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Economic
Q:
Compared with a firm in a perfectly competitive market, the demand curve faced by a monopolistically competitive firm isA) more elastic. B) more inelastic.C) perfectly elastic. D) perfectly inelastic.
Q:
If Japanese producers sell computer chips at a higher price in the United States than in Japan, and if there is no cost difference in producing or transporting the chips, the Japanese producers would be practicingA) cartel pricing. B) price discrimination.C) simple monopoly behavior. D) price sampling.
Q:
If it is not possible for a pharmaceutical drug maker to sell its generic cholesterol reducing drug along with some name brand cholesterol reducing drugs, we have an example ofA) monopoly due to ownership of key resources.B) monopoly due to governmental entry restrictions. C) monopoly due to economies of scale.D) pure competition.
Q:
At the short-run break-even point, the firm isA) earning zero accounting profit. B) losing money.C) earning zero economic profit. D) ready to shutdown.
Q:
An increase in output would result in a rise in long -run average costs when there are
A) economies of scale.
B) diseconomies to scale.
C) constant returns to scale.
D) the law of diminishing marginal product.
Q:
As the quantity of labor increases while the amount of other inputs are held constant, marginal product of labor willA) increase continuously. B) decrease continuously.C) initially decrease and then increase. D) initially increase and then decrease.
Q:
Which combination of circumstances will most likely raise the rate of interest for a loan the most?
A) Low handling charges and low risk
B) Low handling charges and a long length of time for repayment
C) High risk and low handling charges
D) High risk and a long length of time for repayment
Q:
When the supply curve of a resource is vertical, then the return to the resource owner isA) zero.B) partly economic rent and partly opportunity costs.C) partly economic rent and partly profits. D) pure economic rent.
Q:
Which of the following best describes the consumer optimum?A) MUa/Pa = TUb/Pb B) MUa/TUa = PaC) MUa/Pa = MUb/Pb = . . . = MUz/Pz D) change in TU/change in P = MU
Q:
Suppose the demand for rental apartments decreased substantially. We would expect to observeA) no change in rent and a sharp reduction in quantity supplied in the short run, and an even larger decrease in quantity supplied in the long run.B) a large decrease in quantity supplied in the short run, followed by a counter -reaction and an increase in quantity supplied in the long run.C) a small decrease in quantity supplied and significantly lower rents in the short run, and quantity supplied to decrease much more in the long run.D) a large decrease in quantity supplied in the short run and the long run, but much larger reductions in rent in the long run.
Q:
We say that a good has elastic demand whenever the absolute value of the price elasticity of demand is greater than 1. A 1 percent change in price therefore causesA) exactly a 1 percent change in the quantity demanded.B) a change of less than 1 percent in the quantity demanded. C) a greater than 1 percent change in quantity demanded.D) a change that cannot be determined based on 1 percent.
Q:
For endangered species, the federal governmentA) can only protect the animal on federal property because of common property issues.B) has the right to regulate activities on private land to save the species from extinction. C) turns over the protection of an endangered species to the state authorities where the species lives.D) will capture a pair of animals so that the species does not become extinct.
Q:
If the market price of a good does NOT include all of the costs and benefits that arise from the production or consumption of the good, thenA) the market is perfectly competitive. B) an externality is present.C) society is consuming and producing the optimal amount of the good. D) resources are properly allocated.
Q:
A diagonal straight line on a Lorenz curve representsA) a perfectly unequal distribution of income (one person has everything).B) a perfectly equal distribution of income.C) a high level of inequality in the distribution of income.D) an oblique distribution of income.
Q:
Methods that are sometimes used by unions to increase wages of union workers includeI. advertising to increase the demand for union -made goods. II. campaigning against imports.A) I only B) II only C) Both I and II D) Neither I nor II
Q:
Absent government interference, the wage rate for labor in a competitive market is established
A) solely by the firmʹs demand for labor.
B) solely by the market supply of labor.
C) by both the demand for and supply of labor at each individual firm.
D) by the the market supply and market demand for labor.
Q:
Suppose at the current level of labor used, MRP = $100 and MFC = $100. To maximize profits, the firm shouldA) hire more labor. B) reduce the level of labor. C) maintain the current level of labor. D) shut down.
Q:
For a natural monopoly, long-run average costsA) fall as output increases. B) rise as output increases.C) fall as output falls. D) rise as output falls.
Q:
Suppose a firm can charge a relatively low price to try to compete actively with its rivals, or it can charge a relatively high, collusive price. If its strategy is to charge the low price regardless of the other firmsʹ decisions, this low-price is the firmʹsA) dependent strategy. B) independent strategy.C) dominant strategy. D) positive sum strategy.
Q:
Suppose a sushi restaurant is making significant economic profit in the short run. In the long runA) more people will open sushi restaurants, reducing the economic profit for each restaurant. B) high barriers to entry keep people from opening sushi restaurants.C) the government will require the sushi restaurant to sell part of its interests in the city. D) more people will open steak restaurants, increasing the economic profit for the sushi restaurant.
Q:
Which of the following is NOT a necessary condition for a firm to price discriminate?A) The firm must be able to separate markets.B) Buyers in different markets must have different elasticities of demand. C) Resale of the product must be preventable.D) The firm must be a price-taker.
Q:
If it is not profitable for more than one firm to be in an industry, we have an example ofA) monopoly due to ownership of key resources.B) monopoly due to governmental entry restrictions.C) monopoly due to economies of scale. D) pure competition.
Q:
When a firm is earning zero economic profits,A) accounting profit is zero. B) total revenue is greater than total cost.C) P = ATC. D) P is greater than ATC.
Q:
An increase in output would result in no change in long-run average costs when there areA) economies of scale. B) diseconomies to scale.C) constant returns to scale. D) diminishing marginal product.
Q:
The physical output that is due to the addition of one more unit of a variable factor of production isA) average total cost. B) marginal cost.C) average physical product. D) marginal physical product.
Q:
The greater is the risk of non-repayment of a loan, theA) higher is the expected rate of interest.B) longer is the expected time to repay the loan. C) lower is the handling charges for the loan.D) lower is the expected rate of interest.
Q:
Pure economic rent involves situations whereA) the supply curve is perfectly inelastic. B) the supply curve is perfectly elastic.C) the uses to which a resource can be used can be varied but the quality of the resource cannot be varied.D) the quality of a resource can be varied but the price cannot be varied.
Q:
When a consumer is at the consumer optimum, A) MUa = MUb = MUc = . . . = MUn.B) MUa/Pa = MUb/Pb = MUc/Pc = . . . = MUn/Pn = 1. C) TUa = TUb = TUc = . . . = TUn.D) MUa/Pa = MUb/Pb = MUc/Pc = . . . = MUn/Pn.
Q:
The supply curve for housing in the very short run is likely to beA) very elastic. B) very inelastic.C) unit-elastic elastic.D) perfectly elastic.
Q:
When demand is unit elastic, a 10 percent change in the price of the goodA) will cause a change in quantity demanded of less than 10 percent. B) will cause a change in quantity demanded equal to 10 percent.C) will cause a change in quantity demanded greater than 10 percent. D) will not cause any change in quantity demanded.
Q:
The Endangered Species Act is an attempt toA) protect endangered species against greedy loggers, farmers, and business people.B) protect endangered species from the overzealousness of many environmentalists. C) protect species endangered because there are no private property rights on them. D) prevent some people from earning a good living.
Q:
If firms were forced to take into account the full social costs of production, thenA) output would decrease but pollution levels would probably remain at the same levels.B) output would be unaffected but pollution levels would come down. C) output and pollution levels would decrease.D) output could be increased and pollution levels would decrease.
Q:
The distribution of money income can be represented graphically usingA) supply and demand diagrams. B) a Lorenz curve.C) a Keynesian curve. D) a Distribution curve.
Q:
A tariff on imported goods produced by an unlimited industry could benefit the members of the domestic union since the tariff would most likelyA) lower the price of the output that workers purchase.B) lower the domestic production of the good and increase wages.C) increase the demand for domestic, union-made goods. D) decrease the cost of the imported goods.
Q:
In a perfectly competitive labor market, the wage rate paid by the individual firm isA) the equilibrium market wage rate.B) dependent on the demand for the product.C) below the equilibrium market wage rate. D) a function of the tax system.
Q:
Suppose at the current level of labor used, MRP = $100 and MFC = $150. To maximize profits, the firm shouldA) hire more labor. B) reduce the level of labor. C) maintain the current level of labor. D) expand production.
Q:
A firm that has taken advantage of economies of scale and expanded to become the only producer in the market isA) a cartel. B) a natural monopoly. C) a monopolistic competitor. D) an oligopolist.
Q:
The dominant strategy allows a firm toA) obtain the highest benefit, regardless of its rivalsʹ actions.B) transform a negative -sum game into a positive-sum game. C) transform a zero-sum game into a positive -sum game.D) escape from a Prisonersʹ Dilemma situation.
Q:
In the long run, the economic profits of a monopolistically competitive firmA) will tend to be larger than in the short run. B) equal zero.C) will be the average short-run profits earned in the last five years. D) will be the same as in the short run.
Q:
Which of the following is TRUE?
A) Monopoly results in a higher quantity of output being sold compared with perfect competition.
B) Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.
C) Charging all customers the same price when costs vary can actually be a case of price discrimination.
D) Price discrimination guarantees that the monopolist will make a profit.
Q:
Which of the following is not true when there are large economies of scale such that one firm can produce at a lower average cost than can be achieved by multiple firms?A) This situation produces a natural monopoly.B) Proportional increases in output yield proportionally small increases in total cost.C) The long-run average cost curve of the firm will increase at a low level of output. D) There will only be one firm in this industry.
Q:
At the short-run break-even point, the perfectly competitive firm isA) earning positive economic profits. B) earning zero economic profits.C) earning negative economic profits. D) just covering its total variable costs.
Q:
A decrease in long-run average costs resulting from decreases in output isA) attributed to constant returns to scale.B) attributed to economies of scale.C) attributed to the law of diminishing marginal product.D) attributed to diseconomies to scale.
Q:
The change in total product occurring when a variable input is increased and all other inputs are held constant isA) average total cost. B) marginal cost.C) average physical product. D) marginal physical product.
Q:
Interest rates are positive becauseA) people prefer future consumption over current consumption.B) people prefer current consumption over future consumption. C) usury laws require rates to be very high.D) banks are not competitive.
Q:
The payment for a factor of production that is completely inelastic in supply isA) opportunity cost. B) economic rent.C) discounting. D) limited liability.
Q:
A consumer is buying the optimal amount of goods whenA) the total utility from the purchases on all the goods purchased is the same.B) the marginal utility from the purchases of all the goods purchased is the same.C) the marginal utility per last dollar spent on all of the goods purchased is the same.D) the marginal utility from the purchases of all the goods is equal to 1.
Q:
The most important determinant of price elasticity of supply isA) the number of close substitutes there are for the good.B) the time period firms have to adjust to the new price. C) the price of the good.D) the importance of the good in the budgets of consumers.
Q:
If a 5 percent change in the price of a good elicited a 5 percent change in the quantity demanded of the good, we would say that over this range of prices the good has a(n)A) elastic demand. B) inelastic demand.C) perfectly elastic demand. D) unit elasticity of demand.
Q:
Wild animals are likely to beA) private property. B) endangered species. C) domesticated by humans. D) all of the above.
Q:
If crop dusting on your farm causes your neighbors to have sore throats, then crop dusting is creatingA) only explicit costs. B) opportunity costs. C) external costs. D) internal costs.
Q:
Name(s)Income/PersonAl, Bert$3,000David, Jamal$2,000Eve, Eric, Lucy, Cecil$1,500Fran, George$1,000Use the information in the above table. If Income was evenly distributed, each person would receiveA) $9,000. B) $2,500. C) $1,800. D) $1,000.
Q:
If a union limits its size to the number of employed members it had when the union was first formed, over time there will beA) an increase in the supply of union labor.B) falling wages as demand for workers increases.C) rising wages as demand for workers increases and the supply increases proportionally. D) rising wages as demand for workers increases but some potential workers are denied a place in the union.
Q:
A single firm in a competitive labor market has a labor supply curve that is A) upward sloping. B) perfectly inelastic. C) perfectly elastic. D) downward sloping.
Q:
Suppose at the current level of labor used, MRP = $100 and MFC = $50. To maximize profits, the firm shouldA) hire more labor. B) reduce the level of labor. C) maintain the current level of labor. D) shut down.
Q:
A natural monopoly owes its existence toA) control of a key input.B) persistently declining long-run average costs as scale increases. C) patents.D) increasing marginal returns and the ability to obtain quantity discounts from suppliers.
Q:
A noncooperative game situation may occur whenA) firms collude. B) firms find collusion too costly. C) firms merge. D) firms agree to price fixing.
Q:
Which of the following statements is true for a monopolistically competitive firm in the long run?A) P = ATC > MR B) MC > P > ATC C) P > MC > ATC D) P = MC = MR
Q:
Establishing different prices for similar products to reflect differences in marginal cost in providing those goods to different groups of buyers isA) price discrimination. B) cost-plus pricing.C) price differentiation. D) product differentiation.
Q:
When it takes one firm in an industry to produce the quantity necessary to realize low unit costs, the industryA) experiences economies of scale.B) has barriers to entry due to ownership of resources. C) has no barrier to entry.D) has a license granted by the government.
Q:
For a perfectly competitive firm, the short-run break-even point occurs at the level of output whereA) P > MR = MC. B) MR = P > MC. C) MR < P = MC. D) P = MC = ATC.
Q:
An increase in long -run average costs resulting from increases in output isA) attributed to economies of scale.B) attributed to diseconomies to scale.C) attributed to constant returns to scale.D) attributed to the law of diminishing marginal product.
Q:
Marginal physical product isA) the change in total output from using an additional unit of one variable input, holding other inputs constant.B) the change in total output from using an additional unit of all variable inputs.C) the total output divided by the number of units of the variable input.D) the change in total output divided by the number of units of the variable input, holding constant all other inputs.
Q:
People basically borrow in order to
A) go into debt.
B) have more funds.
C) have interest payments.
D) have current consumption rather than waiting to consume in the future.
Q:
The payment for the use of a resource in an amount higher than the resourceʹs opportunity cost isA) a proprietorship. B) an irrational economic concept. C) economic rent. D) reinvestment.
Q:
Your allergies are bad this summer so your allergist writes you a prescription to relieve your symptoms. When you get to the pharmacy, you notice the name brand allergy medicine is more expensive than its generic equivalent. You purchase the generic equivalent and demonstrate all of the following EXCEPTA) the principle of substitution of one product for another.B) the principle of diminishing marginal utility.C) when price decreases, the quantity demanded increases.D) a price change may affect consumer optimum.
Q:
Suppose the short -run supply curve is a straight line of slope +1 that intersects the origin. The long-run supply curve will beA) horizontal.B) steeper. C) shallower.D) vertical.
Q:
A perfectly inelastic demand curve isA) a horizontal straight line.B) a vertical straight line.C) a downward sloping straight line that intersects the horizontal axis at the origin.D) an upward sloping straight line that crosses the vertical axis.
Q:
Which of the following is most likely to be private property?A) bees B) house fliesC) farm raised chickensD) winds
Q:
If the external costs of production are not taken into account, then production willA) be less than socially desirable. B) be more than socially desirable.C) be the same since only prices are affected by externalities. D) cease.
Q:
Name(s)Income/PersonAl, Bert$3,000David, Jamal$2,000Eve, Eric, Lucy, Cecil$1,500Fran, George$1,000Use the information in the above table. The top 40 percent of the population earn A) 66.7 percent of the income. B) 55.5 percent of the income. C) 50.0 percent of the income. D) 44.4 percent of the income.
Q:
When unions raise wages beyond what productivity increases would permit, A) more union workers are employed.B) there are higher wages for all union members.C) there is a redistribution of income from low- to high-seniority workers. D) nonunion workers wages in the economy also increase.
Q:
In the perfectly competitive market, the labor supply curve faced by the individual firm is, while that of the market is .A) perfectly elastic; perfectly inelastic B) perfectly inelastic; perfectly elasticC) perfectly elastic; upward sloping D) perfectly inelastic; upward sloping
Q:
The additional cost associated with the hiring of one more unit of labor is known as theA) marginal physical product of labor. B) marginal revenue product of labor.C) marginal factor cost of labor.D) marginal utility of labor.
Q:
In marginal cost pricing, the natural monopoly would have to set price equal toA) AFC. B) AVC. C) ATC. D) MC.
Q:
Collusion always involves firms engaging in aA) vertical merger. B) horizontal merger.C) cooperative game. D) noncooperative game.
Q:
Use the above figure. When it maximizes its economic profits, the monopolistically competitive firm depicted in the figureA) is earning an economic profit. B) is earning an accounting profit. C) is earning an economic loss.D) must increase output to reduce the ATC.
Q:
Which of the following is NOT necessary in order for a monopolist to practice effective price discrimination?A) The marginal cost of providing the same good to different groups of buyers must be different.B) The monopolist must be able to segregate its market into different submarkets. C) The buyers in various markets must face different price elasticities of demand. D) The monopolist must have a downward sloping demand curve.
Q:
Considering the spectrum of market structures and moving from pure competition to pure monopoly we can say thatA) entry barriers get lower but exit gets more difficult. B) entry becomes harder but exit becomes easier.C) entry gets harder and the number of firms dwindles. D) none of the above
Q:
In the above figure, when price is below E, this firm shouldA) lower prices.B) continue to operate as-is.C) attempt to lower ATC and to raise AVC.D) shut down.