increasing one other factor of production.
C) the change in output resulting from the addition of one more worker, holding other factors of production constant.
D) the change in output resulting from the addition of one more worker, adjusting the level of the capital stock accordingly.
Q:
In the above figure, what would be the profit or loss at the marginal cost pricing point for this natural monopolist?A) -$300 B) $2,700 C) $2,100 D) -$1,200