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Economic
Q:
A decrease in demand for a product, holding other things constant, will
A) increase the marginal revenue product of labor.
B) decrease the marginal revenue product of labor.
C) not change the marginal revenue product of labor.
D) have an undetermined effect upon the marginal revenue product of labor.
Q:
Which of the following best describes the difference between cost -of-service regulation and rate-of-return regulation?A) Costs determine prices in cost-of-service regulation and prices determine costs in rate-of-return regulation.B) Costs determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make a normal rate of return.C) Variable costs determine prices in cost-of-service regulation and prices are set in rate-of-return regulation so the firm can make an economic profit.D) Regulators determine prices in cost-of-service regulation and market forces determine prices in rate-of-return regulation.
Q:
Actions that ignore the possible long-run benefits of cooperation and focus solely on short -run gains areA) a zero-sum game. B) a negative-sum game. C) tit-for-tat strategic behavior. D) opportunistic behavior.
Q:
By promoting its brand name heavily, the monopolistically competitive firmA) earns more profit in the long run.B) signals its long-term intention to stay in the industry. C) signals its intention to leave the industry.D) guarantees a short run profit.
Q:
The profit-maximizing price and quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectivelyA) A and B. B) A and C. C) A and F. D) C and F.
Q:
If a monopolist wishes to increase its output and quantity sold,A) it must reduce its price, so its marginal revenue is greater than its price. B) it must reduce its price, so its marginal revenue is less than its price.C) it must raise its price, so its marginal revenue is greater than its price. D) it must raise its price, so its marginal revenue is less than its price.
Q:
A firm that has negative economic profits has accounting profits that areA) zero.B) positive. C) negative.D) indeterminate without more information.
Q:
All of the following are characteristics of perfect competition EXCEPTA) homogenous products. B) each firm is a price taker.C) product differentiation. D) a lack of barriers.
Q:
The marginal productivity of labor will eventually decrease as more workers are employed becauseA) average product is increasing. B) total product is decreasing.C) the amount of capital will also be increasing.D) on the average each worker will have fewer inputs to work with.
Q:
The real rate of interest is
A) equal to the nominal rate of interest less the anticipated rate of inflation.
B) equal to the nominal rate of interest plus the anticipated rate of inflation.
C) found by taking the nominal rate of interest and dividing it by the actual rate of inflation.
D) found by taking the nominal rate of interest and adding the actual rate of inflation.
Q:
David Ricardo used the example of land to demonstrate the concept of rent, as the supply of land isA) perfectly elastic. B) relatively elastic. C) perfectly inelastic. D) negatively sloped.
Q:
A consumer has been buying 4 magazines and 3 books a month for many months. The price of magazines then decreases, which directly causes the marginal utility per dollar spent onA) magazines to increase, thereby inducing the consumer to purchase fewer magazines and more books.B) magazines to increase, thereby inducing the consumer to purchase more magazines and fewer books.C) books to increase, thereby inducing the consumer to purchase fewer magazines and more books.D) books to decrease, thereby inducing the consumer to purchase fewer magazines and more books.
Q:
Marginal utility isA) the utility received from consuming one unit of a good.B) the change in total utility due to a one-unit change in the quantity of a good consumed. C) the total utility received from consuming a certain quantity of a good divided by the quantity.D) the utility received by the last consumer of a good.
Q:
If a price decrease of a product significantly raises its revenues, then the absolute price elasticity of demand for that product must beA) less than one. B) equal to one.C) greater than one. D) an example of unit elasticity.
Q:
Which of the following constitutes an external cost of driving an automobile?A) insurance B) fuel C) pollution D) wear and tear
Q:
In the United States, inheritance accounts for roughly of income inequality.A) 50 percent B) 30 percent C) 20 percent D) 10 percent
Q:
In the above figure, which wage rate yields the highest union employment?A) W1 B) W2 C) W3 D) W2-W1
Q:
Economic analysis indicates the net long -run effect of outsourcing for the United States is likely to beA) an increased demand for labor due to economic growth.B) a decreased in the demand for labor in the United States in the short run. C) an increase in the supply of labor.D) a decrease in the supply of labor.
Q:
A perfectly competitive firm will hire workers up to the quantity at which the wage rate equals theA) marginal revenue product of labor. B) marginal factor cost of labor.C) price of the extra output produced. D) average physical product of labor.
Q:
Under rate-of-return regulation, the price is set so thatA) price equals the marginal cost of production.B) the firm earns a positive economic profit. C) the firm earns a monopoly profit.D) the firm earns a normal rate of return on investment.
Q:
A dominant strategy is one thatA) yields a position of the winner so long as the other participants act as planned. B) every participant in the game will follow.C) turns a negative-sum game into a positive-sum game.D) always yields the highest benefit regardless of what the other players do.
Q:
A product with qualities that consumers lack the expertise to assess without assistance is called a(n)A) search good. B) experience good. C) credence good. D) inferior good.
Q:
The profit-maximizing quantity of the monopolist compared to the perfectly competitive industry in the above figure are, respectivelyA) Q1 and Q2. B) Q1 and Q3. C) Q1 and Q5. D) Q2 and Q3.
Q:
Why would economies of scale be a barrier to entry?
Q:
A firm that has positive economic profits has accounting profits that areA) zero.B) positive. C) negative.D) indeterminate without more information.
Q:
Which of the following is a characteristic of perfect competition?A) Easy entry and exit B) Few firmsC) Differentiated products D) None of the above
Q:
Phil found that as he continued to crowd laborers into his hot dog stand, the extra output he was receiving from each additional laborer was beginning to fall off. This is an example of theA) law of increasing opportunities. B) law of demand.C) law of diminishing marginal utility. D) law of diminishing product.
Q:
Businesses demand funds because
A) they prefer earlier consumption to later consumption.
B) they have deficits to cover.
C) they prefer to purchase capital goods in the current year.
D) they make investments that they believe will increase productivity and profitability.
Q:
The term ʺeconomic rentʺ refers to paymentsA) to owners of real estate.B) for the use of any resource above its opportunity cost. C) equal to the opportunity cost of the use of land.D) for the use of housing in company owned properties.
Q:
A consumer is at an optimum when the price of one good she has been consuming decreases. As a resultA) the value of the marginal utility of the last unit consumed has increased. B) the value of the marginal utility of the last unit consumed has decreased. C) the price of the other good must decrease too.D) the marginal utility of the last dollar spent on this good is now greater than the marginal utility of the last dollar spent on other goods.
Q:
Marginal utility is measured asA) utility per unit of production.B) extra output divided by extra utility.C) output of a good or service divided by price.D) extra utility from each additional good consumed.
Q:
If the absolute price elasticity of demand of a good is 1.46, then the total revenues will increase if its market priceA) increases. B) decreases.C) stays the same.D) changes, but we canʹt tell without more information if the price increases or decreases.
Q:
Another name for internal cost isA) private cost. B) social cost.C) psychological cost. D) marginal cost.
Q:
Investment in human capital
A) is quite different from and has a much lower return than investment in physical capital.
B) is just like investment in physical capital and has a return similar to that earned from other investments.
C) is just like investment in physical capital but has a much greater return than do other investments.
D) is not comparable to other investments in any way since human capital is embodied in the person.
Q:
The ultimate bargaining tool for unions isA) the strike. B) ʺlaborʹs Magna Carta.ʺC) the Taft-Hartley Act. D) the sympathy strike.
Q:
Employment of labor in a country other than the firmʹs home country is calledA) employing guest workers. B) outsourcing.C) employing non-naturalized workers. D) employing illegal aliens.
Q:
The marginal revenue product curve shifts whenA) wages fall.B) there is a change in the product price workers are producing. C) wages rise.D) the wages paid exceed the price.
Q:
Cost-of-service-regulation sets prices by consideringA) the actual variable cost of providing the service to the customer.B) the actual total cost of providing the service to the customer.C) the actual average cost of providing the service to the customer. D) the actual marginal cost of providing the service to the customer.
Q:
Your teacher decides to play a game where every student must contribute a dollar. All money collected is distributed at the end of the game among the students. This is an example of aA) positive-sum game. B) zero-sum game.C) strategy. D) negative-sum game.
Q:
When a telemarketer calls you about a product, this is an example ofA) direct marketing. B) indirect marketing.C) searching for a good. D) persuasive marketing.
Q:
The profit-maximizing price of the monopolist compared to the perfectly competitive industry in the above figure are, respectivelyA) P1 and P3. B) P1 and P5. C) P1 and P2. D) P2 and P5.
Q:
In principle, can a monopolist hold its monopoly power in the long run? Explain.
Q:
A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $5.50. What do you recommend this firm do?A) Increase production above the current output rate, because MC = MR at this rate of output. B) Continue to produce the current output rate, because P > AVC.C) Shut down, because AVC > P.D) Shut down, because ATC > P.
Q:
Which of the following is NOT a characteristic of a perfectly competitive market?
A) The products sold by the firms in the market are homogeneous.
B) There are many buyers and sellers in the market.
C) It is difficult for a firm to enter or leave the market.
D) Each firm is a price taker.
Q:
Refer to the above figure. The curve reflectsA) the law of diminishing marginal product in labor. B) the law of increasing marginal product in labor.C) the law of diminishing marginal product in capital. D) the law of increasing marginal product in capital.
Q:
Larger loans, other things constant, have lower interest rates becauseA) only large, financially sound corporations obtain such loans. B) large loans always have collateral.C) large loans are always for short time periods.D) the fixed costs associated with the handling charges as a percent of the total loan are less.
Q:
A famous opera star made $2 million per year. He said he would rather sell insurance if he couldnʹt make more than $100,000 per year. If he is telling the truth, how much is he being paid in economic rent?A) $2.0 million B) $100,000 C) $1.9 million D) $2.1 million
Q:
Suppose a consumer is at an optimum. What happens when the price of one good she has been consuming increases?A) The value of the marginal utility of the last unit consumed decreases. B) The value of the marginal utility of the last unit consumed increases.C) The marginal utility per dollar spent on the last unit consumed of that good increases by the same proportion as the price increases.D) The marginal utility per dollar spent on the last unit consumed of that good is now smaller than the marginal utility per dollar spent on other goods the person consumes.
Q:
Which English philosopher set out to develop an arithmetic formula for measuring happiness and along the way invented the util?A) John Maynard Keynes B) Milton FriedmanC) Jeremy Bentham D) Adam Smith
Q:
Given a price elasticity of demand of -0.33, a decrease in price willA) reduce total revenue. B) increase total revenue.C) leave total revenue unchanged. D) decrease quantity.
Q:
By adding internal costs to external costs, we determine the totalA) private cost. B) social cost.C) psychological cost. D) marginal cost.
Q:
In the absence of discrimination, as human capital investments increase, wages will generallyA) decrease. B) increase.C) not change. D) increase or decrease.
Q:
Which of the following is NOT a union wage and employment strategy?
A) ensuring employment for all members of a union
B) maximizing aggregate income of workers
C) maximizing wage rates for some workers
D) minimizing the adjusted gross income of non -members
Q:
Which of the following statements is FALSE about the long -run effects of outsourcing?A) Outsourcing allows countries to specialize in producing what they can produce most efficiently.B) More goods and services can be produced than in the absence of outsourcing.C) Globally wages will increase because of outsourcing.D) Employment levels will decrease globally as the result of outsourcing.
Q:
When increased demand raises the price of the product, the
A) marginal revenue product will also increase.
B) marginal revenue product will fall.
C) marginal revenue product will remain unchanged.
D) sales will fall.
Q:
Under rate-of-return regulation, average cost pricing A) is inflated so the firm can make economic profits. B) includes variable costs but not a cost for capital.C) includes what they consider to be a fair rate of return on investment.D) includes a cost for capital that generates an above normal rate of return.
Q:
Any rule that is used to make a choice isA) positive-sum game. B) zero-sum game.C) strategy. D) negative-sum game.
Q:
According to Edward Chamberlin, is the ʺdifferentnessʺ of products a waste of resources?
Explain.
Q:
The profit-maximizing price and quantity established by a perfectly competitive firm in the above figure areA) Q1 units of output and a price of P5. B) Q3 units of output and a price of P3. C) Q1 units of output and a price of P1. D) Q4 units of output and a price of P4.
Q:
Which of the barriers to entry can last indefinitely and which are more likely to eventually erode such that a new entry can take place?
Q:
A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $4.50. What do you recommend this firm do?A) Increase production above the current output rate, because MC = MR at this rate of output. B) Continue to produce the current output rate, because P > AVC.C) Shut down, because AVC > P.D) Shut down, because ATC > P.
Q:
ʺIf an industryʹs minimum efficient scale is between 2,000 and 4,000 units of output, then a firm producing 2,000 units of output in that industry has a cost -saving advantage over another firm producing 4,000 units of output in the same industry.ʺ Do you agree or disagree? Explain.
Q:
Graphically, what happens to the production function if a firm uses automation to raise the amount of output per worker? Explain.
Q:
Interest rates are higher theA) shorter the duration of the loan. B) greater the risk.C) larger the amount of the loan, holding other things constant. D) lower the inflation rate.
Q:
A famous opera star made $2 million per year. He said he would rather sell insurance if he couldnʹt make more than $100,000 per year. If he is telling the truth, whatʹs his opportunity cost as an opera star?A) $2.0 million B) $100,000 C) $1.9 million D) $2.1 million
Q:
Suppose that a consumer is at an optimum consuming X and Y. If the price of X falls, then to get to a new equilibrium the consumer mustA) purchase less X and more Y. B) purchase less Y and less X. C) purchase more X. D) purchase more Y.
Q:
A representative unit that measures the want-satisfying power of a good is A) a margin. B) purchasing power. C) income. D) a util.
Q:
When demand is elastic, a decrease in price willA) decrease total revenue. B) not change total revenue.C) increase total revenue. D) reduce quantity demanded.
Q:
If pollutants from smoke stacks in a city such as Newark causes people to paint their homes and cars more frequently, this impliesA) external benefits to the home and car owners. B) external costs on home and car owners.C) internal cost to home and car owners.D) none of the above
Q:
What is typically the main cost of pursuing a college education?A) Tuition B) Room and boardC) Books and supplies D) Income forgone by not working
Q:
The figure illustrates all of the following EXCEPTA) if the union establishes by collective bargaining a wage rate that exceeds equilibrium at point Wu an excess quantity of labor will be supplied.B) if the union establishes by collective bargaining a wage rate that exceeds equilibrium, an excess quantity of labor will be demanded.C) there is a trade-off union leadership faces: Higher wages inevitably mean a reduction in total employment - a smaller number of positions.D) at higher wages, more workers will seek to enter the industry, thereby adding to the surplus of workers where QS is greater then QD.
Q:
Which of the following statements describes the long -run effects of global outsourcing?A) Wages for U.S. workers will decrease but wages in other countries will increase.B) Wages in all countries will remain the same as before the outsourcing. C) Wages and employment will increase globally.D) Wages will increase globally and employment will stay the same.
Q:
When the marginal productivity of labor decreases, the demand curve for labor in a perfectly competitive marketA) does not change. B) becomes flatter. C) shifts to the right. D) shifts to the left.
Q:
Under rate-of-return regulation, natural monopolies must useA) marginal cost pricing. B) average cost pricing.C) efficient pricing. D) monopoly pricing.
Q:
A game in which any gains within the group are exactly offset by equal losses by the end of the game is aA) positive-sum game. B) zero-sum game.C) strategy. D) negative-sum game.
Q:
Is monopolistic competition efficient? Explain. What is Edward Chamberlinʹs view about the efficiency of monopolistic competition?
Q:
In the above figure, the difference between the competitive industry price and that of the monopolist isA) 0B. B) 0A. C) AB. D) CE.
Q:
In what ways is government involved with the creation of barriers to entry?
Q:
A perfectly competitive firm faces a market clearing price of $150 per unit. Average total costs are at the minimum value of $120 per unit at an output rate of 70 units. Marginal cost equals $150 per unit at an output rate of 75 units. It can be concluded that the short -run profit-maximizing output rate isA) 75 units, at which the firm earns zero economic profits per unit sold.B) 75 units, at which the firm earns negative economic profits per unit sold.C) 75 units, at which the firm earns positive economic profits per unit sold. D) 70 units, because price is less than average total costs.
Q:
For an industry in which average costs continue to decline as output rises, what would you expect the minimum efficient scale to be? Explain your answer.