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Economic
Q:
Let us suppose that if Oprah Winfrey was not a superstar she would have been a judge making $100,000 per year. If she makes $63 million dollars this year, her economic rent isA) $63.0 million. B) $63.1 million. C) $100,000. D) $62.9 million.
Q:
The substitution effect shows thatA) if the price of a good increases, consumers buy more of that good and less of all others.B) if the price of a good falls relative to all other goods, consumers buy less of that good and more of all others.C) if the price of a good falls, consumers buy less of all goods.D) if the price of a good rises, consumers buy less of that good and more of others.
Q:
Marginal utility can be thought of asA) the incremental change in a personʹs total satisfaction level from the buying of a good.B) the total change in satisfaction from buying a good. C) the additional cost of that next good purchased.D) the opportunity cost of buying the next good.
Q:
In the above figure, over the price range P5P6, demand isA) unit elastic. B) elastic.C) perfectly inelastic. D) inelastic.
Q:
When the total external and internal costs of a transaction are taken into consideration, this is known asA) public costs. B) average total costs. C) social costs. D) marginal costs.
Q:
Which of the following statements are correct about the age -earnings cycle?A) Earnings generally increase up till age 30 and then steadily decrease.B) Earnings increase throughout a prisonʹs lifetime until they reach retirement.C) Earnings increase with age because workers become more productive as they age until around 50 years. Around 50 the effects of aging outweighs the further increases in productivity.D) Since every person is different we can reach no general conclusions about the age-earnings cycle
Q:
To reduce labor surplus above the equilibrium union wage level, a union may do all of the following EXCEPTA) lengthen apprenticeship period. B) assign jobs based on seniority.C) limit the number of new members accepted.D) encourage nonunion members to join the union.
Q:
Which of the following would be the most likely outcome if all perfectly competitive firms in a product market join together to form a monopoly?A) Both the rate of output and the quantity of labor input employed will decrease. B) Both the rate of output and the quantity of labor input employed will increase.C) The rate of output in the market will increase but the quantity of labor input will decrease. D) The rate of output in the market will decrease but the quantity of labor input will increase.
Q:
If the supply of labor to a firm is perfectly elastic at the going wage rate established by the forces of supply and demand then
A) the firm is price taker.
B) the firm can only hire additional units of labor by driving the wage rate up.
C) the wage rate has been decreasing.
D) full employment exists in the labor market.
Q:
Use the above figure. If this monopolist was not regulated, the profit -maximizing quantity and price would beA) Q2 and P1. B) Q2 and P3. C) Q3 and P2. D) Q4 and P1.
Q:
When a player in a game adopts a strategy which always yields the highest benefit regardless of what the other player does, that player is using a(n)A) opportunistic strategy. B) dominant strategy. C) tit-for-tat strategy. D) aggressive strategy.
Q:
Mass marketing involvesA) using all types of media, such as television and radio, to reach as many consumers as possible.B) internet ads only.C) using direct mailings only.D) lower-cost methods of advertising.
Q:
Which of the following statements is FALSE?A) Other things being equal, societyʹs overall well -being is reduced when a perfectly competitive industry is monopolized.B) When both a perfectly competitive industry and a monopolist face the same production costs and the same market demand curve,the monopolist offers a lower level of output for sale.C) The profit-maximizing monopolist will always produce only along the inelastic portion of the demand curve, whereas equilibrium in a perfectly competitive industry always occurs along the elastic portion of the demand curve.D) When both a perfectly competitive industry and a monopolist face the same production costs and the same market demand curve, the monopolist charges a higher price for its product than what would be charged in a perfectly competitive situation.
Q:
The demand curve a monopoly faces isA) horizontal. B) vertical.C) upward sloping. D) downward sloping.
Q:
The owner of a perfectly competitive firm is currently earning an economic profit of zero. This owner
A) should shut down since profits of zero are not good.
B) should raise the price of the product to increase profits.
C) is covering all of his fixed costs.
D) will continue producing in the short-run but will shut down in the long run if profits do not increase.
Q:
Being a price taker essentially meansA) a firm can influence the market price.B) a firm cannot influence the market price.C) the firm cannot legally set its price above the market price. D) the firm cannot legally set its price below the market price.
Q:
As successive equal increases in a variable factor of production are added to fixed factors of production, there will be a point beyond which the extra product that can be attributed to each additional unit of the variable factor of production will decline. This is known as the law ofA) diminishing total product. B) diminishing average product.C) diminishing marginal product. D) decreasing product.
Q:
The real rate of interest is 5% and the anticipated rate of inflation is 2%. What is the nominal rate of interest?A) 7% B) 5% C) 3% D) 2%
Q:
If a major league baseball player would be willing to work for $500,000 per year and is currently being paid $1,200,000 per year, the opportunity cost of his decision to play baseball isA) $500,000. B) $1,200,000. C) $1,700,000. D) $700,000.
Q:
The real-income effect of a price change is most significant whenA) the substitution effect is insignificant.B) the substitution effect is significant too.C) the good under consideration constitutes a major portion of the consumerʹs budget.D) the marginal utility per dollar spent on the last unit is high.
Q:
The concept of marginality is important in economics becauseA) individuals make decisions at the margin.B) marginal decisions indicate a lack of importance. C) individuals make decisions based on tastes only.D) large expenditures are the only factor influencing consumption.
Q:
In the above figure, over the price range P1P2, demand isA) unit elastic. B) elastic.C) inelastic. D) perfectly elastic.
Q:
To find social costs,A) internal and private costs have to be added together.B) internal and external costs have to be added together. C) internal and implicit costs have to be added together.D) internal and production costs have to be added together.
Q:
The regular earnings profile of an individual throughout his or her lifetime is A) the Lorenz curve. B) the age-earnings cycle. C) wealth. D) income-in-kind.
Q:
When you see a commercial on TV asking you to ʺlook for the union label,ʺ the union is trying to
A) increase worker productivity.
B) increase the demand for nonunion goods.
C) increase the demand for union goods.
D) decrease the demand for nonunion goods.
Q:
Other things being equal, the behavior of a monopolist differs from that of a competitive industry in thatA) the monopolist does not attempt to maximize economic profit. B) the monopolist hires more labor.C) the monopolist restricts output and hires less labor.D) the monopolist must consider fixed costs in deciding the optimal level of output to produce in the short run.
Q:
A firm is a price taker in the labor market if
A) the skills of available workers do not match the requirements for the job.
B) there is a scarcity of labor in the market.
C) the hiring of more workers will drive the existing wage rate up.
D) the hiring of more workers will leave the existing wage rate unchanged.
Q:
Use the above figure. If a commission regulates the above monopoly using marginal cost pricing, then the industryʹs output will be and the productʹs price will be .A) Q2; P1 B) Q2; P3 C) Q3; P2 D) Q4; P1
Q:
When oligopolistic companies engage in collusion, the companies are involved in aA) noncooperative game. B) negative-sum game. C) competitive game. D) cooperative game.
Q:
Persuasive advertising is used to
A) induce a consumer to try a product and discover a previously unknown taste for it.
B) promote only used goods.
C) sell to an established clientele.
D) cut costs.
Q:
Which of the following statements is TRUE?A) At the monopolistʹs equilibrium, resources are being efficiently allocated.B) With a monopoly, the value to society of the last unit produced is less than itʹs production cost.C) Monopolists raise the price and restrict production, compared to a competitive situation.D) A monopolist always produces a higher level of output than would be produced if the market were competitive.
Q:
Compared to a monopolist, the demand curve for a perfectly competitive firm will beA) as elastic. B) more elastic.C) less elastic. D) perfectly elastic.
Q:
The owner of a perfectly competitive firm that is earning economic losses in the short runA) should alter the rate of output in order to increase profitability.B) should cut his own salary in order to reach the break -even point.C) is actually losing more than he thinks because not all of the implicit costs have been considered.D) is earning less than he would if he worked for someone else.
Q:
Which of the following is NOT a characteristic of a perfectly competitive industry?
A) There is free entry and exit in the long run.
B) The industry demand curve is downward sloping.
C) Each firm produces the same homogeneous product.
D) Economic profits must be positive in the short run.
Q:
The marginal product of labor may increase rapidly initially as moreA) workers are able to specialize.B) total product is decreasing.C) the amount of other inputs is held constant.D) workers will get crowded in a fixed factory.
Q:
The real rate of interest is 4% and the anticipated rate of inflation is 1%. What is the nominal rate of interest?A) 1% B) 3% C) 4% D) 5%
Q:
If a major league baseball player would be willing to work for $500,000 per year and is currently being paid $1,200,000 per year, that player is earning an annual economic rent ofA) $500,000. B) $1,200,000. C) $1,700,000. D) $700,000.
Q:
The real-income effect is typically small becauseA) the change in price of one particular item has little effect on total purchasing power.B) income has no relation to consumption.C) price changes tend to balance out over time.D) real-incomes are always rising.
Q:
When economists refer to people making decisions at the margin, they mean that we compare benefits with costs.A) total; total B) total; incrementalC) additional; additional D) additional; marginal
Q:
The price elasticity of demand along a linear demand curve isA) more elastic at higher prices than at low prices. B) infinite.C) one.D) constant.
Q:
Costs that are borne solely by the individuals who incur them areA) private costs. B) social costs.C) external costs. D) transaction costs.
Q:
The age-earnings cycle isA) the distribution of money income by age.B) the distribution of wealth by age.C) the relationship between earnings while working and retirement benefits for an individual.D) the regular earnings profile of an individual throughout his or her lifetime.
Q:
If a union negotiated a wage above the market equilibrium wage, we would find
A) a surplus of laborers at the negotiated wage.
B) a shortage of laborers at the negotiated wage.
C) higher efficiency of labor at the negotiated wage.
D) lower worker productivity at the negotiated wage.
Q:
Explain the implications of outsourcing for employment and wages in the domestic and foreign labor markets.
Q:
An outward shift in the consumer demand for wheat willA) raise the price of wheat and shift inward the marginal revenue product of labor producing wheat.B) lead to more capital and less labor used in producing wheat.C) raise the price of wheat and shift out the marginal revenue product of labor producing wheat.D) lead to downward pressure on the wages of those producing wheat.
Q:
Use the above figure. If a commission regulates the above monopoly using fair -return (average cost pricing), then the industryʹs output will be and the productʹs price will beA) Q1; P1 B) Q2; P3 C) Q3; P2 D) Q4; P1
Q:
People do not usually behave in a noncooperative fashion even when it is in their immediate interest to do so becauseA) they realize such behavior is immoral. B) they know there can be 2 winners.C) they know they will have repeated dealings with the other people.D) they understand the difficulties with game theory.
Q:
To differentiate its product, a monopolistic competitive firm will engage in all of the following advertising practices EXCEPTA) direct marketing. B) mass marketing.C) interactive marketing. D) indirect marketing.
Q:
Compared to perfect competition, a monopoly will produce output, and charge a price.A) more; higher B) more; lower C) less; higher D) less; lower
Q:
Compared to perfectly competitive firms, the demand curve for a monopolist will beA) as elastic. B) more elastic.C) less elastic. D) perfectly elastic.
Q:
When a firm is at its short -run break-even point, A) economic profits are positive.B) economic profits equal zero and the firm should shut down.C) economic profits equal zero and the firm is earning a nominal rate of return on investment.D) economic profits are negative but the firm should continue to produce because accounting profits are positive.
Q:
The perfectly competitive firm cannot influence the market price becauseA) it has market power.B) its production is too small to affect the market. C) it is a price maker.D) its costs are too high.
Q:
After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known asA) the long run.B) the law of diminishing marginal product.C) marginal physical product. D) short run average cost.
Q:
If the nominal interest rate is high and rising, a possible cause isA) increased lending activity. B) a rising inflation rate.C) a falling real interest rates. D) increased government borrowing.
Q:
In the market for land, if the supply of land is perfectly inelastic, an increase in the demand for land will result in a(n)A) increase in the real interest rate. B) increase in economic rent.C) decrease in the equilibrium price.D) increase in the quantity supplied of land.
Q:
The real-income and the substitution effects reinforce each other byA) increasing the consumption of good y when the price of x falls.B) increasing the consumption of both goods x and y when income increases. C) decreasing the consumption of good x when the price of good y falls.D) decreasing the consumption of good x when the price of good x increases.
Q:
The term marginal meansA) total. B) cumulative. C) subjective. D) additional.
Q:
The range to the right of the midpoint on a linear demand curve isA) elastic. B) infinite. C) one. D) inelastic.
Q:
When a person smokes a cigarette in his car and throws the butt out of the window, this is a(n) A) marginal cost. B) external cost.C) average total cost. D) public cost.
Q:
Most individualʹs income peaks when they are aboutA) 30. B) 40. C) 50. D) 60.
Q:
In the above figure, which wage rate will yield the highest wage rates for particular workers?A) W1 B) W2 C) W3 D) W3-W2
Q:
Suppose a U.S. computer company outsources its technical -support services to India. This will cause
A) the demand for labor in the United States to fall, lowering U.S. wage rates, and the demand for labor in India to increase, increasing Indian wage rates.
B) the demand for labor in the United States to increase, lowering U.S. wage rates, and the demand for labor in India to fall, increasing Indian wage rates.
C) the demand for labor in the United States to fall, lowering U.S. wage rates, and the demand for labor in India to fall, decreasing Indian wage rates.
D) the demand for labor in the United States to increase, increasing U.S. wage rates, and the demand for labor in India to fall, decreasing Indian wage rates.
Q:
The demand for labor is considered a derived demand since it depends on
A) the supply of labor.
B) the market for capital.
C) the consumer demand for the output produced.
D) competitive markets.
Q:
Use the above figure. A regulatory commission sets the maximum price this monopolist can charge at P1. If this monopolist were to produce, itA) would produce Q4 output and generate losses. B) would produce Q4 output and generate profits. C) would produce Q2 output and generate losses. D) would produce Q2 output and generate profits.
Q:
Cooperation that continues as long as the players continue to cooperate isA) a zero-sum game. B) a negative-sum game. C) tit-for-tat strategic behavior. D) opportunistic behavior.
Q:
If a firm produces an experience good, its mode of advertising will beA) persuasive advertising. B) direct advertising.C) not to advertise. D) none of the above.
Q:
Monopolies are discouraged in the United States becauseA) they are more efficient than other industries.B) they can produce at lower cost in the short run.C) they restrict output and boost prices. D) they hire too many workers.
Q:
The demand curve faced by the monopolistA) is perfectly elastic. B) is perfectly inelastic. C) slopes downward. D) slopes upward.
Q:
When a firm has economic profits equal to zero,
A) the firm is earning a normal rate of return on investment.
B) the firm is not earning a normal rate of return on investment.
C) the firm should shut down.
D) the firmʹs accounting profits are also zero.
Q:
Perfect competition is characterized byA) many buyers and sellers. B) a small number of firms.C) differentiated products of firms in the industry. D) high barriers to entry.
Q:
If we add successive laborers to work a given amount of land on a wheat farm, eventuallyA) average total cost will fall to zero.B) the increases in wheat harvested will rise at a constant rate.C) the increases in wheat harvested will get smaller and smaller.D) the increases in wheat harvested will get larger and larger.
Q:
The nominal rate of interest isA) the rate observed in the market that includes an inflation premium. B) not the rate observed in the market.C) not adjusted for inflation.D) expressed in dollars from the chosen base year.
Q:
A payment for the use of an input that exceeds the opportunity cost of the input is known asA) real interest. B) economic profit. C) economic rent. D) economic cost.
Q:
The real-income effect shows thatA) a decrease in the price of a good increases the purchasing power of the consumerʹs income.B) if the consumerʹs income rises, he or she buys more of inferior goods and less of normal goods.C) if a good is inferior, a decrease in the purchasing power of income results in less of the good being consumed.D) when the price of a good rises, consumers are able to buy more of other goods because of the increase in the purchasing power of income.
Q:
To calculate marginal utility, divide the change in total utility byA) the number of units consumed.B) the price of the product.C) the change in the number of units consumed.D) the consumerʹs subjective level of preference.
Q:
The range to the left of the midpoint on a linear demand curve isA) elastic. B) infinite. C) one. D) inelastic.
Q:
In a situation in which internal costs differ from social costs, we say that there exists a(n) A) welfare loss. B) welfare benefit.C) internality. D) externality.
Q:
The following are all determinants of income differences examined in the text EXCEPT A) age. B) marginal productivity.C) inheritance. D) height.
Q:
In the above figure, which wage rate will maximize union membersʹ income?A) W1 B) W2 C) W3 D) W3-W1
Q:
When firms in a U.S. industry outsource some of their production, A) both U.S. labor demand and U.S. wages in the industry fall
B) U.S. labor demand falls, but U.S. wages are not affected.
C) U.S. labor demand remains unchanged, but U.S. wages fall.
D) U.S. labor demand falls, but U.S. wages increase.