ECON 202 Final

Suppose Slow Ketchup requires that, as a condition of purchase, all restaurants using its product must buy and make available its new sales product. This arrangement is an example of

a tying contract.

For all practical purposes, the supply of land is

almost perfectly inelastic.

The Celler-Kefauver Act of 1950

amended the Clayton Act.

Marginal resource cost refers to the

amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.

The concept of "wages" includes the following items, except

amounts spent by workers.

A conglomerate merger

can extend the line of products sold, extend the territories in which products are sold, or combine totally unrelated products.

Refer to the diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures (a), (b), and (c). Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures, we

can say that the land in Figure (c) is most productive.

The opportunity cost of borrowing funds to finance government deficits is

greatest when the economy is doing well.

The long-run trend of real wages

has been upward.

Real wages in the United States in the long run

have increased at about the same rate as increases in output per worker.

Currently, capitalist income, that is, corporate profits, interest, and rent, accounts for about what percentage of the income paid to American resource suppliers?

20 percent

The pure rate of interest in economic models is best approximated by the

20-year Treasury bond rate.

Effective usury laws cause

a shortage of money in money markets.

A characteristic of a purely competitive labor market would be

"wage-taker" behavior by workers.

Refer to the graph. Assume the market for this product is in equilibrium at the intersection of D2and S1. The shift in supply from S1to S2is due to an excise tax imposed on the product. How much is the tax per unit of product?

$4

The graph illustrates the market for a product on which an excise tax has been imposed by government. How much is the efficiency (or deadweight) loss due to the excise tax?

$9

Transfer payments are about ____ percent of U.S. domestic output (as of 2018).

14

The maximum federal marginal tax rate on taxable personal income is, as of 2019,

37 percent.

The product price is $10 per unit and the cost per worker is $540. How many workers will the firm employ?

5

The individual firm in a purely competitive labor market faces

a perfectly elastic labor supply curve and a downsloping labor demand curve.

The consumer price index is 113 in Year 1 and 118 in Year 2. The nominal wage rate is $8 in Year 1 and $9 in Year 2. What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

8.1 percent

Henry George's single-tax movement was based on the argument that

a high tax on land rent is justified because land rent performs no incentive function.

Restructuring of a major industry resulted from the

AT&T case.

In 2018, "Tax-Freedom Day" (the day average workers have earned enough to pay their tax bills) was

April 19.

Tying contracts are illegal under the

Clayton Act of 1914.

Which of the following is least likely to violate the Sherman Act or the Clayton Act?

Competitive firms F and G independently charge lower prices to frequent customers than to occasional customers.

In the Microsoft antitrust case, the federal government said in essence that

Microsoft was a "bad monopoly."

Movie producers A, B, and C secretly meet and agree to release their summer blockbuster films in sequence, rather than at the same time. The U.S. Justice Department learns of the agreement and files an antitrust suit. The federal government would most likely file charges under the

Sherman Act, Section 1.

Entrepreneurs mostly focus on a single number: profits. As a result, which of the following statements tends to be true about their firms?

The firms pay close attention to every aspect of their operations.

The minimum rate of return or payment necessary to keep an entrepreneur in some specific enterprise is referred to as

a normal profit.

Price-fixing is considered to be a per se violation of the antitrust laws because

a guilty verdict need only show that there was a conspiracy to fix prices, not that it succeeded.

The fact that people prefer present consumption to future consumption results in

an upsloping supply of loanable funds curve.

Economic rent refers to the price paid for land and other natural resources that

are fixed in total supply.

The federal gasoline tax is assessed on a per-gallon basis, and the proceeds are used for highway maintenance and improvements. This tax is consistent with the

benefits-received principle of taxation.

In the diagram, solid arrows reflect real flows, while broken arrows are monetary flows. Flow (2) might represent

corporate income tax payments.

Strict occupational licensing requirements are favored by a(n)

craft union.

Models that analyze how labor unions attempt to raise wage rates include the following, except the

credit union model.

The Sherman Act

declared monopoly and restraints of trade to be illegal.

The marginal revenue product (MRP) of land declines as more land is brought into use. As a result, the

demand curve for land is downsloping.

Government purchases and transfer payments

differ because the former absorb resources while the latter do not.

Productivity measures (such as output per worker-hour) and wage rates adjusted for inflation in the United States are

directly and closely related.

The addition of government to the circular-flow model illustrates that government

does all of the things stated in the other possible answers.

The market supply curve for labor is upsloping because

employers as a group must pay higher wage rates to obtain more workers.

The marginal tax rate is

equal to the change in taxes/change in taxable income.

The benefits-received principle of taxation is most evident in

excise taxes on gasoline.

The electricians' union is a good example of

exclusive unionism

Entrepreneurs normally do all of the following except

getting hired as a top executive in established corporations.

In the diagram, solid arrows reflect real flows, while broken arrows are monetary flows. Flow (1) might represent

government provision of highways for truck transportation.

To say that land rent performs no incentive function means that

higher rental payments will not bring forth a larger quantity of land.

The supply curve of loanable funds is upsloping because

households are willing to save more at high interest rates than they are at low interest rates.

The antitrust laws are based on the

idea that competition leads to greater economic efficiency than does a monopoly.

Increases in the productivity of labor result partly from

improvements in technology.

Marginal revenue product (MRP) of labor refers to the

increase in total revenue resulting from hiring one more unit of labor.

Refer to the graph. Suppose that a competitive firm in long-run equilibrium alongMRP2faces a market wage rate ofW0. If the price of the firm's product increases, other things remaining the same, the effect of this change in price would be to

increase the firm's demand for labor from MRP2 to MRP3.

If the nominal wages of carpenters rose by 5 percent in 2019 and the price level increased by 3 percent, then the real wages of carpenters

increased by 2 percent.

The real wage will rise if the nominal wage

increases more rapidly than the general price level.

The incentive function of prices

indicates that price increases bring forth more of that resource.

The price paid for the use of money is called

interest

A function of the Federal Trade Commission is to

investigate instances of faulty and misleading advertising.

Price-fixing

is a per se violation of the antitrust laws.

The Federal Trade Commission

is empowered to hold public hearings to investigate unfair practices.

Interest rates of various loans vary over a wide range due to differences in all of the following, except

lender characteristics.

The Sherman Act was designed to

make monopoly and acts that restrain trade illegal.

In a monopsonistic labor market, the employer will maximize profits by employing workers up to that point at which

marginal revenue product equals marginal resource (labor) cost.

Government borrowing

may crowd out private sector investment.

Economists would not consider which one of the following to be a productive economic resource?

money

The economic term for a firm that is the sole buyer in a market is

monopsonist.

Refer to the diagram. If demand is D2, a tax of $X per acre will

not affect the quantity of land available to society.

A vertical merger involves a combining of one or more firms

operating at different stages of the production process in a particular industry.

The Clayton Act of 1914

outlawed price discrimination, tying contracts, acquisition of stocks of competing corporations, and interlocking directorates that lessen competition.

Over the long run, real earnings per worker can increase only at about the same rate as the economy's rate of growth of

output per worker.

The largest category of federal spending is for

pensions and income security.

Conspiracies to fix prices are

per se violations of the antitrust laws.

The total supply of land is

perfectly inelastic.

The largest source of tax revenue for the U.S. federal government is

personal income taxes.

Real wages would rise if the

prices of goods and services rose less rapidly than nominal-wage rates.

Revenues flowing to the government from government-run or government-sponsored businesses, such as public utilities and state lotteries, are known as

proprietary income.

The principal objective of industrial regulation is to

protect the consuming public from the market power of natural monopolies.

Real wages in the United States are

relatively high, but not as high as in some other industrially advanced nations.

Proprietary income refers to

revenue generated by government-run businesses.

Taxes on commodities or on purchases are known as

sales and excise taxes.

The public interest theory of regulation

says that industries should be regulated to insure quality service at reasonable prices.

In designing taxes, the government economists might focus on the following goals, except

simplifying the estimation of demand elasticities that are relevant to tax incidence.

The ability-to-pay principle of taxation

suggests that taxes should vary directly with people's income and wealth.

A progressive tax is such that

tax rates are higher the greater one's income.

The demand for farmland will increase if

technological advances make land more productive.

Entry fees at national parks and monuments are an example of

the benefits-received principle of taxation.

A firm charged with monopolizing a market is less likely to be convicted if

the court accepts a broad definition of the market.

Refer to the diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures (a), (b), and (c). Also assume that identical amounts of labor, capital, and other needed inputs are used in farming each grade of land. On the basis of these three figures, we can say that

the land shown in Figure (a) only is a "free good."

Economic rent, or pure rent, is

the price paid for the use of land and other nonreproducible resources.

The equilibrium interest rate equates

the quantities demanded and supplied of loanable funds.

The average tax rate is

the ratio of total taxes paid to total taxable income.

The main purpose of the antitrust laws is

to prevent the monopolization of industries.

Taxable income is

total income less deductions and exemptions.

A merger between an automobile manufacturer and a maker of automobile tires is an example of a

vertical merger.

Economists who adhere to the laissez-faire antitrust perspective

view competition as a long-run dynamic process in which firms battle for dominance of markets but rarely can sustain such dominance once it is achieved.

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

wage rate or price of labor.

Responsibility for enforcing the antitrust laws rests

with both the Department of Justice and the Federal Trade Commission.

The productivity and real wages of workers in industrially advanced economies have risen historically partly because

workers have been able to use larger quantities of capital equipment.

Refer to the diagram. Land

would be a free resource if demand were D4 or less.