Econ 2306 Final: Part III

If the supply of labor in a purely competitive labor market decreases, the labor: A. Supply curve for a single employer will shift downward B. Supply curve for a single employer will shift upward C. Demand curve for a single employer will shift upward D. Demand curve for a single employer will shift downward

b

In 2009, an unattached individual would be defined as living in poverty if his or her income was less than: A. $9,800 B. $10,956 C. $11,654 D. $14,726

b

Other things being equal, the demand for a factor of production will be less elastic if the demand for the final product it produces is: A. Elastic B. Inelastic C. Unitary elastic D. Perfectly elastic

b

Which statement applies to the Social Security system? A. Benefits are paid on the basis of need B. It provides cash assistance and services to families with dependent children C. It is financed by payroll taxes on employees and employers D. Benefit levels vary throughout the nation because the system is administered by the individual states

c

About what percentage of the population in the United States lived in poverty in 2009? A. 14 percent B. 24 percent C. 34 percent D. 44 percent

a

Government programs that pay benefits to those who are unable to earn income because of permanent handicaps or to those who have very low incomes are called: A. Public assistance programs B. Social insurance programs C. Affirmative action programs D. Entitlement programs

a

Which statement is true? A. Monopoly will result in a higher price and a larger output than pure competition B. Monopoly will result in a higher price and a larger output than monopolistic competition C. Pure competition will result in a lower price and a higher output than monopolistic competition D. Monopolistic competition will result in a lower price and a lower output than pure competition

c

Which would result in a decrease in the elasticity of demand for a particular resource? A. A decrease in the rate at which the marginal product of that resource declines B. An increase in the elasticity of demand for the product that the resource helps to produce C. A decrease in the percentage of the firm's total costs accounted for by the resource D. An increase in the substitutability of other resources for the particular resource

c

A Lorenz curve shows: A. The tax and transfer trade-off B. How many households are living in poverty C. Perfect income equality D. The distribution of income

d

A decrease in the supply curve for nurses could be accounted for by all of the following except a(n): A. Increase in the rewards available in other comparable occupations B. Increase in the training required for nurses C. Reduction in the number of nursing schools D. Cut in the wages of nurses

d

An example of a public assistance program, as distinct from a social insurance program, would be: A. Medicare B. Social Security C. Unemployment compensation D. Supplemental Security Income

d

An oligopolistic market is consistent with: A. All firms making economic profits B. A small number of firms in the industry C. The existence of barriers to entry D. All of the above

d

Collusive control over price may permit oligopolists to: A. Use new technology, achieve economies of scale, and get government subsidies B. Achieve economies of scale, reduce costs, and prevent price cheating C. Increase product demand, increase product supply, and lower cost D. Reduce uncertainty, increase profits, and possibly limit entry of new firms

d

Complete income inequality using the Gini ratio would be reflected by a value of: A. 2 B. 3 C. 0 D. 1

d

Government programs that replace earnings lost when people retire or are temporarily unemployed would be considered to be: A. Noncash transfers B. An earned-income tax credit C. Part of public assistance programs D. Part of social insurance programs

d

Government programs, such as Social Security, food stamps, AFDC, SSI, Medicare, and Medicaid, that guarantee particular levels of transfer payments to all who fit the programs' criteria are called: A. Public assistance programs B. Social insurance programs C. Benefit-reduction programs D. Entitlement programs

d

If output is set at the kink of the kinked demand model, then there: A. Is a strong incentive for rivals to decrease prices B. Is a strong incentive for rivals to increase prices C. Is one price at which marginal revenue equals marginal cost D. Are several prices at which marginal revenue equals marginal cost

d

A firm is observed using 15 units of input X when the price of X is $2, and 10 units of X when its price increases to $4. What is the elasticity of demand for input X in this price range? A. 1/2 = .5 B. 3/5 = .6 C. 5/3 = 1.67 D. 2

• Midpoint formual • %changeQ/%changeP • [Q2-Q1/(Q2+Q1)] X [P2+P1/P2-P1]• B

A union representative observed that if the union members' wages were increased by some proportion, the workers would eventually suffer a greater than proportional decline in employment. This statement could best be explained if: A. The new wages are to take effect immediately B. Union labor can easily be replaced with capital C. Union labor is an insignificant portion of the total cost of production D. The demand for the final product the workers produce is relatively inelastic

B • If substitutability for other labor is high than this would describe the elasticity of it

Suppose that Teresa Thomas obtains 12 units of utility from the last dollar of income received by her, while Richard obtains 7 units of utility from the last dollar of his income. Those who: A. Favor an equal distribution of income would advocate redistributing income from Richard to Teresa B. Favor an equal distribution of income would advocate redistributing income from Teresa to Richard C. Favor an equal distribution of income would be content with the distribution of income between Teresa and Richard D. Do not favor an equal distribution of income would argue that any redistribution between Teresa and Richard would increase total utility

a

The average cost curve of labor facing the monopsonist: A. Is the supply curve of labor B. Lies below its supply curve C. Lies above its supply curve D. Is the marginal cost curve of labor

a

The wages of plumbers are likely to increase when: A. Licensing standards for the occupation are increased B. There is an increase in the cost of plumbing supplies C. The length of the training period for plumbers is decreased D. More do-it-yourself home improvement centers open across the nation

a

What will the elasticity of resource demand be if unit wages rise by 8 percent and the number of employed workers falls by 5 percent? A. 0.63 B. 1.61 C. 2.90 D. 4.00

a

When the supply curve of labor is upward sloping, the marginal cost curve of labor facing the monopsonist: A. Lies above the supply curve of labor B. Is the supply curve of labor that it faces C. Lies below and parallel to the supply curve of labor D. Lies above and parallel to the supply curve of labor

a

A major distinction between a monopolistically competitive firm and an oligopolistic firm is that: A. One is a price taker and the other is a price maker B. A recognized interdependence exists between firms in one industry but not in the other C. One always produces differentiated products and the other always produces a homogeneous product D. One necessarily faces a downward-sloping demand curve and the other a horizontal demand curve

b

An example of derived demand is the demand for: A. Housing by consumers B. Machines by businesses C. Paper products by households D. Agricultural products by foreign consumers

b

Suppose that Jane earns $10,000 in year 1 and $100,000 in year 2, while Jim earns $100,000 in year 1 and $10,000 in year 2. Is there income equality for the two individuals? A. The annual data indicate equality, but the two-year data indicate inequality B. The annual data indicate inequality, but the two-year data indicate equality C. Both the annual and the two-year data indicate equality D. Both the annual and the two-year data indicate inequality

b

The necessity to maintain incentives to work and incentives to produce output would be a point made by an individual making the case for: A. Income equality B. Income inequality C. Maximization of total utility D. Maximization of marginal utility

b

The principle underlying the kinked demand curve model of oligopoly is that the demand curve facing one firm is more elastic when other firms in the industry: A. Match the firm's price changes B. Hold price constant when the firm changes its prices C. Hold quantities constant when the firm changes its prices D. Change prices in the opposite direction when the firm changes its prices

b

Under oligopoly, if one firm in an industry significantly increases advertising expenditures in order to capture a greater market share, it is most likely that other firms in that industry will: A. Pursue a strategy to reduce advertising expenditures to maintain profits B. Decide to increase advertising expenditures even if it means a reduction in profits C. Make no changes in advertising expenditures because advertising is effective in the short run, but not the long run D. Increase the price of the product to improve profits and then increase advertising expenditures

b

Which is an example of a change in product demand that increases labor demand? A. Access to computers increases the productivity of mail order businesses, thus increasing the demand for their workers B. Tourism increases in popularity, increasing the demand for workers at tourist resorts C. A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers D. A change in work rules increases output per worker in the auto industry, thus increasing the demand for auto workers

b

Complete income equality using the Gini ratio would be reflected by a value of: A. 2 B. 3 C. 0 D. 1

c

Social Security payments are primarily made to: A. Families with dependent children B. Families affected by natural disasters C. Retired and disabled workers D. Unemployed workers

c

The economic inefficiency of monopolistic competition means that: A. Industries tend to evolve into oligopolies rather than become more competitive B. Industries spend money on advertising and sales promotion C. Producers produce at an output short of, and charge a price greater than, minimum average total cost D. Firms do not maximize profits at the MC equals MR output

c

The eligibility basis for food stamps is: A. Age B. Illness C. Income D. Disability

c

Which is a payment or wage subsidy made by the Federal government to offset Social Security taxes for low-income workers? A. Food stamp program B. Supplement Security Income C. Earned-income tax credit D. Temporary Assistance to Needy Families

c

Which is an example of a change in the price of another resource that increases labor demand? A. Software sales rise, thus increasing the demand for software developers B. Snowboarding increases in popularity, thus increasing the demand for the workers who make snowboards C. A decrease in the price of wood decreases the cost of furniture, thus increasing the demand for furniture workers D. A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers

c

Marginal revenue product describes the: A. Output produced by the last unit of input employed B. Revenue received for the last unit of output produced C. Price a consumer paid for the last unit of output produced D. Revenue received for the output produced by the last unit of labor employed

d

The difference between the 45-degree line and the Lorenz curve shows the: A. Inflationary gap B. Recessionary gap C. Number of households that are classified as being poor D. Degree of income inequality

d

Which is an example of a change in productivity that increases labor demand? A. Mail-order catalog sales rise, thus increasing the demand for workers in the mail-order business B. Sport utility vehicles increase in popularity, thus increasing the demand for the workers who make them C. A decrease in the price of lumber decreases the cost of building homes, thus increasing the demand for construction workers D. A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers

d

In firm X, labor costs are 85 percent of production costs, while in firm Y labor costs are 40 percent of production costs. A 20 percent increase in wages would increase production costs by: A. 23 percent in firm X and 20 percent in firm Y B. 19 percent in firm X and 15 percent in firm Y C. 15 percent in firm X and 6 percent in firm Y D. 17 percent in firm X and 8 percent in firm Y

d • (20% X 85%)=17%