econ final

What quantity in the table maximizes total surplus? a. 8 b. 7 c. 6 d. 4 e. 3

A

Which of the following is not a typical feature of a perfectly competitive market? a. A homogenous product b. No external effects c. Many buyers d. Many sellers e. Buyers and sellers all know the market price

B

A social dilemma can be characterized as a. a zero-sum game. b. an invisible hand game. c. a bargain along the Pareto efficiency curve. d. a game with inefficient equilibrium. e. All of the above

D

In evaluating fairness of an outcome economists consider a. Income. b. Happiness. c. Freedom. d. All of the above.

D

What is Toms opportunity cost of owning his own business? a. $100,000 b. $195,000 c. $90,000 d. $105,000 e. $0

D

Which is a criteria for Procedural Judgement? a. Voluntary exchange of private property. b. Equal opportunity for economic advantage. c. Deservingness. d. All of the above.

D

Which of the following statements about the tragedy of the commons is correct? a. Herders will tend to place too few animals in a common pasture. b. Individual self-interest promotes the public good. c. The commons is not susceptible to social dilemmas. d. The tragedy occurs when individuals pursue their self-interest without concern for others. e. The commons is a private good, because it is rival and excludable.

D

Competitive markets generate efficient allocations of: a. Private goods b. Common pool resources c. Artificially-scarce public goods d. Non-excludable public goods e. All of the above

A

Consider a firm that has market power a. The firm's individual demand curve is downward sloping. b. The firm's individual demand curve is upward sloping. c. The firm's individual demand curve is a horizontal line. d. The firm's individual demand curve is a vertical line. e. The firm has unlimited demand for its good.

A

Consider the case that the market for coffee in the US is perfectly competitive. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if it became illegal to grow coffee in Columbia. a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine

A

Consider the demand curve defined by Q=20-P. Notice the slope of this demand curve is -1. Calculate the price elasticity of demand a P=5. a. 1/3 b. 3 c. 5 d. 1/5 e. 1

A

In economics, institutions determine a. The "rules of the game" or how the game is played. b. the preferences of each person. c. each players exact choices. d. All of the above. e. None of the above.

A

Pick the statement that is false a. Every Nash equilibrium of the game is Pareto efficient. b. Every Nash equilibrium of the game is not Pareto efficient. c. Wash, Wash is better than Leave, Leave by the Pareto criteria. d. Repeated interaction can change the outcome of this game. e. All statements are true.

A

The measure of total gains from trade in a market is a. Total Surplus b. Consumer Surplus c. Producer Surplus d. Deadweight Loss e. Equity

A

The production of Medicine by PharmaCorp has which of the following? a. Decreasing Returns-to-scale b. Increasing Returns-to-scale c. Constant Returns-to-scale d. No Variable Cost e. No Opportunity Cost

A

Which allocation provides Angela with the most grain? a. A b. B c. C d. D e. None of the above

A

Which of the methods below tells us if Tom owning his own business was an optimal decision for 2018. a. Tom's economic profit is positive b. Tom's accounting profit is positive. c. The his accounting profit is greater than combined salary of being an accountant and a consultant. d. Tom's opportunity cost is positive.

A

A common resource (or common pool) is a. rival and excludable good. b. rival and non-excludable good. c. non-rival and non-excludable good. d. non-rival and excludable good. e. none of the above

B

A price setting firm chooses a price that ensures all the following except that a. profits are maximized. b. the allocation is efficient. c. the firm earns monopoly rents. d. marginal revenue equals marginal cost. e. the demand curve is tangent to the isoprofit curve.

B

Consider the case that the market for coffee in the US is perfectly competitive. Suppose that tea is a substitute for coffee. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if the price of tea decreases. a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine.

B

Consider the figure below describing allocations between the farmer Angela and the landlord Bruno. All the allocations A, B, C, and D a. are fair b. are efficient c. are Pareto dominated. d. maximize the amount of grain produced. e. maximize Angela's free time.

B

If allocation A is better than allocation B by the Pareto Criteria, then a. A is better than B according to Procedural Judgment. b. Each person receives at least as much in A as they do in B. c. Total economic rent is maximized in allocation A. d. Each person is strictly better off at A than B.

B

The following statement is true about Abby a. Abby has a best response of Wash to Leave. b. Abby has a dominant strategy of Leave. c. Abby has a dominant strategy of Wash. d. Abby has a best response of Wash to Wash. e. None of the above.

B

The set of Nash equilibrium of the game is a. Wash, Wash. b. Leave, Leave c. Wash, Leave d. Both a and b e. There are no Nash Equilibrium

B

The tragedy of the commons can be modeled as a a. chicken game. b. prisoners' dilemma. c. assurance game. d. invisible hand game. e. none of the above

B

What is true about this market outcome? a. PharmaCorp maximizes Consumer Surplus b. PharmaCorp maximizes Producer Surplus c. PharmaCorp maximizes Total Surplus d. PharmaCorp maximizes Equity e. PharmaCorp maximizes Total Gains from Trade

B

Which of the following is a non-excludable public good? a. a library book b. a firework show c. an apple d. Spotify e. a fishery

B

Which of the following statements about the labor market is correct? a. The seller in the labor market is a price setter. b. The labor market equilibrium is characterized by involuntary unemployment. c. The employment contract is a complete contract. d. The employment contract specifies the level of work effort required from a worker. e. Paying more than is necessary to buy an employee's time is throwing away the money.

B

Which of the following statements is true? a. The market equilibrium is inefficient when firms have market power, contracts are incomplete, or transactions have external effects. b. The market equilibrium is efficient when markets are perfectly competitive, contracts are complete, and transactions have no external effects. c. Efficient equilibria are not necessarily fair. d. a. and b. e. a. b. and c.

B

Which statement is below not true? a. A dominant strategy equilibrium is always also a Nash equilibrium. b. A Nash equilibrium is always also a dominant strategy equilibrium. c. A dominant strategy equilibrium is an outcome in which everyone plays their dominant strategy. d. A dominant strategy equilibrium is an outcome in which everyone plays their best response.

B

Why is the period from the 13th to 16th centuries considered a Malthusian trap? a. There was no change in the real wage during this period. b. There was a negative relationship between population and real wages during this period. c. The bubonic plague decreased the real wage during this period. d. Both population and wages grew during this period. e. The permanent technological revolution occurred during this period.

B

Average work hours declined in the US from 1900 to 2000, while average wages increased sixfold. If American workers chose to take more free time even though the opportunity cost of free time increased, then a. both the income and substitution effect worked in the same direction. b. the income effect dominated the substitution effect. c. the substitution effect dominated the income effect. d. GDP per capita increased more than labor productivity (or GDP per hour worked). e. none of the above

B.

A bakery is one of many that operate in a perfectly competitive bread industry. The market demand curve for bread is downward-sloping. Which of the following statements is correct? a. The bakery's product is differentiated. b. The bakery will set the price above its marginal cost. c. The bakery faces a flat demand curve. d. The bakery always makes a positive economic rent. e. The bakery can raise the price by reducing its quantity produced.

C

A firm in a perfectly competitive market faces a perfectly elastic individual demand curve. What does this mean? a. The firm's individual demand curve is downward sloping. b. The firm's individual demand curve is upward sloping. c. The firm's individual demand curve is a horizontal line. d. The firm's individual demand curve is a vertical line. e. The firm has zero demand for its good.

C

A price-setting firm (with market power) will choose a price a. Above willingness to pay (WTP) b. Below willingness to pay (WTP) c. Above marginal cost (MC) d. Below average cost (AC) e. None of the above

C

Assume Teresa is paid $10/hour to teach economics and a disutility of effort of $1/hour (because she really loves teaching economics). She works 20 hours a week. If she loses her job, she will be unemployed for 25 weeks. What is his total unemployment rent if the unemployment benefit is $3/hour? a. $4,000 b. $3,500 c. $3,000 d. $2,500 e. $2,000

C

Capitalism is an economic system based on a. private property. b. private property and markets. c. private property, markets, and firms. d. markets and state-owned firms. e. markets and family enterprises.

C

Consider the case that the market for aluminum in the US is perfectly competitive. Use the shortrun model of demand and supply to figure out how equilibrium price and quantity of aluminum change if the price of steel increased and aluminum production technology increased. a. Pꜛ b. Qꜜ c. Qꜛ d. Pꜜ e. Not enough information to determine

C

Consider the case that the market for coffee in the US is perfectly competitive. Suppose that coffee is a normal good. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if all Federal income tax rates are lowered. a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine.

C

Experimental economists find that subjects make large and consistent contributions in public good games that allow for a. social preferences. b. repetition. c. peer punishment. d. all of the above e. none of the above

C

From the data in the table, what quantity maximizes PharmaCorp's profit? a. 8 b. 7 c. 6 d. 4 e. 3

C

GDP per capita is used as an approximate measure of a. Equity. b. The Gini Coefficient. c. Efficiency. d. Fairness of Institutions. e. All of the above.

C

Gains from trade do not exists between Ani and Bob in goods A and B if a. Bob has a comparative advantage in the production of A. b. Ani has an absolute advantage in producing both A and B. c. Ani and Bob have the same opportunity cost of producing A. d. Bob has does not have an absolute advantage in producing either good.

C

In a perfectly competitive market, all firms are "price takers" because a. They are not sophisticated sellers. b. They do not like making hard choices. c. They maximize profit by choosing the market price. d. They want to maximize Consumer Surplus. e. Its bad to act like a monopoly.

C

Wage contracts are incomplete because a. workers dislike providing effort. b. bosses like when workers provide effort. c. work effort is not contractible. d. some workers are unemployed. e. None of the above.

C

What is Tom's accounting profit? a. -$5,000 b. $0 c. $100,000 d. $10,000 e. Insufficient information to calculate.

C

Which statement below is the correct definition a player's best response a. A strategy that yields the highest payoff to all possible strategies of the other player. b. A strategy that yields the highest payoff for all players in the game. c. A strategy that yields the highest payoff given a fixed strategy of others player. d. An outcome of a game in which everyone plays their dominant strategy.

C

An allocation is an Nash equilibrium if a. there is no potential Pareto improvement. b. the total surplus is maximized. c. the surplus is equally split. d. no individual has an incentive to change behavior. e. it is technically infeasible to make anyone better off without making someone worse off.

D

Carlos works as a cook in Hector's restaurant. If he were fired for shirking, it would take him 8 weeks to find an identical job. His current job pays $15/hour. While he searched for a new job, he would receive an unemployment benefit of $4/hour. What would make Carlos' total employment rent increase? a. Carlos' disutility of labor effort increases b. Carlos' current wage decreases c. Carlos' unemployment benefit increases d. Carlos' expected during of unemployment increases e. All of the above.

D

Consider a student whose final grade increases with the number of hours spent studying. Her choice is between more free time and higher grades, both of which are goods. Which of the following is the same as her marginal rate of substitution (MRS) between the two goods? a. The opportunity cost of free time. b. The slope of her feasible frontier. c. The number of points she would gain by giving up an additional hour of free time. d. The number of points she is willing to give up for an additional hour of free time. e. The number of points she would lose by taking an additional hour of free time.

D

Consider the case that the market for coffee in the US is perfectly competitive. Use the short-run model of demand and supply to figure out how equilibrium price and quantity of coffee changes if the wages for labor in coffee production decreased. a. Pꜛand Qꜜ b. Pꜜand Qꜜ c. Pꜛand Qꜛ d. Pꜜand Qꜛ e. Not enough information to determine.

D

In which of the following employment situations would the employment rent be high, ceteris paribus? a. In a job that provides no benefits, such as housing and medical insurance. b. In an economic boom, when the ratio of job-seekers to vacancies is low. c. When the worker is paid a high salary because she is a qualified accountant and there is a shortage of accountancy skills. d. When the worker is paid a high salary because the firm's customers know and trust her. e. None of the above.

D

John Rawls' veil of ignorance provides a method for evaluating the _____ of economic institutions. a. efficiency. b. productivity. c. popularity. d. fairness. e. quality.

D

Suppose there are lots of landless farmers with the same productivity, preferences, and reservation option as Angela. What take-it-or-leave-it offer will Bruno make? a. A b. B c. C d. D e. None of the above

D

According to Thomas Malthus, which of the following is the cause of the diminishing average product of labor? a. the division of labor b. an infinite amount of natural resources c. coordination problems due to a larger work force d. environmental effects of over-cultivation (e.g. increased carbon emissions) e. more labor devoted to a fixed quantity of land, or land of inferior quality

E

An allocation is Pareto efficient if a. the surplus is split equally between producers and consumers. b. no individual has an incentive to change behavior. c. profits are maximized. d. the price of goods is greater than their marginal cost. e. it is technically infeasible to make anyone better off without making someone worse off.

E

Carlos works as a cook in Hector's restaurant. If he were fired for shirking, it would take him 8 weeks to find an identical job. His current job pays $15/hour. While he searched for a new job, he would receive an unemployment benefit of $3/hour. What is Carlos' reservation wage? a. $18/hour b. $15/hour c. $12/hour d. $5/hour e. $3/hour

E

Consider the demand curve defined by Q=20-P. Without knowing the firm's cost of production, which price could maximize monopoly profit? a. 9 b. 11 c. 13 d. Both 9 and 11 e. Both 11 and 13

E

In an efficient market we know that a. Producer Surplus is greater than Consumer Surplus. b. Total Surplus is less than Producer Surplus plus Consumer Surplus. c. Each consumer has the same gains from trade. d. Deadweight loss is positive. e. Deadweight loss is less than Total Surplus.

E

In order to fully compare two different economic policies an economist must do a. Positive economics. b. Negative economics. c. Normative economics. d. Positive and Negative economics. e. Positive and Normative economics.

E

The equilibrium in the labor market is characterized by a. employment rents. b. unemployment. c. positive worker effort. d. normal profits. e. All of the above.

E

The outcome in this market is ___________, because ___________. a. Efficient, PharmaCorp maximizes profit. b. Efficient, PharmaCorp average cost is minimized. c. Inefficient, PharmaCorp has high fixed cost. d. Inefficient, PharmaCorp as price goes up less consumers buy medicine. e. None of the above.

E

The top curve shows labor productivity (or the size of the pie) and the bottom curve shows real wages (or labor's share of the pie) from 1760 to 1930. Which of the following statements is true? a. In 1930, workers were 360 times as productive as in 1760. b. Inventions like the spinning jenny and steam engine led to immediate increases in wages. c. Profits (or capital's share of the pie) declined from 1760 to 1860. d. Real wages and labor productivity grew at the same rate from 1760 and 1930. e. Workers earned the same real wage in 1847 as they did in 1760.

E