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Economic
Q:
What is a production function?
Q:
The payment for current rather than future command over resources isA) an implicit cost. B) an implicit benefit.C) interest. D) opportunity cost.
Q:
Which of the following would be most likely to receive high economic rent payments?A) farmer B) professional baseball playerC) factory worker D) doctor
Q:
The change in peopleʹs purchasing power that occurs when the price of a good they purchase changes, assuming all else is held constant is known asA) the substitution effect. B) the real income effect. C) the elasticity effect. D) the multiplier effect.
Q:
In economic utility analysis, consumer tastes and preferences are assumedA) to be determined by income. B) to be influenced by the prices of goods.C) given and stable for an individual. D) given but rapidly changeable.
Q:
When demand is perfectly inelastic, an increase in price willA) leave total revenue unchanged. B) increase total revenue.C) decrease total revenue.D) either increase total revenue or decrease total revenue, but it is impossible to tell which.
Q:
Air pollution is a problem because
A) people are greedy.
B) people are not environmentally conscious.
C) people make use of air without having to bear all the costs of their actions.
D) a market economy does not provide as strong an incentive for environmental cleanup as a socialist economy.
Q:
The most common type of investment in human capital is
A) having more children per family.
B) the migration of labor in search of better jobs.
C) expanded years of schooling.
D) improved health care and maintenance.
Q:
StrikebreakersA) can reduce the bargaining power of a union.B) can strengthen the bargaining power of a union. C) make a union negotiation invalid.D) make a strike permanent.
Q:
Refer to the above figure. Which panel represents what happens in the foreign job market in the short-run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?A) Panel A B) Panel B C) Panel CD) Panel D
Q:
When the price of a product decreases, the marginal revenue product curve in a perfectly competitive marketA) does not change. B) becomes flatter. C) shifts to the right. D) shifts to the left.
Q:
When regulating a natural monopoly, average cost pricing is usually used rather than marginal cost pricing because
A) average cost pricing allows the firm to earn a normal rate of return on investment, while marginal cost pricing leads to economic losses.
B) average cost pricing is more economically efficient than marginal cost pricing.
C) average cost pricing leads to lower profits than marginal cost pricing.
D) average cost pricing leads to a lower market price than marginal cost pricing.
Q:
An example of a zero-sum game isA) exchange.B) a consumer purchasing a used car from a used car dealer. C) the prisonersʹ dilemma.D) poker.
Q:
How does the short-run equilibrium of a monopolistic competitor differ from a monopolist?
How does it differ from a perfect competitor?
Q:
Which of the following statements about a monopolist is TRUE?A) Monopolies tend to misallocate resources.B) All monopolies are unlawful in the United States.C) Monopolies tend to allocate resources in a socially optimal manner.D) Monopolies will always make a profit in the long run.
Q:
Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPTA) franchises.B) environmental protection.C) exclusive ownership of an unimportant resource. D) patents.
Q:
A perfectly competitive firm faces a market clearing price of $150 per unit. Average total costs are at the minimum value of $200 per unit at an output rate of 100 units. Average variable costs are at the minimum value of $100 per unit at an output rate of 50 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) 50 units, because price is less than average variable costs.
Q:
What is minimum efficient scale? Why is it important?
Q:
Explain how you can calculate average physical product and marginal physical product from information on total physical product and variable input.
Q:
Businesses go to credit markets in order toA) obtain capital.B) obtain financial assets that can be used to buy capital. C) obtain capital so they can earn rents.D) channel their savings into investments.
Q:
The British economist most often associated with the issue of economic rent for land wasA) John Maynard Keynes. B) Jeremy Bentham.C) A. W. Phillips. D) David Ricardo.
Q:
To remain in consumer optimumA) a price increase requires an increase in consumption. B) a price decrease requires an increase in consumption. C) a price decrease requires a decrease in consumption. D) prices must remain static.
Q:
In economics, utility is defined asA) the want-satisfying power of a good or service. B) the usefulness of a good or service.C) the utilitarian value of a good or service.D) the objective measure of the desirability of a good or service.
Q:
A decrease in total revenue will result ifA) demand is inelastic and price decreases.B) demand is elastic and price increases. C) demand is elastic and price decreases.D) demand is unitary elastic and price decreases.
Q:
A person removes the anti-pollution devices on his automobile. An external cost associated with this isA) the feeling of guilt the person feels for violating the law.B) the ticket he gets when a highway patrol officer pulls him over.C) the manʹs neighbor washes his car more often because of increasing smog. D) the man buys less gasoline, reducing the income of local gas stations.
Q:
In general, as individuals undertake additional years of schooling, A) their stock of human capital increases.B) the marginal productivity of individuals as workers declines.C) the marginal benefit to society of the extra years of education increases. D) the marginal productivity of individuals as workers becomes negative.
Q:
The primary purpose of a strike by labor unions is toA) force the firm out of business.B) extract from the firm better and improved conditions of work or contract terms. C) secure a larger market share for the firm.D) ensure they get paid for striking.
Q:
Refer to the above figure. Which panel represents what happens in the U.S. job market in the short-run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?A) Panel A B) Panel B C) Panel C D) Panel D
Q:
When the price of a product increases, the marginal revenue product curve in a perfectly competitive marketA) does not change. B) becomes flatter. C) shifts to the right. D) shifts to the left.
Q:
If government regulators make the natural monopolist set price equal to marginal cost
A) the natural monopolist will make zero economic profits.
B) the natural monopolist will make normal profits.
C) the natural monopolist will make losses and go out of business.
D) the natural monopolist will make positive economic profits larger than if it wasnʹt regulated at all.
Q:
A game in which the players neither negotiate nor coordinate in any way is a A) cooperative game. B) noncooperative game. C) zero-sum game. D) negative-sum game.
Q:
How is monopolistic competition like perfect competition? How is it like monopoly?
Q:
ʺPrice discrimination is the same as price differentiation.ʺ Do you agree or disagree? Why?
Q:
Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPTA) economies of scale. B) tariffs.C) licenses. D) franchises.
Q:
A perfectly competitive firm faces a market clearing price of $150 per unit. Average variable costs are at the minimum value of $200 per unit at an output rate of 100 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 $50 in economic profits per unit sold. C) 100 units, because marginal cost equals average variable costs.D) 0 units, because price is less than average variable costs.
Q:
The minimum efficient scale in the figure below shows thatA) point A is the minimum efficient scale (MES) for the firm. B) point B is the minimum efficient scale (MES) for the firm.C) the long-run average cost curve (LAC) reaches a minimum point at B. D) the minimum efficient scale (MES) illustrates maximum average costs.
Q:
Describe the concept of the production function. What happens to the production function when a firm becomes less efficient, so that it now requires more labor to produce the same amount of output as before?
Q:
In economics, interest refers to all of the following EXCEPT
A) the payment for current rather than future command over resources.
B) the cost of obtaining credit.
C) the return paid to owners of financial institutions.
D) the return paid to the owners of capital.
Q:
If the supply curve for land was a vertical line, then any payment made for land would be consideredA) as economic rent. B) as economic lease.C) as economic interest. D) as an opportunity lease payment.
Q:
If Frank has been consuming 5 hamburgers per week at a consumer optimum, and the price of hamburgers falls, how will Frank respond?A) He will save more income.B) He will buy more of everything.C) He will buy more burgers.D) He will buy more of everything except burgers.
Q:
Economists use what term to describe the want -satisfying power of a good?A) Demand B) UtilityC) Marginal propensity to consume D) Income elasticity
Q:
A decrease in total revenue will result ifA) demand is inelastic and price decreases.B) demand is elastic and price decreases.C) demand is inelastic and price decreases.D) demand is unitary elastic and price decreases.
Q:
When a person can pass some of her costs of using a resource on to someone else, A) the use of the resource is not affected by her actions.B) the internal costs of using the resource exceed the private costs. C) she uses too much of the resource.D) she uses too little of the resource.
Q:
With a human capital investment (such as the investment in going to college), the most important cost tends to beA) foregone leisure. B) books and equipment. C) the opportunity cost of not working. D) taxes.
Q:
Unions tend to want import restrictions becauseA) imports are usually of inferior quality.B) they can increase the wages for union workers by increasing the productivity of union workers when the workers arenʹt worried about foreign competition.C) the restrictions also reduce the number of immigrants that can enter the country and decrease the supply of nonunion labor.D) the restrictions decrease the demand for non-union made goods, increasing the demand for union made goods.
Q:
What are the short-run economic effects when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?A) The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will increase.B) The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will decrease.C) The demand curve for labor in the U.S. decreases, and the demand curve in the foreign country will decrease.D) The demand curve for labor in the U.S. increases, and the demand curve in the foreign country will increase.
Q:
The demand for labor isA) derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money.B) derived from the demand for the final product being produced.C) derived from a utility maximizing process similar to that used to derive the demand curve for goods and services.D) totally unrelated to the demand curve for the final product.
Q:
Refer to the above figure. From the standpoint of society, the optimal price isA) P1 B) P2 C) P3 D) P5
Q:
Suppose two firms are in a game situation, and they each must decide on a strategy regarding whether to select a high price or a low price. Profits for a firm are highest when it selects a low price, while the other selects a high price; profits are lowest if one selects a high price, while the other selects a low price; profits are in between when both select low prices; and profits are slightly higher when both select high prices. In the absence of collusion we expectA) one of the firms to select a high price and the other a low price.B) one firm to select a high price and the other a low price in the first period, followed by a reversal in the second period.C) both to select high prices. D) both to select low prices.
Q:
The most significant difference between perfect competition and monopolistic competition is that
A) in a perfectly competitive market products are differentiated, while in a monopolistically competitive market products are homogeneous.
B) in a perfectly competitive market products are homogeneous, while in a monopolistically competitive market products are differentiated.
C) in a perfectly competitive market there is a large number of sellers, while in a monopolistically competitive market there is a small number of sellers.
D) in a perfectly competitive market there is a small number of sellers, while in a monopolistically competitive market there is a large number of sellers.
Q:
Explain how a monopolist can increase profits by price discriminating. What are the conditions necessary for price discrimination?
Q:
Which of the following is most likely to be a monopoly?
A) AOL (America On Line), an internet service provider
B) WABC, a television station
C) The Washington Post
D) a public water utility
Q:
If there is no output for which product price is sufficient to cover variable costs, A) the firm should stay open in the short-run.B) the firm should shut down in the short run.C) the firm earns economic profits by staying open.D) the firm should increase production.
Q:
The lowest rate of output per unit of time at which long-run average costs for a firm are at a minimum definesA) maximum efficient scale. B) minimum efficient scale. C) allowable efficient scale. D) short-run efficient scale.
Q:
Quantity of LaborTotal ProductAverage ProductMarginal Product1 320 2 335 3 3384 320Refer to the above table. What does total product equal when 4 units of labor are used?A) 1328 B) 332 C) 320 D) 960
Q:
The funds used to purchase capital goods are calledA) investment. B) savings.C) financial capital. D) dividends and interest.
Q:
The supply curve for land in New York City is most likelyA) horizontal or perfectly elastic. B) a downward sloping straight line.C) an upward sloping straight line. D) vertical or perfectly inelastic.
Q:
Suppose a consumer is currently buying 5 goods so that utility is maximized. The price of one of the goods falls while the prices of the other 4 goods do not change. The consumer shouldA) buy less of all goods being consumed to get to the optimal position.B) buy more of all of the goods but the one that experiences the decline in price, to get to the optimal position.C) buy more of all goods being consumed to get to the optimal position.D) buy more of the good that has experienced the fall in price to get to the optimal position.
Q:
The utility that people experience from the consumption of a good depends onA) their income level.B) their tastes and preferences. C) total sales of the good.D) how much shopping time they spent obtaining the good.
Q:
An increase in total revenue will result ifA) demand is inelastic and price decreases.B) demand is elastic and price decreases.C) demand is elastic and price decreases.D) demand is unitary elastic and price increases.
Q:
An example of the external costs due to automobile driving isA) wear and tear on toll roads.B) the opportunity cost of the driverʹs time. C) air pollution due to exhaust fumes.D) the cost of washing dirty cars.
Q:
Which of the following determinants of marginal productivity cannot be acquired by someone who wants to increase future productivity?A) Education B) Training C) Talent D) Experience
Q:
A union can achieve higher wages without accepting lower levels of employment of members byA) promoting right-to-work laws.B) increasing the demand for substitute products made by non -union labor. C) increasing conflicts with management.D) beginning a campaign against buying foreign imports.
Q:
What are the short-run economic effects when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?
A) The wage rate in the U.S. will remain the same, and the wage rate in the foreign country will decrease.
B) The wage rate in the U.S. will increase, and the wage rate in the foreign country will decrease.
C) The wage rate in the U.S. will decrease, and the wage rate in the foreign country will decrease.
D) The wage rate in the U.S. will decrease, and the wage rate in the foreign country will increase.
Q:
A firmʹs marginal revenue product of labor curve is alsoA) its labor demand curve. B) its marginal cost curve.C) its total revenue line. D) its long-run input cost function.
Q:
Refer to the above figure. From the standpoint of society, the optimal output isA) Q1 B) Q2 C) Q3 D) Q4
Q:
Refer to above figure, which represents a duopoly industry. What would be the likely total industry payoff or profit?A) $8 million B) $9 million C) $10 million D) $14 million E) zero
Q:
In the long run, a perfectly competitive market produces at , whereas the monopolistic competitive firm does not.A) the output at which the lowest average total cost of production is reachedB) an output level at which positive economic profits existC) zero economic profitsD) the point at which MR = MC=ATC
Q:
An upscale fusion bistro in a small town charges higher prices for the same menu items at dinner time than at lunch time. Does the bistro necessarily practice price discrimination? Explain your answer.
Q:
Economies of scale may be a barrier to entry in a situation in whichA) only small-scale production can lower the per-unit cost of production.B) only small-scale production can meet the constantly changing market demand.C) only large-scale production can lower the per-unit cost of production. D) large-scale production is inefficient.
Q:
A firm that shuts down in the short run experiences losses equal toA) zero. B) total variable costs.C) total fixed costs. D) total marginal costs.
Q:
When the minimum efficient scale occurs at a high level of industry outputA) the firms in the industry will be producing in the diseconomies of scale portion of the curve.B) there will only be a few firms in the industry.C) the government will have to take over the production of the good since it will be unprofitable for firms.D) there will be a lot of firms in this industry.
Q:
Quantity of LaborTotal ProductAverage ProductMarginal Product1 320 2 335 3 3384 320Refer to the above table. What does total product equal when 3 units of labor are used?A) 336 B) 1008 C) 338 D) 3
Q:
Financial capital isA) the collection of stock and bond exchanges around the country. B) funds used to purchase capital goods.C) the foreign exchange market. D) assets of financial institutions.
Q:
When a resource has a perfectly elastic supply curve,A) the amount of economic rent for the resource is determined by its supply.B) the amount of economic rent for this resource is determined by demand for the resource. C) there is no economic rent being earned by this resource.D) the entire payment received by this resource is economic rent.
Q:
Suppose a family purchases 10,000 gallons of water a year at 20 cents a gallon and one diamond ring at a price of $1000. Can we conclude that the diamond ring provides more utility to the family than water? Explain.
Q:
Which of the following is NOT true of utility?A) It represents the want -satisfying power of a good.B) It is measured using a representative unit called a util.C) The utility that a good provides depends on a consumerʹs preferences.D) Utility can be measured objectively.
Q:
An increase in total revenue will result ifA) demand is inelastic and price increases.B) demand is elastic and price increases.C) demand is inelastic and price decreases.D) demand is unitary elastic and price decreases.
Q:
Suppose there are two firms on a river and the production processes of both require clean water.The upstream firmʹs process dirties the water, which it dumps back into the river. The downstream firm must clean the water before using it in its production process. If the two firms would merge,A) the external costs of the merged firm would equal the external costs of the upstream firm, which would then be passed on to its customers.B) the total costs of production fall since the external costs disappear.C) the external costs of the upstream firm are private costs after the merger.D) the internal costs of the downstream firm become external costs of the merged firm.
Q:
Marginal productivity theory would suggest that
A) all workers should be paid the same wage.
B) higher productivity will increase the market wage of an individual.
C) labor demand will have no impact on the wage paid.
D) workers cannot do anything to improve their wage prospects for the future.