Q&A Hero

Q: An increase in long -run average costs resulting from decreases in output isA) attributed to the law of diminishing marginal product.B) attributed to constant returns to scale. C) attributed to economies of scale.D) attributed to diseconomies to scale.

Q: If the average product of 20 workers is 100 bushels of wheat and the average product of 21 workers of wheat is 99 bushels of wheat, then the marginal product of the 21st worker wasA) -1 bushel of wheat. B) 5 bushels of wheat. C) 79 bushels of wheat. D) 99 bushels of wheat.

Q: Because handling charges are relatively fixed, the interest rate on a loan generally A) increases with the size of the loan. B) decreases with the size of the loan. C) is constant regardless of the size of the loan. D) is unrelated to the size of the loan.

Q: Economic rent isA) the return to owners of farmland. B) the return to landlords.C) a payment for the use of any resource above its opportunity cost.D) a payment for land, an apartment, or a house that one does not own.

Q: QuantitiesMUapples(Adam)MUoranges(Adam)QuantitiesMUapples(Eve)MUoranges(Eve)14030115202302021015325153812420124510Use the above table. Adam has 3 apples and 3 oranges. Eve has 2 apples and 2 oranges. Eve asks Adam to give her an apple in exchange for an orange. Should Eve go through with this exchange?A) Yes. This way she will have 3 apples, which will give her more total satisfaction. B) Yes. She is indifferent between consuming apples and oranges.C) No. She gives up more satisfaction than she gets. D) No. Adam likes apples more than oranges.

Q: Supply will become more elastic whenA) a time period lengthens. B) the time period shortens.C) the good is important to consumers. D) there are good substitutes for the goods.

Q: Whenever the absolute value of the price elasticity of demand is greater than 1, but less than infinite,A) demand is inelastic. B) demand is unit elastic.C) demand is elastic. D) demand is perfectly elastic.

Q: The trade-off of saving the spotted owls in the Pacific Northwest wasA) the loss of salmon in the region.B) the increase in the number of marbled murrelets.C) the loss of logging activities by lumber companies. D) none.

Q: Externalities exist becauseA) private costs differ from social costs. B) private costs are equal to social costs.C) government has created them. D) they are a function of socialism.

Q: Name(s)Income/PersonAl, Bert$3,000David, Jamal$2,000Eve, Eric, Lucy, Cecil$1,500Fran, George$1,000Use the above table. What percentage of income is received by the poorest 20% of the population?A) 20 percent B) 13.3 percent C) 11.1 percent D) 7.0 percent

Q: Look at the above figure. A union wishes to maximize wage income for employed union members, so it should aim for a wage rate and a number of employed members equal toA) W1, Q3 B) W2, Q2 C) W3, Q1 D) W4, Q3

Q: Ajax Corporation has just decided to let managers work from home one day a week. This decision will make working conditions better and willA) cause the demand curve for labor for managers to increase. B) increase the elasticity of demand for labor for managers.C) lead to an increase in the supply curve of labor for managers.D) leave the supply curve of labor unchanged.

Q: The additional revenue earned from hiring one more worker 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 average cost pricing, the natural monopoly would have to set price equal toA) AFC. B) AVC. C) ATC. D) MC.

Q: In game theory, the strategy that always yields the highest benefit for the player using it is theA) dominant strategy. B) cooperative strategy. C) prisonersʹ strategy. D) matrix strategy.

Q: Use the above figure. The total profit earned by this monopolistically competitive firm isA) $2,560. B) $1,600. C) $480. D) $1,900.

Q: If the price elasticity of demand for airline tickets is 2.0 for a leisure traveler and 0.5 for a business traveler, then a price-discriminating monopolist would charge A) a higher price for the business traveler than the leisure traveler. B) the same price for both travelers. C) a lower price for the business traveler than the leisure traveler. D) a less profitable price for the business traveler than the leisure traveler.

Q: Entry barriers are most significant inA) pure competition. B) monopolistic competition. C) oligopoly. D) pure monopoly.

Q: In the above figure, assume d3 is the demand curve faced by this firm. Which is true?A) This firm is earning an economic profit.B) This firm is experiencing an economic loss. C) This firm is breaking even.D) This firmʹs total revenues equal HRD0.

Q: A decrease 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: As the amount of a variable input increases, while all other inputs are held constant, total product willA) always increase. B) always decrease.C) initially decrease and then increase. D) initially increase and then decrease.

Q: Creditors require collateral in many cases, because A) it helps offset the risks of lending the funds. B) the borrower is a low risk.C) the loan is small.D) none of the above.

Q: The Hawaiian island of Lanaʹi is privately owned by Castle & Cooke and for generations most of its land was used to grow pineapples. Now, many of the pineapple fields have been replaced by tourist accommodations, including a pair of world-class hotels and a top rated golf course. What would an economist say about this change in land -use patterns?A) While growing pineapples used the islandʹs land more efficiently, tourism provides utility to the largest number of people.B) Economic rent has allocated the islandʹs resources to their highest valued use: tourism.C) Agriculture is still the landʹs highest-valued and most efficient use, but tourism earns more profits for Castle & Cooke.D) To find the landʹs economic rent, add the price per acre that land on Lanaʹi would be worth if used to grow pineapples to the value per acre when used for a golf course.

Q: QuantitiesMUapples(Adam)MUoranges(Adam)QuantitiesMUapples(Eve)MUoranges(Eve)14030115202302021015325153812420124510Adam has 3 apples and 3 oranges. Eve has 2 apples and 2 oranges. The marginal utilities for Adam and Eve are summarized in the above table. Adam asks Eve to exchange one of her apples for an orange.A) Eve will be willing to make the exchange, because her total satisfaction will remain unchanged.B) Eve will be willing to make the exchange, because her total satisfaction will increase.C) Eve will be unwilling to make the exchange, because she loses 5 utils of satisfaction. D) Eve will be unwilling to make the exchange, because she loses 15 utils of satisfaction.

Q: Refer to the above figure. The supply curve isA) elastic at high prices and inelastic at low prices.B) unitary for all prices. C) perfectly elastic.D) perfectly inelastic.

Q: If demand is inelastic and the price of a product decreases by 10 percent, thenA) the change in quantity demanded is less than 10 percent. B) the change in quantity demanded is equal to 10 percent.C) the change in quantity demanded is greater than 10 percent. D) the decrease in quantity demanded is greater than 0 percent.

Q: Which of the following is TRUE about species in the world?A) Most extinct species became extinct within the past 30 years.B) The majority of extinct species became extinct before humans appeared. C) Extinct species became extinct only after human appeared.D) No species has ever become extinct.

Q: If coal-burning electrical utility companies fully internalized pollution costs, then we could expectA) an increase in electricity prices. B) a decrease in electricity prices. C) no change in electricity prices.D) a greater use of coal to produce electricity.

Q: Name(s)Income/PersonAl, Bert$3,000David, Jamal$2,000Eve, Eric, Lucy, Cecil$1,500Fran, George$1,000Use the above table. What percentage of income is received by the poorest 60% of the population?A) 27.78 percent B) 33.33 percent C) 44.44 percent D) 55.56 percent

Q: In the above figure, if the union has Q 2 members and wants to ensure that all members have jobs, it will set wage equal toA) W1. B) W2.C) W3. D) none of the above.

Q: An increase in the supply of labor to an industry could be caused byA) higher wages.B) increased productivity of labor.C) an increase in job flexibility in the industry. D) an increase of wages in another industry.

Q: For a perfectly competitive firm, the value of the marginal product of labor falls as more workers are hired because of the diminishingA) output price. B) marginal physical product of labor. C) price of labor. D) marginal cost of production.

Q: In a natural monopoly situation,A) there are large economies of scale relative to demand. B) the firm has an upward sloping average cost curve.C) producers try to differentiate their product with advertising. D) there is no need for government regulation.

Q: A noncooperative game would refer to a situation in which oligopoly firmsA) are too small to be interdependent.B) do not engage in collusive behavior together. C) are made worse off by their actions.D) behave as a joint monopoly.

Q: Use the above figure. The total cost earned by this monopolistically competitive firm isA) $2,080. B) $3,150. C) $1,600. D) $1,900.

Q: If the price elasticity of demand for U.S. automobiles is higher in Europe than it is in the United States, and transport costs are zero, a price -discriminating monopolist would chargeA) the same price for autos in the United States as in Europe.B) a lower price for autos in the United States than in Europe. C) a higher price for autos in the United States than in Europe.D) a less profitable price for autos in the United States than in Europe.

Q: Shortly after the turn of the century, U.S. Steel owned most of the iron ore reserves in the country. This is an example of A) monopoly due to government restrictions. B) a barrier to entry from owning an important resource. C) a barrier to entry from scale economies. D) monopoly due to governmental entry restrictions.

Q: In the above figure, assume d1 is the demand curve faced by this firm. Which is true?A) This firm is earning an economic profit.B) This firm is experiencing an economic loss. C) This firm is breaking even.D) This firmʹs total costs equal EJA0.

Q: The law of diminishing marginal productA) holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease. B) does not hold in the short run because of fixed costs.C) does not hold in the long run because there are no fixed inputs in the long run. D) holds in the short and long run because of economies to scale.

Q: Refer to the above figure. The curve represents aA) marginal product curve. B) total product curve.C) total cost curve. D) average total cost curve.

Q: In most cases, the higher is the quality of the collateral for a loan is, A) the higher is the interest rate.B) the lower is the interest rate. C) the riskier is the loan.D) the greater is the handling charge for the loan.

Q: Economic rent directs resources toA) the people who can use them most efficiently. B) people only.C) large corporations.D) labor-intensive industries only.

Q: Quantity of AMUaQuantity of BMUbQuantity of CMUc115112115212210210393835464444Based on the information in the above table, what is the total satisfaction Mary can achieve if she is a wise consumer?A) 111 utils B) 82 utils C) 74 utils D) 30 utils

Q: Refer to the above figure. The supply curve isA) elastic at high prices and inelastic at low prices.B) unitary for all prices. C) perfectly elastic.D) perfectly inelastic.

Q: If demand is elastic and the price of a product decreases by 10 percent, thenA) the change in quantity demanded is less than 10 percent. B) the change in quantity demanded is equal to 10 percent.C) the change in quantity demanded is greater than 10 percent. D) the decrease in quantity demanded is greater than 0 percent.

Q: Protecting endangered species are likely to beA) a private cost. B) a public cost.C) both private and public costs. D) neither a private nor public cost.

Q: Which of the following is an example of an external cost? A) The cost of labor to a firm B) The pollution caused by automobile exhaust C) The cost of tires for your car D) The opportunity cost of getting a college education

Q: Name(s)Income/PersonAl, Bert$3,000David, Jamal$2,000Eve, Eric, Lucy, Cecil$1,500Fran, George$1,000Use the above table. What percentage of income is received by the richest 20% of the population?A) 33.33 percent B) 16.67 percent C) 11.11 percent D) 40.00 percent

Q: Consider the above figure, which displays the situation faced by a union employed by a firm with the labor demand curve D. This union has total membership of Q 3 workers, but its single wage setting goal is to maximize wages for the Q 1 members with the most seniority. If the union managers accomplish this goal, what occurs?A) All of the union members will be employed at the wage rate W3. B) All of the union members will be employed at the wage rate W1.C) The senior members of the union will receive a wage equal to W 3, but Q3 union members will be unemployed.D) The select group of senior union members will have work and receive a wage of W 3, but Q3 -Q1 union members will not be employed by the firm.

Q: Which of the following will not cause the supply of labor curve to shift in the economics professor industry?A) A decrease in the wage rate for Ph.D. economists in the banking industry. B) A decrease in the number of courses a professor must teach.C) Universities have discovered a way to make professors more productive.D) University professors are going to be required to spend more time in their offices.

Q: What is the difference between holding a monopoly and monopolization? Which is illegal? Explain.

Q: Regulators usually encourage natural monopolists to engage in A) marginal cost pricing. B) average cost pricing. C) marginal cost pricing, with subsidies from the government offsetting the losses. D) inefficient pricing.

Q: A game in which players as a group gain at the end of the game is referred to asA) zero-sum game. B) negative-sum game.C) positive-sum game. D) tit-for-tat game.

Q: Use the above figure. The total revenue earned by this monopolistically competitive firm isA) $2,560. B) $1,600. C) $480. D) $1,900.

Q: A price discriminating monopolist willA) charge a lower price to those consumers who have more elastic demand.B) charge a higher price to those consumers who have more inelastic demand.C) charge more to those consumers who have more substitute goods. D) charge the same price to all consumers.

Q: All of the following are considered a barrier to entry into a market EXCEPT A) government licenses.B) persistent declining long-run average costs as output increases. C) lowering tariffs.D) governmental regulations of business conduct relating to workplace conditions.

Q: Suppose the market price is $5, marginal cost is $4, and average total cost is $2. The perfectly competitive firm in that market isA) earning $3 in economic profits per unit of output and is not maximizing profits. B) earning $2 in economic profits per unit of output and is maximizing profits.C) earning $1 in economic profits per unit of output and is not maximizing profits. D) none of the above: Insufficient information is given.

Q: The law of diminishing marginal product is responsible forA) economies of scale. B) constant returns to scale.C) diseconomies of scale. D) none of the long-run relationships.

Q: Quantity ofLaborTotalProduct120246363472Refer to the above table. What does the marginal product equal when the quantity of labor goes from 3 to 4?A) 9 B) 18 C) 72 D) 216

Q: Which of the following characteristics is NOT likely to increase the interest on a loan?A) A high-risk proposal B) A non-creditworthy borrowerC) A short-term loan D) A larger dollar loan

Q: If a rock star insists that tickets to her concert be sold for $150 each rather than the $450 each that could be charged as reflected by demand for those tickets, then the result will beA) to create an excess supply of tickets.B) to eliminate $150 worth of economic rent per ticket.C) that part of the economic rent will be dissipated by scalpers, radio station owners, etc.. D) that the demand for tickets will decrease.

Q: Quantity of AMUaQuantity of BMUbQuantity of CMUc115112115212210210393835464444Based on the information in the above table, the price of A is $3, the price of B is $2, and the price of C is $5. If Mary has $22 to spend, what combination of products A, B, and C should she buy in order to maximize her satisfaction?A) 3 units of product A; 3 units of product B; 1 unit of product C B) 2 units of product A; 3 units of product B; 2 units of product C C) 3 units of product A; 4 units of product B; 0 units of product C D) 2 units of product A; 1 unit of product B; 4 units of product C

Q: A perfectly elastic supply curve isA) an upward sloping straight line that intersects the origin. B) horizontal.C) vertical.D) downward sloping.

Q: In an extreme hypothetical instance in which the price change of a good elicited no change in quantity demanded, we would say that the item isA) perfectly elastic. B) perfectly inelastic. C) infinitely elastic. D) unitary elastic.

Q: Endangered species are likely to beA) private property. B) common property.C) both private and common property. D) neither private nor common property.

Q: When both internal and external costs for using a scarce resource are included, then there is A) an increase in the production of the good. B) a negative externality. C) an increase in the price of the good. D) a positive externality.

Q: Use the above figure. Refer to the above diagram where curves (a) through (d) are for four different countries. Income is third most unequally distributed inA) Country A. B) Country B. C) Country C. D) Country D.

Q: If a union wishes to maximize the number of union members employed, it willA) accept the competitive wage.B) set a wage below the competitive wage.C) set a wage where the elasticity of demand for labor equals one.D) set a wage above the competitive wage.

Q: A decrease in the supply of labor could be caused byA) wage rates falling in another industry.B) better working conditions. C) more job flexibility.D) increased wage rates in another industry.

Q: What is the difference between product versioning and product bundling? Which of these two business practices have antitrust authorities been more likely to regard to be the form of price discrimination called tie-in sales? Why?

Q: Suppose that a regulatory agency has imposed marginal cost pricing on a natural monopolist. We expect thatA) the firm will earn only a normal profit.B) the firmʹs average total cost of production is rising over the relevant range of production. C) the firm will earn economic profits.D) the firm will eventually go out of business.

Q: A game in which players as a group lose at the end of the game is referred to asA) zero-sum game. B) negative-sum game. C) positive-sum game. D) tit-for-tat game.

Q: Use the above figure. The profit-maximizing output and price for this monopolistically competitive firm are respectively,A) 100 and $19. B) 160 and $13. C) 160 and $16. D) 210 and $15.

Q: If different markets for a product produced by a monopolist can be separated and if the elasticity of demand differs between the two markets, then the monopolist willA) be able to make higher profits by using price discrimination. B) charge a single price in all markets.C) go out of business.D) sell the product in only one of the markets with inelastic demand curves.

Q: All of the following are considered a barrier to entry into a market EXCEPT A) ownership of resources without close substitutes.B) when firms can only earn a normal rate of return in a market. C) economies of scale.D) governmental restrictions on a firmʹs ability enter a market.

Q: If price is $5, marginal cost is $5, average total cost is $3, and the quantity produced is 150 units, then the perfectly competitive firm isA) not maximizing economic profit.B) earning $2 in economic profits and is maximizing economic profits.C) earning $150 in economic profits and is not maximizing economic profits. D) earning $300 in economic profits and is maximizing economic profits.

Q: If a firm is experiencing diseconomies of scale, thenA) proportional increases in all inputs result in proportional increases in output.B) the long-run average cost curve is rising as output expands.C) the long-run average cost curve is decreasing as output expands. D) the firm should expand the size of its operation.

Q: Quantity ofLaborTotalProduct120246363472Refer to the above table. What does the marginal product equal when the quantity of labor goes from 2 to 3?A) 21 B) 17 C) 63 D) 189

Q: In economic terms, interest is the payment forA) current command over resources. B) producersʹ goods.C) stocks. D) both consumer and capital goods.

Q: If a factor of production with a fixed supply is earning $100 in its current use and its next best use would yield earnings of $80, the factor is earning a pure economic rent equal toA) $0. B) $20. C) $80. D) $180.