13,14,16,17 and 18

2)Oligopolistic industries are characterized by A) a few dominant firms and substantial entry barriers. B) a few dominant firms and no barriers to entry. C) a large number of firms and low entry barriers. D) a few dominant firms and low entry barriers.

A) a few dominant firms and substantial entry barriers.

2)Economic rent refers to the price paid for land and other natural resources that A) are fixed in total supply. B) vary directly with their market prices. C) vary inversely with their market prices. D) are available in nearly unlimited quantities.

A) are fixed in total supply.

18)If a firm is selling in an imperfectly competitive product market, then A) average product will be less than marginal product for any number of workers hired. B) the marginal products of successive workers must be sold at lower prices. C) the marginal products of successive workers can be sold at higher prices. D) the marginal products of successive workers can be sold at a constant price.

B) the marginal products of successive workers must be sold at lower prices.

8)The equilibrium interest rate equates A) nominal and real interest rates. B) the quantities demanded and supplied of loanable funds. C) consumption and saving. D) taxes and government spending.

B) the quantities demanded and supplied of loanable funds.

9)Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm will realize an economic A) loss of $320. B) profit of $480. C) profit of $280. D) profit of $600.

B)profit of $480

9)The supply curve of loanable funds is upsloping because A) businesses find more investments to be profitable at low interest rates than at high interest rates. B) government budget deficits vary inversely with the equilibrium interest rate. C) households are willing to save more at high interest rates than they are at low interest rates. D) banks lend more at low interest rates than they do at high interest rates.

C) households are willing to save more at high interest rates than they are at low interest rates.

4)Landowners will notreceive any rent so long as A) there is any tax on land. B) the supply and demand curves for land intersect. C) the supply curve of land is perfectly inelastic. D) the supply curve lies entirely to the right of the demand curve.

D) the supply curve lies entirely to the right of the demand curve.

8)Refer to the game theory matrix, where the numerical data show the profits resulting from alternative combinations of advertising strategies for Ajax and Acme. Ajax's profits are shown in the upper right part of each cell; Acme's profits are shown in the lower left. Without collusion, Nash equilibrium is represented by which cell? A) A B) B and C both C) D D) There is no Nash equilibrium in this game.

A) A

13)If there are significant economies of scale in an industry, then A) a firm that is large may be able to produce at a lower unit cost than can a small firm. B) a firm that is large will have to charge a higher price than will a small firm. C) entry to that industry will be easy. D) firms must differentiate their products to earn economic profits.

A) a firm that is large may be able to produce at a lower unit cost than can a small firm.

12)Three major means of collusion by oligopolists are A) cartels, informal understandings, and price leadership. B) market sharing, mutual interdependence, and product differentiation. C) cartels, kinked-demand pricing, and product differentiation. D) informal understandings, P= MC pricing, and mutual interdependence.

A) cartels, informal understandings, and price leadership.

7)Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. Which cell represents a Nash equilibrium? A) cell D B) cell A C) Cells B and C both represent a Nash equilibrium. D) There is no Nash equilibrium in this game.

A) cell D

*18* 1)To say that land rent performs no incentive function means that A) higher rental payments will not bring forth a larger quantity of land. B) rent is not a cost to specific firms, but it is a cost from the standpoint of the economy as a whole. C) rent does not allocate land in terms of productive efficiency. D) rent tends to allocate land into the most productive uses.

A) higher rental payments will not bring forth a larger quantity of land.

14)Refer to the diagram. In equilibrium the firm A) is realizing an economic profit of adper unit. B) should close down in the short run. C) is incurring a loss. D) is realizing an economic profit of bdper unit.

A) is realizing an economic profit of adper unit.

16)The economic term for a firm that is the sole buyer in a market is A) monopsonist. B) monopolist. C) bilateral competitor. D) bilateral monopolist.

A) monopsonist.

5)The purely competitive employer of resource A will maximize the profits from A by equating the A) price of A with the MRP of A. B) marginal productivity of A with the MRC of A. C) marginal productivity of A with the price of A. D) price of A with the MRC of A.

A) price of A with the MRP of A.

6)Interest is the A) price paid for the use of money. B) opportunity cost of time. C) expectation of a future return on investment. D) reward for consuming rather than saving.

A) price paid for the use of money.

8)An employer hiring in a competitive labor market should hire additionallabor as long as A) the MRP exceeds the wage rate. B) the wage rate is less than MP. C) average product exceeds MP. D) MC exceeds MR.

A) the MRP exceeds the wage rate.

14)Pure, or economic, profit is A) the amount by which accounting profits exceed normal profits. B) determined by subtracting explicit costs from total revenue. C) the return required to retain entrepreneurial talent in some particular line of production. D) the return toany resource the supply of which is perfectly inelastic.

A) the amount by which accounting profits exceed normal profits.

4)If the four-firm concentration ratio for industry X is 60, A) the four largest firms account for 60 percent of total sales. B) each of the four largest firms accounts for 15 percent of total sales. C) the four largest firms account for 60percent of total advertising expenditures. D) the industry is monopolistically competitive, but on the threshold of being an oligopoly.

A) the four largest firms account for 60 percent of total sales.

11)"Present value" refers to the A) value today of a specific amount of money to be received in the future. B) current value of money held in a bank account. C) amount to which some current amount of money will grow over time. D) interest rate specified when a loan contract is signed.

A) value today of a specific amount of money to be received in the future.

15)The largest single share of all income earned by Americans consists of A) wages and salaries. B) interest. C) rents. D) corporate profits.

A) wages and salaries.

11)Refer to the diagrams, which pertain to monopolistically competitive firms. Long-run equilibrium is shown by A) diagram aonly. B) diagram bonly. C) diagram conly. D) none of these diagrams.

A)diagram A only

7)Suppose a person pays $80 of annual interest on a loan that has a 5 percent annual interest rate. The loan amount is A) $400. B) $1,600. C) $160. D) $85.

B) $1,600.

10)Harry owns a barbershop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per eight-hour day. By hiring a second barber at the same wage rate, the shop can now provide a total of 42 haircuts per day. The MRP of the second barber is A) 18 haircuts. B) $108. C) 42 haircuts. D) $126.

B) $108.

4)The Herfindahl index for a pure monopolist is A) 100. B) 10,000. C) 100,000. D) 10.

B) 10,000.

10)Refer to the diagram for a non collusive oligopolist. Suppose that the firm is initially in equilibrium at point E, where the equilibrium price and quantity are Pand Q. If the firm's rivals will ignore any price increase but match any price reduction, then the firm's demand curve will be (moving from left to right) A) D1ED2. B) D2ED1. C) D1ED1. D) D2ED2.

B) D2ED1.

3)Which of the following is the best example of oligopoly? A) women's dress manufacturing B) automobile manufacturing C) restaurants D) cotton farming

B) automobile manufacturing

10)Refer to the diagrams, which pertain to monopolistically competitive firms. Long-run equilibrium is shown by A) diagram aonly. B) diagram bonly. C) diagram conly. D) none of these diagrams.

B) diagram b only.

6)Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If both firms follow a high-price policy, A) Alpha will realize a $10 million profit and Beta a $30 million profit. B) each will realize a $20million profit. C) Beta will realize a $10 million profit and Alpha a $30 million profit. D) each will realize a $15 million profit.

B) each will realize a $20million profit.

4)Increases in the productivity of labor result partly from A) the law of diminishing returns. B) improvements in technology. C) reductions in wage rates. D) increases in the quantity of labor.

B) improvements in technology.

2)If the nominal wages of carpenters rose by 5 percent in 2013 and the price level increased by 3 percent, then the real wages of carpenters A) decreased by 2 percent. B) increased by 2 percent. C) increased by 3 percent. D) increased by 8 percent.

B) increased by 2 percent.

6)The MRP curve for labor A) intersects the firm's labor demand curve from above. B) is the firm's labor demand curve. C) lies below thefirm's labor demand curve. D) lies above the firm's labor demand curve.

B) is the firm's labor demand curve.

17)In a monopsonistic labor market, the employer will maximize profits by employing workers up to that point at which A) the difference between the wage rate and marginal resource (labor) cost is at a maximum. B) marginal revenue product equals marginal resource (labor) cost. C) the wage rate equals marginal revenue product. D) the wage rate equals marginal resource (labor) cost.

B) marginal revenue product equals marginal resource (labor) cost.

22)Assuming a competitive resource market, a firm is hiring resources in the profit-maximizing amounts when the A) firm's total outlay on resources is minimized. B) marginal revenue product of each resource is equal to its price. C) price of each resource employed is the same. D) marginal revenue product of the last unit of each resource hired is the same.

B) marginal revenue product of each resource is equal to its price.

13)Economic profit is most closely associated with A) the process of saving and investing. B) monopoly, innovation, and uninsurable risks. C) long-run competitive equilibrium. D) a static economy.

B) monopoly, innovation, and uninsurable risks.

6)A firm operating in a purely competitive resource market faces a resource supply curve that is A) perfectly inelastic. B) perfectly elastic. C) highly inelastic. D) highly elastic.

B) perfectly elastic.

21)Employers will hire more units of a resource if the A) price of the resource increases. B) productivity of the resource increases. C) price of the good being produced declines. D) price of a complementary resource rises.

B) productivity of the resource increases.

7)The labor demand curve of a purely competitive seller A) slopes downward because the elasticity of demand is always less than unity. B) slopes downward because of diminishing marginal productivity. C) is perfectly elastic at the going wage rate. D) slopes downward because of diminishing marginal utility.

B) slopes downward because of diminishing marginal productivity.

2)The demand for a resource depends primarily on A) the supply of that resource. B) the demand for the product or service that it helps produce. C) the price of that input. D) the elasticity of supply of substitute inputs.

B) the demand for the product or service that it helps produce.

4)The marginal revenue product schedule is A) the same whether the firm is selling in a purely competitive or imperfectly competitive market. B) the firm's resource demand schedule. C) the firm's resource supply schedule. D) upsloping.

B) the firm's resource demand schedule.

14)In monopolistically competitive markets, resources are A) overallocated because long-run equilibrium occurs where price exceeds marginal cost. B) underallocated because long-run equilibrium occurs where price exceeds marginal cost. C) overallocated because long-run equilibrium occurs where marginal cost exceeds price. D) underallocated because long-run equilibrium occurs where marginal cost exceeds price.

B) underallocated because long-run equilibrium occurs where price exceeds marginal cost.

3)We say that the demand for labor is a derived demand because A) labor is a necessary input in the production of every good or service. B) we demand the product that labor helps produce rather than labor service per se. C) the forces of supply and demand do not apply directly to labor markets. D) labor is hired using the MRP = MRC rule.

B) we demand the product that labor helps produce rather than labor service per se.

13)Which of the following statements is correct regarding profit-maximizing firms in the long run? A) In perfect competition, firms produce an output at which price is less than marginal cost. B)In monopolistic competition, firms produce less than the output at which average total cost is minimized. C) In perfect competition, firms produce an output at which price is greater than marginal cost. D) In monopolistic competition, firms produce more than the output at which average total cost is minimized.

B)In monopolistic competition, firms produce less than the output at which average total cost is minimized.

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be A) $10. B) $13. C) $16. D) $19.

C) $16.

*16* 1)Which of the following statements best illustrates the concept of derived demand? A) As income goes up, the demand for farm products will increase by a smaller relative amount. B) A decline in the price of margarine will reduce the demand for butter. C) A decline in the demand for shoes will cause the demand for leather to decline. D) When the price of gasoline goes up, the demand for motor oil will decline.

C) A decline in the demand for shoes will cause the demand for leather to decline.

9)A profit-maximizing firm employs resources to the point where A) MRC = MP. B) resource price equals product price. C) MRP = MRC. D) MP = product price.

C) MRP = MRC.

7)Which of the following is correctfor a monopolistically competitive firm in long-run equilibrium? A) MC = ATC. B) MC exceeds MR. C) Pexceeds minimum ATC. D) P= MC.

C) Pexceeds minimum ATC.

20)If the minimum wage is set too high, in some labor markets we can expect to see A) a shortage of labor. B) an increase in on-the-job training. C) a surplus of labor. D) a decline in wage costs.

C) a surplus of labor.

5)In the short run, a profit-maximizing monopolistically competitive firm sets it price A) equal to marginal revenue. B) equal to marginal cost. C) above marginal cost. D) below marginal cost.

C) above marginal cost.

6)In the long run, the price charged by a monopolistically competitive firm seeking to maximize profit will A) be less than both MC and ATC. B) exceed ATC but equal MC. C) exceed MC but equal ATC. D) exceed both MC and ATC.

C) exceed MC but equal ATC.

11)Refer to the diagram. Equilibrium output is A) j. B) h. C) g. D) f.

C) g.

*17* 1)The long-run trend of real wages A) cannot be determined from available data on nominal wages and the price level. B) has been downward because the price level has risen faster than nominal wages. C) has been upward. D) has been downward because labor's share of the domestic income has fallen.

C) has been upward.

21)Some economists claim that unions reduce economic efficiency by A) providing a voice mechanism for workers. B) insisting that promotions be based on ability rather than seniority. C) imposing restrictions on the kinds of jobs workers may perform. D) increasing worker turnover.

C) imposing restrictions on the kinds of jobs workers may perform.

5)Marginal revenue product (MRP) of labor refers to the A) increase in total revenue resulting from selling an additional unit of output. B) amount by which a firm's total resource cost increases when it employs one more unit of labor. C) increase in total revenue resulting from hiring one more unit of labor. D) price at which additional units of labor can be employed in a monopsonized labor market.

C) increase in total revenue resulting from hiring one more unit of labor.

5)As a general rule, oligopoly exists when the four-firm concentrationratio A) equals the Herfindahl index. B) yields a Herfindahl index below 500. C) is 40 percent or more. D) is 50 percent or more.

C) is 40 percent or more.

5)Henry George advocated a single tax on A) real capital. B) entrepreneurial profits. C) land. D) labor income.

C) land.

*13* 1) Monopolistic competition is characterized by a A) few dominant firms and low entry barriers. B) large number of firms and substantial entry barriers. C) large number of firms and low entry barriers. D) few dominant firms and substantial entry barriers.

C) large number of firms and low entry barriers.

3)A monopolistically competitive industry combines elements of both competitionand monopoly. The competition element results from A) the likelihood of collusion. B) product differentiation. C) low entry barriers. D) mutual interdependence in decision making.

C) low entry barriers.

2)The restaurant, legal assistance, and clothing industries are each illustration of A) countervailing power. B) homogeneous oligopoly. C) monopolistic competition. D) pure monopoly.

C) monopolistic competition.

3)Over the long run, real earnings per worker can increase only at about the same rate as the economy's rate of growth of A) total output. B) stock of capital. C) output perworker. D) international trade.

C) output perworker.

9)The kinked-demand curve model of oligopoly is useful in explaining A) the way that collusion works. B) why oligopolistic prices and outputs are extremely sensitive to changes in marginal cost. C) why oligopolistic prices might change infrequently. D) the process by which oligopolists merge with one another.

C) why oligopolistic prices might change infrequently.

12)A firm is more likely to increase its total revenue by decreasing the price of its product if: A)the supply of the product is perfectly elastic. B)the demand for the product is perfectly inelastic. C)there are many close substitutes for its product. D)its product accounts for a small portion of a consumer's budget.

C)there are many close substitutes for its product.

7)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 A) marginal revenue product is zero. B) marginal revenue product exceeds marginal resource (labor) cost by the greatest amount. C)marginal resource cost is zero. D) marginal revenue product equals marginal resource (labor) cost.

D) marginal revenue product equals marginal resource (labor) cost.

*14* 1)In which of these continuums of degrees of competition (lowest to highest) is oligopoly properly placed? A) pure monopoly, monopolistic competition, oligopoly, pure competition B) oligopoly, pure competition, monopolistic competition, pure monopoly C) monopolistic competition, pure competition, pure monopoly, oligopoly D) pure monopoly, oligopoly, monopolistic competition, pure competition

D) pure monopoly, oligopoly, monopolistic competition, pure competition

12)The "future value" of a sum of money refers to A) the estimated value of that money invested in a stock portfolio at some future date. B) the purchasing power of a given amount of money adjusted for price changes. C) today's value of a sum of money to be received in the future. D) the amount to which some current sum of money will grow over time.

D) the amount to which some current sum of money will grow over time.