ECN Final Exam

If an industry had a Herfindahl-Hirschman Index of 10,000, how many firms are in the industry? A. 1 B. 10 C. 1,000 D. 10,000

A. 1

Which group has the highest poverty rate from among these groups? A. Children under age 18 B. Persons over age 65 C. White males D. Members of working-class families

A. Children under age 18

Specific business practices such as price discrimination are prohibited by the A. Clayton Act of 1914. B. Sherman Act of 1890. C. Federal Trade Commission Act of 1914.

A. Clayton Act of 1914.

Which of the following statements is FALSE? A. In general, the deregulation of the airlines and interstate trucking industries led to higher costs and higher prices. B. Since the early 1980s the size of companies acquired in mergers has been getting larger. C. The rule of reason is partially in force today as firms are subject to prosecution if they control 60 percent of the relevant market and have behaved badly toward their competitors. D. When two firms in the same industry form one larger company it is called a horizontal merger.

A. In general, the deregulation of the airlines and interstate trucking industries led to higher costs and higher prices.

The largest firm in Industry J has a 90 percent market share, while the remaining ten firms each has a one percent share. The largest firm in industry K has a 80 percent market share, while the other two firms each has a 10 percent share. Which of the following statements is true? A. Industry J has a higher concentration ratio than industry K. B. Industry K has a higher concentration ratio than industry J. C. The industries have the same concentration ratio. D. None of these is true.

A. Industry J has a higher concentration ratio than industry K.

Which of the following statements is FALSE? A. Most poor women who get pregnant do so to get on welfare. B. Most long-term poor people are black. C. The causes of black poverty are not always the same as those of white poverty. D. None of these is false.

A. Most poor women who get pregnant do so to get on welfare.

Which of the following statements is false? A. Oligopolies are illegal in most states. B. Most oligopolies engage in outright collusion. C. Ford Motor Company is an oligopoly. D. None of these is false.

A. Oligopolies are illegal in most states.

Which of the following statements is true? A. There are at least a dozen different theories of poverty. B. The liberals and conservatives are in basic agreement about the causes of poverty. C. The liberals and conservatives are in basic agreement about how to solve the poverty problem. D. None of these is true.

A. There are at least a dozen different theories of poverty.

Which of the following statements is true? A. There is no one single cause of homelessness. B. Most of the homeless have jobs. C. There are fewer Americans homeless than ten years ago. D. People are homeless because they want to be.

A. There is no one single cause of homelessness.

A merger of a firm and its supplier is called A. a vertical merger. B. a horizontal merger. C. a conglomerate merger. D. a direct merger.

A. a vertical merger.

A merger between Hertz Rent-a-Car and Budget Rent-a Car would be a _____ merger. A. horizontal B. vertical C. conglomerate D. diversifying

A. horizontal

The conventional merger is the _____ merger. A. horizontal B. vertical C. conglomerate D. diversifying

A. horizontal

A firm's demand for labor is A. its MRP schedule. B. determined by the going wage rate. C. shaped mainly by the supply of labor.

A. its MRP schedule.

The view that many welfare mothers have baby after baby to keep their welfare checks rising is a view held by A. many conservatives. B. many liberals. C. both many liberals and conservatives. D. neither many liberals nor many conservatives.

A. many conservatives.

A firm will hire a unit of input only if its A. marginal physical product and marginal revenue product are positive. B. marginal physical product and marginal revenue product are negative. C. marginal physical product is positive and whose marginal revenue product is negative. D. marginal physical product is negative and whose marginal revenue product is positive.

A. marginal physical product and marginal revenue product are positive.

The rich receive _____ all property income. A. nearly B. about one-half of C. about one-quarter of D. a very small percentage of

A. nearly

In order for real wages to grow A. productivity must grow. B. productivity must fall. C. money wages must grow. D. money wages must fall.

A. productivity must grow.

An addition of a complementary resource would _____ the marginal revenue product of any given resource. A. raise B. lower C. have no effect upon

A. raise

If the minimum wage were abolished, the employment of unskilled and inexperienced workers would A. rise. B. fall. C. stay the same.

A. rise.

A firm will operate up to the point where A. the MRPs of all resources equal the prices of the resources. B. the MRPs of all resources equal their TRPs. C. the MPPs curves stop rising. D. None of these is true.

A. the MRPs of all resources equal the prices of the resources.

As wage rates rise to extremely high levels A. the income effect becomes stronger than the substitution effect. B. the substitution effect becomes stronger than the income effect. C. both the income effect and substitution effect become stronger. D. both the income effect and substitution effect become weaker.

A. the income effect becomes stronger than the substitution effect.

The demand curve facing an oligopoly will be less elastic A. the larger its share of the market and the more differentiated the product. B. the smaller its share of the market and the more differentiated the product. C. the larger its share of the market and the less differentiated the product. D. the smaller its share of the market and the less differentiated the product.

A. the larger its share of the market and the more differentiated the product.

The era of the trust was A. the late 19th century. B. during the roaring 20s. C. during the Great Depression. D. during World War II.

A. the late 19th century.

The two axes on the Lorenz curve graph of income distribution are A. the percent of households and the percent of income. B. the percent of households and the percent of poverty. C. the number of households and the percent of income below median. D. the number of households and the number of households below poverty.

A. the percent of households and the percent of income

If a large increase in the wage rate leads to a net increase in the use of capital by a firm, then A. the substitution effect outweighed the output effect. B. the output effect outweighed the substitution effect. C. the substitution and output effects are equal. D. There is no way to estimate the relative size of the substitution and output effect.

A. the substitution effect outweighed the output effect.

A family of four with one wage earner who earns the minimum hourly wage would be A. well below the poverty line. B. slightly below the poverty line. C. slightly above the poverty line. D. well above the poverty line.

A. well below the poverty line.

About one-half of the world's population subsists on no more than _____ a day. A. $1.00 B. $2.50 C. $5.00 D. $7.50

B. $2.50

Today a college graduate earns about $__________ a week while a high school graduate earns about $__________. A. 1,450; 500 B. 1,200; 700 C. 700; 500 D. 1,450; 1,200

B. 1,200; 700

Which of the following statements is true? A. A change in derived demand brings about a change in final demand. B. A change in final demand brings about a change in derived demand. C. A rise in final demand is associated with a decline in derived demand. D. None of these is true.

B. A change in final demand brings about a change in derived demand.

_____ is legal and not frowned upon in the U.S. A. Covert collusion B. Cutthroat competition C. Forming a cartel D. None of these is true.

B. Cutthroat competition

Which of the following statements is true? A. Employment discrimination plays virtually no role in determining the distribution of income. B. Training, education, and intelligence play a very large role in determining the distribution of income. C. In our society, it's basically who you know, rather than what you know that determines the distribution of income. D. None of these is true.

B. Training, education, and intelligence play a very large role in determining the distribution of income.

That an increasing number of jobs that do not pay enough to subsist on is _____ theory of poverty. A. a conservative B. a liberal C. both a liberal and a conservative D. neither a liberal nor a conservative

B. a liberal

Even with the big three textbook publishers (McGraw-Hill, Pearson, and Cengage) having a large market share, the textbook industry is still considered _____ because of the high level of competition that exists. A. a cartel B. a model of cutthroat competition C. an example of open collusion D. a price leadership model

B. a model of cutthroat competition

A low concentration ratio would most likely indicate that the industry resembles the behavior of A. a cartel. B. a monopolistic competitor. C. a monopoly. D. an oligopoly.

B. a monopolistic competitor.

The ________ supports the contention that there are non-competing groups in the labor market A. living wage B. dual labor market theory C. backward-bending labor supply curve D. marginal revenue product

B. dual labor market theory

If the prices of cars doubled, the MRP schedule for autoworkers would A. rise. B. fall. C. not be impacted.

B. fall.

The Lorenz curve shows the distribution of A. wealth. B. income. C. poverty. D. jobs.

B. income.

The additional output that one additional input of labor is responsible for is its A. marginal revenue product. B. marginal physical product. C. average revenue product. D. average physical product.

B. marginal physical product.

Demand for a factor can shift for all of the following reasons EXCEPT for a change in A. demand for the final product. B. the factor's price. C. the price of other factors. D. technology.

B. the factor's price.

At least in the short run, each of these factors has increased competition EXCEPT A. the entry of foreign firms. B. the growth in size of many American firms. C. the rise of the service industries. D. the rise of new industries.

B. the growth in size of many American firms.

The greater the barriers to entry into an industry are A. the more elastic will be the demand curves for existing firms. B. the more likely that existing firms will enjoy large profits in the long run. C. the lower will be short-run profits. D. the lower will be the average cost curves of existing firms.

B. the more likely that existing firms will enjoy large profits in the long run.

Workers in one country are more productive than workers in another country because A. they have fewer complementary factors to work with. B. they have more complementary factors to work with. C. they are better motivated and paid.

B. they have more complementary factors to work with.

Which of the following statements is true? A. The lower incomes that women earn relative to those earned by men is explained entirely by employment discrimination. B. Although there are many theories of poverty, few have any validity. C. Much of black poverty is caused by black male joblessness. D. None of these is true.

C. Much of black poverty is caused by black male joblessness.

Which of the following statements is true? A. Most oligopolies in the U.S. take the form of a cartel. B. Covert collusion has probably never taken place among American oligopolists. C. The cartel and the cutthroat competitor are on opposite ends of the competitive spectrum. D. None of these is true.

C. The cartel and the cutthroat competitor are on opposite ends of the competitive spectrum.

A conglomerate merger takes place when A. a firm acquires a competitor. similar firms agree to compete. B. a firm integrates its production backward toward its source of supply or forward in its marketing chain. C. a firm buys another firm unrelated to the original firm's business.

C. a firm buys another firm unrelated to the original firm's business.

The supply curve of labor for any particular occupation is upward sloping because A. higher wages usually imply higher education and training requirements for the job. B. all supply curves are upward sloping. C. a higher wage is necessary to attract more people into that occupation from other occupations. D. working conditions are more important than wages in a person's choice of occupation.

C. a higher wage is necessary to attract more people into that occupation from other occupations.

The conservative theory of poverty blames _____ for welfare dependency. A. the poor B. the government C. both the poor and the government D. neither the poor nor the government

C. both the poor and the government

The demand for goods and services is called _____ demand, while the demand for resources is called _____ demand. A. derived; derived B. final; final C. final; derived D. derive; final

C. final; derived

The minimum wage is a price _____, which tends to _____ the employment of unskilled workers A. ceiling; decrease B. ceiling; increase C. floor; decrease D. floor; increase

C. floor; decrease

Oligopoly is characterized by A. identical products only. B. differentiated products only. C. high barriers to entry. D. many firms.

C. high barriers to entry.

The demand for labor is A. determined by the wage rate. B. determined by the supply of labor. C. its marginal revenue product schedule. D. higher at lower wage rates.

C. its marginal revenue product schedule.

If getting people off welfare could be described as a carrot-and-stick approach, it would be fair to say that A. liberals and conservatives both favor the stick. B. liberals and conservatives both favor the carrot. C. liberals favor the carrot and conservatives favor the stick. D. liberals favor the stick and conservatives favor the carrot.

C. liberals favor the carrot and conservatives favor the stick.

The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is A. monopoly. B. perfect competition. C. oligopoly. D. monopolistic competition.

C. oligopoly.

The Clayton Act of 1914 A. outlawed all mergers. B. abolished the Sherman Act of 1890. C. outlawed specific business practices that discouraged competition. D. reduced the federal government's antitrust authority.

C. outlawed specific business practices that discouraged competition.

The Sherman Act of 1890 A. exempted labor unions from antitrust prosecution. B. included stringent enforcement provisions. C. outlawed unfair business practices to exclude rivals from selling in markets. D. outlawed all monopolies.

C. outlawed unfair business practices to exclude rivals from selling in markets.

A rise in the wage rate would lead to a movement A. down the MRP curve and a rise in the number of workers hired. B. down the MRP curve and a decline in the number of workers hired. C. up the MRP curve and a decline in the number of workers hired. D. up the MRP curve and a rise in the number of workers hired.

C. up the MRP curve and a decline in the number of workers hired.

If there is an increase in the nominal money wage, the real wage A. will also rise. B. will also rise, unless the consumer price index rises. C. will also rise, unless the consumer price index rises as fast as or faster than the money wage. D. None of these is true.

C. will also rise, unless the consumer price index rises as fast as or faster than the money wage.

Real wages have fallen in the U.S. since 1973 for which of the following reasons? A. Productivity growth slowed down during this period. B. American factories were closing left and right as our relatively high-paying manufacturing jobs went to other countries. C. The decline in the percentage of better-paid, unionized workers in the U.S. D. All of these are true.

D. All of these are true.

Which company bilked its stockholders and allowed their employees' pension funds to be wiped out? A. Arthur Andersen B. HealthSouth C. Adelphia D. Enron

D. Enron

Which of the following is an example of an "in-kind" benefit? A. Public assistance payments B. Unemployment insurance benefits C. Social Security benefits D. Food stamps

D. Food stamps

Which of the following statements is FALSE? A. Crime and drugs are central to the ghetto culture. B. Ghetto residents are more likely to be street crime victims than middle-class people. C. A basic way to reduce crime would be to alleviate poverty. D. None of these is false.

D. None of these is false.

Which of the following statements is FALSE? A. The primary labor market includes jobs in the skilled crafts, management, and the professions. B. The dual labor market consists of the primary market and the secondary market. C. The dual labor market theory doesn't account for the huge middle level of occupations—nursing, teaching, social work, and non-college-graduate positions in insurance, banking, and retailing. D. None of these is false.

D. None of these is false.

The official poverty income threshold in the U.S. is A. based on the cost of a budget that includes food, clothing, and shelter. B. never adjusted for the effects of inflation. C. the same for all families independent of the number of people in the family. D. calculated as three times the cost of a minimally acceptable diet for a family.

D. calculated as three times the cost of a minimally acceptable diet for a family.

If labor and capital are substitute resources in production, an increase in the price of capital will A. increase the wage rate and decrease the number of workers hired. B. decrease the wage rate and increase the number of workers hired. C. decrease the wage rate and decrease the number of workers hired. D. increase the wage rate and increase the number of workers hired.

D. increase the wage rate and increase the number of workers hired.

The substitution effect and the output effect work in the A. same direction some of the time. B. same direction all of the time. C. opposite direction some of the time. D. opposite direction all of the time.

D. opposite direction all of the time.

There has been an unmistakable steady trend toward bigness in business since A. the Civil War. B. 1911. C. the mid-1930s. D. the late 1990s

D. the late 1990s

In the ALCOA Case of 1945, the courts held that A. firms that sell more than half of their output overseas are exempt from antitrust legislation. B. retail and wholesale firms are exempt from antitrust legislation. only contracts and combinations that unreasonably restrain trade are C. in violation of the Sherman Act. D. the mere possession of monopoly power is a violation of the antitrust laws.

D. the mere possession of monopoly power is a violation of the antitrust laws.

One company has 90 percent of the market for cola soft drinks. An antitrust action against this company is likely to be defended (by the company) on the grounds that A. there is no substitute for cola soft drinks. B. the market share is not important. C. the relevant market is for cola soft drinks. D. the relevant market is not for cola soft drinks but instead is for all soft drinks.

D. the relevant market is not for cola soft drinks but instead is for all soft drinks.

If Jason were offered a job as an accountant at $30,000 and a job as a running back for the Oakland Raiders at $300,000, and he would have been willing to accept the latter even if it paid as little as $50,000, he will receive economic rent of A. $50,000. B. $220,000. C. $250,000. D. $280,000.

C. $250,000.

________ is a necessary condition for a person to move from the secondary to the primary labor market but is no longer a sufficient condition. A. A graduate degree B. A high school diploma C. A college diploma D. An industry-recognized credential

C. A college diploma

Which of the following statements is FALSE? A. The substitution effect means that as your wage rises, leisure time becomes more expensive. B. The income effect means that as your wage rises, you can afford more leisure time. C. Both of these are true.

C. Both of these are true.

In 2015, the base year, Khodi was earning $400 per week. His wages rose to $550 in 2016, the current year, when the CPI stood at 137.5. What statement can you make about what happened to his real wage over this period? A. It rose. B. It fell. C. It remained the same. D. There is not enough information to determine what happened to Twila's real wage.

C. It remained the same

The optimum resource mix for a firm would occur when A. wage rate / rent = MRP of land / MRP of labor. B. wage rate × rent = MRP of labor × MRP of land. C. MRP of labor / wage rate = MRP of land / rent. D. None of these is true.

C. MRP of labor / wage rate = MRP of land / rent.

Which of the following statements is FALSE? A. According to the theory of the dual labor market, the rich stay rich and the poor stay poor. B. The dual labor market theory does not account for the huge middle level of occupations—such as nursing, teaching, and social work. C. Most poorer people tend to find jobs in the primary labor market, according to the theory of the dual labor market. D. None of these is false.

C. Most poorer people tend to find jobs in the primary labor market, according to the theory of the dual labor market.