MICROECONOMICS QUIZZES PART 2
Answer the question on the basis of the following cost data. Output Total Cost 0 $24 1 33 2 41 3 48 4 54 5 61 6 69 The total variable cost of producing 4 units of output is
$30.
Suppose that a business incurred implicit costs of $300,000 and explicit costs of $2 million in a specific year. If the firm sold 12,000 units of its output at $200 per unit, its accounting profits were
$400,000 and its economic profits were $100,000.
Quantity of Labor Total Product Total Revenue 1 10 $ 80 2 20 160 3 28 224 4 34 272 5 38 304 Refer to the given data. The marginal revenue product of the fourth worker is
$48.
Quantity of Labor Total Product Total Revenue 1 4 $ 16 2 8 32 3 11 44 4 13 52 5 14 56 Refer to the given data. The marginal revenue product of the fourth worker is
$8.
Approximately what percentage of the U.S. labor force works for U.S. governments at the federal, state, and local levels (as of 2020)?
14
Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers Units of Output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 The marginal product of the sixth worker is
15 units of output.
Units of Labor Wage Rate MRC (of Labor) MRP (of Labor) 1 $10 $10 $12 2 10 10 10 3 10 10 8 4 10 10 6 5 10 10 4 Refer to the given data. In maximizing its profit, this firm will employ
2 units of labor.
Total tax revenue in the United States equals approximately what percentage of total output (as of 2020)?
25
Units of Labor Wage Rate MRC (of Labor) MRP (of Labor) 1 $ 8 $ 8 $ 12 2 8 8 10 3 8 8 8 4 8 8 6 5 8 8 4 Refer to the given data. In maximizing its profit, this firm will employ
3 units of labor.
Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers Units of Output 0 0 1 50 2 90 3 125 4 150 5 170 6 165 The marginal product of the second worker is
40 units of output.
Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers Units of Output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 What is the firm's average product when three workers are hired?
42 units of output.
According to data compiled by the Bureau of Economic Analysis, in 2020, total government spending (comprising purchases and transfers) in the United States was about
43 percent of the economy's total output.
Approximately what percentage of the federal government's tax revenues are generated from personal income taxes (in 2020)?
47 percent
As of 2019, approximately what percentage of local tax revenue was generated by property taxes?
72
Which of the following statements is most consistent with the benefits-received principle of taxation?
A childless couple should not be required to pay taxes for the support of public schools.
Which of the following is a short-run adjustment?
A local bakery hires two additional bakers.
Which of the following statements best reflects how a behavioral economist views individual decision making?
Alyssa cares deeply about others, so she often sacrifices what would be in her own self-interest.
The United States' most important trading partner as measured by the dollar value of trade is
Canada
Which country has the largest share of total world exports?
China
In terms of absolute dollar volume, the top three leaders in world exports are
China, the United States, and Germany.
Which of the following best describes federal, state, and local governments spending in the United States in 2020?
Government spending spiked due to the COVID-19 pandemic.
"NAFTA" stands for
North American Free Trade Agreement.
The Boston Marathon is the most well-known marathon in the United States (if not globally). Based on the number of finishers, the New York Marathon is typically the largest marathon in the world. If the average person was asked what the largest marathon is in the U.S. or the world, what answer would a behavioral economist predict?
That the Boston Marathon is larger, based on the recognition heuristic.
Which of the following occurred as a result of COVID-19 relief policies in the United States?
The federal budget deficit tripled from 2019 to 2020.
Suppose a firm sells its product at a price lower than the per-unit implicit costs of producing it. Which of the following statements is definitely true?
The firm may earn positive accounting profits but will face economic losses.
Which of the following represents a long-run adjustment?
Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants.
The organization created to oversee the provisions of multilateral trade agreements, resolve disputes under the international trade rules, and meet periodically to consider further trade liberalization is called the
World Trade Organization (WTO).
Data on education and earnings reveal
a positive relationship between the two.
The federal income tax is consistent with the _________blank principle of taxation, whereas an excise tax on sporting event tickets is consistent with the _________blank principle of taxation.
ability-to-pay; benefits-received
Differences in production efficiencies among nations in producing a particular good result from
all of these
The concept of "wages" includes the following items, except
amounts spent by workers.
Fixed cost is
any cost that does not change when the firm changes its output.
As a proportion of domestic output, taxes in the United States
are lower than in most other industrially advanced countries.
Heuristics
are shortcuts that save time and energy in decision making.
The law of diminishing returns indicates that
as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.
The basic difference between the short run and the long run is that
at least one resource is fixed in the short run, while all resources are variable in the long run.
If you operated a small bakery, which of the following would be a variable cost in the short run?
baking supplies (flour, salt, etc.)
Which is an example of a nontariff barrier (NTB)?
box-by-box inspection requirements for imported fruit
Most people's natural aversion against complex mathematical problems is an example of
cognitive bias.
Countries engaged in international trade specialize in production based on
comparative advantage.
The human tendency to believe only those data that agree with one's preconceptions and ignore other data that contradict the preconceptions is called
confirmation bias.
According to prospect theory, firms are more likely to shrink packages than raise prices because
consumers feel the loss of a price increase more than they feel the loss of buying a smaller package for their money.
The greatest benefit to an economy from international trade is
consumption beyond domestic production possibilities.
Prior to the start of the COVID-19 pandemic, from 1970 to 2019, as percentages of U.S. output, government purchases
declined, but transfer payments increased significantly.
Prior to the start of the COVID-19 pandemic in 2020, from 1970 to 2019, government purchases as a percentage of U.S. output
decreased.
Noncompeting groups of workers are the result of
differences in the innate and acquired abilities of workers.
Compensating differences in wages pay workers for
differences in the nonmonetary characteristics of jobs.
Which of the following is a market imperfection that might explain persistent wage differentials within an occupation?
discrimination
If each taxpayer paid the same lump-sum amount regardless of income level, the tax system would be
disproportionate.
In the labor market shown in the graph, if a minimum wage level is set at Wm, it will cause
employment to decrease from B to A.
What is the difference between an exhaustive and a nonexhaustive government expenditure?
exhaustive expenditures directly require the use of resources; nonexhaustive expenditures do not
Economic profits are calculated by subtracting
explicit and implicit costs from total revenue.
To the economist, total cost includes
explicit and implicit costs.
The long-run trend of real wages
has been upward.
NAFTA
has reduced most trade barriers between Canada, Mexico, and the United States.
Which of the following has not been a major factor contributing to the high productivity of labor in the United States?
high wage rates
When people convince themselves that they "knew all along" what was going to happen, when in fact their predictions were incorrect, they suffer from
hindsight bias.
In 2021, the United States
imported more goods than it exported.
To economists, the main difference between the short run and the long run is that
in the long run all resources are variable, while in the short run at least one resource is fixed.
Marginal revenue product (MRP) of labor refers to the
increase in total revenue resulting from hiring one more unit of labor.
Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would
increase unemployment in the labor market.
In the theory of comparative advantage, a good should be produced in that nation where
its cost is least in terms of alternative goods that might otherwise be produced.
Government trade barriers
lessen or eliminate gains from specialization.
Critics of the minimum wage argue that as an antipoverty device, it is "poorly targeted." By this they mean that
many who benefit from the minimum wage are teenagers or not in poverty.
At the point where diminishing marginal returns of an input sets in, the
marginal product starts to decrease.
A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until
marginal revenue product equals marginal resource (labor) cost.
In the diagram, curves 1, 2, and 3 represent the
marginal, average, and total product curves respectively.
Tariffs
may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs).
The primary gain from international trade is
more goods than would be attainable through domestic production alone.
According to data compiled by the Bureau of Economic Analysis, from 1970 to 2020, government transfer payments as a percentage of U.S. output have
more than doubled as a percentage of output.
The law of diminishing returns in a manufacturing plant of a fixed capacity implies that, eventually, employing one
more worker will decrease the average amount of output per worker.
This question is based on the following table, which provides information on the production of a product that requires one variable input. Input Total Product 0 0 1 5 2 20 3 32 4 42 5 50 6 55 7 58 8 58 9 56 There are negative marginal returns when the
ninth unit of input is added.
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.
The largest source of tax revenue for the U.S. federal government is
personal income taxes.
The three most important sources of federal tax revenue in order of descending importance are
personal income, payroll, and corporate income taxes.
The tendency of people to underestimate the time required to complete a task is called the
planning fallacy.
Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting
profits were $0 and its economic losses were $500,000.
Which of the following is not an important source of revenue for the federal government?
property taxes
(Consider This) A fast-food company spends millions of dollars to develop and promote a new hamburger on their menu only to find that consumers won't buy it because they don't like the taste. From an economic perspective, the company should
pull the hamburger off the menu and treat the development and promotion expenditures as a sunk cost.
A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market finds that the marginal resource (labor) cost of the last unit of labor exceeds its marginal revenue product. The firm should
reduce the amount of labor hired.
A tax that takes a larger proportion of income from low-income groups than from high-income groups is a
regressive tax.
Compensating differences in wages
reward workers differently based on differences in the desirability of jobs.
With respect to state finance, for most states
sales and excise taxes are the major source of revenue and education is the major type of expenditure.
Taxes on commodities or on purchases are known as
sales and excise taxes.
The main difference between sales and excise taxes is that
sales taxes apply to a wide range of products, while excise taxes apply only to a select group of products.
Which of the following cognitive biases refers to people's tendency to attribute their successes to personal ability and effort, and failures to forces outside their control?
self-serving bias
The minimum wage in the United States is
set at the federal level, but many states set their own minimums that are higher than the federal level.
"Offshoring" refers to
shifting work previously done by domestic workers to workers located abroad.
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.
Marginal product is
the change in total output attributable to the employment of one more worker.
Economic cost can best be defined as
the income the firm must provide to resource suppliers to attract resources from alternative uses.
Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. Number of Workers Units of Output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 Diminishing marginal returns become evident with the addition of the
third worker.
Accounting profits equal total revenue minus
total explicit costs.
Which of the following is an example of a labor-intensive good?
toys
Augi carefully plans out an early morning exercise routine to lose weight and get fit. When it's time to work out, however, Augi just "doesn't feel up to it" and decides to sleep in. Behavioral economics would say that Augi
used System 2 of her brain to formulate her workout plan, but then gave in to System 1 when she chose to sleep in.
In the past, Canada has agreed to set an upper limit on the total amount of softwood lumber sold to the United States. This is an example of a(n)
voluntary export restriction.
The World Trade Organization
was established to oversee trade agreements between its member nations.
Which of the following is an example of a land-intensive good?
wool
