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Q:
An 18 percent increase in the price of small cars results in a 10 percent expansion in the quantity supplied. The supply elasticity in this range equals .A) 9/5 B) 5/9 C) 7/10 D) 4/10
Q:
PricePer UnitQuantity DemandedPer Week$10.00259.50309.00358.50408.00457.50507.00556.50606.00655.50705.0075Refer to the above table. For which prices is demand inelastic?A) In a range of prices below $6.00 B) In a range of prices above $6.00C) In a range of prices between $5 and $1 D) In a range of prices above $9.00
Q:
In a market for emission permits, firms that emit over their allowed limitsA) are forced to shut down.B) are taxed by the government for the amount of emissions.C) will sell their excess allowances through a trading system. D) must buy more allowances through a trading system.
Q:
An individual who pays for personal auto repair has incurred aA) social cost. B) private cost.C) negative externality. D) positive externality.
Q:
Wealth is measured asA) only tangible objects.B) only buildings, machinery, land, cars, stocks and bonds.C) only nonhuman wealth.D) nonhuman and human wealth.
Q:
Which of the following is NOT correct regarding the status of U.S. labor unions?A) Today fewer than one in eight workers is a union member.B) A key reason for the decline in union membership is the relative decline in manufacturing jobs as a share of total employment.C) Greater domestic and global competition has had a part in bringing about a decline in unions.D) Global trade has increased the number of union members in the United States.
Q:
If the marginal productivity of labor decreases, thenA) the quantity of labor demanded at every possible wage rate will be less.B) the quantity of labor demanded at every possible wage rate will be higher. C) the quantity of labor demanded will not be affected.D) the demand curve for labor will shift upward and to the right.
Q:
The Sudsy Soda Company will not sell its soft drinks to a restaurant unless that business also buys paper cups from Sudsy. This requirement is an example ofA) product versioning. B) tie-in sales.C) price differentiation. D) complementary pricing.
Q:
The two basic types of government regulation are
A) economic regulation and monopoly regulation.
B) economic and social regulation.
C) social regulation and health and safety regulation.
D) social regulation and financial regulation.
Q:
Economies of scale means thatA) the average fixed cost curve slopes downward over its entire range.B) the four-firm concentration ratio is below 80.C) the long-run average total cost curve slopes downward over it entire range.D) the long-run total cost curve slopes downward over it entire range.
Q:
For the monopolistic competitor, which of the following is INCORRECT?A) Because the firm is not a perfect competitor, its demand curve slopes downward.B) The marginal revenue curve is downward sloping and lies below the demand curve.C) The profit-maximizing rate of output arises at the point at which the marginal cost curve intersects the marginal revenue curve.D) If the firm in a monopolistically competitive industry were making economic losses, new firms will enter the industry.
Q:
For the monopoly in the above figure, if the firm is currently producing 700 units, which of the following is correct?A) It could earn higher profits if it produced more units each day.B) It could earn higher profits if it produced fewer units each day. C) It is maximizing its profits.D) It is incurring a loss.
Q:
Which of the following are barriers to entry?A) Economies of scale B) Patents and copyrightsC) Control of resources D) All of the above
Q:
Refer to the above figure. If the market price is equal to A, which statement can be made about profits?A) Profits are positive and equal to BCEA. B) Profits are positive and equal to BCFG. C) Profits are negative and equal to BCEA. D) Profits are negative and equal to GFQ'0.
Q:
Which of the following statements with respect to the figure below is INCORRECT?A) All the possible short-run average cost curves that correspond to the different plant sizes are shown as SAC1-SAC8.B) If the anticipated permanent rate of output per unit time period is Q1 in panel (a), the optimal plant would correspond to SAC1.C) If the permanent rate of output increases to Q2 in panel (a), it will be more profitable to have a plant size corresponding to SAC3.D) The long-run average cost curve LAC in panel (b) is sometimes called the planning curve representing the locus (path) of points.
Q:
Average physical product is calculated by dividing total product by theA) amount of variable and fixed inputs employed.B) quantity of the variable input. C) quantity of the fixed input.D) production function.
Q:
Which statement is FALSE considering both advantages and disadvantages of corporations as a legal business organization?A) Perhaps the greatest advantage of corporations is that their owners (the shareholders) enjoy limited liability-limited to the value of their shares.B) Legally the corporation continues to exist even if one or more owners cease to be owners.C) Corporations usually are not as well positioned as proprietorships and partnerships to raise large sums of financial capital.D) Separation of ownership and control is a disadvantage of the corporate structure; owners and managers may have different incentives.
Q:
A payment for the use of any resource over and above its opportunity cost is calledA) accounting profit. B) economic profit.C) normal cost. D) economic rent.
Q:
A consumer has spent all of his income on hamburgers and movies. The price of a hamburger is $1 and the price of a movie is $6. The marginal utility of the last hamburger is 5 and the marginal utility of the last movie is 24. The consumer hasA) maximized utility.B) not maximized utility. He should cut back on movies and buy more hamburgers. C) not maximized utility. He should cut back on hamburgers and buy more movies. D) not maximized utility. He should cut back consumption of each good.
Q:
If the supply of a good is perfectly inelastic, the price elasticity of supply will equalA) positive infinity. B) one.C) zero. D) none of the above.
Q:
PricePer UnitQuantity DemandedPer Week$10.00259.50309.00358.50408.00457.50507.00556.50606.00655.50705.0075Refer to the above table. For which prices is demand elastic?A) In a range of prices below $6.50 B) In a range of prices above $6.50C) In a range of prices between $5 and $10 D) In a range of prices above $9.00
Q:
In a market for emission permits, firms that emit over their allowed limitsA) are forced to shut down.B) are taxed by the government for the amount of emissions. C) receive a subsidy for the amount of emissions.D) pay a price of these emissions.
Q:
Pollution created by auto exhaust fumes is an example of a situation in whichA) social costs are greater than private costs.B) social costs are less than private costs. C) social costs are equal to private costs.D) social costs are approaching the shutdown point.
Q:
Which of the following statements is true about income and wealth?A) Income is a flow measure and wealth is a stock measure.B) Income is a stock measure and wealth is a flow measure. C) Both income and wealth are flow measures.D) Both income and wealth are stock measures.
Q:
What time period in U.S. history do we generally recognize as the ʺheydayʺ of labor union membership?A) 1900s-1920s B) 1920s-1940s C) 1940s-1970s D) 1970s-2000s
Q:
An industry utilizes capital and two types of labor. Unskilled labor is a substitute for capital while the skilled labor is complementary to capital. An increase in the price of capital willA) cause the demand for labor to increase, raising wages of both skilled and unskilled labor. B) cause the wage of unskilled labor to rise relative to the price of skilled labor.C) induce the firms in the industry to cut back on all levels-capital, unskilled and skilled labor.D) cause the demand for skilled labor to rise and the demand for unskilled labor to fall.
Q:
Defining the ʺrelevant marketʺ involves looking at two components. They areA) the competitive market and the dominant market. B) the local market and the national market.C) the geographic market and the product market. D) the goods market and the services market.
Q:
The two basic types of government regulation areA) monopoly and oligopoly regulation. B) labor and environmental regulation.C) federal and state industrial regulation. D) economic and social regulation.
Q:
One of the strongest reasons that oligopolies exist is due toA) the homogeneity of their products. B) marginal cost pricing.C) lowest cost production. D) economies of scale.
Q:
In the above figure, what would happen to the monopolistically competitive industry in the long run?A) More producers would enter the market, and the share of the market to this firm would fall, which would cause the demand curve to shift leftward until there is zero economic profit.B) More producers would exit the market, and the share of the market to this firm would fall, which would cause the demand curve to shift leftward until there is zero economic profit. C) More producers would enter the market, and the share of the market to this firm would rise, which would cause the demand curve to shift rightward until there is zero economic profit.D) More producers would enter the market, and the share of the market to this firm would fall, which would cause the demand curve to shift leftward until there is negative economic profit.
Q:
Which of the following is INCORRECT regarding monopoly and profits?A) The mere existence of a monopoly does not guarantee high profits.B) Numerous monopolies have gone bankrupt.C) A monopolist will never experience economic losses.D) The monopolist reaches profit-maximizing output by trial and error.
Q:
In order for a firm to receive monopoly profits, there must beA) homogeneous products. B) barriers to market entry.C) mutual interdependence among firms. D) free entry and exit to the market.
Q:
Refer to the above figure. If the market price is equal to A, which statement can be made about economic profits?A) Economic profits are positive and equal to ABCG.B) Economic profits are positive and equal to ABEF.C) Economic profits are negative and equal to GCEF.D) Economic profits are negative and equal to ABQ'0.
Q:
The long run is defined as a time period during which full adjustment can be made to any change in the economic environment. Thus in the long run, all factors of production are variable. Long-run curves are sometimes called planning curves, and the long run is sometimes called theA) foreseeable future. B) minimum efficient time period. C) non-adjustment period. D) planning horizon.
Q:
In the short run, the additional output that results from hiring an additional unit of a variable input is theA) marginal physical product. B) average product. C) average variable cost. D) marginal cost.
Q:
The majority of business revenues earned in the United States are earned byA) proprietorships. B) corporations.C) partnerships. D) cooperatives.
Q:
Pure economic rent isA) a payment to a resource owner over and above what is necessary to keep the resource in its current use.B) a payment to a resource owner just sufficient to keep its supply constant.C) the inverse of economic profit.D) the competitive rental rate on capital.
Q:
A consumerʹs optimum is found whenA) prices of goods go down.B) the consumer is achieving the maximum level of utility given market prices and their limited income.C) the marginal utility of the last dollar spent equals 0 for every good. D) the consumer saves part of their income.
Q:
If the quantity supplied of candy increases by 10% when the price of candy increases by 20%, which of the following is true?A) Supply for candy is elastic, and price elasticity of supply = 2.0.B) Supply for candy is inelastic, and price elasticity of supply = 2.0.C) Supply for candy is elastic, and price elasticity of supply = 0.5.D) Supply for candy is inelastic, and price elasticity of supply = 0.5.
Q:
A consumer is willing and able to buy 1,000 units of a good at $10, but the consumerʹs quantity demanded falls to zero if the price rises even a fraction of a cent. The consumerʹs demand curve isA) horizontal and is perfectly inelastic. B) horizontal and is perfectly elastic.C) vertical and is perfectly elastic.D) downward sloping from higher prices down to $10 and then horizontal.
Q:
In 2005, the European Union began a program toA) reduce greenhouse gas emissions by 10 percent within 5 years.B) eliminate greenhouse gas emissions by 50 percent within 15 years. C) subsidize firms that pollute more than a given limit.D) allow the trading of carbon -dioxide permits among firms.
Q:
When the costs of an action are not fully borne by the two parties engaged in a transaction, this is called a(n)A) externality. B) equilibrium. C) property right. D) internal cost.
Q:
The return on wealth (both human and nonhuman) isA) a stock variable.B) income.C) measured in the form of bonds.D) a stock or flow variable depending upon whether the wealth is in the form of bonds or other financial assets.
Q:
Currently about what percentage of the civilian labor force is unionized in the United States?A) 6 percent B) 12 percent C) 30 percent D) 70 percent
Q:
Assume that the labor market is perfectly competitive. An increase in the productivity of laborA) causes the marginal factor cost of labor to decrease.B) generates a lower wage rate.C) causes an increase in the demand for labor.D) causes a reduction in the demand for labor since each worker is now more productive.
Q:
The primary measure of monopoly power is called theA) market share test. B) litmus test.C) Robinson-Patman Act ratio. D) monopoly measure.
Q:
This agency is responsible for protecting consumers from products posing fire, electrical, chemical, or mechanical hazards or dangers to children.
A) Environmental Protection Agency
B) Consumer Product Safety Commission
C) Equal Employment Opportunity Commission
D) Occupational Safety and Health Administration
Q:
The situation of oligopoly suggestsA) many firms compete in an industry. B) mergers have not occurred. C) interdependence among firms. D) no barriers to entry exist.
Q:
In the above figure for a monopolistically competitive firm, the total economic profit at the profit-maximizing point isA) $0 B) $240 C) $360 D) $300
Q:
A monopolistic firm will shut down ifA) P < ATC for every level of output. B) P > ATC for every level of output. C) P > AVC for every level of output. D) P < AVC for every level of output.
Q:
ʺA monopolist refers to any firm that is large in size.ʺ Do you agree or disagree? Why?
Q:
Refer to the above figure. When the price in the market is $4, economic profits will equalA) $100. B) $200. C) $300. D) $400.
Q:
The long run for a business is a period of timeA) longer than a year.B) when most inputs are variable. C) when all inputs can change.D) when labor is the only input used by the business.
Q:
The marginal physical product of labor is calculated assuming other factor inputsA) increase more than proportionately. B) increase less than proportionately.C) remain constant. D) decrease.
Q:
You have received your advanced degree in biochemistry with a specialty in recombinant DNA technology. Your colleagues wish to form a partnership to research adenovirus vectors. Your legal counsel advises you on the following aspects of a partnership, yet you tell her, based on your knowledge of economics, that you think one of the following points is INCORRECT.A) An advantage of the partnership would be that it is relatively easy to form, almost as easy as forming a proprietorship.B) The income of the partnership is treated as personal income and is subject only to personal taxation rates.C) The personal assets of each partner should be safe and would not necessarily be at risk due to claims by financial institutions.D) Partnerships often help reduce the costs of monitoring job performance in situations in which it is difficult to measure objectively.
Q:
How does an increase in the price of an individual good or service affect a consumer optimum, and how does this help explain the law of demand?
Q:
A consumerʹs optimum is found whenA) the marginal utility of the last dollar spent equals zero for each good.B) the marginal utility of each good is increasing and the total income is spent.C) the total utility of each good is the same and the total income is spent.D) the marginal utility of the last dollar spent on each good is the same and all income is spent.
Q:
If the price elasticity of supply of television sets is constant and equal to 3, a 10 percent increase in price will result in a change in quantity supplied equal toA) 3 1/3 percent. B) 30 percent. C) 1/3 percent. D) -30 percent.
Q:
A perfectly elastic demand curve isA) vertical. B) horizontal.C) a rectangular hyperbola. D) a downward sloping straight line.
Q:
In the Kyoto Protocol, participating nations agreed toA) trade carbon-dioxide permits.B) eliminate all emissions of greenhouse gases by 2020.C) reduce their overall emissions of greenhouse gases between 1997 and 2020 to as much as 20 percent below 1990 levels.D) buy greenhouse gas emission permits from developing nations.
Q:
Costs that are borne solely by the individuals who incur them are calledA) private costs. B) public costs. C) social costs. D) external costs.
Q:
Compared to the distribution of money income, the distribution of wealth is A) about the same. B) much more equal. C) much less equal. D) a little more equal.
Q:
All of the following are true regarding the current status of labor unions EXCEPT A) organized laborʹs heyday occurred from the 1940s through the 1970s.B) part of the explanation for the decline in union membership has to do with the shift away from manufacturing.C) the deregulation of certain industries has also contributed to a decline in unionism.D) recent labor laws have diminished workerʹs rights.
Q:
A fall in the price of the final product produced by a firm will causeA) a decline in the price of an input used to produce the good.B) a movement down the demand curve for an input used to produce the final product.C) a reduction in demand for an input used to produce the final product.D) a reduction in the supply of an input used to produce the final product.
Q:
As a general rule of thumb, a firm is considered to have monopoly power if
A) it has fewer than 10 competitors nationwide.
B) its share of the relevant market is 70 percent or more.
C) the product it manufactures has less than five close substitutes.
D) its total revenues are greater than $50 million per year.
Q:
This agency regulates workplace safety and health conditions.
A) Environmental Protection Agency
B) Consumer Product Safety Commission
C) Equal Employment Opportunity Commission
D) Occupational Safety and Health Administration
Q:
All of the following are characteristics of an oligopoly EXCEPT A) diseconomies of scale over all ranges of output.B) small number of firms. C) high barriers to entry. D) interdependence.
Q:
In the above figure for a monopolistically competitive firm, the total cost at the profit-maximizing point isA) $480 B) $400 C) $540 D) $880
Q:
Which of the following is a TRUE statement about a monopoly?A) A monopoly does not necessarily earn positive economic profits.B) A monopoly must earn an above-normal profit to stay in business.C) As long as there are barriers to entry, a monopoly can always find some price -output combination that generates positive economic profits.D) As long as the demand curve slopes down, a monopoly can always find some price-output combination that generates positive economic profits.
Q:
What is a monopolist, and what is required for a monopolist to earn profits in the long run?
Q:
The difference between price and average total cost isA) total costs. B) marginal costs.C) average profit. D) an irrelevant quantity.
Q:
The locus of points representing the minimum unit cost of producing any given rate of output is theA) short-run average total cost curve. B) long-run marginal cost curve. C) short-run total cost curve. D) long-run average cost curve.
Q:
In the above table, which two workers have the same marginal physical product?A) 1 and 2 B) 2 and 4 C) 1 and 3 D) 1 and 4
Q:
A disadvantage of the partnership form of business organization is
A) its limited access to capital.
B) its limited liability.
C) that it can issue only one class of stock.
D) that the owners must fight a lot of red tape to form the firm.
Q:
Use the above figure. When the budget line rotates from ʺcʺ to ʺbʺA) the price of product J increases and the quantity demanded of product J decreases.B) the price of product J decreases and the quantity demanded of product J increases. C) the price of product K increases and the quantity demanded of product K decreases. D) the price of product K decreases and the quantity demanded of product K increases.
Q:
The set of goods and services that maximizes the level of satisfaction for each consumer subject to limited income isA) the consumer optimum. B) diminishing marginal utility. C) increasing marginal utility. D) substitution effect.
Q:
Graphically, what is the main difference between the measure of income elasticity of demand as opposed to the measure of price elasticity of demand?
Q:
The price elasticity of demand along a vertical demand curve isA) elastic at high prices and inelastic at low prices. B) infinite.C) one. D) zero.
Q:
The Framework Convention on Climate Change took place inA) the 1973-1979 Tokyo Round B) the 1987-1993 Uruguay RoundC) the 1997 Kyoto Protocol D) the 2001 Doha Round
Q:
Which of the following statements best defines private costs?A) They are internal in the sense that the firm or household must explicitly take them into account.B) They are costs borne by people other than those who commit the action.C) They are synonymous with social costs.D) They represent explicit costs incurred by business firms in the private sector.