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ECON 2010 Unit 3

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Which of the following Gini coefficients represents the income distribution closes to being equal? A. 0.02 B. 0.10 C. 0.50 D. 0.98

A. 0.02

Assume that the USU president pays $25,000 in income taxes on a salary of $250,00 and L. James pays $500,000 in income taxes on a salary of $2,500,000. The average tax rate of the USU Pres is _____ and the average tax rate on L. James is __________. This data suggests a ______ tax. A. 10%, 20%, progressive B. 10%, 10%, proportional C. 20%, 10%, regressive D. 10%, 20%, proportional

A. 10%, 20%, progressive

Refer to the graph : The bottom 20 percent of the families earn: A. 6.6 percent of the income B. 17.3 percent of the income C. 10.7 percent of the income D. 20 percent of the incomme

A. 6.6 percent of the income

It is alleged that google accounts for what percentage of general search engine queries in the United States? A. 90 B. 80 C. 60 D. 50

A. 90

A firm selling which of the following types of goods would be closest to the notion of a monopolist? A. A good for which there are no close substitutes B. A commodity C. A specific brand of a type of good. D. A specific type of entertainment like college basketball

A. A good for which there are no close substitutes

For a natural monopoly, which of the following is true at all levels of output by definition? A. ATC>MC B. ATC<MC C. ATC=MC D. there is no relationship between ATC and MC

A. ATC>MC

For years, Amazon, which began as an internet bookseller, had no profits and was incurring annual losses. Still, the stock market valued the company very highly. One reason for this was that investors believed that: A. Amazon was in a winner- takes- all market B. Amazon faced fierce foreign competition C. The internet was a perfectly competitive market D. On the internet brand reigniting is unimportant

A. Amazon was in a winner-takes-all market

A higher tax rate could result in lower tax revenues if: A. Attempts to avoid or evade taxes increase B. Individuals switch from leisure to labor C. Fewer people qualifying for government assistance D. The tax has no incentive effects

A. Attempts to avoid or evade taxes increase

In the ALCOA antitrust case in 1945, the court ruled that the: A. Company had a monopolistic structure and therefore should be broken up B. Company was guilty of unfair business practices and therefore should be broken up C. Sherman Antitrust Act did not apply D. Two companies had to raise prices

A. Company had a monopolistic structure and therefore should be broken up

In platform monopolies that have natural monopoly elements, average cost: A. Decreases as output rises B. Increases as output rises C. Remains constant as output rises D. Decreases as marginal cost rise

A. Decreases as output rises

According to the text, the most important income distribution decisions that e government makes involve: A. Establishing and protecting property rights B. Maintaining a progressive income tax structure C. Redistributing income through transfer payments to the poor D. Encouraging innovation through direct subsidies

A. Establishing and protecting property rights

Which is included as a plaintiff in the Facebook case? A. Federal trade commission B. US Justice Department C. State of Texas D. All of the above

A. Federal trade commission

The labor supply curve is generally considered to be upward-slopping because the opportunity cost of leisure: A. Increases as wages get higher B. Decreases as wages get higher C. Remains unchanged as wages get higher D. Has nothing to do with wages

A. Increases as wages get higher

In platform monopolies, economics argue that regulation: A. Is not always desirable, we should rely on competition and technological change B. Should be heavily enforced by government C. Is desirable, and should involve strict enforcement D. Is irrelevant

A. Is not always desirable, we should rely on competition and theological change

Approximately 20 years ago, Microsoft was found in violation of the Sherman Act of 1890 as a consequence of integrating application programs (a web browser) with its operating system (Windows). This is an example of: A. Judgement by performance B. Judgement by structure C. Judgement by design D. Judgement that is not part of US antitrust policy

A. Judgement by performance

The meaning of the term "dynamic" implies that firms are most interested in: A. Long-run profits B. Short-run profits C. Long-run customers D. Short-run customers

A. Long-run profits

Monopolistic competition is similar to perfect competition in that: A. Long-run profits tend toward zero in both B. Output is at minimum average total cost in both C. Both entail the production of differentiated products D. Firms advertise in both cases

A. Long-run profits tend toward zero in both

If an oligopolistic has a kinked demand curve, a downward shift in its marginal cost curve: A. May not affect output or price B Increases output or price but not both C. Reduces both output and price D. Reduces output but not price

A. May not affect output or price

Platform monopolies like Twitter are closest to: A. Natural monopolies B. Contestable Monopolies C. Cartels D. Perfect competitors

A. Natural monopolies

Refer to the graph shown. If a natural monopolist were not regulated, the firm would charge: (Image three in your file) A. P1 B. P2 C. P3 D. P4

A. P1

The US federal income tax is a: A. Progressive tax B. Regressive tax C. Proportional tax D. Singular tax

A. Progressive tax

The elasticity of labor demand is higher when: A. There are many substitutes for labor in the production process B. The imputes that could be substituted for labor are relatively expensive C. A large amount fo labor is essential to the production process D. Labor productivity falls rapidly when output is increased

A. There are many substitutes for labor in the production process

An attorney for a firm that is arguing that its market is competitive rather than monopolistic would be most likely to argue that the relevant market is shown by a: A. Three- digit North American Industry Classification System (NAICS) industry B. Four- digit North American Industry Classification System (NAICS) industry C. Five- digit North American Industry Classification System (NAICS) industry D. Six- digit North American Industry Classification System (NAICS) industry

A. Three- digit North American Industry Classification System (NAICS) industry

According to the Google complaint consumers typically do not change their mobile devices default search setting. A. True B. False

A. True

According to the Google complaint google developed android and offered it for free as a means of conquering the wireless market. A. True B. False

A. True

For many years, Apple devices have been preset to Google's search engine A. True B. False

A. True

The wide And extensive use of android has allowed Google to benefit from the network effect. A. True B. False

A. True

If a monopolist increases output from 14 to 15 by lowering its price from $32 to $31, marginal revenue is: A. $1 B. $17 C. $448 D. $465

B. $17

Refer to the graph shown. A profit maximizing firm will set a price equal to: (Image one in your file) A. $10 B. $8 C. $6 D. $4

B. $8

If an industry has exactly 10 firm with identical sales, the four-firm concentration ratio must be: A. 10 B. 40 C. 60 D. 90

B. 40

Assume that in the laptop computer market there are many firms selling differentiated products. This market is: A. A competitive market B. A monopolistically competitive market C. An oligopolistic market D. A monopoly

B. A monopolistically competitive market

It is not uncommon for businesses to pay contingent bonuses that depend on performance. Contingent bonuses are an example of: A. X-inefficiency B. An incentive-comparable contract C. A winner-take-all contract D. A network externality

B. An incentive-compatible contract

A market has the following characteristics: There is strategic pricing, output is somewhat restricted, there is interdependent decision making, and some long-run economic profits are possible. This market is: A. Monopoly B. An oligopoly C. Monopolistically competitive D. Perfectly competitve

B. An oligopoly

Refer to the graph: The Lorenz curve showing the most income equality is: A. A B. B C. C D. D

B. B

In the standard oil antitrust case in 1911, the court ruled that the: A. Company had a monopolistic structure and therefore should be broken up B. Company was guilty of unfair business practices and therefore should be broken up C. Sherman Antitrust did not apply D. Company had to lower prices

B. Company was guilty of unfair business practices and therefore should be broken up

A significant increase in the marginal income tax rate, ceteris paribus, is likely to: A. Increase the quantity of labor supplied B. Decrease the quantity of labor supplied C. Decrease the quantity of labor demanded D. Increase the quantity of labor demanded

B. Decrease the quantity of labor supplied

The opportunity cost of working: A. Increases as wages get higher B. Decreases as wages get higher C. Remains the same as wages get higher D. Has nothing to do with wages

B. Decreases as wages get higher

Which of the following is an action or performance of Google which the plaintiffs claim is a violation of the Sherman act? A. Giving away the android operating system B. Exclusionary distribution agreements C. Giving away the chrome browser D. Giving away the google maps software

B. Exclusionary distribution agreements

The focal point phenomenon: A. Explains why production tends to take place in countries that ave fewer trade barriers B. Explains why production tends to take place in a few select countries rather than being evenly distributed across countries C. Argues that transportation costs make it unprofitable to locate production in other countries D. Argues that trade barriers force countries to locate production in other countries

B. Explains why production tense to take place in a few select countries rather than being evenly distributed across countries

According to the Google complaint Google Chrome has 80% of the browser market. A. True B. False

B. False

According to the Google complaint radio ads are a reasonable substitute for such advertising. A. True B. False

B. False

According to the Google complaint social media platforms are a reasonable substitute for general search services. A. True B. False

B. False

How do you know that firms benefit society? A. Entrepreneurs start businesses B. Firms earn profits and produce goods C. Firms pay taxes and employ people D. Customers voluntarily pay for their products

B. Firms earn profits and produce goods

One way in which real world perfect competition (e.g. a lot of small firms selling a commodity) does not fit the perfectively competitive model is that: A. Firms have the ability to collude B. Firms may have different cost structures C. Firms face a perfectively elastic demand curve D. Firms face a perfectively in elastic demand curve

B. Firms may have different cost structures

Opening an industry to international competition tends to: A. Increase X-inefficiency B. Force lazy monopolists to increase efficiency C. Increase the incidence of lazy monopolists D. Raise a monopolist's profit as the price is driven up

B. Force lazy monopolists to increase efficiency

Historically, technology has: A. Improved and the demand for labor has decrease as output has increased B. Improved and the demand for labor has increased as output has increased C. Worsened and the demand for labor has decreased as output has decreased D. Worsened and the demand for labor has increased as output has decreased

B. Improved and the demand for labor has increased as output has increased

For the US, which of the following statements is true? A. Income distribution became less equal from 1929 to 1970 B. Income distribution became less equal from 1970 to today C. The income of the bottom fifth of families rose 10 percent from 1970 to today D. The income of the bottom fifth of families fell 10 percent from 1929 to today

B. Income distribution became less equal from 1970 to today

Discrimination based on individual characteristics that don't affect job performance: A. Is the hardest kind of discrimination to eliminate B. Is costly to a firm, and so market forces will work toward eliminating it C. Is not costly to a firm and thus is easy to eliminate D. May be profit-maximizing in some cases

B. Is costly to a firm, and so market forces will work toward eliminating it

Suppose an oligopolistic firm assumes that its rivals will ignore a price increase but match a price cut. In this case, the firm perceives its demand curve to be: A. Kinked, being steeper above the going price than below B. Kinked, being steeper below the going price than above C. Linear, being less elastic at lower prices D. Linear, being more elastic at higher prices

B. Kinked, being steeper below the going price than above.

If the income effect of higher wages is large enough, assuming leisure is a normal good, the labor supply curve A. Will still slope up B. May slope down C. Will become perfectively elastic D. Will become perfectively inelastic

B. May slope down

When most people talk of equality, they mean they believe in equality of A. Outcomes for all individuals B. Opportunity C. Income across ethnic groups D. Equality of income across educational classes

B. Opportunity

The US Social Security tax is a: A. Progressive tax B. Regressive tax C. Proportional tax D. Singular tax

B. Regressive tax

Which is the most likely solution to addressing the market power of new firms such as Google and Facebook? A. Breaking up the firms B. Regulating their use of consumer data C. Setting a maximum price for their services D. Converting the firms to utilities

B. Regulating their use of consumer data

Concluding that a company is in violation of antitrust laws because it controls over 90% of the market is an application of judgement by: A. Performance B. Structure C. Design D. Comparative advantage

B. Structure

It is a ledge that Facebook has a monopoly in A. The global personal social networking market B. The US personal social networking market C. The US search engine advertising market D. The universal greed market

B. The US personal social networking market

If the hourly wage of US workers is $16, the hourly wage of Mexican workers is $4, and the US workers produce 5 times as much output per hour as Mexican workers, then, other things equal, it would be efficient to locate production facilities in: A. The US since the cost per unit of output will be higher B. The US since the cost per unit of output will be lower C. Mexico since the cost per unit of output will be higher D. Mexico since the cost per unit of output will be lower

B. The US since the cost per unit f output will be lower

The general monitoring problem implies that: A. Profit maximization should always be a firm's goal B. There is a cost of supervising employees so that they work toward the owner's goals rather than their own C. Government must intervene to protect social goals D. Competition will ensure common goals among the owners and managers of a firm

B. There is a cost of supervising employees so that they work toward the owner's goals rather than their own

Which of the following best characterizes your relationship with Google? A. You are both the customer and the product. B. You are not the customer but you are the product. C. Since you don't pay Google, it is nonprofit company. D. Google is your creator, and you should probably worship it accodingly

B. You are not the customer but you are the product

Refer to the graph shown. A profit maximizing firm will produce at a level of output equal to: (Image two in your file) A. 8 B. 20 C. 30 D. 45

C. 30

On mobile devices Apple's operating system (iOS) and google's operating system (android) constitute ________ and _________ percent of the market respectively. A. 50, 50 B. 40, 60 C. 60, 40 D. 50, 30

C. 60, 40

A reason fewer antitrust cases have been prosecuted in recent year is because A. More and more firms are platform businesses B. Globalization has decreased competition C. A greater appreciation of how technological change is both unpredictable and effective in creating competition D. Democrats have been too busy trying to find Russian collusion

C. A greater appreciation of how technological change is both unpredictable and effective in creating competition

Labor demand is less elastic when: A. There are many substitutes for labor in the production process B. The inputs that could be substituted for labor are relatively inexpensive C. A large amount of labor is essential to the production process D. The demand for output is more elastic

C. A large amount of labor is essential to the production process

Which of the following will not shift the demand for labor to the right? A. An increase I the price of a competing input B. An increase in the demand for output C. An increase in the wage rate D. An increase in the competitiveness of an industry

C. An increase in the wage rate

If the demand for attorneys serves decreases, the demand for legal assistants probably will: A. Not be affected B. Increase C. Decrease D. Change in a manner that cannot be predicted

C. Decrease

A problem with ushering the judgement by performance criterion is that: A. It is difficult to determine the relevant market B. It is difficult to determine the relevant industry C. Each action of a firm must be analyzed separately and within a particular context D. The court must decide whether to use concentration ratios or the Herfindahl index

C. Each action of a firm must be analyzed separately and within a particular context

One way in which real world perfect competition (e.g. a lot of small firms selling a commodity) may not fit the perfectively competitive model is that: A. Firms have the ability to collude B. Firms likely have equivalent cost structures C. Firms have some ability to set price through risk management strategies D. Firms face a perfectively in elastic demand curve

C. Firms have some ability to set price through risk management strategies

According to the Google complaint the most effective way for a search engine to achieve scale is A. To charge a zero price for eight services B. Promised users not to sell their data to other businesses C. Have its search set as the default on devices D. None of the above is correct

C. Have a search set as the default on devices

Assume that in the Logan area Maverik posts the price fo diesel at its stores and then soon thereafter other convenience stores match this price- that's just the way it works. This is an example of: A. Perfect competition B. Monopolistic competition C. Implicit competition D. The kinked demand curve model

C. Implicit competition

Some firms pay efficiency wages because these wages: A. Minimize short-run costs B. Increase turnover C. Increase worker productivity D. Reduce the elasticity of labor supply

C. Increase worker productivity

When a tax is progressive, the average tax rate: A. Decreases with income B. Is constant with income C. Increases with income D. First increases with income, then decreases with income

C. Increases with income

The technology lock-in argument suggests that: A. It is inefficient to try and adapt to new technology B. More efficient technologies always immediately replace less efficient technologies C. May of our institutions and technologies may be inefficient but are ingrained nevertheless D. Existing institutions and technologies are always the most efficient

C. Many of our institutions are technologies may be inefficient but are ingrained nevertheless

For a monopolist, price is greater than marginal cost, hence: A. Total cost to society of producing output is less than the total benefit B. Total benefit to society of producing output is less than the total cost C. Marginal cost to society of increasing output is lower than the marginal benefit D. Marginal cost to society of increasing output is greater than the marginal benefit

C. Marginal cost to society of increasing output is lower than the marginal benefit

Network externalities: A. Results in perfectively competitive markets B. Result in oligopoly markets C. May result in the adoption of inefficient technologies D. Are inconsistent with the Sherman Act of 1890

C. May result in the adoption of inefficient tecnologies

According to T. Bowles, the tightening of border restrictions reducing illegal immigration over the past 15 years has made the labor supply curve for agricultural workers in Idaho and Utah: A. Perfectively elastic B. Perfectively elastic C. More inelastic D. Downward sloping

C. More inelastic

Why is there a tendency for Twitter to become a monopoly? A. High marginal costs B. Trump loves it. C. Network externalities D. Increasing marginal costs

C. Network externalities

In the contestable market model, an oligopoly with no barriers to entry sets a: A. Monopoly price B. Price that significantly exceeds average total cost C. Price that is equal to average total cost D. Collusive price

C. Price that is equal to average total cost

Which of the following is not a Facebook action which is alleged to be anti-competitive? A. Purchase of Instagram in 2012 B. Purchase of WhatsApp in 2014 C. Purchase of Twitter in 2018 D. Restrictive agreements relative to application program interfaces.

C. Purchase of Twitter in 2018

The social security retirement tax is ________; the Medicare tax is __________; and the federal income tax is ___________. A. Progressive, progressive, progressive B. Regressive, proportional, regressive C. Regressive, proportional, progressive D. Regressive, regressive, proportional

C. Regressive, proportional, progressive

Refer to the graph shown. The monopolistically competitive firm represented is in: (Image five in your file) A. Both short-run and long-run equilibrium because price equals marginal cost at the profit-maximizing output level. B. Both short-run and long-run equilibrium because price exceeds average total cost at the profit-maximizing output level C. Short-run equilibrium because price exceeds average total cost at the profit-maximizing output level D. Long-run equilibrium because economic profits are zero at the profit-maximizing output level

C. Short-run equilibrium because price exceeds average total cost at the profit-maximizing output level

Assume the following graph represents Rocky Mountain Power (RMP). If the government forces RMP to follow marginal cost pricing, RMP would be: (Image four in your file) A. Making economic profits B. Making normal profits C. Sustaining losses and eventually would go out of business D. Making zero economic profits

C. Sustaining losses and eventually would go out of business

The standard economic model of the business firm ignores the monitoring problem by assuming that: A. The owner does not maximize profit B. Marginal cost is zero, and so the output at which profit is maximized is the same as the output at which sales revenues are maximized C. The owner of the firm makes all the decisions D. The owner of the firm has no control over decisions

C. The owner of the firm makes all the different

Consumers tend to accept the market restrictions imposed by suppliers because: A. Government prevents them from organizing B. They see themselves as laborers and therefore benefit from restrictions C. Their cost of organizing are higher than the cost of the collusion by the suppliers D. When combined, their losses are small for the group as a whole

C. Their cost of organizing are higher than the cost of the collusion by the suppliers

For U.S. workers in import-competing, tradable sectors (e.g., manufacturing), the effect of globalization has been: A. To push wages up relative to those in non tradable sectors such as government or service workers B. To cause greater upward mobility for those workers while reducing downward mobility C. To push wages down or leave them unemployed D. To reduce employment in this group while leaving wage rates about the same

C. To push wages down or leave the unemployed

Refer to the table shown, which shows the demand schedule for a product sold by a monopolist. Marginal revenue is negative: Price of product(s). Quantity demanded per year $14. 3 $12 4 $10 5 $8 6 $6 7 A. When price is $10 B. When price is above $10 C. When price is below $10 D. For every price

C. When price is below $10

The top four firms in the industry have 10%, 8%, 8%, and 6% of the market. The Herfindahl index of this market is closest to which of the following? A. 8 B. 32 C. 66 D. 264

D. 264

Refer to the graph shown: The 25 percent of the families with the highest income earn: A. 6% of the income B. 19% of the income C. 36% of the income D. 64% of the income

D. 64% of the income

According to T. Bowles, growing income and wealth inequality in the U.S.: A. Has been caused in part by globalization B. Likely is a primary cause of increasing social and political divisions C. Is an exceptionally difficult issue to solve due to the equity-efficiency tradeoff D. All of the above

D. All of the above

Any Facebook case the prayer for relief includes a request that the court A. Declare that Facebook has violated the Sherman act B. Force Facebook to sell Instagram C. Force Facebook to sell WhatsApp D. All of the above

D. All of the above

Medicare: A. Redistributes income form the young to the old B. Provides health insurance for the old C. Has grown rapidly as a share of federal spending in the past 20 years D. All of the above are correct

D. All of the above

The labor market is a: A. A significant part of the factor market B. Important in determining the income distribution C. A critical institution in the lives of many individuals D. All of the above

D. All of the above

The social security system: a. Redistributes income from the young to the old B. Not like a typical private pension program, because some people receive more than they paid in C. Not like a typical private pension program, because individuals do not have a contract- based property right in future benefits D. All of the aboce

D. All of the above

To be successful in increasing prices, oligopolistic acting as a cartel need: A. An agreed upon mechanism, either explicit or implicit, for setting prices B. To limit output C. To have barriers to entry in their particular industry D. All of the above

D. All of the above

Which helped give rise to the Facebook monopoly? A. Low marginal costs B. Economies of scale C. Network externalities D. All of the above

D. All of the above

Which of the following is true of technological change? A. It is inherently difficult to predict B. It can happen in any type of industry C. It can have significant effects on firms in the industry D. All of the above

D. All of the above

According to the Google complaint which of the following is a characteristic of the search engine business that has helped google achieve monopoly status? A. A requirement of an upfront investment of billions of dollars B. Large fixed costs C. Advertisers will pay more for ads from a large provider of search services D. All of the above are correct