ECON 101 FINAL EXAM

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If the world price for good A is below the domestic price for good A without trade, then producer surplus will ________ and total economic surplus will ________ with trade. decrease, decrease increase, decrease decrease, increase increase, increase

decrease, increase

If the world price for good A is below the domestic price for good A without trade, then producer surplus will ________ and total economic surplus will ________ with trade. decrease, increase decrease, decrease increase, decrease increase, increase

decrease, increase

If a nation is initially on its production possibilities curve, then it can increase its production of one good only by increasing the production of the other good. decreasing the price of the other good. decreasing the production of the other good. holding constant the production of the other good.

decreasing the production of the other good.

Tom enjoys Diet Coke, but his enjoyment decreases after each bottle he consumes, and he is willing to pay less for the next bottle. This is an illustration of consumer sovereignty. diminishing marginal utility. the substitution effect. the income effect.

diminishing marginal utility.

A nation will neither export nor import a specific product when its domestic price equals the world price. import demand curve is downsloping. export supply curve is upsloping. export supply curve lies above its import demand curve.

domestic price equals the world price.

A consumer makes purchases of an existing product X such that the marginal utility is 10 and the price is $5. The consumer also tries a new product Y and at the current level of consumption it has a marginal utility of 8 and a price of $1. The utility-maximizing rule suggests that this consumer should increase consumption of product Y and decrease consumption of product X. decrease consumption of product Y and decrease consumption of product X. increase consumption of product X and decrease consumption of product Y. increase consumption of product X and increase consumption of product Y.

increase consumption of product Y and decrease consumption of product X.

If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be left alone. subsidized. taxed. prohibited.

subsidized.

Use the following graph of the market for milk to answer the question below. In this market, the equilibrium (optimal) price is ________ and equilibrium (optimal) quantity is ________. $1.00 per gallon; 35 million gallons $1.50 per gallon; 30 million gallons $1.50 per gallon; 28 million gallons $28 per gallon; 150 million gallons

$1.50 per gallon; 28 million gallons

Use the following graph to answer the question below. At a quantity of 130, marginal benefit equals ________ and marginal cost equals ________. $0.50, $1.60 $1.00, $1.00 $1.60, $1.60 $1.60, $0.50

$1.60, $0.50

Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per 8-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 18 haircuts. $108. 42 haircuts. $126.

$108.

Use the figure below to answer the following question. What was the price of the product before the tax was imposed, and what is the amount of the excise tax? $11, $4 $13, $4 $11, $2 $9, $2

$11, $4

Use the table below to answer the following question. Units Maximum Willingness to Pay Market Price 1 $14 $8 2 12 8 3 10 8 4 8 8 5 6 8 6 4 8 What is the value of consumer surplus? $12 $44 $6 $54

$12

Use the following table to answer the question below. Price Quantity Supplied Quantity Demanded $10 100 295 11 150 275 12 190 250 13 220 220 14 245 180 15 265 135 If a technological advance lowers production costs such that the quantity supplied increases by 60 units of this product at each price, the new equilibrium price would be $13. $11. $12. $14.

$12.

Use the following market data to answer the question below. Price per Unit Quantity Purchased by Consumer Quantity Sold by Producer $ 5 2,000 0 10 1,800 300 15 1,600 600 20 1,400 900 25 1,200 1,200 30 1,000 1,500 In the market above, the marginal cost of 600th unit is $10. $15. $20. $25.

$15.

Use the figure below to answer the following question. What is the amount of producer surplus after the government imposes the excise tax on the market? $180 $540 $486 $162

$162

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 $6. $72. $12. $36.

$36.

Use the following diagram for the corn market to answer the question below. There will be a surplus of 8,000 bushels at the price of $3/bushel. $5/bushel. $2/bushel $4/bushel.

$4/bushel.

Sophie is willing to sell her soccer ball for $10. Ruby is willing to pay $20 for the soccer ball. Sophie and Ruby agree on a price of $16. The gains from trade for Sophie equals ________ and the gains from trade for Ruby equals ________. $5, $5 $4, $6 $6, $4 $10, $20

$6, $4

Wayne's Jacket Shop sells Wayne's jackets for $20 each. Wayne finds that his total revenues change according to the number of workers he hires, as shown in the table below. Workers Total Revenue 1 $1,000 2 1,400 3 2,000 4 1,600 5 800 What is the marginal revenue product of the third worker? $400 $600 $6,000 $667

$600

Lauren makes $150 a day as a bank clerk. She takes two days off work without pay to fly to another city to attend the concert of her favorite band. The cost of transportation and lodging for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Lauren's decision to attend the concert is $250. $600. $300. $450.

$600.

Use the following graph for a competitive market to answer the question below. Assume the government imposes a $2.25 tax on suppliers, which results in a shift of the supply curve from S1 to S2. The government's tax revenue is $900. $675. $1,050. $375.

$675.

Use the following table to answer the next question. Individual Firm Market Supply Number of Units of Labor MRP of Labor Wage Rate Quantity of Labor Supplied 1 $12 $12 1,350 2 11 11 1,200 3 10 10 1,050 4 9 9 900 5 8 8 750 6 7 7 600 7 6 8 5 Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. What will be the equilibrium wage rate? $10 $7 $9 $8

Use the following graph, where Sd and Dd are the domestic supply and demand curves for a product to answer the next question. The world price of the product is $6. If the market is open to international trade but there is a tariff of $2 per unit imposed, the total government revenue generated by the tariff would be $40. $60. $80. $100.

$80.

The nominal annual wage increases from $20,000 to $21,000 while the price level increases by 7%. In this case, the percentage change in the real annual wage is about -1%. 3%. -2%. 5%.

-2%.

Use the figure below to answer the following question: Assume that price decreases from $10 to $2. The coefficient of the price elasticity of supply (midpoint formula) relating to this price change is about 1 and supply is unit elastic. .5 and supply is inelastic. 4 and supply is elastic. .25 and supply is inelastic.

.25 and supply is inelastic.

A price increase from $43 to $49 results in an increase in quantity supplied from 220 units to 240 units. The price elasticity of supply in this price range is (use the midpoint formula): .3 .67 1.50 3.33

.67

When the price of candy bars decreased from $0.55 to $0.45, the quantity demanded changed from 19,000 per day to 21,000 per day. In this price range, the price-elasticity coefficient (based on the midpoint formula) for candy bars is 0.5. 0.2. 1. 2.

0.5.

Answer the next question on the basis of the following information about the cost ratios for two products-fish (F) and chicken (C)-in countries Singsong and Harmony. Assume that production occurs under conditions of constant costs and these are the only two nations in the world. Singsong: 1F = 2C Harmony: 1F = 4C Which one of the following would not be feasible terms for trade between Singsong and Harmony? 1 chicken for 1/5 of a fish 1 fish for 3 chickens 1 chicken for 1/3 of a fish 1 fish for 2½ chickens

1 chicken for 1/5 of a fish

Use the following table to answer the question below. Giovanni's Production Possibility Schedule Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 320 40 120 20 240 80 80 40 160 120 40 60 80 160 0 80 0 One pound of green beans cost Giovanni ________ pound(s) of corn. One pound of green beans cost Jorge ________ pound(s) of corn. 1, 4 1/4, 1 1, 1/4 4, 1

1, 4

Use the following table to answer the question below. Giovanni's Production Possibility Schedule Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 320 40 120 20 240 80 80 40 160 120 40 60 80 160 0 80 0 The terms of trade for 1 pound of green beans must lie between ________ and ________ pounds of corn. 1, 6 1/4, 1 1, 4 1/4, 1

1, 4

1,200.

Use the following table for a certain product's market in Econland to answer the next question. Quantity Demanded Domestically Price Quantity Supplied Domestically 1,400 $10 2,200 1,600 9 2,000 1,800 8 1,800 2,000 7 1,600 2,200 6 1,400 2,400 5 1,200 If the world price of the product is $6 and a tariff of $1 per unit imported is imposed, then the quantity of output that would be supplied domestically would be 1,400 units, and the quantity of output that would be imported would be 400 units. 1,600 units, and the quantity of output that would be imported would be 800 units. 1,600 units, and the quantity of output that would be imported would be 400 units. 1,400 units, and the quantity of output that would be imported would be 800 units.

1,600 units, and the quantity of output that would be imported would be 400 units.

If Countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the production possibilities schedules below. Country Rubber Bands Paper Clips A 40 80 B 10 40 In country A the opportunity cost of 1 paper clip is 2 rubber bands. 1 rubber band. 1/2 rubber band. 1/4 rubber band.

1/2 rubber band.

Use the following table to answer the question below. Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn 0 320 20 240 40 160 60 80 80 0 Jorge's opportunity cost of producing 1 pound of corn is ________ pound(s) of green beans. 1 1/4 4 2

1/4

The supply of product X is perfectly inelastic if the price of X rises by 10% and quantity supplied stays the same. 5% and quantity supplied rises by 7%. 8%and quantity supplied rises by 8%. 7% and quantity supplied rises by 5%.

10% and quantity supplied stays the same.

Use the figure below to answer the following question. If the price in this market was set at $1.60 by the government (price floor), then the number of trades taking place would be 130. 200. 160. 290.

130.

Use the following table to answer the question below. Units Consumed Total Utility Marginal Utility 0 0 - 1 W 20 2 35 X 3 Y 10 4 40 Z The value for X is 15. 10. 55. 5.

15.

Nominal monthly wages increase from $1,500 to $1,800 while the price level increases by 4%. The percentage change in real monthly wages is about 10% 16% 14% 12%

16%

Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour, the shop can provide 24 haircuts per 8-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 MP of the second barber is $108. 18 haircuts. 42 haircuts. $240.

18 haircuts.

Answer the next question(s) on the basis of the data contained in the following table. Units of Labor Total Product Product Price 0 0 $2.20 1 15 2.00 2 28 1.80 3 39 1.60 4 48 1.40 5 55 1.20 6 60 1.10 Assume that the firm is hiring labor in a purely competitive market. If the wage rate is $20, how many workers will the firm choose to employ? 2 3 4 5

Use the following figure to answer the question below. Dave's opportunity cost of producing 1 pound of green beans is ________ pound(s) of corn. 1/2 1 4 2

Which of the following is an example of a public good? a television set a weather warning system a sofa a bottle of soda

a weather warning system

The following table is for a purely competitive market for resources. Number of Workers Total Product Product Price 0 0 $3 1 16 3 2 26 3 3 34 3 4 40 3 5 44 3 How many more workers will the firm hire when the wage rate is $15 instead of $30? 4 workers 1 worker 2 workers 3 workers

2 workers

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the table. If there were 200 buyers in the market, each with a demand schedule identical to Buyer 2, then the weekly quantity of hamburger demanded in the market at a price of $4 would be 8,000. 2,000. 4,000. 7,400.

2,000.

A farmer who has fixed amounts of land and capital finds that total product is 24 for the first worker hired; 32 when two workers are hired; 37 when three are hired; and 40 when four are hired. The farmer's product sells for $3 per unit and the wage rate is $13 per worker. How many workers should the farmer hire? 4 2 3 1

Use the following table to answer the next question. Units of Labor Wage Rate MRC of Labor MRP of Labor 1 $8 $8 $12 2 8 8 10 3 8 8 8 4 8 8 6 5 8 8 4 In maximizing its profit, this firm will employ 4 units of labor. 5 units of labor. 2 units of labor. 3 units of labor.

3 units of labor.

The following table is for a purely competitive market for resources. Number of Workers Total Product Product Price 0 0 $3 1 16 3 2 26 3 3 34 3 4 40 3 5 44 3 At a wage rate of $23 per worker, the firm will choose to employ 2 workers. 3 workers. 5 workers. 4 workers.

3 workers.

Use the data in the table below to answer the following question. Price per Unit Quantity Demanded per Unit of Time $20 12 18 17 16 20 14 24 12 30 10 36 8 40 6 44 4 48 The price elasticity of demand (based on the midpoint formula) when price increases from $18 to $20 is 0.33. 3.29. 1.37. 1.

3.29.

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: In moving from combination E to F, the opportunity cost of an additional unit of steel is 0 unit of wheat. 30 units of wheat. 1 unit of steel. 5 units of steel.

30 units of wheat.

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: In moving from combination E to F, the opportunity cost of an additional unit of steel is 30 units of wheat. 1 unit of steel. 5 units of steel. 0 unit of wheat.

30 units of wheat.

Use the following table to answer the question below. Jane's Production Possibility Schedule Pounds of Green Beans Pounds of Corn 0 80 20 60 40 40 60 20 80 0 If Jane produces 40 pounds of green beans, she can produce ________ pounds of corn. 40 20 60 0

Who determines the price and quantity traded in a market? the government buyers and sellers sellers buyers

buyers and sellers

Use the following table to answer the question below. Giovanni's Production Possibility Schedule Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 320 40 120 20 240 80 80 40 160 120 40 60 80 160 0 80 0 If Giovanni and Jorge both specialize in the production of their respective low-cost goods, then the total production of corn equals ________ pounds and the total production of green beans equals ________ pounds 160, 160 320, 160 160, 320 320, 320

320, 160

Use the following table to answer the question below. Giovanni's Production Possibility Schedule Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 320 40 120 20 240 80 80 40 160 120 40 60 80 160 0 80 0 If Giovanni and Jorge both specialize in the production of their respective low-cost goods, then the total production of corn equals ________ pounds and the total production of green beans equals ________ pounds 320, 160 160, 320 160, 160 320, 320

320, 160

Use the following production possibilities tables to answer the next question. Autos and chemicals are in millions. Germany's Production Possibilities Product A B C D E F Autos 0 4 8 12 16 20 Chemicals 40 32 24 16 8 0 United States' Production Possibilities Product A B C D E F Autos 0 3 6 9 12 15 Chemicals 60 48 36 24 12 0 Suppose that each nation specialized in producing the product for which it has a comparative advantage, and the terms of trade were set at 3 units of chemicals for 1 unit of autos. In this case, Germany could obtain and consume a maximum combination of 8 million units of autos and 12 million units of chemicals. 36 million units of chemicals. 48 million units of chemicals. 24 million units of chemicals.

36 million units of chemicals.

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the table. At a price of $4, the weekly market quantity demanded for hamburger is 37. 24. 23. 17.

37.

Use the following figure to answer the question below. Jorge's opportunity cost of producing 1 pound of green beans is ________ pound(s) of corn. 2 1 1/4 4

Use the following figure to answer the question below. Jorge's opportunity cost of producing 1 pound of green beans is ________ pound(s) of corn. 4 1/4 2 1

Use the following table to answer the question below. Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn 0 320 20 240 40 160 60 80 80 0 Jorge's opportunity cost of producing 1 pound of green beans is ________ pound(s) of corn. 2 1 1/4 4

The following graph is the production possibilities curve of a nation: The opportunity cost of the fourth unit of bread is 0 unit of drill presses. 4 units of drill presses. 1 unit of drill presses. 3 units of drill presses.

4 units of drill presses.

4, 1

Use the following table to answer the question below. Jake's Production Possibility Schedule Jane's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 80 10 120 20 60 20 80 40 40 30 40 60 20 40 0 80 0 Assume Jake consumes 20 pounds of green beans and 80 pounds of corn without trade. Also, assume that Jane consumes 40 pounds of green beans and 40 pounds of corn without trade. If the terms of trade are 1 pound of green beans for 3 pounds of corn, and Jake sells Jane 72 pounds of corn, then the gains from trade for Jake are ________ pounds of green beans and ________ pounds of corn with trade and specialization. 16, 32 4, 8 32, 16 8, 4

4, 8

Use the following figure to answer the question below. The marginal utility of the third unit of X is 15. 5. 2. 4.

The indifference curves in the figure above (I1, I2, and I3) reflect Peter's consumption preferences. Which of the following combinations of goods does Peter prefer the most? 40 slices of pizza and 20 chocolate bars 48 slices of pizza and 12 chocolate bars 32 slices of pizza and 8 chocolate bars 24 slices of pizza and 24 chocolate bars

40 slices of pizza and 20 chocolate bars

The indifference curves in the figure above (I1, I2, and I3) reflect Peter's consumption preferences. Peter prefers consuming ________ to consuming ________. 24 slices of pizza and 24 chocolate bars; 40 slices of pizza and 20 chocolate bars 40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars 32 slices of pizza and 8 chocolate bars; 16 slices of pizza and 16 chocolate bars 48 slices of pizza and 12 chocolate bars; 24 slices of pizza and 24 chocolate bars

40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars

A profit-maximizing firm operates in purely competitive product and resource markets, with the following resource and production schedules. Workers Total Production 8 440 7 410 6 370 5 320 4 260 3 180 2 110 1 55 The product price is $10 per unit and the cost per worker is $540. How many workers will the firm employ? 5 4 7 6

The following is a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. Units of Resource Total Product 1 24 2 42 3 54 4 64 5 72 If the firm's product sells for a constant $2 and the price of the resource is a constant $16, the firm will employ how many units of the resource? 3 2 4 5

Answer the next question based on the data provided in the tables below for two hypothetical nations, Wat and Xat. The nations have the following production possibilities for rice and corn: Wat's Production Possibilities Product A B C D E F Rice 750 600 450 300 150 0 Corn 0 50 100 150 200 250 Xat's Production Possibilities Product A B C D E F Rice 2,500 2,000 1,500 1,000 500 0 Corn 0 100 200 300 400 500 Assume that Wat originally produced rice and corn at combination C and that Xat originally produced combination B. If the nations now fully specialized based on comparative advantage, the total gains from specialization and trade are 100 units of rice and 100 units of corn. 50 units of rice and 50 units of corn. 100 units of rice and 150 units of corn. 25 units of rice and 25 units of corn.

50 units of rice and 50 units of corn.

Answer the next question based on the data provided in the tables below for two hypothetical nations, Wat and Xat. The nations have the following production possibilities for rice and corn: Wat's Production Possibilities Product A B C D E F Rice 750 600 450 300 150 0 Corn 0 50 100 150 200 250 Xat's Production Possibilities Product A B C D E F Rice 2,500 2,000 1,500 1,000 500 0 Corn 0 100 200 300 400 500 Assume that Wat originally produced rice and corn at combination C and that Xat originally produced combination B. If the nations now fully specialized based on comparative advantage, the total gains from specialization and trade are 25 units of rice and 25 units of corn. 100 units of rice and 100 units of corn. 50 units of rice and 50 units of corn. 100 units of rice and 150 units of corn.

50 units of rice and 50 units of corn.

The table below shows the weekly supply for hamburger in a market where there are just three sellers. Price Seller 1 Qs 1 Seller 2 Qs 2 Seller 3 Qs 3 $5 8 5 4 4 6 4 3 3 4 3 2 2 2 2 1 If there were 100 sellers in the market, each with a supply schedule identical to seller 2 in the table above, then the weekly quantity of hamburger supplied in the market at a price of $5 would be 500. 200. 300. 400.

500.

Use the following table to answer the question below. Jake's Production Possibility Schedule Jane's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 80 10 120 20 60 20 80 40 40 30 40 60 20 40 0 80 0 Assume Jake consumes 20 pounds of green beans and 80 pounds of corn without trade. Also, assume that Jane consumes 40 pounds of green beans and 40 pounds of corn without trade. If the terms of trade are 1 pound of green beans for 3 pounds of corn, and Jake sells Jane 72 pounds of corn after specialization, then Jane consumes ________ pounds of green beans and ________ pounds of corn. 24, 88 72, 56 56, 72 88, 24

56, 72

Answer the next question on the basis of the following supply and demand data for wheat. Bushels Demanded per Month Price per Bushel Bushels Supplied per Month 45 $5 77 50 4 73 56 3 68 61 2 61 67 1 57 If the price in this market was set at $1 by the government (price ceiling), then the number of bushels traded taking place would be 57. 67. 10. 61.

Use the following table to answer the question below. Dave's Production Possibility Schedule Pounds of Green Beans Pounds of Corn 0 160 20 120 40 80 60 40 80 0 If Dave produces 40 pounds of green beans, he can produce ________ pounds of corn. 0 80 120 160

Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question. Prior to trade (autarky) consumer surplus equals area A + B E + F A + B + C A.

A + B + C

Use the following graph for a market to answer the question below. Which of the following would best explain why the shift in demand from D1 to D2 would cause price to rise from P1 to P2? After the shift in the demand, there would be a shortage at price P2. After the shift in the demand, there would be a surplus at price P1. After the shift in the demand, there would be a shortage at price P1. After the shift in the demand, there would be a surplus at price P2.

After the shift in the demand, there would be a shortage at price P1.

Use the following graph for a market to answer the question below. Which of the following would best explain why the shift in demand from D1 to D2 would cause price to rise from P1 to P2? After the shift in the demand, there would be a surplus at price P1. After the shift in the demand, there would be a surplus at price P2. After the shift in the demand, there would be a shortage at price P1. After the shift in the demand, there would be a shortage at price P2.

After the shift in the demand, there would be a shortage at price P1.

Use the following graph for a market to answer the question below. Which of the following would best explain why the shift in demand from D1 to D2 would cause price to rise from P1 to P2? After the shift in the demand, there would be a surplus at price P2. After the shift in the demand, there would be a shortage at price P2. After the shift in the demand, there would be a surplus at price P1. After the shift in the demand, there would be a shortage at price P1.

After the shift in the demand, there would be a shortage at price P1.

While eating at Alex's "Pizza by the Slice" restaurant, Kara experiences diminishing marginal utility. She gained 10 units of satisfaction from her first slice of pizza consumed and would only receive 5 units of satisfaction from consuming a second slice, at the same price. Based on this information we can conclude that even if Kara buys a second slice, she will not buy a third slice. Alex may have to lower the price to convince Kara to buy a second slice. Kara will not eat a second slice, even if it is given to her at no charge. Kara will definitely want to buy a second slice of pizza.

Alex may have to lower the price to convince Kara to buy a second slice.

Given the budget line in the above figure, which of the following combinations of pizza and milk are affordable? 4 pizzas, 1 gallon of milk 2 pizzas, 6 gallons of milk 0 pizzas, 10 gallons of milk All of these combinations are affordable.

All of these combinations are affordable.

Which of the following is consistent with the law of demand? A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded. A decrease in the price of tacos causes sellers to want to sell less. An increase in the price of hamburgers causes buyers to buy fewer hamburgers. An increase in the people's craving for pizza causes buyers to buy more pizza.

An increase in the price of hamburgers causes buyers to buy fewer hamburgers.

Use the following graphs to answer the next question. If union workers decide to take more leisure, while the prices of the products produced by union workers increase, this situation is depicted in graph D. C. B. A.

In the diagrams below, the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts. Which diagram above illustrates the effects on the peanut butter market, if severe flooding destroys a large portion of the peanut crop in the economy? A D C B

Use the following graphs to answer the next question. If union workers decide to take more leisure, while the prices of the products produced by union workers decrease, this situation is depicted in graph B. A. C. D.

Use the following graph of demand curves to answer the next question. Which demand curve is relatively most elastic between P1 and P2? D1 D2 D4 D3

Use the following table to answer the question below. Dave's Production Possibility Schedule Simon's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 80 20 120 40 60 40 80 80 40 60 40 120 20 80 0 160 0 Who has the comparative advantage in the production of corn? Both Simon Dave Neither

Dave

Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product to answer the next question. Sd + Q is the product supply curve after an import quota is imposed. A quota of wy will result in a decrease of consumer surplus equal to areas E + F +K. E + F + G + H + J. E. K.

E + F + G + H + J.

Which of the following is an assumption of the theory of consumer behavior described in this chapter? Each good that a consumer consumes has a price. The consumer oftentimes is not sure about her preferences. Marginal utility increases as more units of a good is consumed. The consumer's income increases as prices of goods increase.

Each good that a consumer consumes has a price.

Answer the next question on the basis of the data given for two regions, East and West, of a hypothetical world. The nations have the production possibilities for units of food and clothing given below. East Production Possibilities West Production Possibilities Product A B C D Product A B C D Food 24 16 8 0 Food 45 30 15 0 Clothing 0 4 8 12 Clothing 0 5 10 15 Which of the following is true? For the West region, the cost of 15 units of food is 5 units of clothing. For the East region, the cost of 4 units of clothing is 6 units of food. For the West region, the cost of 5 units of clothing is 10 units of food. For the East region, the cost of 8 units of food is 8 units of clothing.

For the West region, the cost of 15 units of food is 5 units of clothing.

Answer the next question on the basis of the data given for two regions, East and West, of a hypothetical world. The nations have the production possibilities for units of food and clothing given below. East Production Possibilities West Production Possibilities Product A B C D Product A B C D Food 24 16 8 0 Food 45 30 15 0 Clothing 0 4 8 12 Clothing 0 5 10 15 Which of the following is true? For the West region, the cost of 5 units of clothing is 10 units of food. For the West region, the cost of 15 units of food is 5 units of clothing. For the East region, the cost of 4 units of clothing is 6 units of food. For the East region, the cost of 8 units of food is 8 units of clothing.

For the West region, the cost of 15 units of food is 5 units of clothing.

Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product to answer the next question. Sd + Q is the product supply curve after an import quota is imposed. A quota of wy will result in quota rent equal to areas E + F + G + H + J. G + H. F + J. F + G + H + J.

G + H.

In the circular flow model of the market system, households sell products and buy resources. sell products and resources. buy products and sell resources. buy products and resources.

buy products and sell resources.

Use the following table to answer the question below. Giovanni's Production Possibility Schedule Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 320 40 120 20 240 80 80 40 160 120 40 60 80 160 0 80 0 Who has the comparative advantage in the production of green beans? Jorge Neither Giovanni Both

Giovanni

Use the following table to answer the question below. Giovanni's Production Possibility Schedule Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn Pounds of Green Beans Pounds of Corn 0 160 0 320 40 120 20 240 80 80 40 160 120 40 60 80 160 0 80 0 Who has the comparative advantage in the production of green beans? Neither Both Giovanni Jorge

Giovanni

Use the following graph for a competitive market for a product where the government has set a price ceiling of A to answer the question below. What quantity will buyers be able to buy after the imposition of the price ceiling? K J L JL

Jake

Answer the next question on the basis of the following production possibilities tables for two countries, Latalia and Trombonia: Latalia's Production Possibilities Product A B C D E Pork (tons) 4 3 2 1 0 Beans (tons) 0 5 10 15 20 Trombonia's Production Possibilities Product A B C D E Pork (tons) 8 6 4 2 0 Beans (tons) 0 6 12 18 24 If these two nations specialize on the basis of comparative advantage Trombonia will produce both beans and pork. Latalia will produce beans and Trombonia will produce pork. Latalia will produce both beans and pork and Trombonia will produce neither. Trombonia will produce beans and Latalia will produce pork.

Latalia will produce beans and Trombonia will produce pork.

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the MRP curve to shift to the left. MP curve to shift downward. MRC curve to shift downward. MRP curve to shift to the right.

MRP curve to shift to the right.

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the MRP curve to shift to the left. MRC curve to shift downward. MRP curve to shift to the right. MP curve to shift downward.

MRP curve to shift to the right.

Nation Alpha can produce employing all its available resources either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of clothing. Nation Alpha has a comparative advantage in producing chemicals. Nation Beta has a comparative advantage in producing chemicals. Nation Alpha has a comparative advantage in producing clothing. Nation Beta is the high-cost producer of clothing.

Nation Alpha has a comparative advantage in producing chemicals.

Nation Alpha can produce employing all its available resources either 800 units of chemicals or 1,600 units of clothing. Nation Beta can produce either 200 units of chemicals or 800 units of clothing. Nation Alpha has a comparative advantage in producing chemicals. Nation Alpha has a comparative advantage in producing clothing. Nation Beta has a comparative advantage in producing chemicals. Nation Beta is the high-cost producer of clothing.

Nation Alpha has a comparative advantage in producing chemicals.

Who determines the price and quantity traded in a market? the government buyers and sellers buyers sellers

buyers and sellers

Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product to answer the next question. If this economy was entirely closed to international trade, equilibrium price and quantity would be Pa and z. Pa and x. Pc and v. Pc and z.

Pa and x.

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents? Homeowners will reduce their own use of housing space, making more available to others. Poor people will be able to find adequate housing. People moving into the community will have difficulty locating residential space to rent. Those whose needs for housing are most urgent will be able to obtain the space they want.

People moving into the community will have difficulty locating residential space to rent.

Which is most likely to be observed in a community where legal ceilings are imposed on residential rents? People moving into the community will have difficulty locating residential space to rent. Poor people will be able to find adequate housing. Those whose needs for housing are most urgent will be able to obtain the space they want. Homeowners will reduce their own use of housing space, making more available to others.

People moving into the community will have difficulty locating residential space to rent.

Simon

What other economic process needs to accompany international trade, for nations to benefit from such trade? Nationalization of industries. Specialization in production. Regulation of production and trade. Spreading out of resources in more industries.

Specialization in production.

Which of the following is not an assumption of the theory of consumer behavior described in this chapter? The consumer aims to get maximum total utility out of a given budget. The consumer has to make decisions within a given budget constraint. The consumer experiences diminishing marginal utility from consuming goods. The consumer's tastes and preferences continually change within the period studied.

The consumer's tastes and preferences continually change within the period studied.

Which best expresses the law of diminishing marginal benefit? The marginal benefit from a product increases as more of the product is consumed. The marginal benefit of a product decreases as less of the product is consumed. The marginal benefit of the product increases as less of the product is consumed. The total benefit from the product decreases as more of the product is consumed.

The marginal benefit of the product increases as less of the product is consumed.

Which best expresses the law of diminishing marginal benefit? The marginal benefit of the product increases as less of the product is consumed. The marginal benefit from a product increases as more of the product is consumed. The total benefit from the product decreases as more of the product is consumed. The marginal benefit of a product decreases as less of the product is consumed.

The marginal benefit of the product increases as less of the product is consumed.

Which situation is consistent with the law of diminishing marginal benefit? Joe's marginal benefit from eating pizza reaches a maximum when total benefit is zero. The more pizza Joe eats, the less he enjoys an additional slice. The more pizza Joe eats, the more he enjoys an additional slice. Joe's marginal benefit from eating pizza becomes positive after eating three slices.

The more pizza Joe eats, the less he enjoys an additional slice.

Which statement is correct? The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage. The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage

The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage.

Which statement is correct? The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage. The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage

The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage.

The general price level increased by 3.1 percent last year. Unemployment was 6.5 percent of the labor force last year. The real domestic output increased by 2.3 percent last year. The price of personal computers declined 4.7 percent last year.

The price of personal computers declined 4.7 percent last year.

Which of the following is a microeconomic statement? Unemployment was 6.5 percent of the labor force last year. The price of personal computers declined 4.7 percent last year. The general price level increased by 3.1 percent last year. The real domestic output increased by 2.3 percent last year.

The price of personal computers declined 4.7 percent last year.

Which statement is true about supply? Supply refers to the amount of inventory that sellers have in their warehouses. As price decreases, producers are willing to put more of the good on the market for sale. To entice producers to offer more of a good on the market for sale, price must rise. There is an inverse relationship between price and quantity supplied.

To entice producers to offer more of a good on the market for sale, price must rise.

Which question is an example of a macroeconomic question? What economic incentives can be used to reduce the cost of health care in the nation? What market conditions are expected for milk in the nation this year? What policies would be recommended for stimulating national economic growth? What is the level of industrial concentration in the US automobile industry?

What policies would be recommended for stimulating national economic growth?

Which of the following will not cause a shift in the demand for resource X? a decline in the price of resource X an increase in the productivity of resource X a decrease in the price of substitute resource Y an increase in the price of the product resource X is producing

a decline in the price of resource X

Use the following graph of the demand to answer the question below. Refer to the above diagram of three demand curves for steak. Which of the following would cause a shift in steak demand from D1 to D3 if steak is a normal good? a decrease in the price of steak an increase in the price of steak an increase in consumer incomes a decrease in consumer incomes

a decrease in consumer incomes

Use the figure below to answer the following question. The figure shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2? an increase in the price of corn a new tax on corn production an increase in the price of water a decrease in the price of water

a decrease in the price of water

Which would be a likely cause of an increase in the demand for pizza? a decrease in the price of pizza a reduced desire for take-out and fast-food dining an increase in the price of pizza a health report showing eating pizza reduces stress

a health report showing eating pizza reduces stress

Which would be a likely cause of an increase in the demand for pizza? a decrease in the price of pizza an increase in the price of pizza a reduced desire for take-out and fast-food dining a health report showing eating pizza reduces stress

a health report showing eating pizza reduces stress

Which of the following is a valid explanation for real wage growth? a contraction of employment in manufacturing industries a rising rate of labor productivity growth an increase in the quantity of labor the rising cost of capital accumulation

a rising rate of labor productivity growth

Which of the following is a valid explanation for real wage growth? the rising cost of capital accumulation an increase in the quantity of labor a contraction of employment in manufacturing industries a rising rate of labor productivity growth

a rising rate of labor productivity growth

Use the figure below to answer the following question. The figure above shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2? an increase in the price of corn a tax on corn production a decrease in the price of corn a subsidy for corn production

a subsidy for corn production

An industry would be likely to lay off workers following an increase in the price of the firm's product. a successful attempt by an industrial union to push wages above the marginal revenue product of labor. the imposition of a new minimum wage below the current equilibrium wage. an increase in the marginal revenue product of labor.

a successful attempt by an industrial union to push wages above the marginal revenue product of labor.

An industry would be likely to lay off workers following the imposition of a new minimum wage below the current equilibrium wage. a successful attempt by an industrial union to push wages above the marginal revenue product of labor. an increase in the marginal revenue product of labor. an increase in the price of the firm's product.

a successful attempt by an industrial union to push wages above the marginal revenue product of labor.

Answer the next question(s) based on the following supply and demand schedules in units per week for a product. Price Quantity Demanded Quantity Supplied $ 60 100 400 50 140 340 40 180 280 30 220 220 20 260 160 10 300 100 The government's introduction of a guaranteed price floor of $50 will result in an unstable market. no shortage or surplus. a surplus of 200 units. a shortage of 200 units.

a surplus of 200 units.

The terms of trade are acceptable if the price is ________ the seller's opportunity cost and ________ the buyer's opportunity cost. below, above above, below above, above below, below

above, below

The assertion that "there is no free lunch" means that all production involves the use of scarce resources and thus the sacrifice of alternative goods. marginal analysis is used in economic reasoning. there are always trade-offs between economic goals. choices need not be made if behavior is rational.

all production involves the use of scarce resources and thus the sacrifice of alternative goods.

The assertion that "there is no free lunch" means that marginal analysis is used in economic reasoning. there are always trade-offs between economic goals. choices need not be made if behavior is rational. all production involves the use of scarce resources and thus the sacrifice of alternative goods.

all production involves the use of scarce resources and thus the sacrifice of alternative goods.

The assertion that "there is no free lunch" means that marginal analysis is used in economic reasoning. choices need not be made if behavior is rational. there are always trade-offs between economic goals. all production involves the use of scarce resources and thus the sacrifice of alternative goods.

all production involves the use of scarce resources and thus the sacrifice of alternative goods.

The substitution effect always decreases purchases of a good as the price of a good rises. is always smaller than the income effect. increases purchases of the good as the price rises if the good is a normal good. is always larger than the price effect.

always decreases purchases of a good as the price of a good rises.

Marginal revenue product measures the increase in total revenue resulting from the production of one more unit of a product. amount by which the extra production of one more worker increases a firm's total revenue. increase in total resource cost resulting from the hire of one extra unit of a resource. decline in product price that a firm must accept to sell the extra output of one more worker.

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

Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the equilibrium quantity of oranges will rise. demand for oranges will necessarily rise. price of oranges will fall. amount of oranges that will be available at various prices has declined.

amount of oranges that will be available at various prices has declined.

Use the following graph of the demand to answer the question below. Refer to the three demand curves for coffee. Which of the following would cause a shift in coffee demand from D1 to D2 if coffee is a normal good? a decrease in consumer incomes an increase in consumer incomes an increase in the price of coffee a decrease in the price of coffee

an increase in consumer incomes

Use the figure below to answer the following question. The figure above shows three supply curves for corn. Which of the following would cause the quantity of corn supplied to increase form point a to point b? a subsidy for corn production an increase in the price of corn a tax on corn production a decrease in the price of corn

an increase in the price of corn

Use the figure below to answer the following question. The figure above shows three supply curves for corn. Which of the following would cause the quantity of corn supplied to increase form point a to point b? an increase in the price of corn a tax on corn production a subsidy for corn production a decrease in the price of corn

an increase in the price of corn

Which of the following is an example of a positive externality (additional social benefit)? the higher price you pay when you buy a heavily advertised product the costs paid by a company to build an automated factory falling property values in a neighborhood where a disreputable nightclub is operating an increase in the value of land you own when a nearby development is completed

an increase in the value of land you own when a nearby development is completed

Use the following competitive market diagram for product Z to answer the question below. Assume that the current market demand and supply curves for Z are D2 and S2. If there are substantial external benefits associated with the production of Z, then an output greater than G would result in a more efficient allocation of resources. an output smaller than G would improve resource allocation. efficient resource allocation occurs at output G and price B because the market mechanism does not measure all benefits. government should levy a per-unit excise tax on Z to shift the demand curve toward D1.

an output greater than G would result in a more efficient allocation of resources.

The Law of Increasing Opportunity Cost states that: as output decreases the marginal cost increases. as output increases the marginal cost decreases. as output increases the marginal cost increases as output increases the marginal cost does not change.

as output increases the marginal cost increases

A point inside the production possibilities curve is ________ while a point outside the curve is ________. below the maximum possible; the maximum possible the maximum possible; below the maximum possible unattainable; attainable attainable; unattainable

attainable; unattainable

A point inside the production possibilities curve is ________ while a point outside the curve is ________. unattainable; attainable attainable; unattainable below the maximum possible; the maximum possible the maximum possible; below the maximum possible

attainable; unattainable

Use the figure below to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect. If the output level is Q1, then there is missing surplus indicated by the area bce. ecf. 0eQ1. 0abe.

bce.

Lizzie's budget line is shown in the figure above. If the price of a cookie falls, the budget line shifts rightward and its slope does not change. becomes flatter. becomes steeper. shifts leftward and its slope does not change.

becomes steeper.

Use the following supply and demand graph to answer the question below: S1 and D1 represent the current market supply and demand, respectively. S2 and D2 represent the socially optimal supply and demand. The positions of the graphs indicate that there is (are) external costs from production and consumption of the product. benefits from production and consumption of the product. costs from production and external benefits from consumption of the product. benefits from production and external costs from consumption of the product.

benefits from production and consumption of the product.

Mutually beneficial trade is possible when the terms of trade are between the seller's and buyer's opportunity cost. between the seller's and buyer's general behavior. above the seller's opportunity cost and above the buyer's opportunity cost. below the seller's opportunity cost and above the buyer's opportunity cost.

between the seller's and buyer's opportunity cost.

Among the following examples, the one that best illustrates a public good is a(n) laptop used by a student in a college or university. airline ticket bought by a vacationer. movie produced by a Hollywood company. bike path around a city or town.

bike path around a city or town.

Use the following table to answer the question below. Jorge's Production Possibility Schedule Pounds of Green Beans Pounds of Corn 0 320 20 240 40 160 60 80 80 0 Jorge's production possibility schedule demonstrates that green beans have a trade-off with corn, but corn does not have a trade-off with green beans. green beans do not have a trade-off with corn, but corn has a trade-off with green beans. there is no trade-off between corn and green beans. both corn and green beans require a trade-off.

both corn and green beans require a trade-off.

The role of the entrepreneur in society is to regulate what products are considered safe to market. bring the factors of production together and take the risks of producing. provide capital to the firm which the management combines with labor. control the land upon which all production takes place to get the most rent.

bring the factors of production together and take the risks of producing.

A public good can never be provided by a nongovernmental organization. generally results in substantial negative externalities. costs essentially nothing to produce and is thus provided by the government at a zero price. can't be provided to one person without making it available to others as well.

can't be provided to one person without making it available to others as well.

When economists say that the demand for a product has decreased, they mean that the product has become more expensive and thus consumers are buying less of it. consumers are now willing and able to buy less of this product at each possible price. the demand curve has shifted to the right. the product has become particularly scarce for some reason.

consumers are now willing and able to buy less of this product at each possible price.

The theory of consumer behavior assumes that consumers do not know how much marginal utility they obtain from successive units of various products. consumers behave rationally, attempting to maximize their satisfaction. consumers have unlimited money incomes. marginal utility is constant.

consumers behave rationally, attempting to maximize their satisfaction.

Use the following circular flow diagram to answer the question below. If box A represents businesses or firms, B the resource market, and C households, and if flow (7) represents goods and services, then flow (6) would represent consumption expenditures money income goods and services resources

consumption expenditures

corn

From an economic perspective, a student's decision to go to the movies instead of studying for a test indicates that in the student's thinking the marginal benefit of studying is greater than the marginal cost of studying. cost of going to the movies is greater than the marginal cost of studying. cost of going to the movies is less than the marginal benefit of going to the movies. benefit of studying is greater than the marginal benefit of going to the movies.

cost of going to the movies is less than the marginal benefit of going to the movies.

Marginal cost can be defined as the change in cost resulting from one less unit of production. cost resulting from one more unit of production. benefit resulting from one less unit of production. benefit resulting from one more unit of production.

cost resulting from one more unit of production.

The table below shows the weekly supply for hamburger in a market where there are just three sellers. Price Seller 1 Qs 1 Seller 2 Qs 2 Seller 3 Qs 3 $5 8 5 4 4 6 4 3 3 4 3 2 2 2 2 1 Refer to the above table. If the price of hamburger falls from $5 to $4, then the weekly market quantity supplied will increase from 9 to 17. decrease from 17 to 9. increase from 13 to 17. decrease from 17 to 13.

decrease from 17 to 13.

A decrease in demand and an increase in supply will increase price and affect the equilibrium quantity in an indeterminate way. affect price in an indeterminate way and decrease the equilibrium quantity. increase price and increase the equilibrium quantity. decrease price and affect the equilibrium quantity in an indeterminate way.

decrease price and affect the equilibrium quantity in an indeterminate way.

A decrease in demand and an increase in supply will increase price and increase the equilibrium quantity. decrease price and affect the equilibrium quantity in an indeterminate way. affect price in an indeterminate way and decrease the equilibrium quantity. increase price and affect the equilibrium quantity in an indeterminate way.

decrease price and affect the equilibrium quantity in an indeterminate way.

Use the following figure to answer the question below. A point on the production possibilities curve in the figure above is local. inefficient. efficient. not attainable.

efficient.

Use the following figure to answer the question below. A point on the production possibilities curve in the figure above is not attainable. efficient. inefficient. local.

efficient.

A profit-maximizing firm will expand employment if marginal revenue product exceeds marginal resource cost. reduce employment if marginal revenue product equals marginal resource cost. reduce employment if marginal revenue product exceeds marginal resource cost. expand employment if marginal revenue product equals marginal resource cost.

expand employment if marginal revenue product exceeds marginal resource cost.

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will have a domestic shortage of wheat. neither export nor import wheat. import wheat. export wheat.

export wheat.

Suppose the domestic price (no-international-trade price) of wheat is $3.50 a bushel in the United States while the world price is $4.00 a bushel. Assuming no transportation costs, the United States will import wheat. have a domestic shortage of wheat. export wheat. neither export nor import wheat.

export wheat.

Use the following supply and demand graph to answer the question below. In the graph, line S is the current supply of this product, while line S1 is the optimal supply from the society's perspective. This figure suggests that there is (are) currently an underallocation of resources toward producing this good. positive externalities from producing the good. external benefits from the production of this product. external costs in the production of this product.

external costs in the production of this product.

Which of the following is an example of a negative externality (additional social cost)? the costs paid by a company to build an automated factory an increase in the value of land you own when a nearby development is completed the higher price you pay when you buy a heavily advertised product falling property values in a neighborhood where a disreputable nightclub is operating

falling property values in a neighborhood where a disreputable nightclub is operating

Answer the next question on the basis of the given supply and demand data for wheat. If the price in this market was $4 the market would clear; quantity demanded would equal quantity supplied. buyers would want to purchase more wheat than is currently being supplied. farmers would not be able to sell all their wheat. there would be a shortage of wheat.

farmers would not be able to sell all their wheat.

One major part of the opportunity costs of one's decision to go to college after high-school graduation is the full-time job that one could have gotten instead of going to college. additional income that one can get if one had a college degree. high-school diploma needed in order to apply for college. education that one gets while in college.

full-time job that one could have gotten instead of going to college.

One major part of the opportunity costs of one's decision to go to college after high-school graduation is the high-school diploma needed in order to apply for college. education that one gets while in college. additional income that one can get if one had a college degree. full-time job that one could have gotten instead of going to college.

full-time job that one could have gotten instead of going to college.

Assume that the graphs show a competitive market for the product stated in the question below. Select the graph that best shows the change in the market following a reduction in the tax placed on the buyers in the market. graph B graph D graph C graph A

graph A

Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market for chicken when the price of a substitute, such as beef, decreases. graph B graph C graph A graph D

graph B

Assume that the graphs show a competitive market for the product stated in the question below. Select the graph above that best shows the change in the market following a reduction in the tax placed on the suppliers in the market. graph C graph A graph D graph B

graph C

Assume that there are two nations, Alpha and Beta. Each nation produces two products, wheat and steel. Alpha has a comparative advantage in the production of wheat. If the two nations trade, the trade price of wheat in terms of steel will be less than the domestic opportunity cost of wheat in Alpha and greater than the domestic opportunity cost of wheat in Beta. greater than the domestic opportunity cost of wheat in Alpha and less than the domestic opportunity cost of wheat in Beta. less than the domestic opportunity cost of wheat in both nations. greater than the domestic opportunity cost of wheat in both nations.

greater than the domestic opportunity cost of wheat in Alpha and less than the domestic opportunity cost of wheat in Beta.

Assume that there are two nations, Alpha and Beta. Each nation produces two products, wheat and steel. Alpha has a comparative advantage in the production of wheat. If the two nations trade, the trade price of wheat in terms of steel will be less than the domestic opportunity cost of wheat in both nations. greater than the domestic opportunity cost of wheat in Alpha and less than the domestic opportunity cost of wheat in Beta. greater than the domestic opportunity cost of wheat in both nations. less than the domestic opportunity cost of wheat in Alpha and greater than the domestic opportunity cost of wheat in Beta.

greater than the domestic opportunity cost of wheat in Alpha and less than the domestic opportunity cost of wheat in Beta.

Use the following diagrams to answer the next question. The firm will fail to maximize profits if it hires 5 workers. has a marginal resource cost that exceeds the wage rate for each worker. has a principal-agent problem. has a constant marginal resource cost of $5.

has a constant marginal resource cost of $5.

Use the following diagrams to answer the next question. The firm will fail to maximize profits if it hires 5 workers. has a principal-agent problem. has a constant marginal resource cost of $5. has a marginal resource cost that exceeds the wage rate for each worker.

has a constant marginal resource cost of $5.

Which of the following has not been a major factor contributing to the high productivity of labor in the United States? education and training of workers high levels of capital investment technological advancement high wage rates

high wage rates

Which of the following has not been a major factor contributing to the high productivity of labor in the United States? high wage rates high levels of capital investment technological advancement education and training of workers

high wage rates

Use the following graph to answer the next question. It shows a firm that buys its inputs and sells its output in competitive markets. If the firm develops a new technology that increases labor productivity, the equilibrium level of employment for this firm is expected to be Zero. lower than L0. L0. higher than L0.

higher than L0.

A profit-maximizing firm's daily total revenue is $155 with 3 workers, $200 with 4 workers, and $230 with 5 workers. The cost of each worker is $40 per day. The firm should hire five workers. not hire a fourth worker. hire more than five workers. hire four workers.

hire four workers.

Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will export copper. import copper. have a domestic surplus of copper. neither export nor import copper.

import copper.

Country A limits other nation's exports to Country A to 1,000 tons of coal annually. This is an example of a(n) import quota. voluntary export restriction. export subsidy. protective tariff.

import quota.

Increases in the productivity of labor result partly from increases in the quantity of labor. improvements in technology. the law of diminishing returns. reductions in wage rates.

improvements in technology.

Suppose that in each of four successive years producers sell more of their product and at higher prices. This could be explained as an exception to the law of demand. in terms of a stable demand curve and increasing supply. in terms of a stable supply curve and increasing demand. by small annual increases in supply.

in terms of a stable supply curve and increasing demand.

Suppose that in each of four successive years producers sell more of their product and at higher prices. This could be explained in terms of a stable supply curve and increasing demand. in terms of a stable demand curve and increasing supply. by small annual increases in supply. as an exception to the law of demand

in terms of a stable supply curve and increasing demand.

Answer the next question on the basis of the following demand schedule. Price Quantity Demanded $6 1 5 2 4 3 3 4 2 5 1 6 The price elasticity of demand is relatively elastic (based on the midpoint formula). in the $6-$4 price range. in the $3-$1 price range. over the entire $6-$1 price range. in the $6-$5 price range only.

in the $6-$4 price range.

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Refer to the table. If the price of hamburger falls from $5 to $3, then the weekly market quantity demanded will increase from 24 to 52. increase from 120 to 156. increase from 29 to 55. decrease from 52 to 24.

increase from 24 to 52.

The table below shows the weekly supply for hamburger in a market where there are just three sellers. Price Seller 1 Qs 1 Seller 2 Qs 2 Seller 3 Qs 3 $5 8 5 4 4 6 4 3 3 4 3 2 2 2 2 1 If the price of hamburger increases from $2 to $4, then the weekly market quantity supplied will decrease from 9 to 5. increase from 5 to 9. decrease from 13 to 5. increase from 5 to 13.

increase from 5 to 13.

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) decrease in the price and quantity of new homes. increase in the price and quantity of new homes. decrease in the price of new homes and increase in quantity. increase in the price of new homes and decrease in quantity.

increase in the price of new homes and decrease in quantity.

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) decrease in the price of new homes and increase in quantity. increase in the price and quantity of new homes. decrease in the price and quantity of new homes. increase in the price of new homes and decrease in quantity.

increase in the price of new homes and decrease in quantity.

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an increase in the demand for good A as well as for good B. increase in the demand for A and a decrease in the quantity of B demanded. increase in the demand for A and an increase in the quantity of B demanded. increase in the quantity of A demanded and a decrease in the demand for B.

increase in the quantity of A demanded and a decrease in the demand for B.

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an increase in the quantity of A demanded and a decrease in the demand for B. increase in the demand for A and a decrease in the quantity of B demanded. increase in the demand for good A as well as for good B. increase in the demand for A and an increase in the quantity of B demanded.

increase in the quantity of A demanded and a decrease in the demand for B.

An increase in demand for oil along with a simultaneous increase in supply of oil will increase price, but whether it increases quantity depends on how much each curve shifts. increase price and decrease quantity. decrease price and increase quantity. increase quantity, but whether it increases price depends on how much each curve shifts.

increase quantity, but whether it increases price depends on how much each curve shifts.

A decline in the price of resource A will reduce the demand for complementary resource B. increase the demand for complementary resource B. shift the demand curve for A to the left. shift the demand curve for A to the right.

increase the demand for complementary resource B.

Import quotas on products will reduce the quantity of the imported products and increase the total quantity of the product consumed. will not affect the price to the consumers. increase the price to the consumers. decrease the price to the consumers.

increase the price to the consumers.

The income elasticity of demand for jewelry is +2. Other things equal, a 10% increase in consumer income will decrease the quantity of jewelry purchased by 5%. increase the quantity of jewelry purchased by 5%. increase the quantity of jewelry purchased by 20%. decrease the quantity of jewelry purchased by 20%.

increase the quantity of jewelry purchased by 20%.

A tax on buyers will cause the equilibrium price paid by the consumer to ________ and the equilibrium quantity to ________. decrease, increase increase, decrease decrease, decrease increase, increase

increase, decrease

A tax on buyers will cause the equilibrium price paid by the consumer to ________ and the equilibrium quantity to ________. decrease, increase increase, increase increase, decrease decrease, decrease

increase, decrease

If the world price for good A is above the domestic price for good A without trade, then producer surplus will ________ and total economic surplus will ________ with trade. increase, decrease decrease, decrease increase, increase decrease, increase

increase, increase

If the world price for good A is below the domestic price for good A without trade, then consumer surplus will ________ and total economic surplus will ________ with trade. increase, increase increase, decrease decrease, decrease decrease, increase

increase, increase

If the nominal wages of carpenters rose by 5% in 2013 and the price level increased by 3%, then the real wages of carpenters decreased by 2%. increased by 2%. increased by 3%. increased by 8%.

increased by 2%.

If the nominal wages of carpenters rose by 5% in 2013 and the price level increased by 3%, then the real wages of carpenters increased by 2%. increased by 3%. decreased by 2%. increased by 8%.

increased by 2%.

What is the most likely effect of the development of DVDs, rental movies, and online movie streaming on the movie theater industry? movie theater tickets become an inferior good decreased costs of producing movies increased price elasticity of demand for movie theater tickets increased demand for movie theater tickets

increased price elasticity of demand for movie theater tickets

The real wage will rise if the nominal wage falls more rapidly than the general price level. increases at the same rate as labor productivity. increases more rapidly than the general price level. falls at the same rate as the general price level.

increases more rapidly than the general price level.

The real wage will rise if the nominal wage increases more rapidly than the general price level. falls at the same rate as the general price level. increases at the same rate as labor productivity. falls more rapidly than the general price level.

increases more rapidly than the general price level.

As a consequence of the problem of scarcity individuals have to make choices from among alternatives. only some people can "have it all." there is never enough of anything. things that are plentiful have relatively high prices

individuals have to make choices from among alternatives.

As a consequence of the problem of scarcity Correct Answer individuals have to make choices from among alternatives. things that are plentiful have relatively high prices. there is never enough of anything. only some people can "have it all."

individuals have to make choices from among alternatives.

Inclusive unionism is practiced mostly by industrial unions. small unions comprised of skilled workers, such as the bricklayers. craft unions. professional and semiprofessional employees.

industrial unions.

Use the following figure to answer the question below. Point A in the figure above is local. efficient. inefficient. not attainable.

inefficient.

The main function of the entrepreneur is to make routine pricing decisions. create market demand. innovate. purchase capital.

innovate.

Use the following graph of the market for milk to answer the question below. If 30 million gallons of milk are being produced, then we know marginal benefit equals marginal cost. is greater than marginal cost. is less than marginal cost. and marginal cost do not depend on the quantity.

is less than marginal cost.

Use the following graph of the market for milk to answer the question below. If 30 million gallons of milk are being produced, then we know marginal benefit is greater than marginal cost. and marginal cost do not depend on the quantity. is less than marginal cost. equals marginal cost.

is less than marginal cost.

The MRP curve for labor lies above the firm's labor demand curve. lies below the firm's labor demand curve. is the firm's labor demand curve. intersects the firm's labor demand curve from above.

is the firm's labor demand curve.

The economizing problem is essentially one of deciding how to make the best use of unlimited resources to satisfy unlimited economic wants. limited resources to satisfy unlimited economic wants. limited resources to satisfy limited economic wants. unlimited resources to satisfy limited economic wants.

limited resources to satisfy unlimited economic wants.

Use the figure below to answer the following question. Refer to the three demand curves. A "decrease in demand" would be illustrated as a change from line A to C. point 1 to point 4. line C to B. point 1 to point 3.

line A to C.

When restrictions on imported products are removed by a nation, it will result in higher prices and higher quantities consumed in that nation. lower prices and higher quantities consumed in that nation. higher prices and lower quantities consumed in that nation. lower prices and lower quantities consumed in that nation.

lower prices and higher quantities consumed in that nation.

Use the following table to answer the question below. Price per Unit Quantity Demanded per Year Quantity Supplied per Year $ 5 2,000 0 10 1,800 300 15 1,600 600 20 1,400 900 25 1,200 1,200 30 1,000 1,500 There will be an excess demand whenever the price is equals $25. lower than $25. higher than $30. higher than $25.

lower than $25.

Specialization implies that an individual should specialize in the production of a good in which he/she has the ________ opportunity cost. necessary highest lowest general

lowest

If an individual has a comparative advantage in the production of a good, then this individual has the greatest desire for the good. lowest opportunity cost in the production of the good. same opportunity cost in the production of the good. highest opportunity cost in the production of the good.

lowest opportunity cost in the production of the good.

When studying human behavior, economists assume rational self-interest. This means that people are quite selfish and are not concerned about others. make decisions based on some desired outcome. always make the right decisions. have all the information they need to make a decision

make decisions based on some desired outcome.

After eating four slices of pizza, you are offered a fifth slice for free. You turn down the fifth slice. Your refusal indicates that the marginal benefit for the fourth slice is the largest among all slices. marginal benefit is positive for the fourth slice and negative for the fifth slice. marginal benefit for four pizza slices is negative. total benefit for five pizza slices is negative.

marginal benefit is positive for the fourth slice and negative for the fifth slice.

A firm will find it profitable to hire workers up to the point at which their marginal resource cost equals their wage rate. MP is equal to their MRP. wage rate equals product price. marginal resource cost is equal to their MRP.

marginal resource cost is equal to their MRP.

A profit-maximizing firm should hire an input as long as the marginal revenue product of the input is greater than the marginal revenue product of other inputs the firm is using. firm can increase its total revenue. price of the input doesn't exceed the price of the other inputs used in the firm's production. marginal revenue product of the input is at least as much as the cost of hiring the input.

marginal revenue product of the input is at least as much as the cost of hiring the input.

Suppose two workers can harvest $46 and three workers can harvest $60 worth of apples per day. On the basis of this information we can say that the marginal revenue product of each of the first two workers is $23. marginal revenue product of the third worker is $14. third worker should not be hired. marginal product of each of the first two workers is 23.

marginal revenue product of the third worker is $14.

The change in a firm's total revenue that results from hiring an additional worker is measured by the average revenue product. marginal revenue product. marginal revenue. marginal product.

marginal revenue product.

The primary gain from international trade is increased employment in the domestic import sector. increased employment in the domestic export sector. more goods than would be attainable through domestic production alone. tariff revenue.

more goods than would be attainable through domestic production alone.

Use the figure below to answer the following question. An increase in quantity supplied is depicted by a shift from S1 to S2. shift from S2 to S1. move from point y to point x. move from point x to point y.

move from point y to point x.

Use the figure below to answer the following question. An increase in quantity supplied is depicted by a shift from S2 to S1. move from point y to point x. move from point x to point y. shift from S1 to S2.

move from point y to point x.

An "increase in the quantity supplied" suggests a rightward shift of the supply curve. movement up along the supply curve. leftward shift of the supply curve. movement down along the supply curve.

movement up along the supply curve.

Assuming a firm is selling its output in a purely competitive market, its resource demand curve can be determined by multiplying marginal product by product price. comparing marginal product with various possible input prices. multiplying total product by product price. dividing total revenue by marginal product.

multiplying marginal product by product price.

Which of the following is a land resource? a farmer an oil drilling rig a machine for detecting earthquakes natural gas

natural gas

Cross elasticity of demand is unitary for secondary goods. positive for general goods. negative for substitute goods. negative for complementary goods.

negative for complementary goods.

Answer the next question(s) based on the following supply and demand schedules in units per week for a product. Price Quantity Demanded Quantity Supplied $ 60 100 400 50 140 340 40 180 280 30 220 220 20 260 160 10 300 100 The government's introduction of a guaranteed price floor of $10 will result in a surplus of 200 units. a shortage of 200 units. an unstable market. no shortage or surplus.

no shortage or surplus.

Suppose a powerful labor union negotiates a wage for its members above the equilibrium wage rate in a nonunionized market. A likely result of this is that not everyone who wants to work at the new wage will be able to find jobs. the union will have difficulty recruiting new members. this firm will make up for the higher wage rate by expanding output. union members will be able to work more overtime than before.

not everyone who wants to work at the new wage will be able to find jobs.

In an indifference curve/budget line diagram, a consumer's equilibrium consumption combination will occur inside the budget line. at the origin. outside the budget line. on the budget line.

on the budget line.

Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3% percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of imperfect information. normative economics. marginal benefits that exceed marginal costs. opportunity costs.

opportunity costs.

Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3% percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of opportunity costs. imperfect information. marginal benefits that exceed marginal costs. normative economics.

opportunity costs.

An industrial union is most effective in a purely competitive industry. is most concerned with increasing the demand for workers in an industry. restricts supply of labor through licensing requirements. organizes a wide range of workers in an industry to gain bargaining power.

organizes a wide range of workers in an industry to gain bargaining power.

In analyzing human decision and action, economists assume that costs are more important than benefits. scarcity is more important than choice. there are scarce resources in the economy. people's behavior reflects rational self-interest.

people's behavior reflects rational self-interest.

Which of the following is an explanation for the high labor-productivity in the United States? plentiful capital resources plentiful labor resources high price of labor high total output in industries

plentiful capital resources

Use the figure below to answer the following question. Refer to the three demand curves. An "increase in quantity demanded" would be illustrated by a change from point 2 to point 5. point 5 to point 1. point 4 to point 6. point 4 to point 1.

point 4 to point 1.

We would expect the cross elasticity of demand between Pepsi and Coke to be positive, indicating substitute goods. positive, indicating general goods. positive, indicating secondary goods. negative, indicating substitute goods.

positive, indicating substitute goods.

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

price of A with the MRP of A.

Use the figure below to answer the following question. The diagram above shows three supply curves for corn. A movement from point a to point b is caused by a change in the price of corn in the market. number of corn farmers. price of resources used to produce corn. technology of corn farming.

price of corn in the market.

A competitive employer will hire inputs up to the point where the marginal product of the input reaches a maximum. price of the input equals the marginal product of the input. price of the input equals the price of the output. price of the input equals the marginal revenue product of the input.

price of the input equals the marginal revenue product of the input.

In which instances will total revenues decline? price falls and demand is elastic price rises and Ed equals -2.47 price rises and Ed equals -.41 price rises and demand is of unit elasticity

price rises and Ed equals -2.47

Use the figure below to answer the following question. If actual production and consumption occur at Q1 and the price is P2 producer surplus equals area c. deadweight loss equals area f. consumer surplus equals area a + b. producer surplus equals area c + b.

producer surplus equals area c + b.

Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $140. Tony experiences a consumer surplus of $670 and Amanda experiences a producer surplus of $200. producer surplus of $10 and Amanda experiences a consumer surplus of $190. producer surplus of $200 and Tony experiences a consumer surplus of $10. consumer surplus of $10 and Amanda experiences a producer surplus of $190.

producer surplus of $200 and Tony experiences a consumer surplus of $10.

The demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the buyers' incomes. time period, say, from one month to the next. product's price. cost of producing the product.

product's price.

The demand schedule or curve for a product shows the relationship between how much of the product buyers are willing and able to buy and the time period, say, from one month to the next. buyers' incomes. cost of producing the product. product's price.

product's price.

Assume that a restaurant is hiring labor in an amount such that the MRC of the last worker is $16 and her MRP is $12. On the basis of this information, we can say that profits will be increased by hiring additional workers. the restaurant is maximizing profits. marginal revenue product must exceed average revenue product. profits will be increased by hiring fewer workers.

profits will be increased by hiring fewer workers.

Assume that a consumer purchases a combination of products Y and Z and that the MUy/Py = 25 and MUz/Pz = 20. To maximize utility, without spending more money, the consumer should purchase less of Y and more of Z. purchase more of both Y and Z. make no change in Y and Z. purchase more of Y and less of Z

purchase more of Y and less of Z

There is an excess demand in a market for a product when quantity demanded is less than quantity supplied. the current price is higher than the equilibrium price. supply is less than demand. quantity demanded is greater than quantity supplied.

quantity demanded is greater than quantity supplied.

A maximum limit set on the amount of a specific good that may be imported into a country over a given period of time is called a nontariff barrier. quota. tariff. voluntary export restriction.

quota

A profit-maximizing firm will expand employment if marginal revenue product is less than marginal resource cost. reduce employment if marginal revenue product equals marginal resource cost. expand employment if marginal revenue product equals marginal resource cost. reduce employment if marginal revenue product is less than marginal resource cost.

reduce employment if marginal revenue product is less than marginal resource cost.

When economists say that the demand for labor is a derived demand, they mean that it is related to the demand for the product or service labor is producing. dependent on government expenditures for public goods and services. based on the desire of businesses to exploit labor by paying below equilibrium wage rates. based on the assumption that workers are trying to maximize their money incomes.

related to the demand for the product or service labor is producing.

The demand for a luxury good whose purchase would exhaust a big portion of one's income is perfectly price inelastic. relatively price elastic. perfectly price elastic. relatively price inelastic.

relatively price elastic.

Prices usually allocate resources efficiently because they allocate resources to the highest value good or service. consumption to the highest cost of good or service. consumption to the lowest value good or service. resources to the lowest value good or service.

resources to the highest value good or service.

The price elasticity of supply measures how responsive quantity supplied is to a change in incomes. easily labor and capital can be substituted for one another in the production process. responsive the quantity supplied of Y is to changes in the price of X. responsive the quantity supplied of X is to changes in the price of X.

responsive the quantity supplied of X is to changes in the price of X.

Use the following graph, where Sd and Dd are the domestic supply and demand for a product and Pc is the world price of that product to answer the next question. Sd + Q is the product supply curve after an import quota is imposed. A quota of wy will result in an increase of producer surplus equal to areas. result in an increase of producer surplus equal to area E. E + F + K. K. E + F + G + H + J.

result in an increase of producer surplus equal to area E.

Farmers selling some of their soybeans in storage because they anticipate a lower price of soybeans in the near future would cause a rightward shift in the current supply of soybeans. movement down along the current supply curve of soybeans. leftward shift in the current supply of soybeans. movement up along the current supply curve of soybeans.

rightward shift in the current supply of soybeans.

In the circular flow model of the market system, business firms buy products and resources. sell products and resources. sell products and buy resources. buy products and sell resources.

sell products and buy resources.

Use the graph below to answer the next question. Other things equal, a decrease in the price of a substitute resource would cause a shift from D3 to D2 assuming the output effect exceeds the substitution effect. move from b to a on D1. move from a to b on D1. shift from D2 to D3 assuming the output effect exceeds the substitution effect.

shift from D2 to D3 assuming the output effect exceeds the substitution effect.

Use the graph below to answer the next question. Other things equal, an increase in the price of substitute resource would cause a shift from D3 to D2 assuming the substitution effect exceeds the output effect. move from b to a on D1. shift from D2 to D3 assuming the substitution effect exceeds the output effect. move from a to b on D1.

shift from D2 to D3 assuming the substitution effect exceeds the output effect.

ph below to answer the next question. Other things equal, an increase in the price of substitute resource would cause a shift from D2 to D3 assuming the substitution effect exceeds the output effect. shift from D3 to D2 assuming the substitution effect exceeds the output effect. move from b to a on D1. move from a to b on D1.

shift from D2 to D3 assuming the substitution effect exceeds the output effect.

Use the graph below to answer the next question. Other things equal, an increase in labor productivity would cause a move from b to a on D1. move from a to b on D1. shift from D3 to D2. shift from D2 to D3.

shift from D2 to D3.

Use the graph below to answer the next question. Other things equal, an increase in the price of a complementary resource would cause a move from a to b on D1. move from b to a on D1. shift from D3 to D2. shift from D2 to D3.

shift from D3 to D2.

Use the figure below to answer the following question. A decrease in supply is depicted by a shift from S2 to S1. move from point y to point x. shift from S1 to S2. move from point x to point y.

shift from S2 to S1.

If product Y is an inferior good, a decrease in consumer incomes will shift the demand curve for product Y to the right. not affect the sales of product Y. make buyers want to buy less of Product Y. shift the demand curve for product Y to the left.

shift the demand curve for product Y to the right.

If the price of gasoline increases significantly, then we'd expect the demand curve for large trucks and SUVs to shift to the right. become upward-sloping. shift to the left. not shift, but there will be a movement along that demand curve.

shift to the left.

A competitive employer is using labor in such an amount that labor's MRP is $10 and its wage rate is $8. This firm is currently hiring the profit-maximizing amount of labor. is selling its product in an imperfectly competitive market. should hire more labor because this will increase profits. should hire more labor, although this may either increase or decrease profits.

should hire more labor because this will increase profits.

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

slopes downward because of diminishing marginal productivity.

A leftward shift of a product supply curve might be caused by an increase in consumer incomes. a decline in the prices of needed inputs. an improvement in the relevant technique of production. some firms leaving an industry.

some firms leaving an industry.

If the supply of labor in a purely competitive labor market increases, then the product supply curve for a single employer will shift to the left. supply curve for a single employer will shift to the right. demand curve for a single employer will shift to the right. demand curve for a single employer will shift to the left.

supply curve for a single employer will shift to the right.

When economists say that the supply for a product has decreased, they mean that the product has become particularly abundant for some reason. supply curve has shifted to the right. product has become more expensive and thus consumers are buying less of it. supply curve has shifted to the left.

supply curve has shifted to the left.

A tax on suppliers will cause the ________ schedule to shift to the ________. supply, right supply, left demand, right demand, left

supply, left

Use the following diagram for the corn market to answer the question below. If the price in this market is at $4 per bushel, then there will be a surplus and the price will tend to rise. shortage and the price will tend to fall. surplus and the price will tend to fall. shortage and the price will tend to rise.

surplus and the price will tend to fall.

A competitive employer should hire additional labor as long as the wage rate is less than MP. the MRP exceeds the wage rate. MC exceeds MR. average product exceeds MP.

the MRP exceeds the wage rate.

Marginal product is the amount an additional worker adds to the firm's total output. a worker's output multiplied by the price at which each unit can be sold. the amount any given worker contributes to the firm's total revenue. the output of the least skilled worker.

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

A positive externality or spillover benefit (additional social benefit) occurs when a firm does not bear all of the costs of producing a good or service. firms earn positive economic profits. product differentiation increases the variety of products available to consumers. the benefits associated with a product exceed those accruing to people who consume it.

the benefits associated with a product exceed those accruing to people who consume it.

There is an excess demand in a market for a product when: demand is less than supply. the current price is lower than the equilibrium price. supply is less than demand. quantity demanded is lower than quantity supplied.

the current price is lower than the equilibrium price.

The demand for airline pilots results from the demand for air travel. This fact is an example of rising marginal resource cost. elasticity of resource demand. resource substitutability. the derived demand for labor.

the derived demand for labor.

Which of the following would most likely increase the demand for gasoline? an increase in the price of gasoline a decrease in the price of gasoline the expectation by consumers that gasoline prices will be higher in the future the expectation by consumers that gasoline prices will be lower in the future

the expectation by consumers that gasoline prices will be higher in the future

Marginal resource cost is the increase in total resource cost associated with the hire of one more unit of the resource. the change in total revenue associated with the employment of one more unit of the resource. the increase in total resource cost associated with the production of one more unit of output. total resource cost divided by the number of inputs employed.

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

Use the following graph for a competitive market to answer the question below A price ceiling of $25 per unit will result in a surplus of 200 units. a shortage of 200 units. a shortage of 150 units. the market staying at equilibrium price of $15.

the market staying at equilibrium price of $15.

At the output level defining allocative efficiency consumer surplus exceeds producer surplus by the greatest amount. the areas of consumer and producer surplus necessarily are equal. the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output. marginal benefit exceeds marginal cost by the greatest amount.

the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.

As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of consumer sovereignty. diminishing marginal utility. the substitution effect. the income effect.

the substitution effect.

Domestic producers might oppose free trade agreements because there is a decrease in producer surplus. there is an increase in consumer surplus. there is an increase in producer surplus. there is a decrease in consumer surplus.

there is a decrease in producer surplus.

Graphical analysis of tariffs reveals that revenue gains outweigh the costs to domestic consumers. although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs. they increase domestic production of the good for which imports face tariffs. they benefit domestic consumers at the expense of domestic producers.

they increase domestic production of the good for which imports face tariffs.

Graphical analysis of tariffs reveals that they benefit domestic consumers at the expense of domestic producers. revenue gains outweigh the costs to domestic consumers. Correct Answer they increase domestic production of the good for which imports face tariffs. although the benefits are not shared equally, everyone in the domestic economy benefits from tariffs.

they increase domestic production of the good for which imports face tariffs.

Use the following graph that illustrates the supply and demand for labor in a purely competitive market, to answer the next question. The area 0abc represents marginal revenue product of labor. total revenue of the firm. total earnings of labor. marginal labor cost.

total earnings of labor.

Use the figure below to answer the following question. What area represents producer surplus after the government imposes the excise tax on the market? triangle $1c$9 triangle $21a$13 square $13ac$9 triangle abc

triangle $1c$9

The opportunity cost of constructing a new public highway is the value of other goods and services that are sacrificed in order to construct the new highway. expected cost of constructing the new highway in a future year. money cost of hiring contractors and construction workers for the new highway. value of shorter driving times and distances when the new highway is completed.

value of other goods and services that are sacrificed in order to construct the new highway.

A government-set price floor on a product will attract more resources towards the production of the product. is intended to benefit the buyers of the product. does not interfere with the rationing function of price in a market system. will drive resources away from the production of the product.

will attract more resources towards the production of the product.

A government-set price floor on a product will attract more resources towards the production of the product. is intended to benefit the buyers of the product. will drive resources away from the production of the product. does not interfere with the rationing function of price in a market system.

ECON 101 FINAL EXAM

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