Economics of Social Issues Final Exam Part Three

An essential characteristics of a perfectly competitive market is: a) goods are unique b) goods are standardized c) buyers and sellers share market power

B

If a monopolistically competitive firm is earning profit in the short run: a) entry of competing firms will cause price to rise, but not affect the firm's demand curve. b) the entry of competing firms will shift the firm's demand to the left. c) the entry of competing firms will cause price to drop, but not affect the firm's demand curve.

B

If the demand for hand-sewn leather shoes increases, it is likely the demand for: a) leather will stay the same b) leather will also increase c) leather will decrease slightly

B

In the short run, the fixed costs of a firm: a) are greater than zero when quantity produced is zero b) all of these are true c) are irrelevant in deciding whether to shut down production d) must be paid regardless of level of output

B

Spending on imports should get _______ and spending on exports should be ______ a) included in, subtracted b) subtracted from, included c) subtracted from; subtracted as well

B

The competitive firm's maximizing quantity of labor is the quantity where: a) The value of the marginal product of labor is equal to the profit. b) The value of the marginal product of labor is equal to the market wage. c) the quantity of the marginal product of labor is equal to the market wage.

B

The marginal product of any input into the production process: a) none of these statements is true b) is the increase in output that is generated by an additional unit of input. c) is the decrease in output that is generated by an additional unit of output. d) is the constant ratio of inputs to outputs.

B

The most commonly used metric for measuring the value of a national economy is: a) gross national product, GNP b) gross domestic product, GDP c) gross national income, or GNI

B

The value of the marginal product of labor in a competitive market is: a) the marginal product generally by an additional unit of labort times the price of the output. b) the additional inputs required to produce one more additional unit of output. c) the marginal revenue generated by an additional unit of output times the number of workers hired.

B

U.S. Gross Domestic Product include: a) good produced by U.S. firms on foreign soil b) goods produced by foreign firms on U.S. soil c) good produced by foreign firms on foreign soil. d) none of these statements are true.

B

The demand for factors for production is referred to as: a) none of the statements are true b) derived demand c) primary demand d) implied demand

B (Why? Derived demand is a term used in economic analysis that describes the demand placed on one good or service as a result of changes in the price for some other related good or service. It is a demand for some physical or intangible thing where a market exists for both related goods and services in question. The derived demand can have a significant impact on the derived good's market price.)

Using the expenditure method to estimate GDP, we would include:

consumption, invstment, government purchases and net exports.

(Nominal) Gross Domestic product is: a) the sum of the market values of all final goods and services produced within a country in a given period of time. b) the sum of the market values of all final goods and services produced by a country's citizens in a given periods of time.

A

A market with many firms that sell goods and services that are close substitutes for one another is called: a) monopolistic competition b) monopoly c) circular d) perfect competition

A

A person will choose to work another hour if the benefit of another hour of work is: a) greater than the opportunity cost b) less than the opportunity cost c) exactly equal to the opportunity cost d) the supply of labor is unique and does not involve weighing costs and benefits.

A

A price taker is a buyer or seller who: a) has no control over setting the market price b) has complete control over setting the market price c) can influence the market price d) has a goal of maximizing market share, not profits.

A

If the demand for oranges falls, as a result, it is highly likely that the demand for: a) orange grove workers will fall. b) apples will increase c) orange juice will fall d) all of these are likely to happen

A

If total consumption is $5 billion, investments $2 billion, government purchases $1 billion, exports $1 billion, and imports $3 billion, the GDP must be equal: a) $6 billion b) $12 billion c) $9 billion d) $3 billion

A

Offering goods that are similar to competitors' products but more attractive in some ways called: a) product differentiation b) deceptive advertising c) price-point advertising d) product distinction

A

Once a monopolistically competitive firm innovates, it is likely that: a) other firms will rush to create similar, highly substitutable goods. b) it will need government protections to earn enough to cover its R &D costs. c) it will enjoy long-run profits d) None of these statements is true

A

Real GDP: a) is calculated based on goods and services valued at constant prices. b) is useful in clearly seeing changes in prices over time

A

Standardized goods and services refers to those that: a) are interchangable b) have close substitiutes c) are unique

A

The ingredients that go into making any good or service called the: a) factors of productions b) factors of outputs c) fixed costs

A

We can measure total production by: a) adding up what people spend on final goods and services. b) comparing cost of inputs to final sale price. c) none of these statements are true d) adding up everyone's asset wealth

A

An example of an intermediate good would be: a) a bag of Quaker's ice cakes sold to consumers b) a bag of Uncle Ben's rice sold to consumers c) the rice used to make Chex Cereal d) all of these are intermediate goods

C (Why? Intermediate goods or producer goods or semi-finished products are goods , such as partly finished goods, used as inputs in the production of other goods including final goods. A firm may make and then use intermediate goods, or make and then sell, or buy then use them.)

An american citizens works for U.S.-owned architectural firm located in Mexico. This architect will: a) contribute toward U.S. GDP since he's working for a U.S. firm. b) contribute toward both Mexico and U.S's GDP. c) Contribute toward Mexico's GDP since he's working in Mexico.

C

An example of a good or service that would not count in the U.S. GDP would be: a) a car made by toyota b) sneakers made by New Balance in Ohio c) sneakers made by Nike in Indonesia d) a car made by ford in michigan

C

For firms that sell one product in a perfectly competitive market, the market price: a) is equal to the average total cost of a firm b) is equal to the marginal cost of a firm c) will remain constant regardless of an individual firms output decision.

C

If a firm in a perfectly competitive market faces a market price of $2, and it decides to increase its production from 2,000 units and 4,000 units, the firm's marginal revenue. a) will increase from 4,000 to 8,000 b) will decrease from 8,000 to 4,000 c) will stay the same d) none of these is true

C

In the short run, when a firm stops producing: a) it can avoid earning profits less than zero. b) it avoids paying fixed costs c) it avoids paying variable costs

C

When some firms leave a perfectly competitive market, the price: a) increases, and profits of those left fall b) falls; and profits of those left fall c) increases, and profits of those left rise

C

A firm in monopolistic competitor has a ______ market share and _______ influence the price of its good or service. a) large; might be able to b) large; cannot c) small; cannot d) small; can

D

All factors of productions usually experience: a) none of these is common to all factors of production b) decreasing average variable cost c) decreasing average fixed cost d) diminishing marginal productivity

D

For a firm in a perfectly competitive market, if it produces where marginal cost exceeds marginal revenue: a) the firm is not maximizing profits, but its impossible to tell how quantity should be changed without more information b) it is producing a profit-maximizing quantity c) it should increase production to increase profits d) it should cut back production to increase profits

D

GDP counts: a)only intermediate goods and services, because those are easier to track b) those values that are reported to the goverment d) only final goods and services because otherwise certain things will be double-counted and the GDP would be overestimated

D

If U.S. real GDP grew from $12 trillion one year to 12.7 trillion the next, the annual growth rate would be: a) 105.8 percent b) 94.4 percent c) 5.5 percent d) 5.8 percent

D

Monopolistically competitive firms can earn profits in the long run by: a) Monopolistically competitive firms can only earn zero profits in the long run. b) further minimizing their costs c) price discriminating d) continually innovating to differentiate their product.

D

The relationship between the quantity of inputs and the quantity of outputs is called: a) a profit function b) a resource function c) a cost function d) a production function

D

The short-run shutdown rule is to shut down if: a) P>AVC b) P <ATC c) P>ATC d) P < AVC

D

To maximize its profit, a perfectly competitive firm produces so that _______ and a monopolistically competitive firm produces so that ______. a) MR>MC; MR=MC b) MR>MC; MR>MC c) MR =MC; MR =MC

c