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Economic
Q:
When a person drives an automobile, that individual is creatingA) internal costs only.B) private costs only because the individual pays for the insurance, gas etc. C) external costs only.D) social costs.
Q:
The age-earnings profile predicts that earnings will peak atA) the 35-40 age level. B) the 45-50 age level. C) the 60-65 age level. D) retirement.
Q:
A union that pursued a policy of restricting entry over time into the union wouldA) see real wages hold constant over time at whatever premium they could get initially. B) also have to negotiate to be sure that all the members were able to find jobs.C) generate rising real wages for its membership over time as long as demand for union workers increased over time.D) fail to obtain benefits for their workers in excess of what the workers would get under open markets.
Q:
A firmʹs employment of labor outside the country in which the firm is located is calledA) featherbedding. B) a lockout. C) outsourcing. D) dumping.
Q:
Marginal factor cost is
A) the change in the value of output from using an additional unit of the factor.
B) the cost of an additional unit of output.
C) the total value of factor cost divided by the one cost that is being held constant.
D) the cost of using an additional unit of an input.
Q:
If a natural monopolist is unregulated, thenA) the monopoly will produce efficiently from societyʹs point of view.B) the monopoly will produce inefficiently from societyʹs point of view.C) the monopolist will be earning just a normal rate of return on investment.D) the monopolist will determine the profit maximizing quantity by equating marginal cost to the demand curve.
Q:
A cooperative game isA) companies colluding in order to make higher than competitive rates of return.B) the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry.C) a game in which firms will not negotiate in any way.D) when plans made by firms are known as game strategies.
Q:
The long-run equilibrium of a monopolistic competitor differs from the long-run equilibrium of a perfect competitor in that
A) the monopolistic competitor makes economic profits.
B) the monopolistic competitor sets price equal to marginal cost.
C) the monopolistic competitor produces at the minimum point of its average total cost curve.
D) the monopolistic competitor charges a price that exceeds marginal cost.
Q:
Which of the following is NOT necessary for price discrimination to occur?
A) The firm must be able to separate the market into identifiable groups.
B) The firm must be selling a durable good.
C) The firm must have a downward sloping demand curve.
D) The firm has to be able to prevent resale of the product or service.
Q:
A patent protects an inventorʹs creation from being copied or stolen for a period ofA) 10 years. B) 20 years. C) 30 years. D) 50 years.
Q:
The short-run shutdown price for a perfectly competitive firm is where price equalsA) minimum ATC. B) AR.C) MR. D) minimum AVC.
Q:
ʺA firm cannot experience both economies of scale and diminishing marginal product.ʺ Do you agree or disagree? Why?
Q:
Which of the following statement is correct?A) When Marginal Product is greater than Average Physical Product, Average Physical Product is increasing.B) When Marginal Product is greater than Average Physical Product, Average Physical Product is decreasing.C) When Marginal Product is greater than Average Physical Product, Average Physical Product is equal to Total Product.D) When Marginal Product is greater than Average Physical Product, Total Product is increasing at a decreasing rate.
Q:
Suppose that you borrow $10,000 for one year, and at the end of the year, you must repay $10,450. The interest rate isA) 14.5 percent. B) 8.0 percent. C) 4.5 percent. D) 2.7 percent.
Q:
Bonnie is debating whether to take a job as a professional therapist or a florist. She will earn $40,000 a year as a therapist or $22,000 a year as a florist. If she chooses to be a therapist, the economic rent isA) $40,000. B) $22,000.C) $18,000. D) unable to determine.
Q:
Suppose that a consumer is currently at an optimum when consuming goods A and B. Which of the following must be true?A) The total utility from A is equal to the total utility from B. B) The price of A is equal to the price of B.C) The marginal utility of A is equal to the marginal utility of B.D) The marginal utility to price ratio of A is equal to the marginal utility to price ratio of B.
Q:
If the price elasticity of supply is equal to 1, we would say the supply of the item isA) unit elastic. B) inelastic.C) elastic. D) perfectly elastic.
Q:
No matter what the price of coffee is in the cafeteria, Jack spends $20 a week on coffee. We can conclude that the absolute value of the price elasticity of demand for coffee for Jack isA) greater than 1. B) equal to 1. C) less than 1. D) equal to 0.
Q:
The sum of internal and external costs isA) externalities. B) social costs. C) internalities. D) private costs.
Q:
The age-earning cycle shows an individual typically earningA) a constant income (adjusted for inflation) over the entire working life of the worker.B) an income that cycles upward and downward as an individual ages.C) an income that increases with age, peaks, and then falls as retirement approaches.D) an income that declines until age 30 -35 and then increases rapidly.
Q:
The leadership of unions must recognize that they faceA) an economic system that is hostile to the interests of workers.B) a no-win situation whenever they think a strike is necessary.C) a fundamental trade -off between higher wages for members and higher taxes for members.D) a fundamental trade -off between higher wages for members and fewer jobs for members.
Q:
When U.S. computer companies hire workers in India to staff their customer service call centers, they are engaging inA) predatory pricing. B) unfair trade practices. C) outsourcing. D) labor engagement.
Q:
When 5 units of labor are employed, total product is 9 units; when 6 units of labor are employed, total product is 11 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 6th unit of labor?A) $10 B) $5 C) $15 D) $55
Q:
Which of the following statements about natural monopoly is correct?A) Governments regulate natural monopolies in order to ensure that costs of production are minimized.B) Governments regulate natural monopolies in order to ensure that the firm earns a normal profit.C) Governments regulate natural monopolies in order to prevent them from making profits.D) Governments regulate natural monopolies in order to keep their workers from earning wages that are too high.
Q:
A noncooperative game isA) companies colluding in order to make higher than competitive rates of return.B) the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry.C) a game in which firms will not negotiate in any way.D) when plans made by firms are known as game strategies.
Q:
What did Harvard economist Edward Chamberlain say about the observation that a monopolistically competitive firmʹs average cost of production exceeds its minimum average total cost?A) Chamberlain argued that these higher costs represent the wastefulness of this market structure.B) Chamberlain argued that this belief is incorrect. In his view, monopolistically competitive firms do not produce at a cost above their minimum average total costs.C) According to Chamberlain, this cost difference represents the value consumers place on variety and having more choice.D) In Chamberlainʹs view, this is evidence that monopolistic competition uses societyʹs resources inefficiently and in a fashion that merits government intervention.
Q:
When a firm sells a given product at more than one price and the price difference is NOT caused by differences in cost then there isA) price discrimination. B) price differentiation. C) price demarcation. D) price delineation.
Q:
A monopoly which arises from significant economies of scale is referred to as aA) monopolistic competitor. B) strategic resource monopoly. C) natural monopoly. D) patent monopoly.
Q:
A firm that shuts down in the short run experiences losses equal to itsA) total fixed costs.B) average variable costs. C) total variable costs.D) total variable costs minus its total fixed costs.
Q:
ʺThe short-run average total cost curve and the long -run average cost curve are both U-shaped for the same reasons.ʺ Do you agree or disagree? Why?
Q:
The change in output caused by a one-unit change in labor is referred to as theA) compounded physical product of labor. B) average physical product of labor.C) marginal physical product of labor. D) total physical product of labor.
Q:
What is the future value of $1,000 in three years if the rate of discount is equal to 5 percent?A) $1,150.00 B) $1,005.00 C) $1,157.63 D) $863.84
Q:
Bonnie is debating whether to take a job as a professional therapist or a florist. She will earn $40,000 a year as a therapist or $22,000 a year as a florist. If she chooses to be a therapist, the opportunity cost isA) $40,000. B) $22,000.C) $18,000. D) unable to determine.
Q:
The expression ʺgetting the most bang for your buckʺ is an illustration of theA) total utility/price ratio. B) total utility/marginal utility ratioC) marginal utility/price ratio. D) marginal utility/total utility ratio.
Q:
If the price of hamburger meat increases by 20 percent and the quantity supplied by meat packing companies increases by 30 percent, what is the price elasticity of supply?A) 1.65 B) 1.20 C) 0.67 D) 1.50
Q:
When total revenue remain unchanged when there is a change in price, demand isA) unit-elastic. B) inelastic. C) elastic. D) not related.
Q:
The total costs of using a resource are made up ofA) private costs only. B) external costs only.C) social costs only. D) internal and private costs only.
Q:
Which factor listed below does NOT help account for the age-earning cycle?A) productivity B) number of hours worked each weekC) effects of aging D) racial discrimination
Q:
If a union is successful in negotiating a wage rate which is above the market clearing wage, then which of the following would not occur?A) The higher wages attract more workers leading to a shortage of jobs. B) Management may replace part of the workforce with machinery.C) To handle the surplus of labor the union will form a closed shop.D) The union may shift the supply of labor curve by developing methods to ration jobs.
Q:
Explain how the equilibrium wage rate is determined for a perfectly competitive industry and how a firm in that industry determines its profit maximizing employment level.
Q:
When 4 units of labor are employed, total product is 6 units; when 5 units of labor are employed, total product is 9 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 5th unit of labor?A) $3 B) $5 C) $15 D) $45
Q:
An unregulated natural monopolist will produce the quantity at whichA) average total costs are minimized.B) marginal cost equals marginal revenue.C) marginal cost equals the long run average cost curve.D) the long-run average cost curve intersects the demand curve.
Q:
The analytical framework in which two or more firms compete for certain payoffs that depend on the strategy that the others employ isA) game theory. B) the concentration ratio. C) a horizontal merger. D) network effect.
Q:
One way to view the cost structure of monopolistic competition is to say that the cost of product differentiation is equal toA) the difference between marginal revenue and marginal cost.B) the difference between the cost of production for a monopolistically competitive firm in an open market and the minimum average total cost. C) the sum of price and marginal cost.D) the sum of marginal cost and minimum average cost.
Q:
Which is NOT a necessary condition for price discrimination to exist?A) The firm must face a downward sloping demand curve.B) The firm must identify buyers with different elasticities of demand.C) The firm must be able to prevent resale of the product or service. D) The firm must establish different prices to reflect marginal cost.
Q:
Which of the following is a characteristic of a monopoly firm?A) horizontal individual demand curve B) barriers to entryC) easy entry and exit D) many buyers and sellers
Q:
A firm earning economic losses should operate in the short run as long as
A) the price per unit sold is greater than the average fixed cost per unit produced.
B) the price per unit sold is greater than the average variable cost per unit produced.
C) marginal revenue is at least the price per unit sold.
D) the price per unit sold is equal to or greater than the marginal cost of production.
Q:
What factors generate economies of scale?
Q:
At Philʹs Hot Dog Stand, we found the following:4 laborers produced 66 hot dogs5 laborers produced 76 hot dogs6 laborers produced 84 hot dogs7 laborers produced 88 hot dogsWhat was the marginal physical product of the seventh laborer?A) 8 hot dogs B) 10 hot dogs C) 4 hot dogsD) none of the above due to insufficient information
Q:
Given a discount rate of 10 percent, the present value of receiving $10,000 two years in the future isA) $12,000. B) $8,000. C) $8,264.46. D) $12,100.
Q:
The opportunity cost of owner-provided labor is theA) wage rate paid to the owner.B) explicit part of the wage rate paid to the owner.C) salary the owner could have made if she worked at her best alternative job. D) profit after all of the bills have been paid.
Q:
Assume that Jack has the preferences shown in the above table. Also assume that the price of a can of Pepsi is $3.00 and that the price of a slice of pizza is $1.00. If he has $16 available to spend, what combination of Pepsi and pizza will be his consumer optimum?A) 4 cans of Pepsi, 1 slice of pizza B) 3 cans of Pepsi, 2 slices of pizzaC) 2 cans of Pepsi, 4 slices of pizza D) 4 cans of Pepsi, 4 slices of pizza
Q:
The longer the time period that suppliers have to adjust to price changes, theA) greater will be the price elasticity of supply. B) lower will be the price elasticity of supply. C) lower will be the price elasticity of demand.D) greater will be the price elasticity of demand.
Q:
When total revenue and price are directly related, demand isA) unit-elastic. B) inelastic. C) elastic. D) not related.
Q:
Social costs areA) costs that are borne by the government.B) the full cost borne by society whenever a resource use occurs. C) borne by individuals who incur them.D) another term for external costs.
Q:
Which of the following are determinants of differences in income?A) age B) marginal productivityC) discrimination D) all of the above
Q:
Unions can ration the excess supply of labor generated by the establishment of a wage that is above the competitive wage byA) lengthening the time period for apprenticeship programs. B) lowering union dues.C) encouraging older workers to take early retirement.D) having more intensive membership drives to ensure a larger proportion of workers are covered by the union contract.
Q:
What can cause the demand curve for labor to shift? Explain.
Q:
The marginal revenue product of labor isA) the marginal physical product multiplied by marginal revenue.B) the marginal revenue of output multiplied by the price of the input.C) total sales divided by total labor employed. D) total labor employed divided by total sales.
Q:
When production is characterized by persistently declining long -run average costs as output increases,A) the costs of production are greater when competition exists than when a single firm produces a good.B) it is impossible for two firms to compete in the market.C) the costs are lower if a single firm exists, and even if the firm is unregulated, price will still be lower with a single firm.D) there is no need for the government to limit competition by licensing requirements.
Q:
In a ʺgame,ʺ strategies are
A) the reactions of firms to the changes in the economy.
B) the laws regulating the industry.
C) the plans made by the participants.
D) the potential returns the participants may get.
Q:
Monopolistic competition and perfect competition are different in thatA) only monopolistically competitive firms advertise.B) only monopolistically competitive firms can earn economic losses in the short-run. C) only perfectly competitive firms maximize profits where marginal revenue equals marginal cost.D) only perfectly competitive firms are characterized by long -run economic profits of zero.
Q:
Price discrimination exists whenA) a firm charges different buyers different prices for its product but the costs are the same.B) each buyer is treated equally. C) sales are made below cost.D) a firm charges each buyer a price of the product in proportion to its costs.
Q:
A monopolist would probably earn fewer profits ifA) the importance of specialized capital equipment in its production techniques increased.B) the time length of patents increased.C) environmental regulations increased that required the purchase of special capital equipment.D) tariffs on competing products were lowered.
Q:
A firm should never produce any output ifA) P < AVC.B) P < ATC.C) AR < ATC.D) MR < MC.
Q:
Which of the following statements is true?A) If a firm is experiencing economies of scale, diminishing marginal product has not set in yet.B) No firm would ever operate at a level of output for which it experiences diseconomies of scale.C) A firm can experience diminishing marginal product and economies of scale at the same time.D) Diseconomies of scale is a short-run concept, while economies of scale is a long -run concept.
Q:
At Philʹs Hot Dog Stand, we found the following:4 laborers produced 66 hot dogs5 laborers produced 76 hot dogs6 laborers produced 84 hot dogs7 laborers produced 88 hot dogsWhat was the marginal physical product of the sixth laborer?A) 10 hot dogs B) 8 hot dogs C) 6 hot dogs D) 4 hot dogs
Q:
If the interest rate is 5 percent per year and you borrow $100 for two years, at the end of the second year you must pay backA) $90.70. B) $10.25. C) $105. D) $110.25.
Q:
George is debating whether to concentrate on playing professional football or professional baseball. He is offered $6 million a year to play baseball and $7 million a year to play football. If he chooses to play football,A) the economic rent in his salary is $7 million. B) the economic rent in his salary is $6 million. C) the economic rent in his salary is $1 million. D) the economic rent in his salary is $13 million.
Q:
Assume that Catherine has the preferences shown in the above table. Also assume that the price of a can of Pepsi is $3.00 and that the price of a slice of pizza is $2.00. If she has $16 available to spend, what combination of Pepsi and pizza will be her consumer optimum?A) 1 can of Pepsi, 4 slices of pizza B) 2 cans of Pepsi, 5 slices of pizzaC) 4 cans of Pepsi, 2 slices of pizza D) 6 cans of Pepsi, 0 slices of pizza
Q:
For most items, we find the price elasticity of supply will beA) negative. B) positive. C) invisible. D) inverse.
Q:
When total revenue and price are inversely related, demand isA) unit-elastic. B) inelastic. C) elastic. D) not related.
Q:
The sum of internal and external costs isA) private costs. B) social costs.C) internality. D) common property.
Q:
Age is a determinant of income becauseA) with age typically come experience, education, and training that can increase income.B) age contributes to costs as medical expenses increase. C) older workers have accumulated more wealth.D) older workers have accumulated less wealth.
Q:
Suppose a union successfully negotiates for its members a wage rate that is above the competitive wage rate, thenA) there will be a surplus of jobs. B) antitrust laws become effective.C) there will be downward pressure on the wage rate until equilibrium is established.D) there will be an excess supply of labor.
Q:
Explain the efficiency wage theory.
Q:
The marginal revenue product is
A) the change in total output resulting from a one -unit change in variable output.
B) the change in marginal output resulting from a one -unit change in variable input.
C) the change in total revenue resulting from a one-unit change in variable input.
D) the change in marginal revenue resulting from a one-unit change in variable input.
Q:
A natural monopoly exists whenA) control of a key input leads to a single-firm industry.B) increasing marginal returns and the ability to obtain quantity discounts from suppliers leads to a single-firm industry.C) economies of large-scale production are substantial, leading to a single-firm industry.D) the government restricts entry that leads to a single-firm industry.
Q:
The manner in which one oligopolist reacts to a change in price, output, or quality made by another oligopolist in the industry isA) a cooperative game. B) the reaction function.C) a zero-sum game. D) the concentration ratio.
Q:
Monopolistic competition and perfect competition are similar in that each market structure is characterized byA) advertising.B) production at minimum average cost in the long run.C) a horizontal demand curve.D) the absence of long-run economic profits.