Unit 5 & 6 Micro MCQ

The following graph shows the marginal social cost (MSC), the marginal private cost (MPC), and the marginal social benefit (MSB) of a good. Which of the following indicate the marginal external cost and the socially optimal quantity?

$1.00 and 20 units

The data in the table describe the supply schedule for labor in a monopsonistic labor market. The marginal factor cost of the fifth worker is

$15

If the government regulates the monopolist to produce the allocatively efficient quantity and provides a subsidy sufficient to maintain zero economic profits for the firm, what price would the government set and what level of output would the firm produce?

$2.00 and 80

The diagram describes conditions for a natural monopoly. In order to regulate the monopoly to produce the largest possible output without a loss, government regulators would establish a price of

$2.50

The table shows the short-run production of a firm that produces and sells its product in a perfectly competitive market. If the firm sells its product at the market price of $10 per unit, the marginal revenue product of the fourth worker is

$50

Which of the following will cause a decrease in the demand for labor?

A decrease in the price of the product that the labor is used to produce

In the absence of externalities, which market structure produces the socially optimal quantity?

Perfect Competition

The city council divides a community's residents into three groups: individual young adults, families with children, and older adults. The following table summarizes how much each group is willing to pay for each playground. The city council must pay $2,250 to build each playground. Which of the following is a characteristic of playgrounds and what is the optimal number of playgrounds for the township to build?

Playgrounds are rival in consumption, and the optimal number of playgrounds is three.

Which of the following will occur in a given labor market when the wage rate rises?

The quantity of labor supplied will increase.

The table shows the short-run production of a firm that produces and sells its product in a perfectly competitive market. If the firm sells its product at the market price of $10 per unit, how many workers should the firm employ to maximize profit if the wage rate is $55?

Three

The closer income distribution moves toward complete equality, the closer the Lorenz curve moves to

a diagonal line

A free-rider problem exist when

a good is nonexcludable in consumption.

An example of a good that is nonrival and nonexcludable is

a lighthouse

Antitrust laws are intended to

control monopolies and maintain a competitive market environment

The higher wages college graduates receive are primarily due to

differences in human capital

The graph represents a monopsonistic labor market and shows the marginal factor cost (MFC), the marginal revenue product (MRPL), and the supply of labor (SL). Assuming the firm sells its output in a perfectly competitive commodity market, the firm will

employ Qa workers and pay a wage of W1

In comparison to a firm in a perfectly competitive labor market, a firm in a monopsonistic labor market typically will hire

fewer workers and pay a lower wage

The following graph shows the marginal social cost (MSC), the marginal private cost (MPC), and the marginal social benefit (MSB) of a good. If the government wants the firm to internalize the externality, the government can do so by

imposing a per-unit tax of $1.00

In the absence of externalities, the perfectly competitive market maximizes economic surplus when

the market is at equilibrium

Which of the following Gini coefficients indicates that a country has an equal distribution of income?

0

Which of the following will result in a decrease in the supply of labor?

An increase in the preference for leisure

A firm is currently producing 3,000 units of output daily by employing 20 units of labor at a price of $100 per unit and 40 units of capital at a price of $40 per unit. The marginal product of the last unit of labor employed is 50, and the marginal product of the last unit of capital employed is 30. In order to minimize its production costs, the firm should do which of the following?

Employ less labor and more capital because the marginal product per dollar spent on labor is less than the marginal product per dollar spent on capital.

Assume the government implements a policy that causes a market to produce the socially optimal level of output. Which of the following must be true?

Equating marginal private benefit and marginal private cost must have resulted in inefficiencies in the market.

Which of the following is an example of a positive externality?

Immunizations that prevent the spread of diseases

A firm's decision to hire a factor of production DOES NOT depend on which of the following?

The average product of the factor input

Which of the following illustrates how factor demand is related to product demand?

The demand for airline pilots depends on the demand for air travel.

Suppose the demand for automobiles increases. Which of the following explains what happens in the labor market for automobile workers?

The demand for automobile worker increases resulting in higher wages and employment.