Econ 3 exam
Which of the following statements is not characteristic of a perfectly competitive industry in long run equilibrium?
A profit maximizing firm may produce and output level at which P<LRATC
Real Gross Domestic Product is total value of all:
Final goods and services adjusted for inflation
Which one of the following is not a characteristic of a perfectly competitive market?
Firms advertise in order to distinguish their products and increase market share.
Refer to exhibit 7-11, if input costs are constant and there are no barriers to entry, the long run equilibrium price of a pound of walnuts will be about:
$2.00
What is the maximum amount of profit the perfectly competitive firm depicted below could earn in the short run?
$220
Why are creditors harmed by unexpected inflation?
-Creditors are paid back money with less spending power than when it was originally loaned out.
Assuming a price was $2.00, how many units should this perfectly competitive firm produce and sell in order to maximize profits?
26
What would happen to the real interest rate it originally the nominal interest rate was 14% and the inflation rate was 10%, then the nominal interest rate fell to 7% as the inflation rate fell to 4%? It would go from:
4% to 3%
If the number of employed persons equals 180 million the number of unemployed persons equals 15 million, and the number of persons over age 16 in the population equals 210 million, unemployment rate equals _____ and the labor force participation rate equals ______.
7.7%;92.9%
The current cost of a market basket of goods is $800. The cost of the same basket of goods in the base year was $1,000. The current price index is:
80.
The GDP deflator represents a somewhat ______ measure of prices that CPI and the GDP deflator tends to be _____ volatile than the CPI
Broader; less
For a perfectly competitive firm, average revenue is:
Characterized by both (b) and (c)
unemployment rises in _____, and falls in _____.
Contractions; expansions
Which of the following statements is correct?
In a growing dynamic economy, jobs are constantly being both destroyed and created.
If a perfectly competitive firm is operating in the short run and seeks to maximize profit, the firm should:
Increase output whenever price exceeds marginal cost
The horizontal demand curve facing an individual firm in a perfectly competitive market:
Is a reflection of the firms small size relative to the total market.
Suppose that everyone who has looked for a job for more than six months gave up in despair and stopped looking. What would happen to the unemployment rate?
It would fall
A perfectly competitive firm seeking to maximize its profits would want to maximize the difference between:
It's total revenue and it's total cost
If the numbers of officially employed and officially unemployed do not change but the size of the population increases by 10% what would be the effect?
No change in the unemployment rate and a decrease in the labor force participation rate
If the price index is now 120, it means:
Prices are 20 percent higher than in the base year.
If new entry occurs in a perfectly competitive industry, the demand curve for each existing firm will:
Shift down
If the market demand curve in a perfectly competitive industry shifts left, the demand curve for each existing firm will:
Shift down
Darlene runs a fruit and vegetable stand in a medium sized community where there are many such stands. Her weekly total revenue equal $2,000. Her weekly total cost of running the stand equals $3,500, consisting of $2,500 of variable costs and $1,000 of fixed costs. An economist would likely advise Darlen to:
Shut down as quickly as possible in order to maximize her losses.
Constant cost industries:
Significantly increase the demand for inputs when expanding output, and as a result, input prices rises.
Which of the following statements is correct?
The efficiency wage model asserts that higher wages will lead higher productivity.
Which of the following observations concerning phases of a business cycle is incorrect?
The maximum amount of unemployment occurs exactly at the trough.
The shape of the long run industry supply curve in a perfectly competitive industry is largely determined by:
The price of inputs as the industry expands.
Which of the following observations concerning leading economic indicators is true?
They provide warnings of likely downturns.
the unemployment rate measures:
Unemployed workers as a percentage of the labor force.
structural unemployment includes:
Unemployment caused by automation that displaces workers from their jobs.
A firm that is a price taker:
Will lose all sales if it prices it's product in excess of the market equilibrium price
If there are discouraged workers:
the unemployment rate will tend to understate the true level of unemployment.