econ
If industry sales are $2,000, and the top four firms have sales of $170, $140, $100, and $80, respectively, what will be the fourminus−firm concentration ratio? A. 24.5 percent B. 490 percent C. 49 percent D. 2.45 percent
A. 24.5 percent
If the demand for hamburgers increases, it is likely that the demand for fast food employees will A. increase. B. stay the same. C. increase at first but then fall rapidly. D. decrease.
A. increase.
Which of the following combinations would constitute a vertical merger? A. General Motors and Bridgestone Tire Company B. Yahoo! and Google Internet search engine companies C. Dell and Apple computer companies D. General Motors and Ford Motor Company
A. General Motors and Bridgestone Tire Company
According to the table at right, which assumes that opportunity costs of producing goods X and Y are constant, Holly has comparative advantage in production of A. Good Y. Your answer is correct. B. Good X. C. neither good. D. both goods. Maximum Feasible Hourly Production Rate Chen Holly Units of Good X 50 40 Units of Good Y 25 100
A. Good Y.
If the price of golf balls increases, what will likely happen to the demand for golf club manufacturing employees? A. It will increase. B. It will stay the same. C. It will decrease. D. Nothing, the two are not related.
A. It will increase.
Refer to the above figure. Which panel represents what happens in the U.S. job market in the short run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.? A. Panel A B. Panel B C. Panel C D. Panel D
A. Panel A
The long-run equilibrium of monopolistic competition is characterized by A. P = ATC > MC. B. P = MR = MC. C. P = MC > ATC. D. P = MC = ATC.
A. P = ATC > MC.
Suppose the market for tortillas is initially in equilibrium, but then the equilibrium wage rate and the equilibrium quantity of labor both increased. What happened in the market for tortillas? A. The demand for tortillas increased. B. The supply for tortillas decreased. C. The demand for tortillas decreased. D. The supply for tortillas increased.
A. The demand for tortillas increased.
If there are two goods and two countries, then one country can have A. a comparative advantage in only one good. B. a lower opportunity cost of producing both goods. C. a comparative advantage in both goods. D. a higher opportunity cost of producing both goods.
A. a comparative advantage in only one good.
Which of the following would cause the labor demand curve to shift to the right? A. an increase in labor productivity B. a decrease in output price C. a decrease in demand for the product the labor is used to produce D. a decrease in the price of a complimentary resource
A. an increase in labor productivity
Which of the following is most likely to be a monopolistically competitive firm? A. computer software maker B. college textbook publisher C. smartphone manufacturer D. cellphone service provider
A. computer software maker
In the figure at right, the line labeled "MRP" also represents the firm's A. demand curve. B. supply curve. C. total physical product curve. D. marginal physical product curve.
A. demand curve.
The demand curve for the product of a monopolistic competitor is A. downward sloping. B. horizontal. C. unitary elastic. D. vertical.
A. downward sloping.
If a good sells for $10 domestically and the same good sells for $7 abroad, then this firm is engaging in A. dumping. B. marginal cost selling. C. price differentiation. D. price discrimination.
A. dumping.
Given two economic systems, A and B, if economy A has a comparative advantage in the production of widgets, then A. economy A must give up less of all other goods to produce widgets than economy B. B. the inputs necessary to produce widgets in economy A cost less than in economy B. C. economy A is less efficient in the production of some goods than economy B. D. economy A would not benefit from the specialization of production.
A. economy A must give up less of all other goods to produce widgets than economy B.
If the price elasticity of demand is greater than 1, then consumer demand is A. elastic. B. unrelated to the elasticity of demand. C. inelastic. D. unitary elastic.
A. elastic.
If a firm wants to maximize profits it should A. equate the marginal revenue product for each input to the price of the input. B. equate the marginal physical product for each input to the price of the input. C. hire unskilled labor rather than skilled labor since unskilled labor is cheaper. D. hire lots of capital and very little labor since labor needs to be trained.
A. equate the marginal revenue product for each input to the price of the input.
In the long run, imports will most likely be paid for with A. exports. Your answer is correct. B. the extension of credit. C. higher domestic unemployment. D. the sale of real and financial assets.
A. exports.
The providers of information products typically A. have high fixed costs. B. have zero fixed costs. C. have high marginal costs. D. have low fixed costs.
A. have high fixed costs.
For a worker to be potentially available, he or she must A. have the skills required by the firm and be in the relevant geographic market. B. have most of the skills required by the firm only. C. be in the relevant geographic market and be willing to work for minimum wage. D. know about the jobs available at a particular firm.
A. have the skills required by the firm and be in the relevant geographic market.
One argument against free trade is the A. infant industry argument. Your answer is correct. B. absolute advantage argument. C. considerate advantage argument. D. comparative advantage argument.
A. infant industry argument.
The argument that with initial protection an industry will eventually become competitive is called the A. infant industry argument. Your answer is correct. B. the trade adjustment assistance argument. C. national security argument. D. strategic bargaining argument.
A. infant industry argument.
An example of a positive market feedback is A. installation of a phone app. B. routine maintenance on a car. C. the declining use of land line telephones for long distance calls. D. the use of telegraph services in the twenty first century.
A. installation of a phone app.
Dumping is A. international price discrimination. B. international monopolistic pricing. C. collusive behavior among producers in different countries. D. selling goods produced with government approval.
A. international price discrimination.
The demand curve for the product of a monopolistically competitive firm A. is downward sloping. B. is perfectly elastic. C. is unitary elastic. D. is perfectly inelastic.
A. is downward sloping.
Refer to the table at right. For each level of employment of labor shown A. marginal product falls for all employees beyond the 10th unit of labor. B. marginal product holds constant. C. marginal product declines. D. marginal product rises.
A. marginal product falls for all employees beyond the 10th unit of labor.
CHAP 26 In an oligopolistic market, each firm A. must consider the reaction of rival firms when making a pricing or output decision. B. produces at minimum average cost in the long run. C. has a constant marginal cost. D. faces a perfectly elastic demand function.
A. must consider the reaction of rival firms when making a pricing or output decision.
Maximum Feasible Hourly Production Rates of Either Pizzas or Donuts Using All Available Resources Product Country Alpha Country Beta Pizzas 10 2 Donuts 10 12 According to the above table, Alpha has comparative advantage in producing A. pizzas. B. donuts. C. both pizzas and donuts. D. neither pizzas nor donuts.
A. pizzas.
The effect of a quota is to A. reduce quantity supplied and raise price. B. increase demand for the good and increase price. C. increase quantity supplied and lower price. D. increase quantity supplied and increase price.
A. reduce quantity supplied and raise price.
U.S. automakers have an interest to make it more difficult for European competitors to locate assembly plants in Canada or Mexico and thereby ship finished automobiles to the United States dutyminus−free. This is an example of A. rules of origin. B. quotas. C. trade deflection. D. trade diversion.
A. rules of origin.
Suppose that the opportunity cost of producing goods differs between two nations. We can correctly state that A. specialization can lead to an increase in the production of all goods. B. specialization can lead to a decrease in the production of all goods. C. neither country has a comparative advantage in the production of any good. D. the two nations should not specialize in the production of goods.
A. specialization can lead to an increase in the production of all goods.
Maximum Feasible Hourly Production Rates of Either Tablets or TVs Using All Available Resources Product United States Mexico Tablets 8 2 TVs 6 4 According to the above table, if these two countries trade, A. the United States should export tablets and Mexico should export TVs. Your answer is correct. B. Mexico should export computers and the United States export TVs. C. the United States should import tablets and Mexico should import TVs. D. we cannot tell which country should export which good without knowing the amount of labor utilized in each country.
A. the United States should export tablets and Mexico should export TVs.
Maximum Feasible Hourly Production Rates of Either Food or Cloth Using All Available Resources Product United States Mexico Food 4 12 Cloth 3 6 Using the data in the above table, and assuming constant opportunity costs, it is likely that A. the United States will import food. B. the United States will export both cloth and food. C. Mexico will export both cloth and food. D. Mexico will export cloth.
A. the United States will import food.
The manner in which one oligopolist reacts to a change in price, output, or quality made by another oligopolist in the industry is A. the reaction function. B. a cooperative game. C. the concentration ratio. D. a zero-sum game.
A. the reaction function.
In the table at right, what is the marginal revenue product of the 1st worker? A. $700 B. $400 C. $920 D. $80
A. $700
A game in which players collectively lose is known as a A. negative-sum game. B. positive-sum game. C. zero-sum game. D. cooperative game.
A. negative-sum game.
Suppose Ethan and Ava work in a farm that grows apples and oranges of the same size. In one hour, Ethan can pick 8 pounds of apples or 1 pound of oranges. Ava can pick 6 pounds of apples or 1 pound of oranges. It can be concluded that A. Ethan has a comparative advantage in picking apples. B. Ethan has an absolute advantage in picking oranges. O C. Ava has a comparative advantage in picking apples. D. Ava has an absolute advantage in picking apples.
A. Ethan has a comparative advantage in picking apples.
Groups of nations that grants members trade privileges are called A. allies. B. local trade protectionists. C. trade settlements. D. regional trade blocs.
D. regional trade blocs.
Which does NOT cause an industry that might otherwise be competitive to tend toward oligopoly? A. barriers to entry B. mergers C. economies of scale D. strategic independence
D. strategic independence
In the figure at right for a monopolistically competitive firm, the profit-maximizing output and price are respectively A. 80 units and $11. B. 60 units and $14. C. 50 units and $8. D. 60 units and $9.
B. 60 units and $14.
Refer to the table at right. The four-firm concentration ratio is A. 75 percent. B. 72.5 percent. C. 59.2 percent. D. 85.8 percent.
B. 72.5 percent.
Sam, who owns a carpentry shop, discovered that with 4 laborers he could produce 18 cabinets per day. With 5 laborers he produced 25 cabinets and with 6 laborers he produced 36 cabinets. What was the MPP of the 6th laborer? A. 36 cabinets B. 11 cabinets C. 7 cabinets D. 9 cabinets
B. 11 cabinets
Refer to the figure at right. The figure shows the cost structure of a firm producing an information product. Which curve represents average total cost? A. Any of the 3 could be ATC. B. Curve 1 C. Curve 3 D. Curve 2
B. Curve 1
Which of the following is FALSE regarding the general rule for hiring? A. Virtually every optimizing rule in economics involves comparing marginal benefits with marginal cost. B. If any firm hired fewer workers over time, profits would definitely increase at that firm. C. The firm hires workers up to the point at which the additional cost associated with hiring the last worker is equal to the additional revenue generated by that worker. D. The benefit from added workers is extra output and consequently more revenues.
B. If any firm hired fewer workers over time, profits would definitely increase at that firm.
If Abigail can produce 4 portable power banks or 3 smartphones in a day, while Jacob can produce 1 portable power bank or 2 smart phones, then it is correct to state that A. Abigail has an absolute advantage in producing portable power banks but not smartphones. B. Jacob has a comparative advantage in smartphones. Your answer is correct. C. Abigail has a comparative advantage in producing smartphones. D. Jacob has an absolute advantage in smartphones.
B. Jacob has a comparative advantage in smartphones.
In an hour Jane can solder 50 connections or inspect 20 parts while Jim can solder 25 connections or inspect 20 parts in an hour. A. Jim has a comparative advantage over Jane in soldering while Jane has a comparative advantage in inspecting. B. Jane has a comparative advantage over Jim in soldering while Jim has a comparative advantage in inspecting. C. Jim had a comparative advantage over Jane in both soldering and inspecting. D. Jane has a comparative advantage over Jim in both soldering and inspecting.
B. Jane has a comparative advantage over Jim in soldering while Jim has a comparative advantage in inspecting.
Refer to the above figures. A quota is placed on a foreign good. Which figure represents the situation in the domestic market for a competing domestic good? A. Panel A B. Panel B C. Panel C D. Panel D
B. Panel B
Refer to the above figure. A long-run equilibrium in monopolistic competition is pictured by A. Panel A. B. Panel B. C. Panel C. D. Panel D.
B. Panel B.
When there is an increase in the wages the banking industry offers accountants, what happens to the supply of accountants available to other industries? A. The supply curve for other industries shifts to the right. B. The supply to other industries falls. C. The supply to other industries increases. D. no change
B. The supply to other industries falls.
The most important international trade organization with the largest membership, that grants members special trade privileges, is the A. General Agreement on Tariffs and Trade. B. World Trade Organization. This is the correct answer. C. North American Free Trade Agreement. Your answer is not correct. D. European Union.
B. World Trade Organization.
Positive market feedback refers to a tendency for A. price leaders to respond to an increase in market demand by increasing the prices of their products. B. a particular product to come into favor with additional consumers because other consumers have chosen to purchase the product. C. potential entrants to an oligopolistic industry to respond to entry deterrence strategies by contemplating setting their prices above prices established by firms already in the industry. D. potential entrants to an oligopolistic industry to respond to entry deterrence strategies by contemplating producing more output than the quantities produced by firms already in the industry.
B. a particular product to come into favor with additional consumers because other consumers have chosen to purchase the product.
In the 1920s and 1930s, economists became increasingly aware that there were industries that did not fit the model of perfect competition or pure monopoly. Two separate theories of monopolistic competition resulted. Edward Chamberlin of Harvard published the Theory of Monopolistic Competition in 1933. Chamberlin defined monopolistic competition as A. a relatively small number of producers offering similar but differentiated products. B. a relatively large number of producers offering similar but differentiated products. C. a market situation in which a small number of firms produce similar products. D. a market situation in which a large number of firms produce identical products.
B. a relatively large number of producers offering similar but differentiated products.
The infant industry argument suggests that A. the industry has no potential and must be protected to survive. B. an industry may require temporary tariff protection until the industry matures. C. a country requires protection against unfair trade practices. D. a country requires tariff protection when it has no comparative advantage in the production of any good.
B. an industry may require temporary tariff protection until the industry matures.
A VRA is an example of A. an illegal foreign tariff. B. a "voluntary" quota. Your answer is correct. C. a tariff. D. an illegal foreign good.
B. a "voluntary" quota.
The outputs of an oligopolistic industry A. must be at high levels so that price exceeds average total cost. B. can be homogeneous or differentiated. C. have no substitutes on the market. D. always have excise taxes imposed on them
B. can be homogeneous or differentiated.
For infant industry tariff protection to be valid requires that A. the tariff must be allowed to last forever. B. government officials must predict which industries will eventually be able to compete with more established foreign producers. Your answer is correct. C. only industries that currently are producing efficiently should be protected. D. the industries protected must have substantial monopoly power in the absence of foreign competition.
B. government officials must predict which industries will eventually be able to compete with more established foreign producers.
The importance of international trade in the U.S. economy A. has been decreasing but is expected to start to increase. B. has been increasing and is expected to continue to increase. C. has been increasing but is expected to decrease in the future. D. has been decreasing and is expected to continue to decrease.
B. has been increasing and is expected to continue to increase.
The demand curve for a monopolistically competitive firm is A. horizontal. B. less elastic than the demand curve of the perfectly competitive firm. C. more elastic than the demand curve of the perfectly competitive firm. D. the same as the industry demand curve.
B. less elastic than the demand curve of the perfectly competitive firm.
CHAP 28 Suppose at the current level of labor used, MRP = $20 and MFC = $20. To maximize profits, the firm should A. reduce the level of labor. B. maintain the current level of labor. C. hire more labor. D. shut down
B. maintain the current level of labor.
The monopolist's input demand curve is equal to its A. average cost curve. B. marginal revenue product curve. C. marginal cost curve. D. variable cost curve.
B. marginal revenue product curve.
The addition to revenue obtained from firing an additional unit of labor is A. marginal factor cost. B. marginal revenue product. C. total product. D. marginal physical product of labor.
B. marginal revenue product.
Advertising intended to reach as many consumers as possible, typically through television, newspaper, or magazine ads is referred to as A. interactive advertising. B. mass marketing. C. direct marketing. D. subliminal advertising.
B. mass marketing.
In 1990, there were 50 bilateral agreements and regional trade agreements between countries. Today there are A. more than 10,000 of these agreements. B. more than 230 of these agreements. Your answer is correct. C. none of these agreements remaining. D. 30 of these agreements.
B. more than 230 of these agreements.
In a monopolistically competitive market, having a large number of firms in the market means that A. individual firms will have a large portion of the market giving them monopoly power. B. no firm attempts to take into account the reaction of rival firms. C. firms will cooperate with each other to drive competitors out of the market. D. firms will get together and collude because this will be the only way to earn monopoly profits.
B. no firm attempts to take into account the reaction of rival firms.
The demand curve for labor slopes down because A. firms must lower prices to sell the additional units of its product that the extra workers produce. B. of the law of diminishing marginal product. C. firms value less efficient workers less than they value more efficient workers. D. of profit maximizing behavior.
B. of the law of diminishing marginal product.
For a firm that sells an information product, the long-run equilibrium exists at a point where A. price equals average variable cost. B. price equals average total cost. C. price equals average fixed cost. D. price equals marginal cost.
B. price equals average total cost.
A significant advantage to being a member of a trade bloc is A. higher tariff collections from member countries. B. reduced or eliminated tariffs among member countries. C. reduced tariff rates only for the largest member countries. D. None of the above; there is no economic advantage to a trade bloc.
B. reduced or eliminated tariffs among member countries.
An experience good is a product A. with qualities that consumers lack the expertise to assess without assistance. B. that an individual must consume before the quality can be established. C. with characteristics that enable an individual to evaluate the product's quality in advance of a purchase. D. that emphasizes the features of its product.
B. that an individual must consume before the quality can be established.
If the price of a product being sold in a perfectly competitive market decreases, A. the MRP curve shifts to the right. B. the MRP curve shifts to the left. C. the MFC curve shifts to the right. D. the MFC curve shifts to the left.
B. the MRP curve shifts to the left.
The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is A. a voluntary restraint agreement. B. the infant industry argument. C. dumping. D. a basic argument for free trade.
B. the infant industry argument.
The downward sloping marginal revenue product of labor is A. the firm's marginal cost of labor. B. the firm's short-run demand for labor. C. the firm's supply of labor. D. another term for the marginal revenue product of labor.
B. the firm's short-run demand for labor.
Because of NAFTA, the U.S. shifts some of its imports from Europe to Mexico (a member of NAFTA). This is an example of A. rules of origin. B. trade diversion. Your answer is correct. C. protectionism. D. trade deflection.
B. trade diversion.
Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per-unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should A. use relatively more capital. B. use relatively less capital. C. decrease all inputs proportionately. D. increase all inputs proportionately.
B. use relatively less capital.
When the supply of labor to a firm is perfectly elastic the marginal factor cost will equal the A. marginal physical product. B. wage rate. C. market price of the product. D. wage rate times the number of workers.
B. wage rate.
In the long run, if imports increase, then exports A. will become zero. B. will also increase. Your answer is correct. C. will decrease. D. will not change.
B. will also increase.
A monopolistic competitor in long-run equilibrium is like a perfect competitor in that A. both produce at the minimum points of their average total cost curves. B. zero economic profits are made. C. price is greater than marginal cost. D. price equals marginal cost.
B. zero economic profits are made.
Refer to the table. If the price of the good produced is $6, the marginal revenue product of the 11th worker is A. $360 B. $60 Your answer is correct. C. $66 D. $350 Labor Input (workers/day) 10 11 12 13 14 Total Physical Product (output/day) 50 60 69 76 80
B. $60
In the figure at right, the profit-maximizing output and price for this monopolistically competitive firm are A. 12,000 units at a price of $8 per unit. B. 10,000 units at a price of $10 per unit. C. 10,000 units at a price of $5 per unit. D. 13,000 units at a price of $7 per unit.
B. 10,000 units at a price of $10 per unit
When U.S. residents buy products that were made in Japan, then ultimately the Japanese want A. dollars. B. goods, including U.S.-made goods. C. yen. D. Japanese goods.
B. goods, including U.S.-made goods.
Chap 32 For the United States since 1950, imports as a percentage of GDP has? A decreased B tripled. C increased slightly D remained constant
B. tripled
Maximum Feasible Hourly Production Rates of Either Wine or Beef Using All Available Resources Product Argentina France Wine (gallons) 30 60 Beef (pounds) 10 30 Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a gallon of wine in Argentina is A. 0.5 pound of beef. B. 2 pounds of beef. C. 0.33 pound of beef. Your answer is correct. D. 3 pounds of beef.
C. 0.33 pound of beef.
Maximum Feasible Hourly Production Rates of Either Wine or Beef Using All Available Resources Product Argentina France Wine (gallons) 30 60 Beef (pounds) 10 30 Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a gallon of wine in France is A. 0.33 pound of beef. B. 3 pounds of beef. C. 0.5 pound of beef. Your answer is correct. D. 2 pounds of beef.
C. 0.5 pound of beef.
In the table, if the marginal factor cost is $480, how many workers would be hired? A. 6 B. 3 C. 5 Your answer is correct. D. 4 Quantity of Workers 1 2 3 4 5 6 Total Product 7 18 30 40 48 52 Price of Final Product $100 90 80 70 60 50
C. 5
Which of the following is an example of outsourcing? A. A U.S. firm moves a manufacturing plant from the U.S. to Thailand where the firm can hire cheaper labor. B. A German firm hires an accountant in the U.S. to manage its payrolls. C. All the above are examples of outsourcing. D. None of the above is an example of outsourcing.
C. All the above are examples of outsourcing.
Which of the following statements is true about the economic profits earned by a monopolistic competitor firm in the long run? A. Economic profits will be positive since the firm has a downward sloping demand curve. B. Economic profits can be negative since there is so much competition in the market. C. Economic profits will tend towards zero since positive profits will attract new firms into the industry. D. Economic profits can be positive since firms have some degree of monopoly power.
C. Economic profits will tend towards zero since positive profits will attract new firms into the industry.
A monopolistic competitor will maximize its profits at the output level at which A. the MC curve intersects the demand curve. B. TC = TR. C. MC = MR. D. MR = ATC.
C. MC = MR.
In constructing the monopolist's input demand curve, which of the statements is FALSE? A. The demand curve has a negative slope due to the law of diminishing marginal product. B. A monopoly restricts output and hires fewer units of labor than a perfectly competitive firm. C. Marginal revenue is always positive. D. The supply curve a monopoly faces is horizontal because the monopoly is a price taker.
C. Marginal revenue is always positive.
Which of the following represents the general rule of hiring for a firm? A. Total physical product equals marginal factor cost. B. Marginal cost equals marginal revenue. C. Marginal revenue product equals marginal factor cost. D. Average revenue product equals the wage rate.
C. Marginal revenue product equals marginal factor cost.
Which of the following is consistent with international trade theory? A. The United States has been falling behind Europe and Japan because its economy is too open. B. The United States needs trade restrictions to stay competitive. C. The standard of living within a country is a function of the economic strength of the economy and not of its relative position. Your answer is correct. D. A country should strive for comparative advantage in manufacturing.
C. The standard of living within a country is a function of the economic strength of the economy and not of its relative position.
Suppose the market for pizza makers is initially in equilibrium, but then the equilibrium wage rate increased and the equilibrium quantity of labor will decreased. What happened in the market for pizza makers? A. The demand for pizza makers increased. B. The demand for pizza makers decreased. C. The supply for pizza makers decreased. D. The supply for pizza makers increased.
C. The supply for pizza makers decreased.
There are a number of reasons why labor supply curves will shift in a particular industry. Which one of the following is NOT one of them? A. Job flexibility that determines the position of the labor supply curve. B. Changes in working conditions in an industry affect the labor supply curve. C. There is a change in the market wage rate. D. Taxes on labor affect the labor supply curve.
C. There is a change in the market wage rate.
A tariff is A. a subsidy on domestically produced goods. B. the difference between the world market price and the domestic price when a group of firms in an industry collude successfully. C. a tax on imported goods. Your answer is correct. D. a government imposed restriction on the quantity of a specific good that can be imported into the country and sold.
C. a tax on imported goods.
A tariff is A. a voluntary agreement to restrict exports. B. a subsidy on domestically produced goods. C. a tax on imported goods. Your answer is correct. D. a government-imposed restriction on the quantity of a specific good that can be imported into the country.
C. a tax on imported goods.
Firms face downward sloping demand curves in A. monopolies only. B. monopolies and oligopolies only. C. all market structures except perfect competition. D. monopolies and oligopolies that collude only.
C. all market structures except perfect competition.
Outsourcing is A. not beneficial to the consumers who purchase outsourced goods. B. not beneficial to any country. C. another way for residents of different nations to conduct trade with one another. D. only beneficial to a few select countries.
C. another way for residents of different nations to conduct trade with one another.
Dumping occurs when, in a foreign market, a good is sold A. at a price above the equilibrium price. B. below its nominal price. C. below its cost of production or below the price in that market. Your answer is correct. D. at a discount below the list price.
C. below its cost of production or below the price in that market.
In general, who will benefit as the result of a tariff? I. Domestic producers II. Domestic consumers III. The domestic government A. I only B. II only C. both I and III Your answer is correct. D. both II and III E. All of the above are correct
C. both I and III
A group of firms that try to work together to earn monopoly profits is called a(n) A. monopolistic merger. B. natural monopoly. C. cartel. D. public enterprise.
C. cartel.
Maximum Feasible Hourly Production Rates of Either Product A or Product B Using All Available Resources Product Country X Country Y A 4 8 B 4 4 Refer to the above table. If opportunity costs are constant, each nation produces only the one good for which it has a comparative advantage, and trade can occur between the two countries, A. country Y will refuse to trade with country X since country Y has a comparative advantage in both products. B. country X will refuse to trade with country Y since country X has a comparative advantage in both products. C. country X will produce product B and country Y will produce product A. D. country X will produce product A and country Y will produce product B.
C. country X will produce product B and country Y will produce product A.
Typically a mix of informational and persuasive advertising is used for A. search goods. B. credible goods. C. credence goods. D. experience goods.
C. credence goods.
The demand for labor is A. derived from the satisfaction that hiring the inputs provides the owner or manager of the firm more money. B. derived from a utility maximizing process similar to that used to derive the demand curve for goods and services. C. derived from the demand for the final product being produced. D. totally unrelated to the demand curve for the final product.
C. derived from the demand for the final product being produced.
In a twominus−sided market, the platform may offer different prices to different group of end users due to A. a lack of product differentiation in the products sold. B. substitution effects between the end users and the platform. C. different network effects between groups of end users. D. the budget constraints of end users.
C. different network effects between groups of end users.
Judy has just looked through her favorite catalog that came in the mail and has placed an order. The catalog is an example of A. mass marketing. B. indirect marketing. C. direct marketing. D. interactive marketing.
C. direct marketing.
The selling of a good or service abroad at a price below production costs is A. marginal cost selling. B. price differentiation. C. dumping. Your answer is correct. D. price discrimination.
C. dumping.
When a good is put onto the global market at a price below the cost to produce it, this is known as A. the infant-industry argument. B. protection of domestic jobs. C. dumping. Your answer is correct. D. a quota.
C. dumping.
One of the strongest reasons that oligopolies exist is due to A. marginal cost pricing. B. the homogeneity of their products. C. economies of scale. D. lowest cost production.
C. economies of scale.
John has just tried on the most comfortable pair of pants that he has ever known. The pants are a(n) A. information good. B. credence good. C. experience good. D. logo good.
C. experience good.
Straight Cut beauty salon merges with Clean-Cut beauty salon. This is an example of A. vertical merger. B. conglomerate merger. C. horizontal merger. D. concentration ratio.
C. horizontal merger.
The standard of living in a nation depends on A. how well its economy functions relative to other countries. B. the size of the country, with larger nations always doing better than smaller ones. C. how well the economy functions within that country. Your answer is correct. D. whether or not its currency is adopted as the world's monetary standard.
C. how well the economy functions within that country.
Holding other things constant, an increase in the use of capital in production would A. decrease proportionately the marginal productivity of labor. B. not change the marginal productivity of labor. C. increase the marginal productivity of labor. D. decrease, but not proportionately, the marginal productivity of labor.
C. increase the marginal productivity of labor.
The demand for an input will be more inelastic when A. the time period being considered is relatively long. B. the demand for the product being produced is elastic. C. it is difficult to substitute other inputs for this input. D. the cost of the input is a relatively large percentage of total production costs.
C. it is difficult to substitute other inputs for this input.
A firm that wants to maximize profits should hire each input to the point where A. its marginal revenue product divided by its marginal physical product equals the wage. B. its marginal physical product divided by the price of the input equals the product price. C. its marginal revenue product divided by the price of the input equals one. D. its marginal revenue product divided by the product price equals one.
C. its marginal revenue product divided by the price of the input equals one.
An increase in the supply of labor generates A. a decrease in the quantity demanded of labor. B. increased unemployment. C. lower wages. D. an offsetting increase in the demand for labor.
C. lower wages
CHAP 25 In a monopolistically competitive market if the additional revenue generated from advertising equals the additional cost of advertising, the firm should A. advertise more to lower marginal costs. B. advertise less to decrease costs. C. maintain its current amount of advertising. D. advertise more to increase sales.
C. maintain its current amount of advertising.
The contribution to total revenues coming from the next worker hired is A. total product. B. total revenues. C. marginal revenue product. D. marginal product.
C. marginal revenue product.
Compared to the perfectly competitive firm , the monopolist's input demand curve is A. more elastic. B. marginal factor cost. C. more inelastic. D. due to a constant perminus−unit price of the product.
C. more inelastic.
Within a game theory model, if a change in decision-making raises corporation A's profits by $100 and lowers corporation B's profits by $200, the game is a A. positive−sum game. B. cooperative game. C. negative−sum game. D. zero−sum game.
C. negative−sum game.
The demand curve for labor slopes down because A. firms must lower prices to sell the additional units of its product that the extra workers produce. B. of profit maximizing behavior. C. of the law of diminishing marginal product. D. firms value less efficient workers less than they value more efficient workers.
C. of the law of diminishing marginal product.
If protective import-restricting tariffs are imposed by a country, in the majority of cases that nation's consumers end up A. having a higher standard of living than they otherwise would. B. consuming more of the good than they otherwise would. C. paying a higher price for the good than they otherwise would. D. paying a lower price for the good than they otherwise would.
C. paying a higher price for the good than they otherwise would.
For a firm in a perfectly competitive labor market, the supply curve of labor is A. inelastic. B. elastic. C. perfectly elastic. D. perfectly inelastic.
C. perfectly elastic.
The price elasticity of demand for labor will depend upon all but the A. price elasticity of supply for the final product. B. availability of substitutes for inputs. C. price elasticity of demand for the final product. D. time period being considered.
C. price elasticity of demand for the final product.
In long-run equilibrium in a monopolistically competitive industry, a firm will A. have a perfectly elastic demand curve. B. always earn an economic profit. C. produce at a point to the left of the minimum point on its average total cost curve. D. produce an output rate at which P = MC.
C. produce at a point to the left of the minimum point on its average total cost curve.
In a monopolistically competitive market, the consumer receives the benefit of A. production at minimum average cost. B. allocative efficiency. C. product differentiation. D. production where price equals marginal cost.
C. product differentiation.
The demand curve for the product of a monopolistically competitive firm slopes downward because A. products are homogeneous. B. people only care about price when they buy a good. C. products are perceived by consumers as different. D. the firm's goal is to maximize profits.
C. products are perceived by consumers as different.
Firms that sell information products experience relatively high fixed costs but, once they have produced the first unit, can A. sell additional units at a loss, or above cost. B. experience shortminus−run diseconomies of scale. C. sell additional units at a relatively low cost per unit. D. provide expensive information products to consumers.
C. sell additional units at a relatively low cost per unit.
When a tariff is imposed, the supply curve for the imported good A. does not change. B. becomes perfectly inelastic. C. shifts upward and to the left. Your answer is correct. D. shifts downward and to the right.
C. shifts upward and to the left.
By promoting its brand name heavily, the monopolistically competitive firm A. guarantees a short run profit. B. signals its intention to leave the industry. C. signals its long-term intention to stay in the industry. D. earns more profit in the long run.
C. signals its long-term intention to stay in the industry.
Maximum Feasible Hourly Production Rates of Either Computers or Bicycles Using All Available Resources Product United States China Computers 8 3 Bicycles 2 6 Refer to the above table. If opportunity costs are constant and the two countries trade, A. there will be no trade because they are so different. B. the United States should specialize in both bicycles and computers, and China should specialize in neither. C. the United States should specialize in computers and China in bicycles. D. the United States should specialize in bicycles and China in computers.
C. the United States should specialize in computers and China in bicycles.
A profit maximizing firm will hire additional workers until A. the extra revenue generated by the last worker hired equals zero. B. the extra cost associated with hiring the last worker equals the price of the good produced. C. the additional cost associated with hiring the last worker equals the additional revenue generated by that worker. D. the additional cost associated with hiring the last worker equals the average wage rate of the workers.
C. the additional cost associated with hiring the last worker equals the additional revenue generated by that worker.
We would expect unions to have a more difficult time negotiating higher wages for their members when A. the product produced makes up a small portion of families' budgets. B. there are not good substitutes for labor in the production process. C. the product produced has several close substitutes. D. labor represents a small portion of total costs
C. the product produced has several close substitutes.
The demand for computers increases. As a result, A. the quantity demanded of workers increases, the wage rate rises, and the supply of labor increases. B. the demand for workers increases, hiring increases, but wages stay the same since each firm faces a horizontal supply curve of labor. C. the wage rate increases in the industry and the quantity supplied of workers increases. D. the wage rate increases in the industry and the quantity demanded of workers falls.
C. the wage rate increases in the industry and the quantity supplied of workers increases.
Firms in a monopolistically competitive market will advertise because A. they want to increase the elasticity of the demand curve. B. of the significant differences in their product over their competitors. C. they want to differentiate their products. D. the elasticity for their product is inelastic.
C. they want to differentiate their products.
People who focus on the "competitiveness" of the United States are A. focusing on the right thing if the United States is to stay a leading economic power. B. correctly recognizing that trade is a zero-sum game. C. treating the United States as if it is a business firm. D. also focusing on the importance of education.
C. treating the United States as if it is a business firm.
If a firm faces perfectly competitive product and factor markets and the marginal product of labor and capital are 4 and 9, respectively, while the wage rate is $2 and the rental rate on capital is $4, the firm should A. use relatively less capital. B. increase all inputs proportionately. C. use relatively more capital. D. decrease all inputs proportionately.
C. use relatively more capital.
In the table at right, if this is a perfectly competitive firm and the market price of the product is $10, what is the marginal revenue product of worker 4? A. $411 B. $210 C. $100 Your answer is correct. D. $120 Quantity of Workers 0 1 2 3 4 5 Total Product 0 7 18 30 40 48
C. $100
In the above figure, this profitminus−maximizing monopolistic competitive firm will realize an economic profit of A. $1,400. B. $2,100. C. $700. D. minus−$1,400.
C. $700.
In the table, if this is a perfectly competitive firm and the market price of the product is $8, what is the marginal revenue product of worker 3? A. $80 B. $88 C. $96 D. $240
C. $96
Comparative advantage is defined as A. producing all goods at lower opportunity costs than other countries can. B. the ability to produce more output from given inputs than anyone else can. C. producing one good at a lower opportunity cost than another country can. D. a lower opportunity cost than another country can. producing more output of all goods than anyone else can.
C. producing one good at a lower opportunity cost than another country can.
Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can produce a maximum of eight pies or two cakes in a day. Fred has an comparative advantage in the production of A. neither cakes nor pies. B. pies. C. both cakes and pies. D. cakes.
D. cakes.
Maximum Feasible Hourly Production Rates of Either Wine or Beef Using All Available Resources Product Argentina France Wine (gallons) 30 60 Beef (pounds) 10 30 Use the above table. Assuming constant opportunity costs, if Argentina and France specialize based on comparative advantage, then they will trade if the rate of exchange A. is 7 gallons of wine for 1 pound of beef, and Argentina imports beef. B. 0.25 gallons of wine for 1 pound of beef, and France imports beef. C. 0.25 pounds of beef for 1 gallon of wine, and Argentina imports wine. Your answer is not correct. D. 0.4 pounds of beef for 1 gallon of wine, and France imports wine.
D. 0.4 pounds of beef for 1 gallon of wine, and France imports wine.
The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources Product United States (Workerminus−Days) Switzerland (Workerminus−Days) Cuckoo Clocks 8 6 Movies 12 4 Based on the data in the above table, then if opportunity costs are constant, the opportunity cost of producing cuckoo clocks in the United States is ________, and the opportunity cost of producing cuckoo clocks in Switzerland is ________. A. 0.33 movies; 0.67 cuckoo clocks B. 3 movies; 1.33 cuckoo clocks C. 0.67 movie; 1.5 movies Your answer is not correct. D. 1.5 movies; 0.67 movie
D. 1.5 movies; 0.67 movie
The table at right depicts prices, quantities, and marginal costs the campus bookstore faces. Based on marginal analysis, what is the profit-maximizing level of output for the bookstore? A. 2 books B. 4 books Your answer is not correct. C. 1 book D. 3 books
D. 3 books
Maximum Feasible Hourly Production Rates of Either Wine or Beef Using All Available Resources Product Argentina France Wine (gallons) 30 60 Beef (pounds) 10 30 Use the above table. Assuming constant opportunity costs, the opportunity cost of producing a pound of beef in Argentina is A. 0.5 gallons of wine. B. 2 gallons of wine. C. 0.33 gallons of wine. D. 3 gallons of wine.
D. 3 gallons of wine.
Maximum Feasible Hourly Production Rates (in tons) of Either Cookies or Coffee Using All Available Resources Product Country Alpha Country Beta Cookies 3 8 Coffee 9 4 Use the above table. Assuming constant opportunity costs, the opportunity cost of producing cookies in country Alpha is ________, and the opportunity cost of producing cookies in country Beta is ________. A. 2.67 tons of coffee; 0.44 ton of cookies B. 0.375 ton of cookies; 2.25 tons of coffee C. 0.33 ton of coffee; 2 tons of coffee D. 3 tons of coffee; 0.5 ton of coffee
D. 3 tons of coffee; 0.5 ton of coffee
Which of the following will not lead to a change in the demand for labor? A. A change in demand for the final good. B. A change in labor productivity. C. A change in the price of a substitute input. D. A change in the supply of labor.
D. A change in the supply of labor.
Which of the following statements is true? A. Both a firm and the industry can move down their demand curves for labor without causing product price to change. B. A firm cannot increase quantity demand for labor when the wage rate falls without causing the product price to decline. C. A movement along the market demand curve for labor does not require a change in the product price. D. A firm can increase quantity demanded for labor when the wage rate falls without affecting the product price but the industry cannot hire more workers without causing the product price to fall.
D. A firm can increase quantity demanded for labor when the wage rate falls without affecting the product price but the industry cannot hire more workers without causing the product price to fall.
Ajax has just discovered that the marginal revenue product generated by the last worker hired was $125 while the marginal factor cost was $85. What should Ajax do? A. Reduce the amount produced. B. Leave the level of production unchanged. C. Collect more information before making a decision. D. Increase the amount produced.
D. Increase the amount produced.
If a firm uses only capital and labor as inputs, then what should the firm do at a given rate of production if the marginal physical product of labor per last dollar spent is lower than the marginal physical product of capital per last dollar spent? A. The firm should decrease the quantity of capital and increase the quantity of labor. B. The firm should decrease both the quantity of capital and the quantity of labor. C. The firm should increase both the quantity of capital and the quantity of labor. D. The firm should increase the quantity of capital and reduce the quantity of labor.
D. The firm should increase the quantity of capital and reduce the quantity of labor.
An association of producers in an industry that agree to set common prices and output quotas to prevent competition is A. an oligopolist. B. a monopolistic competitor. C. a constrained monopoly. D. a cartel.
D. a cartel.
Voluntary restraint agreements are A. a type of tariff in which the tax is a fixed amount per unit of good imported. B. a type of quota that actually benefits the firms facing the restrictions. C. a type of tariff in which the tax is based on the value of the good. D. a type of quota agreed to "voluntarily" in order to prevent more severe protection of another type.
D. a type of quota agreed to "voluntarily" in order to prevent more severe protection of another type.
If a firm hires 200 workers and produces 5,000 computers. If the firm hires one more worker, it produces 5,050 computers. If computers sell at a constant price of $100 and labor is hired at a constant wage rate of $4,000 per worker A. the firm should hire and retain the additional worker. B. the marginal factor cost of labor is $4,000. C. the marginal revenue product of the added worker is $5,000. D. all of the above
D. all of the above
Persuasive advertising is mostly used for A. a persuasive good. B. a search good. C. an inferior good. D. an experience good.
D. an experience good.
In the long run, a monopolistic competitor will produce to the point at which A. average total costs are at the minimum of possible ATC. B. at the lowest possible price. C. resources are used at the lowest possible cost. D. average total costs are higher than the minimum of possible ATC.
D. average total costs are higher than the minimum of possible ATC.
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 both kinds of labor to decrease. Wages rates of both kinds of labor would decrease too. B. cause the demand for labor to increase, raising wages of both skilled and unskilled labor. C. 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. D. 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 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.
Today, the share of international trade in U.S. GDP is A. about 10 percent. B. almost 0 percent. Your answer is not correct. C. more than 150 percent. D. close to 30 percent.
D. close to 30 percent.
Comparative advantage is based on the A. concept that some countries are better endowed with natural resources. B. concept of absolute advantage of producing goods in different countries. C. concept that some countries are superior to others. D. concept of relative opportunity cost of producing goods in different countries.
D. concept of relative opportunity cost of producing goods in different countries.
Comparative advantage is based on the A. concept that some countries are better endowed with natural resources. B. concept that some countries are superior to others. C. concept of absolute advantage of producing goods in different countries. D. concept of relative opportunity cost of producing goods in different countries.
D. concept of relative opportunity cost of producing goods in different countries.
A decrease in demand for a product, holding other things constant, will A. not change the marginal revenue product of labor. B. increase the marginal revenue product of labor. C. have an undetermined effect upon the marginal revenue product of labor. D. decrease the marginal revenue product of labor.
D. decrease the marginal revenue product of labor.
A monopolistic competitor is in long-run equilibrium when A. economic profits are greater than zero and the average total cost curve is tangent to the demand curve. B. economic profits are equal to zero and the marginal cost curve is tangent to the demand curve. C. economic profits are greater than zero and the marginal cost curve is tangent to the demand curve. D. economic profits are equal to zero and the average total cost curve is tangent to the demand curve.
D. economic profits are equal to zero and the average total cost curve is tangent to the demand curve.
In the long run, input demand becomes more A. inelastic. B. cost efficient. C. unit-elastic. D. elastic.
D. elastic.
In the long run, the economic profits of a monopolistically competitive firm A. will be the average short-run profits earned in the last five years. B. will tend to be larger than in the short run. C. will be the same as in the short run. D. equal zero.
D. equal zero.
The number of firms in a monopolistically competitive industry means that A. existing firms in the industry will make sure new firms do not enter. B. firms will try to set a common price. C. firms will collude. D. firms will not cooperate to set a pure monopoly price.
D. firms will not cooperate to set a pure monopoly price.
The analytical framework in which two or more individuals, companies, or nations compete for certain payoffs that depend on the strategy that others employ is A. opportunistic behavior. B. the tit-for-tat equilibrium. C. the dominant equilibrium. D. game theory.
D. game theory.
Maximum Feasible Hourly Production Rates of Either Cuckoo Clocks or Movies Using All Available Resources Product United States Switzerland Cuckoo Clocks 4 2 Movies 10 4 Refer to the above table. If opportunity costs are constant, residents of the United States will gain from specializing and trading with Switzerland if the A. produce both clocks and films and export clocks to Switzerland. B. produce both clocks and films and export both to Switzerland. C. import films and export clocks to Switzerland. D. import clocks and export films.
D. import clocks and export films.
Persuasive advertising is used to A. sell to an established clientele. B. cut costs. C. promote only used goods. D. induce a consumer to try a product and discover a previously unknown taste for it.
D. induce a consumer to try a product and discover a previously unknown taste for it.
For a perfectly competitive firm, the value of the marginal product is A. the same thing as marginal factor cost. B. the same thing as marginal physical product. C. marginal physical product times the wage rate. D. marginal physical product times the product price.
D. marginal physical product times the product price.
A profit maximizing monopolist will hire labor up to the point where A. marginal revenue product is greater than the wage rate. B. marginal revenue product equals the price of the product. C. marginal revenue product is less than the wage rate. D. marginal revenue product equals than the wage rate.
D. marginal revenue product equals than the wage rate.
A market with one seller, considerable influence over price, high barriers to entry, a homogeneous product, and non-price competition to allow for price discrimination is known as A. perfect competition. B. monopolistic competition. C. oligopoly. D. monopoly.
D. monopoly.
In the long run, monopolistically competitive firms will not earn economic profits because A. input prices will be bid up. B. average total cost will shift up to meet the demand curve. C. production will not be at minimum average cost. D. new firms will enter the industry.
D. new firms will enter the industry.
An example of a zero-sum game is A. the prisoners' dilemma. B. exchange. C. a consumer purchasing a used car from a used car dealer. D. poker.
D. poker.
In long-run equilibrium in a monopolistically competitive industry, a firm will A. always earn an economic profit. B. produce an output rate at which P = MC. C. have a perfectly elastic demand curve. D. produce at a point to the left of the minimum point on its average total cost curve.
D. produce at a point to the left of the minimum point on its average total cost curve.
Comparative advantage is A. the ability to produce more output of all goods than anyone else can. B. the ability to produce all goods at lower costs than anyone else can. C. the ability to produce more output from given inputs than another producer can. D. the ability to produce a good at a lower opportunity cost than other producers.
D. the ability to produce a good at a lower opportunity cost than other producers.
The contention that tariffs should be imposed to protect from import competition an industry that is trying to get started is A. a voluntary restraint agreement. B. a basic argument for free trade. C. dumping. D. the infant industry argument.
D. the infant industry argument.
When market wages increase in a perfectly competitive market, then A. the marginal product increases. B. the marginal factor cost decreases. C. the marginal product decreases. D. the marginal factor cost increases.
D. the marginal factor cost increases.
When 4 units of labor are employed, total product is 6 units; when 5 units of labor are employed, total product is 8 units of output. If the price of output is $5 per unit, what is the marginal revenue product of the 5th unit of labor? A. $2 B. $5 C. $40 D. $10
D. $10
The figure at right shows the situation of a monopolistic competitor in the short run. The maximum economic profits of the firm equal A. $50,000. B. zero. C. 15,000. D. $30,000.
D. $30,000.
Refer to the table at right. If the price of the good produced is $10 and the wage rate is $500, then the marginal revenue product of the 5th worker is A. $10. B. $4,750. C. $50. D. $750.
D. $750.
Use the figure at right. The total profit earned by the monopolistically competitive firm is A. $0. B. +$300. C. −$15. D. +$15.
D. +$15.
When the price of labor increases, the substitution effect will ________ the quantity of labor demanded and the output effect will ________ it. A. decrease; increase B. increase; increase C. increase; decrease D. decrease; decrease
D. decrease; decrease
During the 1960s, U.S. steel firms argued they needed tariff protection because Germany and Japan were using new mills to make steel since their old mills were destroyed in World War II. Essentially, this argument is a form of the A. anti-dumping argument. Your answer is not correct. B. national defense argument. C. countering foreign subsidies argument. D. infant-industry argument.
D. infant-industry argument.