microeconomics final exam

the demand curve shows the relationship between:

price and quantity demanded

the supply curve shows the relationship between:

price and quantity supplied

interest is the:

price paid for the use of money

which characteristic would best be associated with pure competition?

price takers

critics of minimum-wage legislation argue that it:

undermines incentives to work

Xavier produces and sells tomatoes in a purely competitive market. This implies that Xavier's marginal revenue from an extra unit of tomatoes price per pound would be:

unit price

the largest single share of all income earned by Americans consists of:

wages and salaries

Which of the following persons is most likely to be insured for health care?

A skilled worker employed by a large multinational corporation.

the incidence of a tax pertains to

who actually bares the burden of a tax

Economies and diseconomies of scale explain:

why the firm's long-run average total cost curve is U-shaped

Compensating wages differentials:

will attract U.S. workers to undesirable jobs if the differential over less unpleasant work is sufficiently high

The kinked demand model of oligopoly assumes that:

Rivals will ignore price increases but will match price cuts

compensating differences in wages:

are wage differences that compensate for differences in the desirability of jobs

non-competing groups of workers are the result of:

differences in the innate and acquired abilities of workers

total fixed cost (TFC):

does NOT change as total output increases or decreases

"beaten paths" from one country to another:

encourage migration by providing employment contacts and job information.

if the nominal wage rises by 4 percent, and the price level rises by 7 percent, the real wage will:

fall by 3%

In an oligopolistic market there are:

few sellers

The monopolistic competition model assumes that:

firms will engage in nonprice competition

suppose that Joe sells pork in a purely competitive market. The market price of pork is $3 per pound. Joe's marginal revenue form selling the twelfth pound would be:

$3

assume labor is the only variable input and that an additional input of labor increases total output from 72 to 78 units. If the product sells for $6 per unit in a purely competitive market, the MRP of this additional worker is:

$36

Which of the following is a demand-increasing factor in the health care market?

*rising incomes *asymmetric information *the aging of the population

About ____ of recent annual labor force growth in the United States is the result of immigration.

1/2

According to U.S. Census Bureau data, approximately how many illegal immigrants are estimated to be living continuously in the United States?

11 million

the United States devotes about _________ percent of its gross domestic product to health care.

17%

in the quintile distribution of income, the term "quintile" represents:

20 percent of the income recievers

Health care expenditures coming directly out of consumers' pockets, primarily in the form of deductibles and copayments, account for what percent of U.S. health care spending?

33%

the basic tax rate on taxable corporate income is:

35%

the maximum federal marginal tax rate on taxable personal income is, as of 2013:

39.6%

The first Pepsi yields Craig 18 units of utility and the second earns him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the 3rd Pepsi is:

8 units of utility

Collusion refers to a situation where rival firms decide to:

Agree with each other to set prices and output

The main determinant of elasticity of supply is the:

Amount of time the producer has to adjust inputs in response to a price change

A profit-maximizing firm should shut down in the short run if the average revenue it receives is less than:

Average variable cost

the incentive to cheat within a cartel increases with an increase in the following factors, except:

Economic performance and industry sales

The law of diminishing marginal utility states that:

Beyond some point, additional unit of a product will yield less and less extra satisfaction to a consumer

A perfectly inelastic demand schedule:

Can be represented by a line parallel to the vertical axis

Marginal utility is the:

Change in total utility obtained by consuming one more unit of a good

The demand for a product is inelastic with respect to price if:

Consumers are largely unresponsive to a per-unit price change

Which set of characteristics below best describes the basic features of monopolistic competition?

Easy entry, many firms, and differentiated products

which of the following groups has the HIGHEST poverty rate?

Female-headed households

which is the following is most likely to be an implicit cost for Company X?

Forgone rest from the building owned and used by company X

Let us suppose Harry's , a local supplier of chili and pizza, has the following revenue and cost structure: Total Revenue: $3,000 per week Total Variable Cost: $2,000 per week Total Fixed Costs: $2,000 per week

Harry's should stay open in the short run

Which of the following is a measure of the degree of industry concentration?

Herfindahl Index

Under pure monopoly, a profit-maximizing firm will produce:

In the elastic range of its demand curve

Marginal utility can be:

Positive, negative, or zero

If the demand for bacon is relatively elastic, a 10% decline in the price of bacon will:

Increase the amount demanded by more than 10%

Which of the following is not a source of economies of scale?

Inelastic resource supply curves

The utility of a good or service:

Is the satisfaction or pleasure one gets from consuming it

Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing monopoly is determined by:

Marginal cost = marginal revenue

A major reason that firms form a cartel is to:

Maximize joint profits

A unique feature of an oligopolistic industry is:

Mutual interdependence

In which set of market models are there the most significant barriers to entry?

Oligopoly and pure monopoly

One major barrier to entry under pure monopoly arises from:

Ownership of essential resources

The basic formula for the price elasticity of demand coefficient is:

Percentage change in quantity demanded/ percentage change in price

When a purely competitive industry is in long-run equilibrium, which statement is true?

Price and average total cost are equal

In which of the following instances will total revenue decline?

Price rises and demand is elastic

If the price is above the equilibrium level, competition among sellers to reduce the resulting:

Surplus will increase quantity demanded and decrease quantity supplied

Which of the following is not characteristic of the demand for a commodity that is elastic?

The elasticity coefficient is less than one

The elasticity of demand for a product is likely to be greater:

The greater the amount of time over which of buyers adjust to a price change

Where total utility is at a maximum, marginal utility is:

Zero

Economic immigrants:

are defined as international migrants motivated by economic gains.

If two goods are complements:

a decrease in the price of one will increase the demand for the other.

An explicit cost is:

a money payment made for resources not owned by the firm itself.

economist cost can best be defined as:

a payment that must be made to obtain and retain the services of a resource

One feature of pure monopoly is that firm is:

a price maker

if the wage rate increases:

a purely competitive producer and an imperfectly competitive producer will both hire less labor

Most remittances flow toward:

advanced industrial nations

the real rate of interest is the interest rate:

after adjustment has been made for inflation

In the long run:

all cost are variable costs

for all practical purposes, the supply of land is:

almost perfectly inelastic

marginal revenue product measures the:

amount by which the extra production of one more worker increases a firm's total revenue

In the standard model of pure competition, a profit-maximizing firm will shut down in the short run if price is below:

average variable cost

Given the availability of the Medicaid program, why are so many poor people uninsured?

because many poor people earn enough that they do not qualify for Medicaid

The price elasticity of demand measures:

buyer responsiveness to price changes

social security is financed:

by payroll taxes on employees and employers

Marginal cost is the:

change in total cost that results form producing one more unit of output

Marginal revenue is the:

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

Average fixed cost:

declines continually as output increases

other things equal, an increase in the equilibrium interest rate will:

decrease purchases of capital goods and reduce R&D spending

in the health care market:

demand has increase relative to supply

each of the following contributes to income inequality except:

government transfers

other things equal, the optimal quantity of immigrants will be greater, the:

greater the degree of complementary between immigration and domestic-born workers

the long-run trend of real wages:

has been upward

"Remittances" occur when:

immigrants send financial payments back to family int heir country of origin.

to economist, 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

employer-provided private health insurance in the United States has resulted in:

incentives that encourage the overuse of health care

when the price of a product increases, a consumer is able to buy less of it with a given money income.

income effect

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

income mobility

effectively removing all illegal immigrants from U.S. labor markets would:

increase employment of domestic of domestic-born workers, but by a lesser amount than the number of jobs lost by illegal workers.

An increase in the price of product A will:

increase the demand for substitute product B

which of the following helps explain growing income inequality in the United States in recent years?

increased demand for highly skilled workers

the real wage will rise if the nominal wage:

increases at the same rate as labor productivity

Labor unions may attempt to raise wage rates by:

increasing the price of complementary resources

inclusive unionism is practiced mostly by:

industrial unions

If the University chamber music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is:

inelastic

Health care:

is a normal good

employer-provided private health insurance:

is a unique to the United States and not typically found in other countires

A Market:

is an institution that brings together buyers and sellers

the Lorenz curve:

plots graphically the distribution on income

other things equal, interest rates are:

lower on less risky loans than on risker loans

A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should:

make no change in the level of output

Monopolistic competition means:

many firms producing differentiated products

in a monopsonistic labor market, the employer will maximize profits by employing workers up to that point at which:

marginal revenue product equals marginal resource (labor) cost

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 which two market models would advertising be used most often?

monopolistic competition and oligopoly

the unemployed are disproportionately represented among the uninsured because:

most workers obtain health insurance through their employers

which of the following is true under conditions of pure competition?

no single firm can influence the market price by changing its output

Pure monopolists may obtain economic profits in the long run because:

of barriers to entry

in pure competition, if the market price of the product is initially higher than the minimum average cost of the firms, then:

other firms will enter the industry and the industry supply will increase

some economists have criticized standard government figures on income inequality, arguing that these data:

overstate the degree of income inequality by failing to include non-cash transfers as income

Which of the following is a barrier to entry?

patents and licenses

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

Defensive medicine refers to the idea that:

physicians may require unnecessary testing as a means of protecting themselves against malpractice suits.

the major purpose of Medicare is to:

provide health care services to people on Social Security

the major objective of Medicaid is to:

provide health care services to those receiving public assistance

An industry compromised of a very large number of sellers producing a standardized product is known as:

pure competition

in which market model are the conditions of entry into the market easiest?

pure competition

the twin problems of the U.S. health care industry are:

rapidly raising costs and unequal access to health care

the highest quintile of households in the income distribution:

receives about 51 percent of the total income

insurance companies use deductibles and copayments to:

reduce health care costs by discouraging overuse of the health care system

the term "quantity demanded":

refers to the amount of a product that will be purchased at some specific price

a tax that takes a larger proportion of income form low-income groups than from high-income groups is a:

regressive tax

the price elasticity of demand for health care is:

relatively inelastic

the price of medical care in the United States has:

risen faster than the overall price level

an improvement in production technology will:

shift the supply curve to the right

A leftward shift of a product supply curve might be caused by:

some firms leaving an industry

Federal tax policy

subsidizes health insurance and thereby increases the demand for health care

a progressive tax is such that:

tax rates are higher the greater one's income

a competitive employer should hire additional labor as long as:

the MRP exceeds the wage rate

Human capital refers to:

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

Marginal product is:

the amount an additional worker adds to the firm's total output.

minority workers are underrepresented and have less access to certain high-paying occupations. This illustrates:

the crowning model

each of the following has contributed to growing income inequality in the United Sates since 1975 except:

the decline in unionism

illegal immigration positively contributes to the U.S. standard of living by reducing:

the fiscal burdens of state and local governments

Marginal resource cost is:

the increase in total resource cost associated with the hire of one more unit of the resource.

The change in a firm's total revenue that results from hiring an additional worker is measured by:

the marginal revenue product

One defining characteristic of pure monopoly is that:

the monopolistic produces a product with no close substitutes

if the existence of health insurance increases one's incentive to use the health care system more intensively, this is an illustration of:

the moral hazard problem

By an "increase in demand", economist mean that:

the quantity demanded at each price in a set of prices is greater

at the point where the demand and supply curves for a product intersect:

the quantity that consumers want to purchase and the amount producers choose to sell are the same