microecon final
16.10 Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is
$108
13.8 Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be
$16
18.7 Suppose a person pays $80 of annual interest on a loan that has a 5% interest rate. The loan amounts
$1600
1.13 To maximize profits, the firm whose data is shown in the graph should produce the quantity
0 C.
13.4 The Herfindahl index for a pure monopolist is
10,000
16.16 Refer to the table, which gives data for a firm that is hiring labor in a purely competitive market. If the wage rate is $11, how many workers will the firm choose to employ?
3
17.13 The table shows labor demand data on the left and labor supply data on the right. How many workers will this profit-maximizing firm choose to employ?
3
1.32 Suppose a city facing a shortage of rental apartments eliminates rent controls. Rent control is when a government dictates a maximum rental price. Which of the following is most likely to occur?
an increase in rents and an increase in the number of apartments supplied
16.19 Refer to the graph, a move from b to a along labor demand curve D1 would result from
an increase in the wage rate
18.2 Economic rent refers to the price paid for land and other natural resources that
are fixed in total supply
1.17 A firm that has the long-run cost curves shown in the graph would be able to do or have the following, except
attain lower units costs by reducing its output level.
14.3 Which of the following is the best example of Oligopoly
automobile manufacturing
1.14 Which of the following is a characteristic of pure monopoly
barriers to entry
14.12 Three major means of collusion by oligopolists are
cartels, informal understandings, and price leadership.
14.7 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. Which cell represents a Nash equilibrium?
cell D (in which the lowest price is shared by two firms
1.38 As a firm increases its output level in the short run, the costs of producing additional units of output eventually increase because of:
diminishing marginal returns.
1.12 The MR = MC rule can be restated for a purely competitive seller as p=mc because,
each additional unit of output adds exactly its price to total revenue.
14.6 Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If both firms follow a high-price policy,
each will realize a $20 million profit.
16.22 Assuming a competitive resource market, a firm is hiring resources in the profit maximizing amounts when the
marginal revenue product of each resource is equal to its price.
13.2 The restaurant, legal assistance, and clothing industries are each illustration of
monopolistic competition
18.13 Economic profit is most closely associated with
monopoly, innovation, and uninsurable risks.
17.16 The economic term for a firm that is the sole buyer in a market is
monopsonist
1.22 Under monopolistic competition, entry to the industry is
more difficult than under pure competition but not nearly as difficult as under pure monopoly.
1.39 39) The market demand for a product has increased if:
more of the product can be sold at all possible prices.
17.6 A firm operating in a purely competetive resource market faces a resource supply curve that is
perfectly elastic
16.5 The purely competitive employer of resource A will maximize the profits from A by %equating the
price of A with the MRP of A
18.6 Interest is the
price paid for the use of money
1.10 If producers must obtain higher prices than before to produce a given level of output, thenthe following has occurred.
a decrease in supply
14.13 If there are significant economies of scale in an industry, then
a firm that is large may be able to produce at a lower unit cost than can a small firm.
17.18 If the diagram were relevant to an individual firm, we could conclude that the firm is
a monoppsonist in hiring labor
13.5 In the short run, a profit-maximizing monopolistically competitive firm sets it price
above marginal cost
14.4 If the four-firm concentration ratio for Industry X is 60
the four largest firms account for 60 percent of total sales
18.8 The equilibrium interest rate equates
the quantities demanded and supplied of loanable funds.
1.27 By an "increase in demand," economists mean that
the quantity demanded at each price in a set of prices is greater
1.37 firm is most likely to monopolize a market whenever:
economies of scale are large relative to market demand.
1.29 In the provided diagram, at the profit-maximizing output, total profit is
efbc
1.23 In the long run, the price charged by a monopolistically competitive firm seeking to maximize profit will
exceed MC but equal ATC
13.6 In the long run, the price charged by a monopolistically competetive firm seeking to maximize profit will
exceed MC but equal ATC.
1.16 Natural monopolies result from
extensive economies of scale in production.
18.4 Landowners will not receive any rent so long as
the supply curve lies entirely to the right of the demand curve.
1.8 A negative externality or spillover cost occurs when
the total cost of producing a good exceeds the costs borne by the producer.
1.42 A firm is more likely to increase its total revenue by decreasing the price of its product if:
there are many close substitutes for its product.
13.12 A firm is more likely to increase its total revenue by decreasing the price of its product if:
there are many close substitutes for its product.
17.3 Over the long run, real earnings per worker can increase only at about the same rate of the economist rate of growth of
total output.
13.14 In monopolistically competitive markets, resources are
underallocated because long-run equilibrium occurs where price exceeds marginal cost.
17.12 Refer to the diagrams. The firm
has a constant marginal resource cost of $5
1.15 A pure monopolist should never produce in the
inelastic segment of its demand curve, because it can always increase the total revenue by more than it increases total cost by reducing price
14.5 As a general rule, oligopoly exists when the four- firm
is 40 percent or more
18.11 Present value refers to the value
value today of a specific amount of money to be received in the future.
18.15 The largest single share of all income earned by Americans consist of
wages and salaries.
1.11 If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue
will also be $5.
1.24 In the long run, the price charged by the monopolistically competitive firm attempting to maximize profits
will be equal to ATC.
Refer to the diagram. A shortage of 160 units would be encountered if price was (page 1 # 3)
$0.50
16.25 The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely competitive market at $1 per unit. Assuming the prices of resources a and b are $5 and $8, respectively, when the firm hires the profit-maximizing combination of resources, its economic profit will be
$170
17.9 Refer to the given data. At the profit-maximizing level of employment, this firm's total labor cost will be
$24
16.12 Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively.
$3
17.15 The table shows labor demand data on the left and labor supply data on the right. What will be the profit-maximizing wage rate?
$3
17.10 Refer to the given data. At the profit-maximizing level of employment, this firm's total revenue will be
$30
16.11 Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively.
3 Units
:and b are $5 and $8 respectively, what is the least costly combination of resources for the firm to employ in producing 192 units of output?
3 of a and 4 of b
17.8 Refir to the given data. In maximizing its profits, this firm will employ
3 units of labor
1.30 Refer to the given table. If the firm is hiring workers under purely competitive conditions at a wage rate of $22, it will employ
3 workers
16.14 Refer to the given table. If the firm is hiring workers under purely competitive conditions at a wage rate of $22, it will employ
3 workers
1.36 Refer to the given table. If the firm is hiring workers under purely competitive conditions at a wage rate of $10, it will employ
3 workers.
17.14 The table shows labor demand data on the left and labor supply data on the right. How many units of output will this profit-maximizing firm produce?
39
16.13 Assume Manfred's Shoe Shine Parlor hires labor, its only variable input, under purely competitive conditions. Shoe shines are also sold competitively. If the wage rate is $11, how many workers will manfred hire to maximize profits?
5
16.24 The table gives marginal product data for resources a and b. The output of these independent resources sells in a purely capitative market at $1 per unit. Assuming the prices of resources a and b are $5 and $8 respectively, what is the maximizing combination of resources?
5 of a and 7 of b
17.11 The table shows labor demand data on the left and labor supply data on the right. The firm will maximize profits (or minimize losses) by employing
5 workers
14.8 Refer to the game theory matrix, where the numerical data show the profits resulting from alternative combinations of advertising strategies for Ajax and Acme. Ajax's profits are shown in the upper right part of each cell; Acme's profits are shown in the lower left. Without collusion, Nash equilibrium is represented by which cell?
A
1.21 Refer to the total revenue graph above. Demand is price elastic between points
A and B
16.1 Which of the following statements best illustrates the concept of derived demand?
A decline in the demand for shoes will cause the demand for leather to decline
14.2 Oligopolistic industries are characterized by
A few dominant firms and substantial entry barriers
17.20 If the minimum wage is set too high, in some labor markets we can expect
A surplus of labor
13.7 Which of the following is correct for a monopolistically competitive firm in long-run equilibrium?
P exceeds minimum ATC.
1.9 The location of the product supply curve depends on
A) production technology.
1.26 Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium price will be
A.
1.33 If all the firms in a competitive industry are legally required to meet new regulations that increase their costs of productions
A. Supple of the product will increase
If an effective ceiling price is placed on hamburgers, then
All of these are likely outcomes.
17.4 Increases in the productivity of labor result partly from
B) improvements in technology
17.17 In a monopsonistic labor market, the employer will maximize profits by employ workers up to that point at which
B) marginal revenue product equals marginal resource (labor) cost.
The concept of opportunity cost
B) suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.
14.10 Refer to the diagram for a non collusive oligopolist. Suppose that the firm is initially in equilibrium at point E, where the equilibrium price and quantity are P and Q. If the firm's rivals will ignore any price increase but match any price reduction, then the firm's demand curve will be (moving from left to right)
D2 ED1
13.11 Refer to the diagrams, which pertain to monopolistically competitive firms. Long-run equilibrium is shown by
Diagram A only
13.10 Refer to the diagram, which pertain to monopolistcally competetive firms. A short-run equilibruim entailing economic profts is shown by
Diagram B only (atc curve line falls below D)
18.10 Refer to the diagram. If the supply of loanable funds is S1 and the demand for loanable funds is D1, the equilibrium interst rate and quantity of funds borrowed will be
F and A
1.35 Which of the following correctly describes an external benefit resulting from an individual's purchase of flu shots from a doctor?
Flu shots reduce the likelihood of others catching the flu.
14.11 Refer to the diaram, equalibrium output is
G (where the line goe downwards)
18.9 The supply curve of loanable funds is upsloping because
Households are willing to save more at a high interst rates than they are at low interest rates.
13.13 Which of the following statements is correct regarding profit-maximizing firms in the long run?
In monopolistic competition, firms produce less than the output at which average total cost is minimized
1.43 Which of the following statements is correct regarding profit-maximizing firms in the long
In monopolistic competition, firms produce less than the output at which average total cost is minimized.
17.2 If the nominal wages of carpenters rose by 5 percent in 2013 and the price level increased by 3 percent, then the real wages of carpenters
Increased by 2 percent
1.40 Many U.S. interstate highways are crowded with traffic, but tolls are not collected even :when the highways are crowded. Which of the following is true about this no-toll policy?
It is inefficient because each person's use of the interstate adds to the congestion.
13.1 Monopolistic competition is characterized by a
Large number of firms and low entry barriers
16.9 A profit-maximizing firm employs resources to the point where
MRP= MRC
1.25 In the short run the price charged by a monopolistically competitive firm attempting to maximize profits.
May be either equal to ATC, less than ATC, or more than ATC
1. 5.Refer to the diagram. Rent controls are best illustrated by
Price A
1.6 Refer to the diagram. A government price support program to aid farmers is best illustrated by
Price C
1.31 In an economy where heating oil is the primary source of heat for most households, new supplies of natural gas, a substitute for heating oil, are discovered. Natural gas provides heat at a much lower cost. What is the most likely effect of these discoveries on the market price and quantity of heating oil produced?
Price: Decrease, Quantity: Decrease
1.18 Refer to the diagram for a natural monopolist, If a regulatory commission sets a maximum price of P2, the monopolist would
Produce output Q3 and realize a normal profit
1.34 At the profit-maximizing level of output, a purely competitive firm will:
Produce the quantity of output at which marginal cost equals price
17.19 refer to the diagram, assuming no union or relevant minimum wage, hire
Q2 workers and pay a W1 wage rate.
16.15 refer to the given table. Which of the following best represents the labor demand schedule for this firm?
Qd (1234)
16.8 An employer hiring in a competetive labor market should fire additional labor if
The MRP exceeds the wage rate
16.2 The demand for a resource depends primarily on
The demand for the the product or service that it helps to produce
16.18 If a firm is selling in an imperfectly competitive product market, then
The marginal products of successive workers must be sold at lower prices.
16.3 We say that the demand for labor is a derived demand because
We demand the product that labor helps produce rather than labor service per se
14.9 The Kinked-Demand curve model of oligopoly is useful in explaining
Why oligopolistic prices might change infrequently
18.3 refer to the diagram. Land
Would be a free resource if demand were D4 or less.
17.1 The long-run trend of real wages
has been upward
18.1 To say that land rent preforms no incentive function means that
higher rental payments will not bring forth a larger quantity of land
17.21 Some economists claim that unions reduce economic efficiency by
imposing restrictions on the kinds of jobs workers may perform.
17.5 Marginal revenue product (MRP) of labor refers to the
increase in total revenue resulting from hiring one more unit of labor.
1.20 Refer to the total revenue graph above. If the quantity of product X demanded falls from 14,000 to 16,000 units, then it suggests that the price of X was
increased and the demand is inelastic.
1.28 In the provided diagram, the profit maximizing output
is n
14.14 Refer to the diagram. In equilibrium the firm
is realizing an economic profit of ad per unit
16.6 The MRP curve for labor
is the firm's labor demand curve from above.
18.5 Henry George advocated a single tax on
land
13.3 A monopolistically competitive industry combines elements of both competition and monopoly. The competition element results from
low entry barriers
17.7 A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until
marginal revenue product equals marginal resource (labor) cost.
16.21 Employers will hire more units of a resource if the
productivity of the resource increases.
The opportunity cost to a consumer who smokes cigarettes consists of the
products that the consumer could have bought instead of cigarettes.
13.9 Refer to the diagram for a monopolistically competetive firm in short-run equilibrium. This firm will realize an economic
profit of $480
14.1 In which of these continuums of degrees of competition (lowest to highest) is oligopoly properly placed
pure monopoly , oligopoly, monopolistic competition, pure competition.
1.19 Refer to the total revenue graph above. An increase in the quantity of product X demanded from 14,000 to 16,000 units Iimplies that the price of product X was
reduced and demand is inelastic
1.41 A key economic objection to unregulated, profit-maximizing monopoly is that in the short run monopolists:
restrict output to levels at which their products are valued more than the marginal cost of producing them.
16.20 Refer to the graph, other things equal, an increase in labor productivity would cause a
shift from D2 to D3
16.7 The labor demand curve of a purely competetive seller
slopes downward because of diminishing marginal productivity
18.14 Pure, or economic profit is
the amount by which accounting profits exceed normal profits*
18.12 The "future value" of a sum of money refers to
the amount to which some current sum of money will grow over time.
1.7 A positive externalitie or spillover benefit occurs when
the benefits percieved with a certain product exceed those accruing to those people who consume it
16.17 The data in the table reveal that
the firm is selling its product in a purely competitive market.
16.4 The marginal revenue product schedule is
the firm's resource demand schedule