ECON 202 FINAL EXAM
Refer to the given data. In maximizing its profit, this firm will employ a) 2 units of labor b) 4 units of labor c) 5 units of labor d) 3 units of labor
d) 3 units of labor
Answer the question of the basis of the following demand and cost data for a specific firm Refer to the data. If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit- maximizing price will be: a) $6 b) $9 c) $11 d) $7
b) $9
Answer the question on the basis of the information given in the following table: Refer to the given data. If the firm is hiring workers under purely competitive conditions wage rate of $22, it will employ: a) 2 workers b) 3 workers c) 4 workers d) 1 worker
b) 3 workers
Refer to the labor market diagrams. The tactics of exclusive unionism are portrayed in figure a) 4 b) 3 c) 2 d) 1
d) 1
Refer to the given data. If there is neither a union nor a minimum wage, we can conclude the firm a) has a perfectly elastic labor demand curve b) faces a perfectly inelastic labor supply curve c) "purchases" labor in a purely competitive labor market d) is a monopsonist
c) "purchases" labor in a purely competitive labor market
The Herfindahl index for a pure monopolist is: a) 100,000 b) 100 c) 10,000 d) 10
c) 10,000
Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The firm's profit-maximizing output will be: a) 180 b) 210 c) 160 d) 100
c) 160
Assume six firms comprising an industry have market shares of 30, 30, 10, 10, 10, and 10 percent. The Herfindahl index for this industry is: a) 1,600 b) 2,000 c) 2,200 d) 80
c) 2,200
Answer the question on the basis of the data contained in the following table. Assume the firm is hiring labor in a purely competitive market Refer to the given data. If the wage rate is $11, how many workers will the firm choose to employ? a) 3 b) 2 c) 5 d) 4
c) 5
When a monopolistically competitive firm is in long-run equilibrium a) MR > MC and P= minimum ATC b) MR= MC and minimum ATC > P c) MR = MC and P > minimum ATC d) P = MC = ATC
c) MR = MC and P > minimum ATC
Refer to the data. If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing level of output will be: a) 8 units b) 10 units c) 12 units d) 9 units
a) 8 units
Refer to the diagrams. The profit maximizing firm's total wage cost a) is 0Wbc b) is 0abc c) is Wab d) cannot be determined
a) is 0Wbc
Oligopolistic industries are characterized by: a) a few dominant firms and substantial entry barriers b) a large number of firms and low entry barriers c) a few dominant firms and low entry barriers d) a few dominant firms and no barriers to entry
a) a few dominant firms and substantial entry barriers
In the long run, a profit- maximizing monopolistically competitive firm sets it price: a) above marginal cost b) equal to marginal cost c) below marginal cost d) equal to marginal revenue
a) above marginal cost
In the short run, a profit-maximizing monopolistically competitive firm sets it price: a) above marginal cost b) equal to marginal revenue c) below marginal cost d) equal to marginal cost
a) above marginal cost
Excess capacity refers to the: a) amount by which actual production falls short of the minimum ATC output b) differential between price and marginal costs that characterizes monopolistically competitive firms c) fact that entry barriers artificially reduce the number of firms in an industry d) fact that most monopolistically competitive firms encounter diseconomies of scale
a) amount by which actual production falls short of the minimum ATC output
Refer to the diagrams, which pertain to monopolistically competitive firms. long-run equilibrium is shown by: a) diagram a only b) diagram b only c) diagram c only d) both diagrams b and c
a) diagram a only
An important similarity between a monopolistically competitive firm and a purely competitive firm is that a) economic profit tends toward zero for both b) both realize productive efficiency c) both realize allocative efficiency d) both face perfectly elastic demand schedules
a) economic profit tends toward zero for both
As a general rule, oligopoly exists when the four-firm concentration ratio: a) is 40 percent or more b) is less than the Herfindahl index c) is 15 percent more d) exceeds the Herfindahl index
a) is 40 percent or more
Monopolistically competitive firms: a) may realize either profits or losses in the short run but realize normal profits in the long run b) persistently realize economic profits in both the short run and long run c) realize normal profits in the short run but losses in the long run d) incur persistent losses in both the short run and long run
a) may realize either profits or losses in the short run but realize normal profits in the long run
Under monopolistic competition entry to the industry is: a) more difficult than under pure competition but not nearly as difficult as under pure monopoly b) blocked c) completely free of barriers d) more difficult than under pure monopoly
a) more difficult than under pure competition but not nearly as difficult as under pure monopoly
Craft unions a) only organize workers who have a particular set of skills b) have been declared illegal by federal legislation c) attempt to organize workers at all skill levels in a firm or industry d) attempt to increase the supply of their particular type of labor
a) only organize workers who have a particular set of skills
concentration ratios measure the: a) percentage of total industry sales accounted for by the largest firms in the industry b) number of firms in an industry c) geographic location of the largest corporations in each industry d) degree to which product price exceeds marginal cost in various industries
a) percentage of total industry sales accounted for by the largest firms in the industry
Which of the following is not characterized of monopolistic competition? a) recognized mutual interdependence b) the use of trademarks and brand names c) a relatively large number of sellers d) product differentiation
a) recognized mutual interdependence
Wage differentials may result from all the following except: a) the tendency of qualified workers to move from lower pay jobs to higher pay jobs b) differences in the non monetary aspects of various occupations c) geographic and sociological immobility of workers d) differences in the education and skills of workers
a) the tendency of qualified workers to move from lower pay jobs to higher pay jobs
In the long run, the price charged by the monopolistically competitive firm attempting to maximize profits a) will be equal to ATC b) may be either equal to ATC, less than ATC, or more than ATC c) must be more than ATC d) must be less than ATC
a) will be equal to ATC
a monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from a) the likelihood of collusion b) product differentiation c) mutual independence in decision making d) high entry barriers
b) product differentiation
Refer to the labor market diagrams. The tactics of inclusive unionism are shown in figure a) 5 only b) 4 and 5 c) 3 only d) 1 and 2
b) 4 and 5
The term oligopoly indicates: a) an industry whose four-firm concentration ratio is low b) a few firms producing either a differentiated or a homogeneous product c) a one-firm industry d) many producers of a differentiated product
b) a few firms producing either a differentiated or a homogeneous product
Which of the following is a market imperfection that might explain persistent wage differentials within an occupation a) movement of labor from lower-wage to higher-wage jobs b) discrimination c) readily available information about job opportunities and pay d) principal-agent problems
b) discrimination
Which of the following factors is not relevant in explaining the persistence of wage differentials? a) noncompeting groups b) free public education c) labor immobility d) compensating differences
b) free public education
Refer to the diagrams. The firm a) is a monopsonist in the hiring of labor b) is a "wage taker" c) must be selling its product in an imperfectly competitive market d) must pay a higher marginal resource cost for each successive worker
b) is a "wage taker"
Refer to the diagram. If all monopolistically competitive firms in the industry have profit circumstances similar to the firm shown above: a) no firms will enter the industry b) new firms will enter the industry c) all firms will exit the industry d) some firms will exit the industry
b) new firms will enter the industry
Answer the question on the basis of the information given in the following table: Refer to the given data, This firm is: a) hiring workers in an imperfectly competitive market b) selling its product in an purely competitive market c) selling its product in an imperfectly competitive market d) hiring workers in a purely competitive market
b) selling its product in an purely competitive market
If all monopolistically competitive firms in the industry have profit circumstances similar to the firm shown above: a) no firms will exit the industry b) some firms will exit the industry c) all firms will exit the industry d) new firms will enter the industry
b) some firms will exit the industry
If an industry evolves from monopolistic competition to oligopoly, we would expect: a) the four-firm concentration ratio to decrease b) the four-firm concentration ratio to increase c) barriers to entry to weaken d) the four-firm concentration ration to remain the same
b) the four-firm concentration ratio to increase
If an exclusive union is successful in restricting the supply of labor, the: a) demand for labor curve will shift leftward b) wage rate will rise c) number of job opportunities in the firm or industry will increase d) quantity of labor demanded will rise
b) wage rate will rise
Refer to the given data. At the profit-maximizing level of employment, this firm's total revenue will be a) $16 b) $24 c) $30 d) $32
c) $30
Answer the question on the basis of the information given in the following table: Refer to the given data. Which of the following best represents the labor demand schedule this firm? a) WR Qd $35 2 29 3 23 4 17 5 b) WR Qd $40 1 35 2 30 3 25 4 c) WR Qd $35 1 29 2 23 3 17 4 d) WR Qd $35 3 29 4 23 5 17 6
c) WR Qd $35 1 29 2 23 3 17 4
nonprime competition refers to: a) competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts b) reductions in production costs that are not reflected in price reductions c) advertising, product promotion, and changes in the real or perceived characteristics of a product d) price increases by a firm that are ignored by its rivals
c) advertising, product promotion, and changes in the real or perceived characteristics of a product
Monopolistically competitive firms shown in the figure: a) is in the long-run equilibrium b) can realize an economic profit c) cannot operate profitably in the short run d) might realize an economic profit or a loss, depending on its choice of output level
c) cannot operate profitably in the short run
Monopolistic Competition is characterized by a a) large number of firms and substantial entry barriers b) few dominant firms and substantial entry barriers c) large number of firms and low entry barriers d) few dominant firms and low entry barriers
c) large number of firms and low entry barriers
Which of the following tactics is most associated with the demand-enhancement union model? a) restricting the number of workers allowed to work in the industry b) reducing the price of inputs that are substitutes for union workers c) lobbying for increases in public expenditures on the product it is producing d) increasing the price of products that are complements for the one it is producing
c) lobbying for increases in public expenditures on the product it is producing
The purely competitive employer of resource A will maximize the profits from A by equating the: a) marginal productivity of A with the price of A b) price of A with the MRC of A c) price of A with the MRP of A d) marginal productivity of A with the MRC of A
c) price of A with the MRP of A
Suppose that total sales in an industry in a particular year are $600 million and sales by the top four sellers are $200 million, $150 million, $100 million, and $50 million, respectively. We can conclude that: a) this industry is a differentiated oligopoly b) price leadership exists in this industry c) the concentration ratio is more than 80 percent d) the firms in this industry face a kinked demand curve
c) the concentration ratio is more than 80 percent
Answer the question on the basis of the data contained in the following table. Assume the firm is hiring labor in a purely competitive market The given data reveal: a) the law of diminishing returns is not applicable to this firm b) there is no level of output at which this firm can operate at a profit c) the firm is selling its product in an imperfectly competitive market d) the firm is selling its product in a purely competitive market
c) the firm is selling its product in an imperfectly competitive market
If the four-firm concentration ratio for industry X is 80: a) the industry is monopolistically competitive b) each of the four largest firms accounts for 20 percent of total sales c) the four largest firms account for 80 percent of total sales d) the four largest firms account for 20 percent of total sales
c) the four largest firms account for 80 percent of total sales
Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The firm's profit-maximizing price will be: a) $13 b) $19 c) $10 d) $16
d) $16
Answer the question on the basis of the information given in the following table: Refer to the given data. If the firm is hiring workers under purely competitive conditions wage rate of $10, it will employ: a) 4 workers b) 2 workers c) 3 workers d) 5 workers
d) 5 workers
Marginal revenue product measures the : A) increase in total resource cost resulting from the hire of one extra unit of a resource b) decline in product price that a firm must accept to sell the extra output of one more worker c) increase in total revenue resulting from the production of one more unit of a product d) amount by which the extra production of one more worker increases a firm's total revenue
d) amount by which the extra production of one more worker increases a firm's total revenue
A shift in union labor demand from D1 to D2 in the diagram might be the result of a) a strike (work stoppage) by the union b) a refusal by union members to buy the product they are producing c) increases in the prices of complementary inputs d) an increase in tariffs on products competing with those produced by relevant union workers
d) an increase in tariffs on products competing with those produced by relevant union workers
In short- run equilibrium, the monopolistically competitive firm show will set its price a) above ATC b) below MR c) below MC d) below ATC
d) below ATC
The market supply curve for labor is upsloping because a) of declining MRC b) of diminishing returns c) each employer is a "wage taker" d) employers as a group must pay higher wage rates to obtain more workers
d) employers as a group must pay higher wage rates to obtain more workers
The general rule for hiring any input (say, labor) in the profit-maximizing amount is MRC=MRP (where W is the wage rate) when the: a) firm is hiring labor under imperfectly competitive conditions b) supply of labor is inelastic c) labor supply curve is upsloping d) firm is hiring labor under purely competitive conditions
d) firm is hiring labor under purely competitive conditions
Labor unions may attempt to raise wage rates by a) decreasing the demand for labor b) increasing the price of complementary resources c) increasing the supply of labor d) forcing employers, under the threat of a strike, to pay above-equilibrium wage rates
d) forcing employers, under the threat of a strike, to pay above-equilibrium wage rates
Refer to the diagrams. The firm a) has a marginal resource cost that exceeds the wage rate for each worker b) has a principal- agent problem c) will fail to maximize profits if it hires 5 workers d) has a constant marginal resource cost of $5
d) has a constant marginal resource cost of $5
Answer the question on the basis of the following information: Harry owns a barber shop that charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By sighing a second barber at the same wage rate, the shop can now provide of 42 haircuts per day. Refer to the given information. Harry should: a) not hire the second barber because he will diminish profits b) hire the second barber because he will add $108 to profits c) not hire the second barber because he is less productive than the first barber d) hire the second barber because he will add $28 to profits
d) hire the second barber because he will add $28 to profits
Inclusive unionism is practiced mostly by: a) professional and semiprofessional employees b) small unions consisting of skilled workers, such as the bricklayers c) craft unions d) industrial unions
d) industrial unions
Monopolistic competition means a) a market situation where competition is based entirely on product differentiation and advertising b) a large number of firms producing a standardized or homogenous product c) a few firms producing a standardized or homogenous product d) many firms producing differentiated products
d) many firms producing differentiated products
Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. They will realize an economic: a) loss of $320 b) profit of $280 c) profit of $600 d) profit of $480
d) profit of $480
When economists say that the demand for labor is a derived demand, they mean that it is: a) based on the assumption that workers are trying to maximize their money incomes b) dependent on government expenditures for public goods and services c) based on the desire of businesses to exploit labor by paying below equilibrium wage rates d) relate to the demand for the product or service labor is producing
d) relate to the demand for the product or service labor is producing
The marginal revenue product schedule is: a) the same whether the firm is selling in a purely competitive or imperfectly competitive market b) upsloping c) the firm's resource supply schedule d) the firm's resource demand schedule
d) the firm's resource demand schedule
If a firm is hiring a certain type of labor under purely competitive conditions, a) the labor supply curve will lie above the marginal labor cost curve b) its labor demand curve will be perfectly elastic at the market-determined wage rate c) the labor supply and marginal labor (resource) cost curves will coincide and be upsloping d) the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic
d) the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic
