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Q:
Quantityof AQuantityTUaof BTUb118110233218342322448424551525The price of product A is $3, the price of product B is $2, and you have $18 to spend. What combination of product A and product B will give you the most satisfaction?A) 5 units of product A; 1 unit of product BB) 4 units of product A and 3 units of product B C) 2 units of product A and 5 units of product B D) 3 units of product A and 5 units of product B
Q:
A perfectly inelastic supply curve isA) an upward sloping straight line that intersects the origin.B) horizontal. C) vertical.D) downward sloping.
Q:
If the absolute price elasticity of demand for a product is greater than 1, thenA) the absolute price elasticity of demand is inelastic and consumers are relatively insensitive to price changes.B) the absolute price elasticity of demand is inelastic and consumers are relatively sensitive to price changes.C) the absolute price elasticity of demand is elastic and consumers are relatively insensitive to price changes.D) the absolute price elasticity of demand is elastic and consumers are relatively sensitive to price changes.
Q:
Which of the following are most likely to become an endangered species?
A) animals in the wild
B) domesticated animals
C) animals that people like to keep at home as pets
D) animals that people have property rights to own
Q:
When social costs for using a scarce resource are included, then there isA) a decrease in the production of the good. B) a negative externality.C) a decrease 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 most unequally distributed inA) Country A. B) Country B. C) Country C. D) Country D.
Q:
If a union succeeds in increasing the wage rate by restricting labor supply, thenA) all of its members will be better off. B) some members may lose their jobs.C) all of its members will be worse off. D) more of its members will be employed.
Q:
Which of the following will not lead to an increase in the demand for labor for a firm producing automobiles?A) A decrease in labor productivity.B) A decrease in the price of robots that are used to solder parts of the car together. C) An increase in the demand for automobiles.D) A decrease in the price of automobiles.
Q:
When Microsoft put together a set of products with the Windows operating system, it was practicingA) bundling. B) tie-in sales. C) versioning. D) compacting.
Q:
If a public service commission requires a natural monopoly to set its price equal to the long -run marginal cost, this will result inA) excessive economic profits to the monopoly. B) normal economic profits to the monopoly.C) losses to the monopoly.D) either economic profits or losses, depending on the efficiency of the monopoly.
Q:
Game theory would classify a cartel under the topic ofA) zero-sum games. B) cooperative games.C) noncooperative games. D) dominant-strategy games.
Q:
The short-run profit-maximizing output level for a monopolistically competitive firm is the point at whichA) P = ATC. B) MR = MC. C) MR > P. D) MR > ATC.
Q:
In order to price discriminate, a firm mustA) produce a product that is a close substitute for products of other firms. B) have different marginal costs for serving different customers.C) sell to customers with identical price elasticities of demand. D) be able to prevent resale of its product.
Q:
For a firm to become a monopoly in an industry, A) barriers to entry must exist.B) the firm must charge higher prices than its competitors. C) the firm must produce a faulty product.D) the firm will engage in unfair practices to drive all competitors out of the market.
Q:
In the above figure, if price is equal to P4, the firm willA) earn positive economic profits. B) incur an economic loss. C) earn zero economic profits. D) shut down.
Q:
Which of the following physical relationships might generate economies of scale?A) Proportionally larger pipes can transport more than a proportional increase in oil.B) Larger equipment tends to weigh more and use more fuel on a per -unit-of-output basis. C) Each lift truck requires one lift truck driver.D) A doubling of all inputs leads to a doubling of output.
Q:
Quantity ofLaborTotalProduct120246363472Refer to the above table. What does the marginal product equal when the quantity of labor goes from 1 to 2?A) 46 B) 23 C) 26 D) 92
Q:
Interest can be defined as
A) the amount of funds loaned to a creditor.
B) the participation of a shareholder in the operations of a firm.
C) the return paid to owners of capital.
D) the return above opportunity cost paid to owners of a firm.
Q:
Suppose that Justin Timberlake sells 10,000 tickets to a concerts at $480 each. If the equilibrium price is $600 per ticket for a fixed supply of 10,000 tickets, what is the value of the additional economic rent that Timberlake could earn if he charged the market clearing price?A) $12.00 B) $1.2 million C) $3 million D) $1.8 million
Q:
Quantity of Magazines/WkTotal UtilityQuantity of Paperbacks/WkTotal Utility000016012002100240031303500414045505142557561426580Refer to the above table. If the consumerʹs equilibrium consists of 3 magazines and 6 books, then we know thatA) the price of a magazine is 4.5 times more than the price of a book. B) the price of a magazine is 6 times more than the price of a book.C) the price of a book is 2 times more than the price of a magazine. D) the price of a book is 3 times more than the price of a magazine.
Q:
Which of the following statements is FALSE?A) A perfectly inelastic supply curve is a vertical line.B) Time is an important consideration in determining supply elasticity.C) Price elasticity of supply can never equal 1. D) A horizontal supply curve is possible.
Q:
If the absolute price elasticity of demand for a product is less than 1, thenA) the absolute price elasticity of demand is inelastic and consumers are relatively insensitive to price changes.B) the absolute price elasticity of demand is inelastic and consumers are relatively sensitive to price changes.C) the absolute price elasticity of demand is elastic and consumers are relatively insensitive to price changes.D) the absolute price elasticity of demand is elastic and consumers are relatively sensitive to price changes.
Q:
Which of the following is most likely to be common property?A) a cat in a house B) farm raised catfish in AlabamaC) tuna in the Pacific Ocean D) cattle in a Texas ranch
Q:
When a person does not have to pay the full costs for using a scarce resource, then there isA) an underproduction of a good. B) a negative externality.C) a positive externality. D) too little economic profit in the activity.
Q:
Use the above figure. Refer to the above diagram where curves (a) through (d) are for four different countries. Income is equally distributed inA) Country A. B) Country B. C) Country C. D) Country D.
Q:
When a group of workers forms a union, they introduce an element ofA) pure competition into the labor market. B) monopoly into the labor market.C) monopoly into the product market. D) monopsony into the product market.
Q:
Suppose firms in an industry hire unskilled labor and skilled labor. Unskilled labor is a substitute for capital and skilled labor is a complement with capital. A decrease in the real price of capital would
A) cause the demand for labor to increase, raising wages of both skilled and unskilled labor.
B) cause the demand for unskilled labor to increase and the demand for skilled labor to decrease. The wage of unskilled labor would rise relative to the wage of skilled labor.
C) cause the demand for unskilled labor to decrease and the demand for skilled labor to increase. The wage of unskilled labor would decrease relative to the wage of skilled labor.
D) cause the demand for both kinds of labor to decrease. Wages rates of both kinds of labor would decrease too.
Q:
A measure of monopoly power used by the government is theA) percentage share of the relevant market or market share test.B) profit of the firm compared to other firms in the industry. C) price charged by the firm for goods and services.D) percentage difference between price and marginal cost.
Q:
If regulators force a natural monopoly to price as a perfectly competitive firm would, the natural monopolistA) will earn higher economic profits. B) will earn an economic loss.C) will expand its output.D) will experience a rise in long-term average costs.
Q:
Within a game theory model, if a change in decision -making raises corporation Aʹs profits by $50 and lowers corporation Bʹs profits by $60, the game is aA) negative-sum game. B) zero-sum game. C) positive-sum game. D) cooperative game.
Q:
Use the above figure. The total cost of producing at the optimal level for the monopolistically competitive firm isA) $285. B) $255. C) $180. D) $300.
Q:
Other things being equal, a price-discriminating firm will charge less to the customers whoA) have the lowest incomes.B) have the least elastic demand for its product.C) have the most elastic demand for the product. D) are the most rational in making their decisions.
Q:
A barrier to entry isA) a term used to explain why monopolies always make economic profits.B) a restriction on the profits that a monopoly can make.C) the situation when the government produces a good instead of relying on private firms to produce the good.D) a restriction on starting a business.
Q:
Suppose that in a perfectly competitive market, the market price is $10. A firm in that market has marginal cost of $10, average total cost of $12, and it is producing 100 units. The firm isA) earning $1,000 in total economic profits and is maximizing economic profits. B) earning $200 in total economic profits and is maximizing economic profits.C) earning zero total economic profits and is not maximizing economic profits. D) incurring $200 in total economic losses and is minimizing economic losses.
Q:
Which of the following is NOT a reason a firm might experience economies of scale?A) Specialization B) Dimensional factorsC) Increasing long-run average costs D) More productive equipment
Q:
Quantity ofLaborTotalProduct120246363472Refer to the above table. When the quantity of labor equals 4, what does the average product equal?A) 9 B) 18 C) 72 D) 216
Q:
Which of the following is correct?A) real interest rate = nominal interest rate - anticipated inflation rate B) real interest rate = nominal interest rate + anticipated inflation rate C) real interest rate = nominal interest rate * anticipated inflation rate D) real interest rate = nominal interest rate / anticipated inflation rate
Q:
If land is reallocated or switched from agricultural use to recreational use, then it is likely that
A) food is not as important as recreation.
B) the demand for food is less today than in previous decades.
C) land earns a higher rent in recreational use than in agricultural use.
D) the demand curve for land in the agricultural industry is shifting to the right.
Q:
Quantity of Magazines/WkTotal UtilityQuantity of Paperbacks/WkTotal Utility000016012002100240031303500414045505142557561426580Refer to the above table. If the consumerʹs equilibrium consists of 4 magazines and 4 books, then we know thatA) the price of a magazine is 5 times more than the price of a book. B) the price of a magazine is 6 times more than the price of a book. C) the price of a book is 5 times more than the price of a magazine. D) the price of a book is 3 times more than the price of a magazine.
Q:
When quantity supplied is not very responsive to a change in price, supply isA) elastic. B) unit-elastic.C) inelastic. D) income sensitive.
Q:
Moving down a straight-line demand curve, the absolute price elasticity of demandA) increases. B) is constant.C) decreases. D) varies in uncertain ways.
Q:
All of following are commonly considered to be common property EXCEPT A) spotted owls in the wild. B) fish in an ocean.C) chickens raised in a farm. D) wild salmon in a river.
Q:
Suppose there are two factories on a river, and both need clean water for their production processes. The upstream factory takes in clean water and dumps dirty water back into the river. The downstream firm must clean up the water it gets from the river before using it. In this situation,A) the private costs of the downstream factory are more than the private costs of the upstream factory, but for both factories private costs and social costs are the same.B) the social costs are greater than the private costs for the upstream firm, while the social costs are less than the private costs for the downstream firm.C) the upstream factoryʹs private costs are less than its social costs, and its external costs are borne by the downstream factory.D) the internal costs of the upstream factory are externalized by the downstream factory, which then passes them on to its customers.
Q:
The Lorenz curve is criticized for all of the following EXCEPT A) that it excludes transfers-in-kind income.B) that it does not account for the size differences of households.C) that it does not account for age differences of households.D) that it does not account for the impact of trade on the standard of living.
Q:
A union can induce a rise in equilibrium wages in a unionized industry by
A) not striking.
B) successfully increasing the demand for union labor.
C) successfully decreasing the demand for union labor.
D) reducing the marginal revenue product of firms employing union labor.
Q:
Coal and iron ore are complements in the manufacture of steel. An increase in the price of coal would lead toA) an increase in the demand for iron ore as producers substitute more iron ore for coal in the production process.B) a decrease in the demand for iron ore as steel manufacturers reduce production of steel. C) an increase in the supply of iron ore as iron ore producers see an opportunity to expand their markets.D) no change in the demand for iron ore since the steel makers must use both iron ore and coal if they are to make steel.
Q:
Enforcement of antitrust policy is the responsibility ofA) the Trust Division of Congress and the World Trade Organization.B) the Federal Trade Commission and the Antitrust Division of the Department of Justice. C) the World Trade Organization and the FDA.D) the Food and Drug Administration and Congress.
Q:
In the above figure, if this natural monopolist were regulated and allowed to earn a ʺfairʺ rate of return, it would sell the product at the price .A) A B) C C) B D) F
Q:
Within a game theory model, if a change in decision -making raises corporation Aʹs profits by $50 and lowers corporation Bʹs profits by $40, the game is aA) negative-sum game. B) zero-sum game. C) positive-sum game. D) cooperative game.
Q:
Use the above figure. The total profit earned by the monopolistically competitive firm isA) +$300. B) +$15. C) -$15. D) $0
Q:
Other things being equal, a price-discriminating firm will charge more to the customers whoA) have the highest incomes.B) have the least elastic demand for its product.C) have the most elastic demand for the product. D) are the least rational in making their decisions.
Q:
If a government imposes high enough tariffs, one result will be thatA) foreign producers will be able to sell more goods.B) domestic producers will face no foreign competition.C) consumers will benefit from lower prices. D) markets will become more globalized.
Q:
A company finds that at its present level of production, MR = MC at $14, MC = AVC at $15, and MC = ATC at $20. Your advice to the firm regarding its short -run operations is A) to continue production, as it is earning an economic profit of $1 per unit. B) to continue production, as it is earning an economic profit of $6 per unit. C) to shut down.D) to continue production at a loss.
Q:
When increasing its output results in falling costs, a firm that can adjust all inputs is experiencingA) diseconomies of scale. B) economies of scale. C) loss. D) capital gains.
Q:
Quantity ofLaborTotalProduct120246363472Refer to the above table. When the quantity of labor equals 3, what does the average product equal?A) 21 B) 17 C) 63 D) 189
Q:
Interest is paid toA) all holders of stock. B) individuals who own gold. C) owners of capital. D) borrowers of funds.
Q:
Supermodel Linda Evangelista has been quoted as saying, ʺ[I] donʹt wake up for less than $10,000 a day.ʺ If Ms. Evangelista is paid $15,000 for her next daylong photo shoot, thenA) she is being paid $15,000 to cover her opportunity cost.B) the first $10,000 she receives is economic rent to labor and the next $5,000 is more economic rent.C) the entire $15,000 would be considered economic rent to labor.D) she is receiving economic rent to labor equal to $5,000.
Q:
Quantity of Magazines/WkTotal UtilityQuantity of Paperbacks/WkTotal Utility000016012002100240031303500414045505142557561426580Refer to the above table. If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $33, the rational consumer will purchaseA) 2 magazines and 2 books. B) 2 magazines and 3 books. C) 5 magazines and 6 books. D) 4 magazines and 5 books.
Q:
When quantity supplied is very responsive to a change in price, supply isA) elastic. B) unit-elastic.C) inelastic. D) income sensitive.
Q:
When the absolute price elasticity of demand equals 0.67, demand isA) elastic.B) unit-elastic. C) inelastic.D) undetermined without more information.
Q:
Many ecologists argue that several species of whales are close to extinction. If this is true, the reason isA) inadequate enforcement of international laws. B) whales are a type of common property.C) the marginal benefit of hunting and killing a whale is greater than zero. D) whale-killing technology is too productive.
Q:
When a person does not have to pay the full costs for using a scarce resource, then
A) the use of the resource is not affected since society pays for the resource.
B) more of the resource will be used.
C) the internal costs of using the resource are too high.
D) the social costs of the resource are less than they would be if the ʺcorrectʺ amount of the resource were being used.
Q:
A Lorenz curve measures the on the vertical axis.A) cumulative percentage of money income B) cumulative percentage of family wealth C) cumulative percentage of familiesD) demand of families on welfare
Q:
If a union sets the wage rate to maximize the total wage receipts of its members, the marginal revenue would beA) zero. B) negative.C) positive, but greater than 1. D) positive, but less than 1.
Q:
When manufacturing a car, parts must be soldered together. This work can be done by labor or by a robot (capital). More robots will be hired when the price of labor increases. This is known asA) the effect of changing labor productivity.B) marginal revenue product. C) the complementary effect. D) the substitution effect.
Q:
One of the agencies responsible for enforcement of antitrust policy isA) the Trust Division of Congress. B) the Federal Trade Commission.C) the World Trade Organization. D) the Food and Drug Administration.
Q:
In the above figure, if this natural monopolist were unregulated, the profit maximizing firm would sell the product at the price .A) A B) B C) C D) F
Q:
Within a game theory model, if a change in decision -making raises corporation Aʹs profits by $50 and lowers corporation Bʹs profits by $50, the game is aA) negative-sum game. B) zero-sum game. C) positive-sum game. D) cooperative game.
Q:
Use the above figure. The total revenue earned by the monopolistically competitive firm isA) $300. B) $285. C) $180. D) $255.
Q:
If a firm is price differentiating, then it isA) producing a homogenous product.B) charging different prices to different consumers based on differences in marginal costs. C) charging different prices based on quality.D) charging different prices based on advertising costs.
Q:
The use of a tariff provides monopoly protection sinceA) it allows more imports into the country.B) it reduces competition from imports by raising the import price.C) it reduces exportersʹ profits. D) it expands tax credits.
Q:
A company finds that at its present level of production, MC = AVC at $15, MC = ATC at $20, and MC = MR at $17. Your advice to the firm regarding its short -run operations isA) to continue production, as it is earning an economic profit of $2 per unit. B) to continue production, as it is earning an economic profit of $3 per unit. C) to shut down.D) to continue production at a loss.
Q:
A horizontal long-run average cost curve indicatesA) constant returns to scale. B) diseconomies of scale.C) constant marginal physical product. D) economies of scale.
Q:
Quantity ofLaborTotalProduct120246363472Refer to the above table. When the quantity of labor equals 2, what does the average product equal?A) 46 B) 23 C) 26 D) 92
Q:
ʺEconomic profits are less than or at most equal to accounting profits.ʺ Do you agree or disagree? Explain.
Q:
An individual would willingly give a concert for $2,000. If she is paid $5,000 for the concert, she isA) receiving $3,000 to cover her opportunity cost. B) not being paid her full opportunity cost.C) receiving $3,000 of economic rent.D) certainly being paid more than warranted by the level of demand.
Q:
Quantity of Magazines/WkTotal UtilityQuantity of Paperbacks/WkTotal Utility000016012002100240031303500414045505142557561426580Refer to the above table. If the price of a magazine is $2 and the price of a paperback book is $5 and the consumer has $19, the rational consumer will purchaseA) 2 magazines and 2 books. B) 2 magazines and 3 books. C) 5 magazines and 6 books. D) 6 magazines and 6 books.
Q:
We generally expect the price elasticity of supply to beA) zero. B) negative.C) positive. D) between -1 and +1.
Q:
When the absolute price elasticity of demand equals 2.5, demand isA) elastic.B) unit-elastic. C) inelastic.D) undetermined without more information.
Q:
ʺCreating a free market for carbon -dioxide emission permits would only encourage firms to pollute more.ʺ Do you agree or disagree? Why?