ECON 202- final exam
The efficient scale of production occurs at which quantity?
C
Which of the figures represents the total cost curve for a typical firm
Figure 2
Which of the following will occur in the long run in this indusrty?
Firms will enter this industry
Suppose this market is severed by two firms who each face the marginal cost curve shown in the diagram and have zero fixed cost. The minimal revenue curve that a monopolist would have this market is also shown. If the firms are able to collude successfully, each firm should earn a profit equal to
NOT $6
Given demand for labor, D1, and supply of labor, S1, what are the equilibrium wage and quantity of labor?
NOT $8 & 400
How much profit will the monopolistically competitive form earn in this situation?
NOT $80
Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at
NOT Q2 only
To maximize total surplus, a benevolent social planner would choose which of the following outcomes?
NOT Q=60 & P=30
In the prisoners'' dilemma game, self interest leads
NOT each prisoner to stay silent
In the long run a company that produces and sells popcorn incurs total costs of $1,050 when output is 90 canisters and $1,200 when output is 120 canisters. The popcorn company exhibits
NOT economies of scale because total cost is rising as output rises
In a long-run equilibrium
NOT only a monopolistically
Assume that the market starts in equilibrium at point W in graph (b) and that graph (a) illustrates the cost curves facing individual firms. Suppose that demand increases from D0 to D1. Which of the following statements is not correct?
NOT point Z
For a firm, marginal revenue minus marginal cost is equal to
NOT profit
The graph illustrates a typical
NOT total cost curve
Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $6. Its average total cost is $4. Its profit is
$1,600
If the market price is $10, what is the firm's short run economic profit?
$15
What is the marginal product of the second worker?
8
What is the total revenue from selling 4 units?
$480
If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00?
30,000
In the following figure, graph (a) depicts the linear marginal cost (MC) of a firm in a competitive market, and graph (b) depicts the linear market supply curve for a market with a fixed number of identical firms. If there are 300 identical firms in this market, what level of output will be supplied to the market when price is $1.00?
30,000
Which of the following examples illustrates an oligopoly market?
A city with two firms who are licensed to sell school uniforms for the local schools
Adibok knows that it produces and sells high-quality athletic shoes. Wurkout knows that it produces and sells low-quality athletic shoes. According to the signaling theory of advertising
Adibok has an incentive to spend a large amount of money on advertising for its athletic shoes, but Wurkout does not
Which of the following does not explain the rise in income inequality in the US from 1970 to 2017?
An increase in minimum wages
Economists study poverty and income inequality to answer which of the following questions?
How much inequality is there in society?
A society consists of three individuals: Sam, Tristan and Ulyana. In terms of income and utility, Sam is currently best off, Tristan ranks in the muddle, and Ulyana is worst off. Which of the following statements is correct?
Liberalism suggests that government policies should strive to increase Ulyana"s utility
Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 132). Then the marginal product of the 13th worker is
NOT 10 units of output
To maximize profit (or minimize losses), the firm will produce
NOT 50
How much output will the monopolist produce in this situation?
NOT 80 units
Based upon the information shown, how many units will Bearclaws produce to maximize profits?
NOT 90 70
What price will the monopolist charge in order to maximize profit?
NOT A
Which of the curves is most likely to represent average fixed costs?
NOT D
The firm's maximum profit
NOT is -$7,000
If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference whatever a family earned and $25,000, which of the following is correct?
This program reduces the incentive to work to earn any wage up to $25,000
"An extra dollar of income gives more additional satisfaction to a poor person than a rich person." This is an important assumption of which political philosophy?
Utiliarianism
Which political philosophy believes that the government should equalize the incomes of all members of society
Utilitarian, liberalism, and libertarianism all do not believe the government should equalize the incomes of all members of society
Construction work is much riskier than working as a server at a restaurant. As a result, we'd expect a difference in wages between the two jobs. The difference is known as
a compensating differential
When an oligopoly market reaches a Nash equilibrium,
a firm will have chosen its best strategy, given the strategies chosen by other firms in the market
According to the signaling theory of education, better-educated workers
are likely to be high-ability workers
For an individual firm operating in a competitive market, marginal revenue equals
average revenue and the price for all levels or output
If a firm in a monopolistically competitive market successfully uses advertising to decrease the elasticity of demand for its product, the firm will
be able to increase its markup over marginal cost
A change in the supply of one factor of production
can alter the earnings of all other factors
Price discrimination
can maximize profits if the seller can prevent the resale of goods between customers
Each August many high school and college students visit a doctor's office to have sports physical. If the price of sports physical falls, what happens in the market for nurses?
demand decreases from D2 to D1
Because a firm's demand for a factor of production is derived from its decision to supply a good in the market, it is called a
derived demand
If long-run average total cost decreases as the quantity of output increases, the firm is experiencing
economies of scale
A benefit to society of the patent and copyright laws is that those laws
encourage creative activity
According to the human-capital view, education
enhances productivity
Which of the graphs illustrates the demand curve most likely faced by a firm in a monopolistically competitive market?
graph (b)
An oligopolist will increase production if the output effect is
greater than the price effect
Chloe and Guilherme both work at the local factory producing cars. Chloe earns $22 per hour working the day shift, and Guilherme earns $25 per hour working the night shift. Chloe and Guilherme do the same job, have the same experiences, and have the same level of education. This means that the
higher-paying job has a compensating wage differential of $3 per hour
Assuming the firm is maximizing profit, this firm is operating
in the short run and earning a positive economic profit
If the monopoly firm is currently producing Q4 units of output, then a decrease in output will necessarily cause profit to
increase if the output is between Q3 and Q4
Empirical work that does not account for differences in the productivity of workers
is likely to misinterpret apparent evidence of labor market discrimination
What happens to the labor supply curves in both countries when Mexican workers leave Mexico and move to the US?
labor supply increases in the US and decreases in Mexico
Because of diminishing returns, a factor in abundant supply has a
low marginal product and a low rental price
The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?
natural monopoly
A market structure with only a few sellers, each offering similar or identical products, is known as
oligopoly
The marginal product of labor is defined as the change in
output per additional unit of labor
monopolistic competition is considered inefficient because
price exceeds marginal cost
If duopoly firms that are not colluding were able to successfully collude, then
price would rise and quantity would fall
If one firm left a duopoly market where the firms did not cooperate then
price would rise and quantity would fall
The wage is to the labor market as the
rental price of capital is to the capital market
The Sherman Antitrust Act
restricted the ability of competitors to engage in cooperative agreements
Which of the following is consistent with the data reported in the figure?
the female poverty rate is higher for all age groups than the male poverty rate
A government-created monopoly arises when
the government gives a firm the exclusive right to sell some good or service
In which of the following markets are strategic interactions among firms most likely to occur?
the market for tennis balls
A cooperative agreement among oligopolists is more likely to be maintained
the more likely it is that the game among the oligopolists will be played over and over again
The rental price of land is
the price paid for the flow of services from land over a specified time period
Farmer McDonald sells wheat to a broker in Kansas City, Missouri. Because the market for wheat is generally considered to be competitive, Mr. McDonald maximizes
the quantity at which market price is equal to Mr. McDonald's marginal cost of production
A monopolistic competitive form chooses
the quantity of output to produce, but the price of its output is determined by demand
A recent law school graduate is considering two offers to practice law, one in New York and the other in Illinois. The New York bar exam is very difficult to pass compared with Illinois's exam, Assuming all other things equal, the attorney would expect
to make a lower wage in Illinois
To maximize profit, a competitive firm hires workers up to the point of intersection of the
value of marginal product curve and the wage
When labor supply increases,
wages decrease as long as labor demand is downward sloping
Curve A is always declining because
we are dividing fixed costs by higher and higher levels of output
After an employer pays the cost of educating a worker, the
worker might look for another job unless his employer pays him more
In the short run, if the market price is P4, individual firms in a competitive industry will earn
zero profits
What price will the monopolistically competitive form charge in this market?
$80
A competitive firm sells its output for $60 per unit. Assume that labor is the only input that varies for the firm. The marginal product of the 10th worker is 20 units of output per day; the marginal product of the 11th worker is 16 units of output per day. The firm pays its workers a wage of $150 per day. For the 11th worker, the value of the marginal product of labor is
$960
What area measures the monopolist's profit?
(K-B) X W
If Rochelle and Alec operate as a profit maximizing monopoly in the market for water, how many gallons of water will be produced and sold?
600
A profit maximining monopoly's total revenue is equal to
P5 x Q3
A profit maximizing monopoly will produce an output level of
Q3
A disadvantage associated with in-kind transfers to reduce poverty is that they
do not allow poor families to make purchases based on their preferences
Robin owns a horse stables and riding academy and gives riding lessons for children at "pony camp." Her business operates in a competitive industry. Robin gives riding lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal cost of pony camp is $250 per child. In order to maximize profits, Robin should
give riding lessons to fewer than 20 children per month
In the parable of the leaky bucket, a fundamental problem with government redistribution program is identified. As long as the government only has "leaky buckets" at its disposal
it should not try to reach complete equality in income
If the government forces this firm to produce at its efficient scale, it will
produce 5 units and lose $5
Suppose this market is served by two firms who each face the merginal cost curve shown in the diagram. The marginal revenue curve that a monopolist would face in this market is also shown. If the firms are able to collude successfully
the total output will be 2 units and the price will be $8.00 per unit
As the number of firms in an oligopoly increases,
the total quantity of output produced by firms in the market gets closer to the socially efficient quantity
If the minimum wage is $8, then
there is a surplus of 3 million workers
How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?
$200
If the US government determines that the cost of feeding an urban family of four is $7,500 per year, then the official poverty line for a family of that type is
$22,500
Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?
$280
Suppose the firm hires each unit of labor for $600 per week, and each unity of output sells for $9. What is the value of the marginal product of the third worker?
$675
Suppose that the firm pays its workers $45 per day. Each unit of output sells for $10. How many workers should the firm hire?
4
Why doesn't the total cost curve begin at the origin (point 0,0)?
Because fixed costs are positive when output is zero
Dr. Benson is regarded as, by far, the best dentist in his part of the country, yet his income is not significantly higher that the average income for a dentist in his area. In contrast, Bo Johnson, the best baseball player in that region, earns five times the average salary of all baseball players. The most likely explanation is that
Bo Johnson, unlike Dr. Benson, can provide his services to millions of people simultaneously
Economists generally agree that
differences in average wages do not by themselves provide conclusive evidence about the magnitude of discrimination
"The firm hires the factor up to the point where the value of the factor's marginal product is equal to the factor's price." This statement applies to which factor of production?
land, labor, and capital
Firms may experience diseconomies of scale when
large management structures are bureaucratic and inefficient
the firm should shut down if the market price is
less than $6
