micro final
Attending college can be viewed as a form of: a. An investment in which costs are borne today and benefits are received in the future b. investment in which benefits are received today and cost are borne in the future c. consumption, because learning is an enjoyable activity d. leisure because learning is an enjoyable activity e. saving for the future
A
Economists classify all of the following as capital except which one. Which one is not capital: a. a $20 bill in a firm's petty cash drawer b. the building where our economy class meets c. a plumber's wrench d. a railroad car E. a factory
A
Households: a. own and sell resources b. play a very minor role in the economy c. supply goods and services d. are the largest purchasers of resources e . none of the above
A
The law of comparative advantage says that: a. the individual with the lowest opportunity cost of producing a particular good should produce it b. comparative advantage exists only when one person has an absolute advantage in the production of two goods c. whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good d. whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good e. gains form trade are possible only when one person has the competitive advantage is producing both goods
A
Barter occurs when: a. two people share everything b. one product is exchanged directly for another product c. money is used to buy goods d. money is used directly for other money e. goods are used to buy money
B
If all resources are used efficiently to produce goods and services, a nation will find itself producing a. inside its production possibilities frontier b. somewhere on its production possibilities frontier c. outside of its production possibilities frontier d. at one extreme end of its production possibilities frontier more of one product with no E. decrease in the production of any other product
B
In macroeconomics, we analyze: a. all of the following b. the overall performance of the economy as a whole c. arrangements through which specific products are exchanged d. influences on the decision making of particular households e. the factors that affect the decisions of individuals firms
B
An entrepreneur: a. always makes a profit b. generally avoids risky situations c. claims the residual (i.e. leftovers) after other resource suppliers are compensated d. is a parasite that benefits by not paying other resources for their services e. is the manager who runs an enterprise and keeps customers happy
C
Michigan has an abundant supply of fresh water. However, an economist would consider it a scarce resource because: a. water is necessary for human's physical survival b. pollution will eventually destroy the life of the Great Lakes c. water is limited relative to people's unlimited wants d. water commands a very high price nature can destroy water as well as it creates it
C
Opportunity cost is defined: a. only in terms of money spent b. as the value of all alternatives not chosen c. as the value of the best alternative not chosen d. as the difference between the benefits form your choice and the benefits form your choice and the benefits form the next best alternative E. as the difference between the benefits form your choice and the cost if that choice
C
Specialization of labor: a. increases productivity without creating any problems b. reduces productivity, and is usually eliminated by business firms c. can create problems of boredom and repetitive motion injuries d. prevents the introduction of more sophisticated and efficient production techniques E. ignores individual preferences and natural abilities
C
The law of increasing opportunity cost explains why: a. opportunity cost is constant along the PPF b. the production possibilities frontier is downward sloping c. the production possibilities frontier is curved d. efficient points lie along the production possibilities frontier e. technology remains constant along a production possibilities frontier
C
Unlike a "service", a "good": a. is desirable b. uses resources to satisfy wants c. is physical and tangible d. is abundant and free E. is a resource
C
Which of the following is a service: a. anything that is scarce and satisfies human wants b. things for which people pay money c. an intangible activity that satisfies human wants d. any output produced by a service-sector industry, such as fast food E. something less desirable than a good
C
If Jason can wash a car in 20 minutes and wash the dog in 10 minutes, and Megan can wash the car in 15 minutes and wash the dog in 15 minutes, which of the following statements is true: a. the opportunity cost of washing the car is greater for Megan b. the opportunity cost of washing the car is one dog for Jason c. Megan could wash two cars in the time it takes to wash the dog d. Jason has both the comparative and an absolute advantage in washing the dog e. the opportunity cost of washing the dog is greater for Jason
D
Economics is the study of: a. how to get rich by playing the stock market b. the best ways to reduce people's wants, given the scarcity of resources c. how rational government officials determine what goods should be produced d. money and why it is good e. how people use limited resources to try to satisfy unlimited wants
E
In economics, "land" refers: a. only to plots of ground on the surfaces of the earth b. to the specific area of earth in a country or region c. to rural regions as distinguished from urban areas d. to the arrival, or coming to rest, of any vehicle E. to any and all natural resources
E
Scarcity a. exists because people have wants that are unlimited relative to the availability of resources to satisfy those wants b. creates a need for society to allocate goods according to some set of criteria c. means that society and individuals must make choices d. exists in all societies E. all of the above
E
Sunk costs: a. can be only measured in monetary terms b. are opportunity costs c. should influence peoples' choices is they are marginal decision makers d. lower the efficiency of production E. should not be considered when making economic decisions
E
Which of the following would not shift the production possibilities frontier: a. an increase in worker training b. a war that destroyed many buildings c. a technological improvement that improved fuel efficiency in cars d. a decrease in the size of the labor force e. a change to a more inefficient production process
E
A good whose price represents a very large percentage of the consumer's budget will tend to have: a. an elastic demand b. a perfectly elastic demand c. more inelastic demand d. an upward-sloping demand curve e. very many substitutes
a
A monopolistically competitive firm can raise price somewhat due to: a. product differentiation b. barriers to entry c. product similarity d. its homogenous product e. high tariffs
a
A perfectly inelastic demand curve is: a. a vertical straight line b. a horizontal straight line c. a downward sloping straight line d. an upward-sloping straight line e. not a straight line
a
A profit-maximizing firm will employ a resource up to the point where: a. Its marginal resource cost equals its marginal revenue product b. Its marginal resource cost equals its marginal product c. Its marginal resource cost equals the marginal revenue of the output d. Its marginal resource cost equals the price of the resource e. The price of the resource equals the marginal revenue of the output
a
As output rises, marginal product eventually diminishes and: a. marginal cost increases b. average cost falls c. total cost falls d. fixed cost is increasing e. average production is negative
a
Census data on the income distribution among families in the United States in recent years show: a. a rising share earned by the top fifth and a declining share earned by the bottom fifth b. a rising share earned by the bottom fifth and a declining share earned by the top fifth c. both the share earned by the top fifth and the share earned by the bottom fifth rising d. both the share earned by the top fifth and the share earned by the bottom fifth falling e. falling income in the top fifth
a
Consider Exhibit 0123. If the market price is $8.50, what is the profit-maximizing output and profit? a. output = 40; profit = $35 b. output = 40; profit = $0 c. ouput = 0 ; profit = - $50 d. output and profit cannot be determined because marginal revenue cannot be calculated e. output and profit cannot be determined because average variable cost cannot be calculated
a
Consider the information in Exhibit 0077. What is the marginal utility of the third pretzel? : a. 5 b. 10 c. 15 d. -0.15 e. 55
a
Firms want to maximize profit because a. it is the entrepreneurs' source of income and it improves the firms' chance of survival b. firm owner are free to do anything they want c. firm owners want to force buyers to pay the highest possible prices d. government will force owners to sell the firm unless they make a profit e. government will tax away any profit a firm makes
a
Government attempts to prohibit monopolization of a market are known as: a. antitrust regulation b. economic regulation c. social regulation d. anticompetitive regulation e. Herfindhal regulation
a
If a regulator sets the price equal to the natural monopolist's marginal cost: a. the monopoly will experience a loss b. the monopoly will earn a profit c. the monopoly will earn zero profit d. consumers will be worse off than they would be if the firm's profit maximization activities were unregulated e. the monopoly will be better off than it would be if its profit maximization activities were unregulated
a
If there is a shortage in the market for athletic shoes: a. the price should rise to eliminate the shortage b. inventories of athletic shoes are growing c. demand will decrease to restore equilibrium d. firms will reduce production to restore equilibrium e. supply will increase to restore equilibrium
a
In a market economy, income depends mostly on: a. productivity b. luck c. age d. sex e. discrimination
a
In the market structure of monopoly, new firms: a. cannot profitably enter the industry, even in the long run b. may freely enter and leave the industry in both the long and short run c. may freely enter and leave the industry in the long run only d. may freely enter and leave the industry in the short run only e. have no incentive to enter the industry, even if economic profits are present
a
Most U.S. imports are: a. manufactured goods b. agricultural services c. petroleum and related products d. minerals such as bauxite and nickel e. military goods
a
Pollution and other negative externalities arise because: a. there are no enforceable property rights to open-access resources b. legislators cannot agree on what to do about them c. they are the price consumers are willing to pay for production of goods and services d. private property rights to pollute are controlled by businesses e. science cannot decide how to control them
a
Poverty is: a. a relative concept b. an absolute concept c. more prevalent in North American countries than in other areas d. an insufficient income level to purchase all necessities e. the same in all countries
a
Production by a monopoly would result in the socially optimal allocation of resources if: a. price is set equal to marginal cost b. marginal revenue is set equal to price c. marginal revenue is set equal to cost d. price is set equal to average total cost e. marginal revenue is set equal to average total cost
a
The basis of the benefits of specialization is: a. comparative advantage b. absolute advantage c. size of country d. identical production costs between two countries e. self-sufficiency
a
The demand for flounder (a specific type of fish) is: a. more elastic than the demand for fish because there are more substitutes for flounder and for fish in general b. less elastic than the demand for fish because there are more substitutes for flounder than for fish in general c. more elastic than the demand for fish because there are more substitutes for fish in general then there are for flounder d. less elastic than the demand for fish because there are more substitutes for fish in general than for flounder e. more elastic than the demand for fish because flounder is one of the less expensive kinds of fish
a
The income distribution in less-developed nations tends to be: a. more uneven than typical in developed countries b. less uneven than is typical in developed economies c. similar to what is typical in developed countries d. impossible to calculate e. not comparable because tax structures differ among countries
a
The market supply of labor curve is the sum of: a. Individual labor supply curves at each wage rate b. The upward-sloping portions of individual labor supply curves c. The downward-sloping portions of individual supply curves d. The average of all individual labor curves e. Individual labor supply curves at each net utility for market work
a
The success of a strike depends on the union's ability to: a. Do all of the following b. Reduce the supply of labor to the firm c. Reduce the supply of scabs to the firm d. Remain unified e. Endure the strike
a
The term "utility" means: a. satisfaction b. a low-valued good c. productivity d. adaptability e. efficiency
a
When consumption of a good or service produces benefits or costs that are not reflected in the market price for the good, this is known as: a. externality b. common pool problem c. non-excludable resource d. public good e. renewable resource
a
When family incomes are ranked from lowest to highest, the middle income is known as the : a. median income b. mean income c. means-tested income d. official poverty level e. transfer income
a
When resource markets are free to adjust, temporary differentials will cause: a. B,C, and E to occur b. The allocation of fewer resources to lower-paid uses c. The equalization of payments for the same resource in different uses d. No change in the allocation of resources e. The allocation of more resources to higher-paid uses
a
Which country is the United States largest trading partner? a. Canada b. Japan c. Great Britain d. Mexico e. South Korea
a
Which of the following affects the interest rate on a loan: a. All of the following b. The duration of the loan c. The tax treatment of the loan d. The administrative cost of the loan e. The risk of default on the loan
a
Which of the following is not necessary a characteristic of perfect competition: a. low prices b. a large number of buyers and sellers c. a homogenous product d. perfect information e. easy entry and exit in the long run
a
Which of the following is true? a. international trade makes it possible for a country's consumption possibilities to exceed its production possibilities b. international trade requires that a country's production possibilities exceed its consumption possibilities c. a country's production possibilities always equals its consumption possibilities d. a country's production possibilities can never equal its production possibilities because of leakage in the system e. as long as there is full employment of resources, a country's production possibilities will exceed its consumption possibilities even with trade
a
Which of the following will not shift the market supply curve for corn: a. a change in the price of corn b. a change in the price of soybeans c. a change in the price of herbicides and pesticides d. a change in storage technology e. a change in the number of acres planted in corn
a
. Monopolistic competitors are: a. price takers b. price searchers c. price maximizers d. price ignorers e. collusive price fixers
b
A firm with market power can: a. set price above average total cost b. set price above marginal cost c. set whatever price it requires d. always achieve economies of scale e. eliminate all other firms in the industry
b
A firm's marginal rate of return on investment curve shows the amount: a. Saved by the firm at each alternative interest rate b. Invested by the firm at each alternative interest rate c. Saved by the firm at each alternative rate of time preference d. Invested by the firm at each alternative marginal product of investment e. Saved by the firm at each alternative marginal revenue product of investment
b
A profit-maximizing monopolist that produces in the short run will: a. produce the level of output where marginal revenue exceeds marginal cost by the largest amount b. increase output as long as the marginal revenue exceeds the cost of producing that product c. produce the level of output where average total cost is at a minimum d. increase price as long as the average revenue exceeds the average total cost e. produce the level of output where average revenue exceeds average total cost by the largest amount
b
All of the following are examples of negative externalities except: a. water pollution b. your roommate going on a diet c. second-hand smoke d. loud conversation in the work-place e. your neighbor building a bomb shelter on her front lawn
b
Average revenue for a perfectly competitive firm is equal to: a. price times output b. marginal revenue c. total revenue/ marginal revenue d. output/total revenue e. zero
b
Consumers derive consumer surplus whenever: a. the monetary value of total utility equals total expenditure b. the monetary value of total utility is greater than total expenditure c. the monetary value of total utility is less than total expenditure d. marginal utility is greater than total utility e. marginal utility is less than total utility
b
Corporations can obtain investment funds by: a. Buying the government securities b. Selling stock c. Increasing dividends d. Purchasing more capital e. Buying back stock
b
Economic rent is defined as: a. The opportunity cot of a resource b. The payment to a resource in excess of its opportunity cost c. Opportunity cost d. Total earnings e. The part of a homeowner's housing that is included in GDP accounts
b
Externalities are defined as: a. any transaction external to the firm b. costs or benefits that fall on third parties c. policies that firms undertake to sell products outside the country d. managers' dealing with stockholders outside the firm e. cost of maintaining plan and equipment to avoid the scrutiny of external auditors
b
Financial intermediaries bring suppliers and demanders together in the market for: a. Checks b. Loanable funds c. Saving d. Physical capital e. Income
b
Government regulation of the prices charged by natural monopolies is an example of: a. safety regulation b. economic regulation c. Herfindhal regulation d. antitrust regulation e. anti-merger regulation
b
If a good B is a complement to good A, then a rise in the price of B: a. increases the quantity demanded of A b. decreases the demand for A c. increases the demand for A d. decreases the quantity demanded of A e. will cause the demand for B to increase
b
If periodic use of a resource can be continued indefinitely, that resource is said to be: a. removable b. renewable c. cyclical d. recyclable e. part of a common pool
b
In terms of utility theory, "equilibrium" in the real world means that: a. households are consuming as much of everyday commodity as they would like b. households have spent their incomes in such a way that their overall satisfaction is maximized c. households have spent their incomes in such a way that their marginal utility is maximized d. households have spent their incomes in such a way that their marginal utility is zero for every product consumed e. households have spent their incomes in such a way that their total utility is zero
b
Marginal utility is a measure: a. of total utility derived form consuming a given amount of a good b. of the utility gained form consuming an extra unit of a good c. computed by dividing total utility by the amounts of a good consumed d. determined by interactions of supply and demand in the market e. consumer costs associated with consuming one more good
b
Oligopolist industries consist of: a. a few independent firms b. a few interdependent firms c. many interdependent firms d. many independent firms e. a small monopoly
b
The higher the interest rate on your savings account, a. The lower the opportunity cost of present consumption b. The higher the opportunity cost of present consumption c. The higher the opportunity cost of saving d. The higher the present level of consumption e. The lower the present rate of saving
b
The law of demand assumes that as the price of a good increases: a. people recognize that its price may be even higher in the future, so they buy now rather than later b. consumers tend to shift their purchases to relatively cheaper substitutes c. people will buy less in the hope that the commodity will be cheaper in the future d. the money income of the consumer increases, and he or she is less able to buy all goods, including the goods whose price is increased e. the money income of the consumer decreases, and if the product is a normal good, more will be purchased
b
The law of diminishing marginal returns explains why: a. monopolies have a guaranteed profit margin b. short-run MC and AVC are U-shaped c. the production possibilities curve is bowed out d. long run supply curves are downward sloping e. total product is straight line
b
The quantity of labor an individual supplies to any market: a. Always increases as the market wage rate rises b. Assumes that wage rates offered in other labor markets do not change c. Always decreases as the market wage rate rises d. Could never be zero over the realistic range of wage rates e. Only depends on the opportunity cost of the individual's time in other labor markets
b
The rate at which two countries trade one good for another: a. is known as the foreign exchange rate b. is known as the terms for trade c. is known as the export line d. equals the slope of the import line e. equals the common slope of the countries production possibilities frontier
b
The supply curve will be more elastic if: a. a good had few substitutes b. the time the producer had to adjust if long c. the time frame for adjusting to price changes is short d. demand is elastic e. demand is inelastic
b
The world price of a good is: a. the price paid by consumers in all nations b. the price at which it is traded internationally c. the price paid in U.S. dollars d. the price paid in foreign currency e. the terms of trade for each nation
b
To solve the common pool problem in fishing, governments can_____, or _____. a. impose a depletion tax; prohibit resource use entirely b. impost a depletion tax; restrict output c. introduce an offsetting positive externality; prohibit resource use entirely d. use a variable technology; impose a depletion tax e. restrict output; prohibit use entirely
b
Which of the following characteristics does perfect competition share with monopolistic competition? a. price-taking firms b. zero long-run economic profit c. homogenous product d. some barriers to entry e. economies of scale in producton
b
Which of the following could explain why hockey players earn such high income: a. All of the following are correct b. Average careers are very short; the chances of being unemployed are greater than in may other jobs c. The income effect encourages them to work more as the wage increases d. Many people want to become hockey players e. The threat of injury makes the job more exciting than other jobs
b
Which of the following statements about income and education in the United States is correct? a. there is no relation between income and education b. at every age, average earnings are higher for those with more education c. aver earnings are higher for those with more education, but only if they are over the age of 60 d. average earnings are higher for those with more education, but only if they are under the age of 60 e. income levels peak at a younger age for those with college educations than they do for those with only elementary educations
b
Which of the following taxes is based on the ability-to-pay principle: a. tolls on bridges b. income taxes c. gasoline tax exercises d. property taxes e. user fees that collect the same amount form each person
b
Which of the following would not bar entry into a market: a. control by a single firm of an essential resource b. the necessity of taking risks when starting a firm c. patents d. economics of scale e. government regulations limiting the number of firms in an industry
b
Which of the following would not shift the demand curve for pork: a. an increase in the price of beef b. an increase in the price of pork c. an increase in the incomes of pork producers d. a widespread advertising campaign for pork e. a finding that consumption of beef increases the risk of heart attack
b
Which of the four types of economic decision makers is most important? a. firms, because they produce all goods and services in the economy b. households, because they demand goods and services and supply resources c. government, because it ultimately sets and enforces the "rules of the game" d. government, because it steps in when there is market failure E. the rest of the world, because there are over 150 countries
b
A major difference between social insurance and income assistance programs is that: a. social insurance programs are run by the states and income assistance programs are run by federal governments b. funding for social insurance programs come exclusively from the federal governments c. benefits form social insurance programs are related to a worker's contributions to the program, whereas benefits form income assistance programs are not d. social insurance programs are available only to households with children e. income assistance programs are available only to households without children
c
A natural monopoly exists when, throughout the range of the market demand: a. average cost are increasing b. there are diseconomies of scale c. there are economies of scale d. average cost are constant e. marginal cost exceed average cost
c
An increase in supply will cause equilibrium price to______ and equilibrium quantity to _____: a. increase; increase b. increase; decrease c. decrease; increase d. decrease; decrease remain constant; increase
c
An inferior good: a. any good of low quality b. one that consumers buy less of as the price rises c. one that consumers buy less of as their income rises d. one that has few substitutes e. any good made with inexpensive labor
c
Another term for an investment good is: a. Interest b. Savings c. Capital d. Rent e. Production
c
Because leisure is a normal good, an increase in income: a. Decreases the demand for leisure time and reduces the amount of time allocated to market at work b. Decreases the demand for leisure time and increases the amount of time allocated to market work and/or non-market work c. Increases the demand for leisure time and reduces the amount of time allocated to market and non-market work d. Increase the demand for leisure time and increases the amount of time allocated to market and non-market work e. Has no impact on the demand for leisure time
c
Because of easy entry, monopolistically competitive firms will: a. produce at the lowest average total cost b. charge a price equal to marginal cost c. earn no economic profit in the long run d. take advantage of all economies of scale e. earn no economic profit in the short run
c
Firms in perfect competition are price takers because: a. all small firms must take the price set by the largest firm in the market b. firms take the price that government determines is a "fair" price c. each firm is small and goods are perfect substitutes for one another d. free entry and exit in the short run creates a constant market price in the long run e. high barriers to entry force firms to compete by charging lower prices than other firms in the industry
c
Firms in perfect competition have no control over: a. all of the following b. where to operate on their average total cost curve c. what price to charge d. how many inputs to use e. how much to produce
c
In terms of the numbers of firms in the U.S. economy, the most common type of firm is the: a. corporation b. partnership c. sole proprietorship d. nonprofit organization e. limited partnership corporation
c
Interdependent decision making on price, quality, or advertising is characteristic of: a. perfect competition b. monopolies c. oligopolies d. monopolistic competition e. both oligopolies and monopolistic competition
c
Interest is a payment for deferred: a. Taxation b. Saving c. Consumption d. Investment e. None of the above
c
Luxury goods are: a. price inelastic b. income inelastic c. income elastic d. goods with negative income elasticity e. goods with positive price elasticity
c
Marginal revenue is: a. total revenue minus total cost b. total revenue divided by quantity of output c. the change in total revenue divided by the change in ouput d. the change in total revenue divided by the change in the quantity of an input used e. economic profit
c
One reason investors may prefer bonds over stocks is: a. Potential profits are larger b. Bond prices never vary c. Bondholders get paid before stockholders d. Owning bonds implies owning a part of the company e. Interest rates do not affect the value of bonds
c
Open-access resources tend to be: a. conserved b. taxed c. overused d. efficiently used e. used in an environmentally sound matter
c
Perfectly competitive firms that earn an economic profit in the short run choose the output that: a. maximizes total revenue b. maximizes total cost c. maximizes the difference between total revenue and total cost d. maximizes the difference between total revenue and explicit cost e. maximizes the difference between total revenue and implicit cost
c
Price elasticity of demand is useful because it measures _____ responsiveness to changes in _____. a. taxpayers ; demand b. producers' ; supply c. Consumers' ; price d. consumer's ; demand e. producer's ; income
c
Saving is necessary for production because: a. More roundabout production is better b. Less roundabout production is better c. Production takes time d. Production is expensive e. Production requires labor
c
The price charged by a perfectly competitive firm is determined by: a. each individual firm b. a group of firms acting together as a cartel c. market demand and market supply d. the firm's total cost alone e. the firm's average variable cost
c
Truck drivers usually earn more than secretaries because: a. Drivers require more education and training b. Truck drivers have more flexibility in their daily activities c. Truckers face greater risks d. Secretaries have higher productivity than truckers e. Truckers are discriminated against
c
When a market is in equilibrium: a. producers earn profits b. the minimum possible price is achieved c. there is no incentive for consumers or producers to change their current behavior d. excess demand is less than excess supply e. the maximum possible price is achieved
c
When a resource is an open-access resources: a. each individual in the society owns it b. the group owns it c. no one owns it d. the government owns it e. some non-profit agency owns it
c
Which of the following are implicit costs for a typical firm?: a. insurance costs b. electricity costs c. opportunity costs of capital owned and used by firm d. cost of labor hired by the firm e. the cost of raw materials
c
Which of the following is not true of monopolies: a. the entry of new firms is not a major concern b. monopolist seek to maximize profits c. monopolist can charge any price they want to make a profit d. monopolist can choose any point on the market demand curve e. monopolist can raise price more than 10 percent
c
With respect to the average cost curves, the marginal cost curve: a. intersects average total cost, average fixed cost at their minimum points b. intersects average total cost, average fixed cost, and average variable cost at their maximum points c. intersects both average total cost and average variable cost at their minimum points d. intersects average total cost where it is increasing and average variable cost where it is decreasing e. intersects only average total cost at its minimum point
c
A fair distribution of income for the U.S. economy is: a. not an economic issue b. defined by the U.S. Department of Agriculture c. a positive economic question d. a normative economic question e. a state and local issue but not a normal one
d
A large inheritance from a relative will tend to: a. Cause movement up and to the right along your labor supply curve b. Cause movement down and to the left along your labor supply curve c. Shift your labor curve outward d. Shift your supply curve inward Make the income effect of wage increase positive
d
A monopolistic competitor's demand curve is: a. perfectly elastic b. less elastic than a monopolist's or oligopolist's but more than a perfect competitor's c. as elastic as an oligopolist's d. more elastic than a monopolist's or oligiploist's but less than a perfect competitor's e. perfectly inelastic
d
Abby maximizes utility by allocating time among leisure, market work, and non-market work so that the: a. total utility of each is equal b. average utility of each is equal c. total utility is per hour of each is equal d. marginal utility per hour of each is equal e. Maximum amount of goods and services can be acquired
d
Absolute advantage: a. is the same as comparative advantage b. implies autarky c. means that countries of the same size have the same opportunity cost of producing both goods d. means that a country can produce more of two goods than another country can e. means that a country can produce less of two goods than another country can
d
Antitrust laws attempt to promote competition by controlling: a. market structure only b. market conduct only c. market structure and performance d. market structure and conduct e. market structure, conduct, and performance
d
Contracts are enforced by: a. the firms that make the contracts through buy-out clauses b. law firms that specialize in contract enforcement c. corporations specializing in contract writing and enforcement d. the government through the judicial system e. both households and firms through "customer relations" departments
d
Cross-price elasticity of demand measures: a. elasticity of demand at the intersection of the supply and demand curves b. elasticity of supply at the intersection of supply and demand curves c. the relative elasticity of supply and demand at the intersection of the two curves d. the relationship between the demand for one good and the price of another e. the relationship between the demand for one good and the supply of another
d
Derived demand refers to: a. Demand curves are derived from utility functions b. An individual demand curve estimated from a market demand curve c. a market demand curve estimated from individual demand curve d. demand for a resource derived form the demand for the product produced by that resource e. demand for a product derived from the demand for the resource used to make that product
d
Diminishing marginal utility means that: a. as you consume more of a good, other things constant, the total satisfaction you obtain from consuming this good tends to fall b. as you hire more labor, other things constant, the total amount produced begins to fall c. as you hire more labor, other things constant, the marginal product begins to fall d. as you consume more of a good, other things constant, the additional satisfaction you obtain form each individual unit of the good tends to fall e. as you consume more of a good, other things constant, the extra satisfaction you obtain form each extra good becomes negative
d
Gilligan runs the only dry-cleaning business on a desert isle. If the cost of cleaning fluid falls, he can increase profits by: a. raising price b. charging the highest price he can c. using less cleaning fluid d. lowering price e. charging a price equal to marginal cost
d
If Kelly's wage rate increases, the income effect will encourage her to devote: a. More time to market work and pursue less leisure time b. Less time to market work and pursue less leisure time c. More time to market work and pursue more leisure time d. Less time to market work and pursue more leisure time e. Less time to market but have no impact on the pursuit of leisure
d
If a firm is experiencing diminishing marginal returns: a. Total output decreases as all resources are increased b. Total output decreases as all resources are decreased c. Total output decreases as one variable resource is increased, other things constant d. Additional increments of output diminish as one variable resource is increased, other things constant e. Additional increments of output diminish as all variable resources are increased
d
If a price reduction leads to larger total revenue, demand is: a. perfectly inelastic b. inelastic c. unit elastic d. elastic e. perfectly elastic
d
If government regulators force a natural monopoly to produce where price equals marginal cost , the monopoly will earn: a. a " fair return" b. positive economic profit c. zero economic profit d. negative economic profit e. greater economic profit than if it were unregulated
d
If the price of Pepsi-Cola increases form 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then, according to the midpoint formula , the value of price elasticity of demand for Pepsi-Cola is: a. -0.5 b. -0.25 c. -1 d. -3 e. -2
d
If the supply of a product increases, then: a. more will be purchased at the same price b. the price of the product first decline c. demand for the good must have increased d. producers are willing to accept a lower price for each unit sold e. producers will offer less for sale at each possible price
d
If we say that demand has increased, we mean that there has been: a. a leftward movement along the demand curve b. a rightward movement along the demand curve c. a leftward shift of the demand curve d. a rightward shift of the demand curve e. an increase in the slope of the demand curve
d
In exhibit 0077, what is the utility of three pretzels?: a. 5 b. 15 c. 40 d. 55 e. 70
d
International trade is most likely to occur whenever: a. one of the trading nations is self-sufficient b. all of the trading nations are self-sufficient c. one of the trading nations gains from trade d. each of the trading nations gains from trade e. labor is cheaper abroad
d
Marginal revenue product is: a. The additional cost of hiring one more unit of resource b. The additional units of output generated by hiring one more unit of resource c. Calculated by multiplying marginal revenue by the price of the resource d. The expected additional revenue generated by hiring one more unit of resource e. Calculated by multiplying marginal revenue by the marginal resource cost if a resource
d
One likely result of monopoly power is: a. a wide variety of substitute products from which consumers may choose b. an elimination of barriers to industry entry c. a decline in the government regulation d. a higher price than would exist in the competitive industry e. an improvement in allocative efficiency
d
Permanent differentials in resource prices will cause: a. All of the following b. The allocation of fewer resources to lower-paid uses c. The equalization of payments for the same resources in different uses d. No change in the allocation of resources e. The allocation of more resources
d
Pollution arises because: a. the atmosphere is a nonrenewable resource b. the atmosphere is a renewable resource c. of enforceable property rights d. the atmosphere is an open-access resource e. pollution effects few people
d
Suppose Bob leaves his $50,000-a-year job as a financial advisor to P.E.T.S. and starts his own business selling spot remover to Dalmatians. In the first year his accounting profits are $70,000. Based on this level of success, Bob should: a. return to his old job because his economic profits are negative b. return to his old job because his economic profits are smaller than his accounting profits c. return to his old job because his economic profits are less than his old salary d. stay with his new firm because his economic profits are positive e. stay with his new firm because accounting profits are positive
d
Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $9. Which of the following will happen? a. the firm will not sell any profit b. the firm will sell less output than its competitors c. the firm will make more profit than it could at the $10 price d. the firm will make less profit than it could at the $10 price e. the firm's revenue will increase and its costs may decrease
d
The demand for a product is the amount that: a. buyers purchase in the market b. buyers are willing to purchase at a given price c. sellers are willing to sell at a particular price d. buyers are willing and able to purchase at alternative prices e. buyers are able to purchase at a specific price
d
The difference between fiscal policy and monetary policy is that: a. fiscal policy is macroeconomic policy and monetary policy is microeconomic policy b. monetary policy is macroeconomic policy and fiscal policy is microeconomic c. fiscal policy involves regulations of natural monopolies and monetary policy involves the provision of public goods d. monetary policy involves regulation of the money supply and fiscal policy involves government spending and taxing e. fiscal policy involves the promotion of competition and monetary policy involves collecting money to pay for taxes
d
The income effect of a decrease in the price of legal services (a normal good) is a(an): a. decrease in the demand for legal services b. decrease in the quantity demanded of legal services c. increase in the demand for legal services d. increase in the quantity of legal services e. new demand curve because everything else is no longer constant
d
The official poverty level in the United States: a. has been the same since 1980 b. is the same as in other developed countries because it is based on a United Nations definition c. is defined by the United States d. is defined by the Department of Agriculture and based on food costs e. has been adjusted for inflation but not for changes in family size
d
The primary reason why individuals are willing to pay entrepreneurs to organize production is: a. that they have to guarantee that the entrepreneur will make a profit b. they avoid taxation when activities are organized by someone else c. that it is better for businesses to pay taxes than individuals d. that it reduces the transaction costs e. that entrepreneurs are likely to promote self-interest than are individuals
d
To calculate the Herfindhal index: a. add the market shares of all firms in the industry b. add the market shares of any four firms in an industry and then square them c. add the market shares of the four largest firms in the industry d. square the market shares of all firms in the industry and then add them e. square the market shares of the four largest firms in an industry and then add them
d
When firms differentiate their products they: a. provide information to consumers with no additional use of productive resources b. always increase their profits c. always create real differences among products d. frequently create artificial or superficial differences among products, thus raising production cost e. usually strain the physical capacity of their plans
d
Which of the following best explains why physical therapist' salaries have increased substantially over the last decade: a. Physical therapist today are smarter b. The supply of the physical therapists has increased c. The supply of physical therapists has decreased d. The demand for physical therapists has increased e. The demand for physical therapists has decreased
d
Which of the following concerning utility is correct: a. It is possible to precisely measure the utility an individual receives form consuming a particular good or service b. It is always possible to determine whether Dalene or Juloy gets more utility from consuming identical units of the same goods c. The utility of goods can be measured while the same is not true for services d. Utility is a subjective measure of satisfaction an individual receives form consuming a good or service e. it is only useful if there is not scarcity
d
Which of the following is an example of a durable good? a. a cowboy b. a cherry pie c. a newspaper d. a hand-held calculator E. a pencil
d
Which of the following statements cannot be made regarding consumer preferences: a. Pat enjoys her second cotton candy less than her first b. Bill enjoys his second cotton candy as much as the first c. Arnie enjoys two cotton candies more than one cotton candy d. Arnie enjoys two cotton candies fore than Pat enjoys one cotton candy e. Bill and Arnie enjoy their second cotton candy less than they did their first
d
. Consumer surplus is: a. the amount by which quantity exceeds quantity demanded at the current market price b. the amount by which quantity demanded exceeds quantity supplied at the current market price c. the change in the total utility derived form a one-unit change in the consumption of a good d. the difference between the price of a good paid by the consumer and the costs of production to seller e. the difference between the maximum amount that a customer is willing to pay for a given amount of a good and the amount that the consumer actually pays
e
A consumer maximizes utility when the marginal utilities of all goods: a. having positive money prices that are equal to zero b. are equal c. are maximized d. are equal to the opportunity costs for al goods that are considered necessities e. are exactly proportional to their market prices
e
A monopolist is: a. one of a large number of small firms producing is a homogenous good b. one of a small number of large firms producing a differentiated good c. a single seller of a product with many close substitutes d. one of small number of large firms producing a homogenous good e. a single seller of a product with no close substitutes
e
A variable cost is one that changes: a. in the long run only b. in the short run only c. year to year d. month to month e. as output changes
e
Accounting profit equals: a. explicit costs minus implicit costs b. economic profit minus implicit costs c. economic profit minus explicit costs d. economic profit minus explicit costs and implicit costs e. economic profit plus implicit costs
e
Along a backward-bending labor supply curve, the: a. Income effect always dominates the substitution affect b. Substitution effect always dominates the income effect c. Substitution effect is always equal to the income effect d. Substitution effect dominates the income effect at high wage rates e. Substitution effect dominates the income effect at low wage rates
e
Differences in resource endowments are differences in: a. tariffs charged by each country b. consumption patterns across nations c. production patterns across nations d. the quantity, but not the quality, of resources available in different nations e. the quality and quantity of resources available in different nations
e
Economic profit is defined as: a. total revenue minus implicit costs b. total revenue plus explicit costs c. total revenue plus implicit costs d. wages plus interest minus rent e. total revenue minus implicit and explicit costs
e
For a monopolist, there is no supply curve because: a. the supply curve is the same as the marginal cost curve b. the monopolist does not maximize profit c. the quantity supplied is independent of marginal cost d. the quantity supplied is independent of demand e. there is no unique relationship between price and quantity supplied
e
Government policies are coercive, whereas markets are not. This is implies that: a. Government activity will always be less efficient than market activity b. Households cannot maximize utility if they consumer any government goods and services c. Market transaction result in an equal number of gainers and losers d. Self-interest and public interest are always a conflict Government can provide some goods and services when private markets fail to so do
e
Household production is more likely to occur when: a. it requires many specialized resources b. technology makes it more costly than market production c. tax avoidance is undesirable d. less control over the final product is desirable e. the opportunity cost of household work is relatively small.
e
If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay: a. variable costs but not fixed costs b. no costs at all c. variable cost and fixed cost d. only variable cost e. only fixed cost
e
If demand increases and supply decreases: a. equilibrium price will fall and equilibrium quantity will rise b. equilibrium price and quantity will both rise c. equilibrium quantity will rise; equilibrium price will either rise or fall d. equilibrium price will fall; equilibrium quantity will either rise or fall e. equilibrium price will rise; equilibrium quantity will either rise, fall, or remain unchanged
e
If income were distributed solely according to marginal productivity: a. every family would be above the property level b. it would be distributed evenly c. it would be distributed normally d. workers in capital-intensive industries would earn less than workers in labor- intensive industries a. some individuals would not receive any income
e
In determining comparative advantage, cost is measured in terms of: a. foreign currency b. domestic currency c. gold only d. units of weight and measure e. opportunity forgone
e
In exhibit 0138, the marginal revenue of the sixth unit is: a. $10 b. $60 c. $100 d. $40 e. $-40
e
In the case of a normal good, an increase in consumers incomes would shift with: a. the demand curve inward b. the ply curve inward c. the supply curve outward d. the supply and demand curves inward e. demand curve outward
e
Property rights can be defined and enforced: a. only by the government b. only by ethical norms c. by the government and by ethical norms d. only through constant renegotiation e. by government, by informal social actions, and by ethical norms
e
Resource owners will supply additional units of resource as long as: a. doing so increases their costs b. doing so increases production c. the quantity of the resource demanded exceeds the resource price d. resource users demand the resource e. doing so increases their utility
e
The common pool problem: a. occurs whenever goods are not rivals in consumption b. is an example of adverse selection c. arises whenever property rights are well defined d. is usually caused by government intervention into private markets e. is one in which resources to which access is unrestricted will tend to be overused
e
The length of time that represents the long run: a. is greater than one year b. is greater than six months c. is longer in service than in industries than in manufacturing d. is the same for all industries e. varies form industry to industry
e
The term monopolistic competition: a. is an alternate expression for monopoly b. is used to describe perfect competition with strong entry barriers c. denotes an industry with one seller of many differentiated products d. denotes an industry with many sellers of homogenous products e. denotes an industry with many sellers of differentiated products
e
The total revenue curve for a perfectly competitive firm: a. is horizontal b. is vertical c. has a diminishing slope as output increases d. has an increasing slope as output increases e. has a constant slope as output increases
e
Unions and employers use collective bargaining to negotiate: a. Wages only b. Wages and employee benefits only c. Employee benefits only d. Working conditions only e. Wages, employee benefits, and working conditions
e
Which of the following describes the market structure of monopoly: a. many firms with some control over price, and considerable product differentiation b. many firms with no control over price, producing identical products with no differentiation c. a few firms with some control over price, producing similar products which are close substitutes d. a few firms with no control over price, producing highly differentiated products e. a single firm producing all of the output for the industry
e
Which of the following is not a criticism of firms that act as monopolies? a. they restrict output b. they set price above the perfectly competitive level c. they tend to be less innovative that firms in the competitive market d. they exert a disproportionate amount of political influence d. they reduce all allocative efficiency through perfect discrimination
e
Which of the following is not a form of non-market work? a. Working on your car at home b. Doing your laundry in a Laundromat c. Making bread for a dinner at your sister's house d. Caring for you sister's children as a favor e. Babysitting for a fee
e
Which of the following is not a function of government? a. promotion of competition b. stabilization to achieve macroeconomic goals c. redistribution of income through taxation and transfer payments d. production of public goods e. providing the economy's private goals
e
