ECON 2100 Test 3 Practice Questions (Ch. 17, 18, 19, 20, & 21)

A society consists of three individuals: Arthur, Billie, and Chris. In terms of income and utility, Arthur is currently best-off, Billie ranks in the middle, and Chris is worst-off. Which of the following statements is correct? a. Utilitarianism suggests that government policies should strive to maximize the sum of all three individuals' utility. b. Liberalism suggests that government policies should strive to maximize the sum of Billie's utility and Chris's utility. c. Libertarianism suggests that government policies should strive to maximize Chris's utility. d. Mobilism suggests that the government policies should strive to make Billie better off than Arthur.

A

A utilitarian government will pursue policies that redistribute income from the rich to the poor. One problem with these policies is that a. everyone has less incentive to work hard. b. the rich will work harder while the poor will not. c. the poor will work harder while the rich will not. d. everyone in the middle class ends up worse off

A

Competitive firms that maximize profits will hire workers until the value of the marginal product of labor a. equals the wage. b. equals the price of the final good. c. begins to fall. d. begins to rise

A

Raising total utility is the prime objective of which political philosophy? a. utilitarianism b. liberalism c. libertarianism d. None of the above is correct

A

Refer to Figure 17-1. The dominant strategy for ABC is to a. produce high output, and the dominant strategy for XYZ is to produce high output. b. produce high output, and the dominant strategy for XYZ is to produce low output. c. produce low output, and the dominant strategy for XYZ is to produce high output. d. produce low output, and the dominant strategy for XYZ is to produce low output.

A

Refer to Figure 18-4. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If bakeries adopt new labor-augmenting technologies, what happens in the market for bakers? a. Demand increases from D1 to D2. b. Demand decreases from D2 to D1. c. Supply increases from S1 to S2. d. Supply decreases from S2 to S1.

A

Refer to Figure 18-4. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the price of breakfast pastries rises, what happens in the market for bakers? a. Demand increases from D1 to D2. b. Demand decreases from D2 to D1. c. Supply increases from S1 to S2. d. Supply decreases from S2 to S1.

A

Refer to Figure 18-4. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the supply of commercial-grade ovens in which the bakers bake their breads and pastries increases, what happens in the market for bakers? a. Demand increases from D1 to D2. b. Demand decreases from D2 to D1. c. Supply increases from S1 to S2. d. Supply decreases from S2 to S1.

A

Refer to Scenario 19-4. If consumers do not discriminate between bald barbers and barbers with hair, then a. competitive pressure in the market for haircuts will eventually cause the equilibrium wage in both markets to be identical. b. the equilibrium wage in the "bald" market will eventually fall. c. the equilibrium wage in the "hairy" market will eventually rise. d. wages in the market for barbers can never be in equilibrium.

A

Refer to Table 17-13. When this game reaches a Nash equilibrium, annual profit will grow by a. $1.5 million for HomeMax and by $1.0 million for Lopes. b. $3.4 million for HomeMax and by $0.4 million for Lopes. c. $0.6 million for HomeMax and by $3.2 million for Lopes. d. $2.5 million for HomeMax and by $2.0 million for Lopes

A

Suppose that a company hires recent college graduates for two types of jobs, sales people and credit analysts. The hours worked and skill levels are the same for both positions. The sales people get to travel to several desirable locations, whereas the credit analysts do not leave the home office. When comparing the salaries of the two positions, it is likely that the company pays the a. sales people less as a compensating differential. b. credit analysts less as a compensating differential. c. same salary for both positions because they require the same skill level. d. same salary for both positions because it would be illegal to do otherwise

A

The basic tools of supply and demand apply to a. both markets for goods and services and markets for labor services. b. markets for goods and services but not to markets for labor services. c. markets for goods and services but not to markets for factors of production. d. all markets except those in which demand is derived demand.

A

The goal of utilitarians is to a. apply the logic of individual decision making to questions concerning morality and public policy. b. measure happiness and satisfaction. c. redistribute income based on the assumption of increasing marginal utility. d. All of the above are correct.

A

Which of the following explains the "beauty premium" differences in wages? a. People who spend time on their personal appearance may send a signal that they are more productive workers. b. Personal appearance and intelligence are inversely related. c. The "superstar phenomenon" explains the "beauty premium." d. Better-looking people are more efficient; thus, they are paid an efficiency wage.

A

Which of the following statements is characteristic of utilitarianism? a. An extra dollar of income provides higher marginal utility to a poor person than to a rich person. b. Social policies should be created behind a "veil of ignorance." c. Society should strive to maximize the utility of its wealthiest member. d. Equality of opportunity is more important than equality of incomes

A

"The government should choose policies to maximize the total utility of society." This statement is most closely associated with which political philosophy? a. liberalism b. utilitarianism c. libertarianism d. welfarism

B

A competitive firm sells its output for $30 per unit. 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 a. $120. b. $480. c. $600. d. $2,400.`

B

A difference in wages that reflects differences in the nonpay features of two jobs is called a. a compensating differential. b. a wage adjustment. c. an efficiency wage. d. a minimum wage.

B

According to a utilitarian, total social utility will be maximized when marginal dollars are distributed to the people with the a. lowest marginal utility of income. b. highest marginal utility of income. c. highest total utility from their income. d. most productive labor resources.

B

Diminishing marginal product occurs when a. the marginal product of an input increases as the quantity of the input increases. b. the marginal product of an input decreases as the quantity of the input increases. c. total output increases as the quantity of an input increases. d. total output decreases as the quantity of an input increases

B

For a competitive, profit-maximizing firm, the labor demand curve is the same as the a. marginal cost curve. b. value of marginal product curve. c. production function. d. profit function

B

Human capital is a. an important determinant of wages, but it does not affect the production of goods and services. b. an important determinant of wages, and it affects the production of goods and services. c. a specific type of physical capital made by humans rather than machines. d. very different from physical capital in that physical capital represents an investment, while human capital does not represent an investment.

B

If employers are profit-maximizers, then a. competition will always eventually eliminate employment discrimination. b. employment discrimination may persist if consumers discriminate. c. employment discrimination will persist because it is always profitable. d. compensating differentials cannot exist.

B

If there is systematic discrimination against a group of workers, then the wage paid to those workers likely will be a. lower due to a higher supply of workers in that group. b. lower due to a lower demand for workers in that group. c. higher due to a lower supply of workers in that group. d. higher due to a higher demand for workers in that group.

B

In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has "leaky buckets" at its disposal, a. the costs of welfare programs will exceed the benefits. b. it should not try to reach complete equality in income. c. income equality will be the best policy option. d. equality of economic opportunity will reduce society's utility

B

Refer to Figure 18-4. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If bakeries adopt new labor-saving technologies, what happens in the market for bakers? a. Demand increases from D1 to D2. b. Demand decreases from D2 to D1. c. Supply increases from S1 to S2. d. Supply decreases from S2 to S1.

B

Refer to Figure 18-4. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the price of breakfast pastries falls, what happens in the market for bakers? a. Demand increases from D1 to D2. b. Demand decreases from D2 to D1. c. Supply increases from S1 to S2. d. Supply decreases from S2 to S1.

B

Refer to Figure 18-4. The graph above illustrates the market for bakers who make homemade breads and breakfast pastries. If the supply of commercial-grade ovens in which the bakers bake their breads and pastries decreases, what happens in the market for bakers? a. Demand increases from D1 to D2. b. Demand decreases from D2 to D1. c. Supply increases from S1 to S2. d. Supply decreases from S2 to S1.

B

Refer to Scenario 19-4. If some consumers in the market for haircuts have a strong preference for having their hair cut by a barber who is not going bald, then a. the difference in wages will eventually disappear since a haircut is a homogeneous good. b. barbershops that hire barbers with hair will be able to charge a higher price for a haircut to those consumers who have a strong preference for barbers with hair. c. barbershops that hire barbers with hair will always be much more profitable. d. barbershops that hire bald barbers will always be much more profitable

B

Refer to Scenario 19-5. Why might an economist be skeptical of Billy's discrimination complaint? a. Through antitrust laws, discriminating firms can be penalized with large fees. b. In a competitive market, employers pay employees based on their value to the firm. c. Discrimination leads to profit maximization. d. Only cost minimizers practice discrimination

B

Refer to Table 17-11. When this game reaches a Nash equilibrium, profits for Firm A and Firm B will be a. $-5 and $-50, respectively. b. $-10 and $-10, respectively. c. $-20 and $-15, respectively. d. $-50 and $-5, respectively.

B

Refer to Table 17-12. If both countries follow a dominant strategy, the value of trade flow benefits for Farland will be a. $5 b. b. $75 b. c. $275 b. d. $285 b.

B

Refer to Table 17-12. If both countries follow a dominant strategy, the value of trade flow benefits for the United States will be a. $35 b. b. $65 b. c. $130 b. d. $140 b.

B

Refer to Table 17-12. When this game reaches a Nash equilibrium, the value of trade flow benefits will be a. United States $35 b and Farland $285 b. b. United States $65 b and Farland $75 b. c. United States $140 b and Farland $5 b. d. United States $130 b and Farland $275 b

B

Refer to Table 17-13. If both stores follow a dominant strategy, HomeMax's annual profit will grow by a. $0.6 million. b. $1.5 million. c. $2.5 million. d. $3.4 million.

B

Refer to Table 17-13. If both stores follow a dominant strategy, Lopes's annual profit will grow by a. $0.4 million. b. $1.0 million. c. $2.0 million. d. $3.2 million.

B

Refer to Table 17-13. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimize growth related profit. They should both agree to a. increase their store and parking lot sizes. b. refrain from increasing their store and parking lot sizes. c. be more competitive in capturing market share. d. share the context of their conversation with the Federal Trade Commission.

B

Rosie's Flower Shop sells floral arrangements for $20 each. If Rosie hires 10 workers, she can sell 600 arrangements per week. If she hires 11 workers, she can sell 650 arrangements per week. Rosie pays each of her workers $400 per week. Which of the following is correct? a. For the 11th worker, the marginal profit is $1,000. b. For the 11th worker, the marginal revenue product is $1,000. c. The firm is maximizing its profit. d. If the firm is employing 11 workers, then its profit would increase if it cut back to 10 workers.

B

The "superstar" phenomenon can apply to which of these jobs? a. high-school teacher b. anchorperson for a national news program c. heart surgeon d. carpenter.

B

The concept of utility is fundamental to utilitarianism and describes the a. optimal distribution of wealth in society. b. level of satisfaction derived from a person's circumstances. c. method by which society chooses to allocate resources. d. method whereby wealth is stored.

B

The founders of utilitarianism include a. A. C. Pigou and John Maynard Keynes. b. Jeremy Bentham and John Stuart Mill. c. Augustin Cournot and Jean B. Say. d. A. Kondratieff and Thomas Malthus

B

The marginal product of labor is defined as the change in a. output per additional unit of revenue. b. output per additional unit of labor. c. revenue per additional unit of labor. d. revenue per additional unit of output.

B

To maximize profit, a competitive firm hires workers up to the point of intersection of the a. marginal product curve and the wage line. b. value of marginal product curve and the wage line. c. value of marginal product curve and the marginal revenue curve. d. total revenue curve and the wage line

B

Utilitarians believe a. that the government should choose just policies as evaluated by an impartial observer behind a "veil of ignorance." b. in the assumption of diminishing marginal utility. c. that everyone in society should have equal utility. d. that the government should not redistribute income

B

Whether or not policymakers should try to make our society more egalitarian is largely a matter of a. economic efficiency. b. political philosophy. c. egalitarian principles. d. enhanced opportunity

B

Which of the following is not an example of a factor of production? a. labor b. interest c. land d. capital

B

A utilitarian government must a. calculate the utility of each individual in society. b. avoid enacting any policies that redistribute income from the rich to the poor. c. balance the gains from greater equality against the losses from distorted incentives. d. pursue policies that do not affect the middle class.

C

According to the human-capital view, education a. has no effect on lifetime earnings. b. alters work ethic. c. enhances productivity. d. is an indicator of natural ability

C

According to utilitarians, the ultimate objective of public actions should be to a. enhance the income of the rich. b. ensure an egalitarian distribution of income. c. maximize the sum of individual utility. d. provide for the betterment of the poor.

C

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 a. differentiated demand. b. secondary demand. c. derived demand. d. hybrid demand-supply.

C

Refer to Table 17-12. This particular game a. features a dominant strategy for the U.S. b. features a dominant strategy for Farland. c. is a version of the prisoners' dilemma game. d. All of the above are correct.

D

Cartels are difficult to maintain because a. antitrust laws are difficult to enforce. b. cartel agreements are conducive to monopoly outcomes. c. there is always tension between cooperation and self-interest in a cartel. d. firms pay little attention to the decisions made by other firms.

C

Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profitmaximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $10. The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired? a. $5 b. $10 c. $20 d. There is insufficient information to answer this question.

C

Refer to Figure 17-1. Which of the following statements is correct? a. ABC can potentially earn its highest possible profit if it produces a high level of output, and for that reason it is a dominant strategy for ABC to produce a high level of output. b. The highest possible combined profit for the two firms occurs when both produce a low level of output, and for that reason producing a low level of output is a dominant strategy for both firms. c. Regardless of the strategy pursued by ABC, XYZ's best strategy is to produce a high level of output, and for that reason producing a high level of output is a dominant strategy for XYZ. d. Our knowledge of game theory suggests that the most likely outcome of the game, if it is played only once, is for one firm to produce a low level of output and for the other firm to produce a high level of output

C

Refer to Scenario 19-4. Competition in the market for haircuts is consistent with which of the following statements? a. Firms hiring nonbald barbers will have a cost advantage, leading to an increase in the demand for nonbald barbers. b. All firms that hire only bald barbers will go out of business. c. Firms hiring bald barbers will enter the market, increasing the demand for bald barbers. d. Firms hiring nonbald barbers will enter the market, increasing the demand for nonbald barbers.

C

Refer to Table 17-11. If both firms follow a dominant strategy, Firm A's profits (losses) will be a. $-50 b. $-20 c. $-10 d. $-5

C

Refer to Table 17-11. If both firms follow a dominant strategy, Firm B's profits (losses) will be a. $-50 b. $-15 c. $-10 d. $-5

C

Refer to Table 17-12. Pursuing its own best interests, Farland will impose trade sanctions against U.S. firms a. only if the U.S. does not renew MFN status with Farland. b. only if the U.S. renews MFN status with Farland. c. regardless of whether the U.S. renews MFN status with Farland. d. None of the above is correct. In pursuing its own best interests, Farland will in no case impose trade sanctions against U.S. firms.

C

Refer to Table 17-13. Increasing the size of its store and parking lot is a dominant strategy for a. Lopes, but not for HomeMax. b. HomeMax, but not for Lopes. c. both stores. d. neither store.

C

Refer to Table 17-13. Pursuing its own best interest, HomeMax will a. increase the size of its store and parking lot only if Lopes also increases the size of its store and parking lot. b. increase the size of its store and parking lot only if Lopes does not increase the size of its store and parking lot. c. increase the size of its store and parking lot regardless of the decision made by Lopes. d. not increase the size of its store and parking lot regardless of the decision made by Lopes.

C

Refer to Table 17-13. Pursuing its own best interest, Lopes will a. increase the size of its store and parking lot only if HomeMax also increases the size of its store and parking lot. b. increase the size of its store and parking lot only if HomeMax does not increase the size of its store and parking lot. c. increase the size of its store and parking lot regardless of the decision made by HomeMax. d. not increase the size of its store and parking lot regardless of the decision made by HomeMax.

C

Suppose a market is initially perfectly competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect a. an increase in market output and an increase in the price of the product. b. an increase in market output and an decrease in the price of the product. c. a decrease in market output and an increase in the price of the product. d. a decrease in market output and a decrease in the price of the product

C

The negative slope of the value of marginal product curve is most easily explained by a. tight labor markets. b. a surplus of workers. c. diminishing marginal product. d. diminishing marginal cost.

C

The utilitarian case for redistributing income is based on the assumption of a. collective consensus. b. a notion of fairness engendered by equality. c. diminishing marginal utility. d. rising marginal utility.

C

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market, we have a. a cartel. b. a group of oligopolists behaving as a monopoly. c. a Nash equilibrium. d. the perfectly competitive outcome

C

Which of the following events could decrease the demand for labor? a. An increase in the number of migrant workers b. An increase in the marginal productivity of workers c. A decrease in demand for the final product produced by labor d. A decrease in the supply of labor

C

Which of the following events could increase the demand for labor? a. A decrease in output price b. A decrease in the amount of capital available for workers to use c. An increase in the marginal productivity of workers d. A decrease in the wage paid to workers

C

Which of the following is an example of a factor of production? a. rent b. interest c. land d. Social Security payments

C

Which of the following will not occur when government policies are enacted to make the distribution of income more equitable? a. People will alter their behaviors. b. Incentives will be distorted. c. Total utility will likely remain constant. d. The allocation of resources will be less efficient

C

A signaling theory of education suggests that educational attainment a. is a signal of high marginal productivity. b. is correlated with natural ability. c. increases the productivity of low-ability workers. d. Both a and b are correct.

D

A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives. To maximize total utility, therefore, the government a. would never tax labor income. b. must always achieve a fully egalitarian society. c. enacts policies that only benefit the middle class. d. stops short of a fully egalitarian society

D

Diminishing marginal product is closely related to a. diminishing total cost. b. diminishing marginal cost. c. increasing price. d. increasing marginal cost.

D

Games that are played more than once generally a. lead to outcomes dominated purely by self-interest. b. lead to outcomes that do not reflect joint rationality. c. encourage cheating on cartel production quotas. d. make collusive arrangements easier to enforce.

D

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's a. profit. b. total cost. c. total revenue. d. All of the above are correct.

D

In the prisoners' dilemma game with Bonnie and Clyde as the players, the likely outcome is a. a very good outcome for both players. b. a very good outcome for Bonnie, but a bad outcome for Clyde. c. a very good outcome for Clyde, but a bad outcome for Bonnie. d. a bad outcome for both players.

D

Other things the same, in which case is the quantity produced the highest? a. There is one firm. b. There are two firms that successfully collude. c. There are two firms in Nash equilibrium. d. There are a very large number of firms.

D

Refer to Figure 17-1. If this game is played only once, then the most likely outcome is that a. both firms produce a low level of output. b. ABC produces a low level of output and XYZ produces a high level of output. c. ABC produces a high level of output and XYZ produces a low level of output. d. both firms produce a high level of output

D

Refer to Scenario 19-4. If consumers do not discriminate between bald barbers and barbers with hair, then a. all barbershops now earn a normal economic profit. b. competition will ensure the difference in wages will persist. c. barbershops that hire barbers with hair will be more profitable than those that don't. d. barbershops that hire bald barbers will be more profitable than those that don't.

D

Refer to Scenario 19-5. In a competitive market for piano movers, why might Billy's wage differential persist? a. Billy works harder than the other employees. b. Billy joins a labor union. c. Billy's amiable personality allows him to work well with his co-workers. d. Customers do not like Billy because he has a bad attitude.

D

Refer to Scenario 19-5. Which of the following statements would weaken Billy's case against his employer? a. Billy only works part-time; as a result, he has fewer hours of experience even though he has been with the company for more years. b. Billy complains of lower back problems; as a result, he frequently gets the easy job of holding the doors open while the movers carry the piano into the customer's house. c. The other employees have high school diplomas, but Billy did not graduate from high school. d. All of the above statements would weaken Billy's case.

D

Refer to Table 17-11. Pursuing its own best interests, Firm A will concede that cigarette smoke causes lung cancer a. only if Firm B concedes that cigarette smoke causes lung cancer. b. only if Firm B does not concede that cigarette smoke causes lung cancer. c. regardless of whether Firm B concedes that cigarette smoke causes lung cancer. d. None of the above. In pursuing its own best interests, Firm A will in no case concede that cigarette smoke causes lung cancer.

D

Refer to Table 17-11. Pursuing its own best interests, Firm B will concede that cigarette smoke causes lung cancer a. only if Firm A concedes that cigarette smoke causes lung cancer. b. only if Firm A does not concede that cigarette smoke causes lung cancer. c. regardless of whether Firm A concedes that cigarette smoke causes lung cancer. d. None of the above; in pursuing its own best interests, Firm B will in no case concede that cigarette smoke causes lung cancer.

D

Refer to Table 17-12. Assume that trade negotiators meet to discuss trade policy between the United States and Farland. If neither party to the negotiation is able to trust the other party, then a. each should assume that the other will choose a strategy that optimizes total value of the trade relationship. b. the Nash equilibrium will provide the largest possible gains to each party. c. Farland negotiators should assume that United States negotiators will implement a policy that is in the mutual best interest of both countries. d. each should follow its dominant strategy

D

Refer to Table 17-12. If trade negotiators are able to communicate effectively about the consequences of various trade policies (i.e., enter into an agreement about the policy they should adopt), then we would expect the countries to agree to which outcome? a. United States $35 b and Farland $285 b b. United States $65 b and Farland $75 b c. United States $140 b and Farland $5 b d. United States $130 b and Farland $275 b

D

Refer to Table 17-12. Pursuing its own best interests, the U.S. will renew MFN status with Farland a. only if Farland does not impose trade sanctions against U.S. firms. b. only if Farland imposes trade sanctions against U.S. firms. c. regardless of whether Farland imposes trade sanctions against U.S. firms. d. None of the above is correct. In pursuing its own best interests, the United States will in no case renew MFN status with Farland.

D

Refer to Table 17-13. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimize growth related profit. If they both agree to cooperate on a strategy that maximizes their joint profits, annual profit will grow by a. $1.0 million for Lopes and by $1.5 million for HomeMax. b. $0.4 million for Lopes and by $3.4 million for HomeMax. c. $3.2 million for Lopes and by $0.6 million for HomeMax. d. $2.0 million for Lopes and by $2.5 million for HomeMax.

D

Sally runs a hair styling salon. Sally is a profit-maximizing owner whose firm operates in a competitive market. The marginal cost of a haircut is $11. What is the maximum wage that Sally will pay her stylists? a. less than $11 per haircut b. $11 per haircut c. more than $11 haircut d. There is insufficient information to answer this question.

D

Suppose a society consists of only two people, John and Jane. A utilitarian would say that the proper role of government in this society is to a. equalize the incomes of John and Jane. b. equalize John's utility and Jane's utility. c. equalize John's marginal utility and Jane's marginal utility. d. maximize the sum of John's utility and Jane's utility.

D

The English philosophers Jeremy Bentham and John Stuart Mill founded the school of thought called a. liberalism. b. libertarianism. c. mobilism. d. utilitarianism.

D

The goal of utilitarians is to a. punish crimes and enforce voluntary agreements but not to redistribute income. b. redistribute income until each person has equal earnings. c. redistribute income until the marginal utility of the wealthiest person equals the total utility of the poorest person. d. redistribute income based on the assumption of diminishing marginal utility.

D

Utilitarianism is a. a liberal religion that focuses on individual rights. b. a political philosophy that believes the government should choose policies deemed to be just by an impartial observer. c. a political philosophy that believes the government should not redistribute income. d. a political philosophy that believes the government should choose policies to maximize the total utility of society.

D

When incentives to earn income are distorted by income redistribution programs, a. losses can exceed potential gains from greater equality of income. b. total income in an economy can fall. c. total utility in society can fall. d. All of the above are correct.

D

When the government taxes income as part of a redistribution program, a. the poor pay higher taxes. b. the rich always benefit more than the poor. c. the poor are encouraged to work. d. incentives to earn income are diminished.

D

When we focus on the firm as a supplier of a good or a service, we assume that the firm is a profit maximizer. When we focus on the firm as a demander of labor, we assume that the firm's objective is to a. minimize wages. b. minimize variable costs. c. maximize the number of workers hired. d. maximize profit.

D

Which of the following can be used to help explain wage differences among different groups of workers? a. human capital b. discrimination c. unions d. All of the above could explain wage differences among groups.

D

Which of the following can be used to help explain wage differences among different groups of workers? a. human capital acquired through education b. human capital acquired through job experience c. compensating differentials d. All of the above can explain wage differences

D

Which of the following helps to explain the differences in earnings in the United States? a. ability, effort, and chance b. compensating differentials c. physical attractiveness d. All of the above are correct.

D

Which of the following is an example of human capital? a. Machines built by people. b. Formal education acquired in schools. c. On-the-job training. d. Both b and c are correct.

D

Which political philosophy believes that the government should equalize the incomes of all members of society? a. Utilitarianism. b. Liberalism. c. Libertarianism. d. None of the above is correct

D

Why is a plumber never likely to be as rich as a movie star? a. Compensating differentials create a higher wage in the movie business. b. There haven't been any significant technological advances in the plumbing industry. c. Productivity levels are low in the plumbing industry due to low worker morale. d. A plumber can provide his services to only a limited number of customers.

D