Econ Final Exam

2a Which of the following is a public assistance or welfare program as opposed to a social insurance program? A. Food Stamps B. unemployment compensation C. Medicare D. Social Security

A. Food Stamps

20. Which of the following cases best illustrates economic immigration? A. Julio migrated to Australia to take a job paying three times what he earned at home.. B. Nguyen migrated to the United States to escape religious persecution. C. Sophia migrated to Germany to rejoin her family D. Vladimir migrated to Great Britain to avoid political imprisonment.

A. Julio migrated to Australia to take a job paying three times what he earned at home

3 Which of the following measurement issues make interpretation of U.S. poverty rates difficult? A. Poverty statistics measure income rather than consumption, and some families may be able to consume above the official poverty line. B. The high cost of living in rural areas tends to result in the understatement of poverty. C. Most people below the poverty line have substantial unreported income. D. The poverty rate is adjusted for every urban and rural area, so people's poverty status changes whenever they move.

A. Poverty statistics measure income rather than consumption, and some families may be able to consume above the official poverty line

9a Suppose you go to a doctor but your health insurance plan reimburses you for only 80 percent of the bill. This is an example of: A. a copayment. B. a deductible. C. monopsony power. D. a deferred benefit plan.

A. a copayment

4. Marginal revenue is the: A. change in total revenue associated with the sale of one more unit of output. B. change in average revenue associated with the sale of one more unit of output. C. change in product price associated with the sale of one more unit of output. D. difference between product price and average total cost.

A. change in total revenue associated with the sale of one more output.

20. If a monopolist engages in price discrimination, it will: A. charge a higher price where individual demand is inelastic and a lower price where individual demand is elastic B. charge a competitive price to all its customers. C. produce a smaller output than when it did not discriminate. D. realize a smaller profit.

A. charge a higher price where individual demand is inelastic and a lower price where individual demand is elastic

13. The process by which new firms and new products replace existing dominant firms and products is called: A. creative destruction. B. mergers and acquisitions. C. monopolistic competition. D. process innovation.

A. creative destruction

18 "Remittances" occur when: A. immigrants send financial payments back to family in their country of origin. B. migrants return to their home country. C. physical capital flows into a country that has lost labor due to migration. D. two countries send immigrants to each other in approximately equal numbers.

A. immigrants send financial payments back to family in their country of origin

25. Homogeneous oligopoly exists where a small number of firms are A. producing virtually identical products. B.setting price and output independently. C.setting price and output collusively. D.producing differentiated products.

A. producing virtually identical products

23. Ending discrimination against minority groups in educational processes and in employment situations would cause total domestic output to A.rise because of an increase in the productivity of the labor force. B.rise because spending on consumer goods and services would decrease. C. fall because of the increased costs of training and living. D. fall, since trained minority workers would force some present workers out of their jobs.

A. rise because of an increase in the productivity of labor force

21. Humancapital refers to: A. the accumulated knowledge and skills that allow a person to be productive. B. machinery that requires extensive human interaction to be productive. C. the accumulated financial assets of people. D. all of these things.

A. the accumulated knowledge and skills that allow a person to be productive

3. If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A. will also be $5. B. will be greater than $5. C. will be less than $5. D. may be either greater or less than $5.

A. will also be $5

17. Which of the following is an example of creative destruction? A. An economic recession forces firms out of business. B. Automobile production causes the wagon industry to shut down. C. Apple earns more economic profits than other manufacturers of MP3 players. D. Starbucks shuts down stores to create greater demand for its remaining outlets.

B. Automobile production causes the wagon industry to shut down

16 Which of the following statements is true about the effects of illegal immigration in the United States? A. Illegal immigrant workers displace domestic-born workers on a one-for-one basis. B. Illegal immigration has a negative fiscal impact that falls most heavily on state and local governments. C. Illegal immigration negatively impacts wages and the standard of living for all domestic-born workers. D. All of these are true.

B. Illegal immigration has a negative fiscal impact that falls most heavily on state and local governments

24. Why did the U.S. become dominated by employer-provided health insurance? A. The federal government required during the Great Depression. B. Offering health insurance as a fringe benefit was a way to attract employees during World War II. C. The rise in the number of cases of childhood polio during the 1950s made it necessary to attract workers who had families. D. Doctors and hospitals thought it would be an interesting way to increase business and pitched it to corporations as an idea in the 1960s.

B. Offering health insurance as a fringe benefit was a way to attract employees during World War ||

13 Which of the following statements is correct? A. Limited access to the health care system is a major cause of rising health care costs. B. Rising health care costs are a major cause of limited access to the health care system. C. Rising health care costs have forced employers to raise real wages above labor productivity. D. The tax subsidy which government provides for health care causes health care to be underconsumed.

B. Rising health care costs are a major cause of limited access to the health care system

22. The monopolistic competition model assumes that: A. allocative efficiency will be achieved. B. firms will engage in nonprice competition. C. firms will realize economic profits in the long run. D. productive efficiency will be achieved.

B. firs will engage in nonprice competition

19. A person will be more likely to migrate the: A. greater the distance they will have to travel from their country of origin. B. greater the wages in their prospective new country relative to wages in their home country. C. fewer the number of "beaten paths" that exist to their prospective new country. D. greater the number of children they have.

B. greater the wages in their perspective new country relative to wages in their home country

11 The problem of asymmetric information is that: A. neither health care buyers nor providers are well-informed. B. health care providers are well-informed, but buyers are not. C. the outcomes of many complex medical procedures cannot be predicted. D. insurance companies are well-informed but policy purchasers are not.

B. health care providers are well-informed, but buyers are not

12. Entrepreneurs in purely competitive industries: A. have no incentive to innovate because in the long run they will earn no economic profits. B. innovate to lower operating costs and generate short-run economic profits. C. utilize pricing strategies to generate short-run economic profits. D. rarely try to innovate because of a lack of financial resources.

B. innovate to lower operating costs and generate short-run economic profits

.24. Mutual interdependence means that each oligopolistic firm: A. faces a perfectly elastic demand for its product. B. must consider the reactions of its rivals when it determines its price policy. C. produces a product identical to those of its rivals. D. produces a product similar but not identical to the products of its rivals.

B. must consider the reactions of its rivals when it determines its price policy

10a If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of: A. the free-rider problem. B. the moral hazard problem. C. the adverse selection problem. D. the Coase theorem.

B. the moral hazard problem

5. A competitive firm will maximize profits at that output at which: A. total revenue and total cost are equal. B. total revenue exceeds total cost by the greatest amount. C. price exceeds average total cost by the largest amount. D. the difference between marginal revenue and price is at a maximum.

B. total revenue exceeds total cost by greatest amount

2. A purely competitive seller is: A. both a "price maker" and a "price taker." B. neither a "price maker" nor a "price taker." C. a "price taker." D. a "price maker."

C a "price taker"

16. A monopolistic firm has a sales schedule such that it can sell 16 prefabricated garages per week at $100,000 each, but if it restricts its output to 15 per week it can sell these at $110,000 each. The marginal revenue of the tenth unit of sales per week is: A. $1,000. B. $9,000. C. $10,000. D. -$1,000.

C. $10,000

17 What is the net effect of illegal immigration on total employment in the United States? A. The net effect is zero, as illegal immigrant workers displace domestic-born workers on a one-for-one basis. B. Total employment decreases. C. Total employment increases, but with some substitution of illegal immigrants for domestic-born workers. D. Total employment increases, with no displacement of or substitution for domestic-born workers.

C. Total employment increases, but with some substitution of illegal immigrants for domestic-born workers

21. Monopolistic competition resembles pure competition because: A. both industries emphasize nonprice competition. B. both industries entail the production of differentiated products. curves. C. barriers to entry are either weak or nonexistent. D. in both instances firms will operate at the minimum point on their long-run average total cost

C. barriers to entry are either weak or nonexistent

28. Alex decides to buy a $25 ticket to a performance of the Richmond Symphony at Randolph-Macon rather than a $15 ticket for a Yellowjackets football game. We can conclude that Alex: A. is relatively unappreciative of sports. B. obtains more marginal utility from the football game than from the symphony. C. has a higher "marginal utility to price ratio" for the symphony than for the football game. D. has recently attended several other Yellowjacket football games.

C. has a higher "marginal utility to price ratio" to the symphony than for the football game

5a The basic argument for income inequality is that: A. the very rich establish consumption patterns that are desirable for the rest of society to emulate. B. the rich buy luxury goods that soon become affordable to everyone else because of economies of scale. C. income inequality is essential to maintain incentives to work and produce. D. inequality undermines incentives and tends to reduce the size of the national income.

C. income inequality is essential to maintain incentives to work and produce

12 Based on what we have learned about income and the demand for health care we would have to conclude that health care: A. is an inferior good. B. is highly elastic with respect to price C. is a normal good. D. has a price elasticity of 1.

C. is a normal good

7 Income mobility: A. contributes to greater wealth inequality in the United States. B. is less in the United States than in most developing nations. C. is the movement of individuals and households from one income quintile to another over time. D. makes lifetime income inequality among income receivers in the United States greater than income inequality in any single year.

C. is the movement of individuals and households from one income quintile to another over time

26. Concentration ratios A.may overstate the degree of competition because they ignore imported products. B.may overstate the degree of competition because interindustry competition is ignored. C. may understate the degree of competition because they ignore imported products. D. provide detailed insights as to the price and output behavior of firms that compose the various industries.

C. may understate the degree of competition because they ignore imported prducts

4a The equality-efficiency tradeoff refers to: A. the conflict between risk averters and risk takers B. the willingness of Congress to abandon existing welfare programs in favor of a comprehensive plan to increase education and training for low-income persons. C. possible trade-offs between the goals of economic efficiency and greater income equality D. the difference between the goals of income equality and equality of economic opportunity.

C. possible trade-offs between the goals of economic efficiency and greater income equality

18. Because the monopolist's demand curve is downsloping: A. the elasticity coefficient will increase as price is lowered. B. MR will equal price. C. price must be lowered to sell more output. D. its supply curve will also be downsloping.

C. price must be lowered to sell more output

9. A constant-cost industry is one in which: A. resource prices fall as output is increased. B. resource prices rise as output is increased C. resource prices remain unchanged as output is increased. D. small and large levels of output entail the same total costs.

C. resource prices remain unchanged as output is increased

14. Which of the following best approximates a pure monopoly? A. the foreign exchange market B. the Kansas City wheat market C. the only bank in a small town D. the soft drink market

C. the only bank in small town

1. The term productive efficiency refers to: A. any short-run equilibrium position of a competitive firm. B. the production of the product-mix most desired by consumers. C. the production of a good at the lowest average total cost. D. fulfilling the condition P = MC.

C. the production of a good at the lowest average total cost

Explain and provide an example of how and firms in a monopolistic competitive market may choose to use non-price competition.

Create Answer (Test 2 EC)

There are two situations that will allow the budget constraint illustrated below to shift out and to the right. What are they and how would they impact an existing indifference curve?

Create Answer (Test 2 EC)

Using a supply demand graph, demonstrate the main problem that would be generated by government-mandated free health care.

Create Answer (Test 4 EC)

14 The United States devotes about ______ percent of its domestic output to health care. A. 4 B. 8 C. 13 D. 17

D. 17

1a The "taste for discrimination" model has been shown to be economically A. A good practice because it is more profitable B. A good practice because it reduces absenteeism C. Of no impact D. A bad practice because it raises costs by keeping out talented workers from certain groups.

D. A bad practice because it raises costs by keeping out talented workers from certain groups

25. Which of these is a factor that would make it more likely a worker would be willing to migrate to another country? A. The destination country is close to the country of origin. B. The worker's age. C. The worker's marital and family situation. D All of these could make more likely a worker would be willing to migrate.

D. All of these could make more likely a worker would be willing to migrate

6 Each of the following contributes to inequalities of income except: A. differences in ability and training. B. differences in job tastes. C. differences in wealth ownership. D. government transfers of wealth.

D. government transfers of wealth

23. The larger the number of firms and the smaller the degree of product differentiation the: A. greater the divergence between the demand and the marginal revenue curves of the monopolistically competitive firm. B. larger will be the monopolistically competitive firm's fixed costs. C. less elastic is the monopolistically competitive firm's demand curve. D. more elastic is the monopolistically competitive firm's demand curve.

D. more elastic is the monopolistically competitive firm's demand curve

6. An unprofitable motel will stay open in the short-run if: A. marginal revenue exceeds price. B. marginal revenue exceeds marginal cost. C. price (average nightly room rate) exceeds average fixed cost D. price (average nightly room rate) exceeds average variable cost.

D. price(average nightly room rate) exceeds average variable cost

15 Illegal immigration positively contributes to the U.S. standard of living by reducing: A. the fiscal burdens of state and local governments. B. the average wages of domestic-born workers. C. crime rates. D. prices of goods and services produced with illegal immigrant labor.

D. prices of good and services produced with illegal immigrant labor

10. When LCD televisions first came on the market, they sold for at least $1,000, and some for much more. Now many units can be purchased for under $400. These facts imply that: A. the LCD television industry was once competitive, but is now monopolistic. B. fewer firms produce LCD televisions than was the case five or ten years ago. C. the demand curve for LCD televisions has shifted leftward. D. the LCD television industry is a decreasing-cost industry.

D. the LCD television industry

29. Which of the following represents a long-run adjustment? A. an aluminum manufacturer cuts back on its purchases of bauxite, needed to make aluminum B. a beef processing plant reduces the number of workers as Americans switch to chicken as a result of an advertising campaign C. a farmer uses an extra dose of fertilizer on his corn crop D. unable to meet foreign competition, a U.S. computer manufacturer sells one of its branch plants

D. unable to meet foreign competition, a US computer manufacturer sells on of its branch plants