Econ Final
(Short Answer) List five goods that are likely sold in a monopolistically competitive market.
1. Books 2. CD's 3. Movies 4. Cookies 5. Clothes
Assume the role of a critic of advertising. Describe the characteristics of advertising that reduce the effectiveness of markets and decrease the social welfare of society.
Advertising manipulates people's tastes and is psychological rather than informational. As a result it creates a desire for a product that might not otherwise exist
Assume the role of a defender of advertising. Describe the characteristics of advertising that en- hance the effectiveness of markets and increase the social welfare of society.
Advertising provides information to customers and thus allows consumers to make informed decisions. It also fosters competition by making consumers more aware of prices and product characteristics in a market.
Why does a typical monopolistically competitive firm face a downward-sloping demand curve?
Firms have market power, therefore they can raise prices without losing all of their customers because their products are different than their competitors.
(Short Answer) Even when allowed to collude, firms in an oligopoly may choose to cheat on their agreements with the rest of the cartel. Why?
Individual profits can be increased at the expense of group profits if individuals cheat on the cartels cooperative agreement
Monopolistically competitive firms, like monopoly firms, maximize their profits by charging a price that exceeds marginal cost. a. True b. False
True
Which of the following is a commonly-cited benefit of advertising? a. Advertising can be a signal of the quality of a product. b. Advertising impedes competition. c. Advertising reduces the deadweight loss associated with monopolistic competition. d. Advertising encourages free entry, which increases profits.
a. Advertising can be a signal of the quality of a product.
Which of the following statements is characteristic of utilitarianism? a. An extra dollar of income provides higher marginal utility to a poor person than to a rich person. b. Social policies should be created behind a "veil of ignorance." c. Society should strive to maximize the utility of its wealthiest member. d. Equality of opportunity is more important than equality of incomes.
a. An extra dollar of income provides higher marginal utility to a poor person than to a rich person. b. Social policies should be created behind a "veil of ignorance."
Daryn is raking leaves to earn money for his university's economics club. In the first hour, he rakes 8 bags of leaves. In the second hour, he rakes 6 bags of leaves. If he earns $8 per hour, the value of the marginal product of the second hour of labor is $48. a. True b. False
a. True
Higher levels of human capital are correlated with higher earnings because firms are willing to pay more for better-educated workers who have higher marginal productivities. a. True b. False
a. True
In a competitive market, strategic interactions among the firms are not important. a. True b. False
a. True
Land, labor, and capital are examples of factors of production. a. True b. False
a. True
The fact that doctors are paid more than economics professors is an example of a compensating differential. a. True b. False
a. True
A compensating differential is a. a difference in pay due to nonmonetary characteristics of jobs. b. an high wage paid by employers to entice workers to be more productive. c. the difference between the quantity of labor supplied and the quantity of labor demanded at the minimum wage. d. equivalent to a union wage.
a. a difference in pay due to nonmonetary characteristics of jobs.
The most popular movie stars have high incomes for a number of reasons. One such reason is a. an ability for almost everyone to enjoy movies at a relatively low cost. b. the above-average intellect of the average movie star. c. a compensating differential. d. a lack of technological advances in the movie industry.
a. an ability for almost everyone to enjoy movies at a relatively low cost.
Bill and Ted went to trade school at the same time. Each graduated with an associate's degree. They have received similar performance evaluations. Bill's employer is not a good business man- ager, and the bookkeeper embezzled money from the company. Because of the loss of funds, the employees did not receive raises last year. Ted's employer is a savvy business manager. If Ted has higher earnings than Bill, the difference is most likely a function of a. chance. b. differences in human capital. c. differences in signaling. d. discrimination.
a. chance.
The Sherman Antitrust Act prohibits price-fixing in the sense that a. competing executives cannot even talk about fixing prices. b. competing executives can talk about fixing prices, but they cannot take action to fix prices. c. a price-fixing agreement can lead to prosecution provided the government can show that the public was not well-served by the agreement. d. None of the above is correct. The Sherman Act did not address the matter of price- fixing.
a. competing executives cannot even talk about fixing prices.
Certain factors that are probably important in determining wages are nevertheless difficult to meas- ure. Consequently, labor economists find those factors difficult to incorporate into their studies of labor markets and wages. Those factors include a. effort and natural ability. b. natural ability and years of experience. c. years of experience and job characteristics. d. race and job characteristics.
a. effort and natural ability.
Competitive firms that maximize profits will hire workers until the value of the marginal product of labor a. equals the wage. b. equals the price of the final good. c. begins to fall. d. begins to rise.
a. equals the wage.
If a worker is indifferent between a job with a wage of $12 per hour and a job with a wage of $15 per hour, then the a. higher-paying job has a compensating wage differential of $3 per hour. b. higher-paying job has a compensating wage differential of $15 per hour. c. higher-paying job is intrinsically more attractive than the lower-paying job. d. worker's preferences are not rational.
a. higher-paying job has a compensating wage differential of $3 per hour.
Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell a. highly-differentiated consumer goods. b. goods produced by natural monopolies. c. agricultural products. d. products with a limited shelf life such as milk and lettuce.
a. highly-differentiated consumer goods.
The study by economists Cox and Alm found a. inequality in consumption is much smaller than inequality in annual income. b. inequality in consumption is slightly smaller than inequality in annual income. c. inequality in consumption is slightly larger than inequality in annual income. d. inequality in consumption is much larger than inequality in annual income.
a. inequality in consumption is much smaller than inequality in annual income
A downward-sloping demand curve a. is a feature of all monopolistically competitive firms b. means that the firm in question will never experience a zero profit c. causes marginal revenue to exceed price d. prohibits firms from earning positive economic profits in the long run
a. is a feature of all monopolistically competitive firms
A downward-sloping demand curve a. is a feature of all monopolistically competitive firms. b. means that the firm in question will never experience a zero profit. c. causes marginal revenue to exceed price. d. prohibits firms from earning positive economic profits in the long run.
a. is a feature of all monopolistically competitive firms.
Libertarians believe that a. it is more important to evaluate the process by which economic outcomes are produced than the outcomes themselves. b. government should attempt to redistribute income from the rich to the poor when the gap between rich and poor is more than 20%. c. equality of income is more important than equality of opportunity. d. it is more important to evaluate economic outcomes first and then the process that produced them.
a. it is more important to evaluate the process by which economic outcomes are produced than the outcomes themselves.
For a "superstar" to emerge, it must be the case that a. it is possible to supply the good or service that the superstar produces at low cost to every customer. b. some customers are willing and able to pay large sums of money to enjoy the good or service provided by the superstar. c. the superstar has a natural monopoly on his or her good or service. d. the superstar is willing to settle for a level of pay that is less than the value of his marginal product.
a. it is possible to supply the good or service that the superstar produces at low cost to every customer.
A monopolistically competitive industry is characterized by a. many firms selling products that are similar but not identical. b. many firms selling identical products. c. a few firms selling products that are similar but not identical. d. a few firms selling highly different products.
a. many firms selling products that are similar but not identical.
Like monopolists, oligopolists are aware that an increase in the quantity of output always a. reduces the price of their product. b. reduces their profit. c. reduces their revenue. d. reduces productivity.
a. reduces the price of their product.
The human capital theory explanation for why people invest in education has been challenged by a theory that suggests a. schooling acts only as a signal of ability. b. humans cannot be considered "capital." c. productivity is not linked to wages. d. college is largely a social phenomenon.
a. schooling acts only as a signal of ability.
In markets characterized by oligopoly a. the oligopolists earn the highest profit when they cooperate and behave like a monopolist. b. collusive agreements will always prevail. c. collective profits are always lower with cartel arrangements than they are without cartel arrangements. d. pursuit of self-interest by profit-maximizing firms always maximizes collective profits in the market.
a. the oligopolists earn the highest profit when they cooperate and behave like a monopolist.
Which of the following represents a problem in measuring inequality? a. Measurements of income distributions typically include in-kind transfers, which distort the measure of inequality. b. A normal life-cycle pattern causes inequality in the income distribution but may not reflect inequality in living standards. c. Transitory income is a better measure of inequality than permanent income. d. Both a and b are correct.
b. A normal life-cycle pattern causes inequality in the income distribution but may not reflect inequality in living standards.
Which of the following explains the rise in income inequality in the United States from 1970 to 2008? a. An increase in minimum wages. b. An increase in the demand for skilled labor. c. An increase in the demand for unskilled labor. d. Reduced international trade with low-wage countries.
b. An increase in the demand for skilled labor.
Of the four countries below, which has the highest degree of income inequality? a. Japan b. Brazil c. South Africa d. United States
b. Brazil
Which of the following pairs illustrates the two extreme examples of market structures? a. competition and oligopoly b. competition and monopoly c. monopoly and monopolistic competition d. oligopoly and monopolistic competition
b. Competition and monopoly
The superstar phenomenon explains why professional athletes earn more than amateur athletes. a. True b. False
b. False
Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage? a. The opportunity cost of Fiona's leisure time has decreased. b. Fiona may choose to work fewer hours due to the increase in her wage. c. If Fiona's labor supply curve is upward sloping, she will choose to work fewer hours. d. Both a and b are correct.
b. Fiona may choose to work fewer hours due to the increase in her wage.
Which of the following statements is correct? a. When duopoly firms reach a Nash equilibrium, their combined level of output is the monopoly level of output. b. When oligopoly firms collude, they are behaving as a cartel. c. In an oligopoly, self-interest drives the market to the competitive outcome. d. An oligopoly is an example of monopolistic competition.
b. When oligopoly firms collude, they are behaving as a cartel.
Among the people who are characterized below, who has the highest opportunity cost of leisure? a. an attorney who earns $200 per hour and who plays golf during her leisure time b. a medical doctor who earns $210 per hour and who sleeps during his leisure time c. a retail clerk who earns $15 per hour and who watches TV during her leisure time d. a waiter who earns $12 per hour and who reads poetry during his leisure time
b. a medical doctor who earns $210 per hour and who sleeps during his leisure time
Dave and Andy are competitors in a local market. Each is trying to decide if it is better to advertise on TV, on radio, or not at all. If they both advertise on TV, each will earn a profit of $4,000. If they both advertise on radio, each will earn a profit of $7,000. If neither advertises at all, each will earn a profit of $10,000. If one advertises on TV and other advertises on radio, then the one advertising on TV will earn $6,000 and the other will earn $5,000. If one advertises on TV and the other does not advertise, then the one advertising on TV will earn $11,000 and the other will earn $2,000. If one advertises on radio and the other does not advertise, then the one advertising on radio will earn $12,000 and the other will earn $4,000. If both follow their dominant strategy, then Dave will a. advertise on TV and earn $4,000. b. advertise on radio and earn $7,000. c. advertise on TV and earn $11,000. d. not advertise and earn $10,000.
b. advertise on radio and earn $7,000.
Human capital is a. an important determinant of wages, but it does not affect the production of goods and services. b. an important determinant of wages, and it affects the production of goods and services. c. a specific type of physical capital made by humans rather than machines. d. very different from physical capital in that physical capital represents an investment, while human capital does not represent an investment.
b. an important determinant of wages, and it affects the production of goods and
"In a long-run equilibrium, price is equal to average total cost." This statement applies to a. competitive markets, but not to monopolistically competitive markets or monopolies. b. competitive and monopolistically competitive markets, but not to monopolies. c. competitive markets, monopolistically competitive markets, and monopolies. d. None of the above is correct.
b. competitive and monopolistically competitive markets, but not to monopolies.
A distinguishing feature of an oligopolistic industry is the tension between a. profit maximization and cost minimization. b. cooperation and self interest. c. producing a small amount of output and charging a price above marginal cost. d. short-run decisions and long-run decisions.
b. cooperation and self interest.
That some schools direct females away from science and math courses is evidence of a. labor-market discrimination b. discrimination that occurs prior to people entering the labor market c. discrimination by customers d. discrimination by employers
b. discrimination that occurs prior to people entering the labor market
The accumulation of investments in people, such as education and on-the-job training, is known as a. physical capital. b. human capital. c. efficiency wage. d. a union.
b. human capital.
The "beauty premium" can be explained by the fact that a. marginal productivity in all occupations has a physical dimension. b. in some occupations, physical attractiveness of workers may enhance the value of their marginal product. c. beauty acts as an implicit signal of innate intelligence. d. beautiful people are likely to reflect "good breeding."
b. in some occupations, physical attractiveness of workers may enhance the value of their marginal product.
The time spent by students in college a. leads to lower lifetime earnings because opportunity costs are high. b. is an investment in human capital. c. decreases human capital by lowering work experience. d. increases as the wages paid to low-skilled workers rise.
b. is an investment in human capital.
Suppose the average value of in-kind transfers increases by $2,000 from 2010 to 2011. The poverty rate a. is more likely to understate the true level of poverty. b. is more likely to overstate the true level of poverty. c. will increase by $2,000 divided by the poverty level. d. Both b and c are correct.
b. is more likely to overstate the true level of poverty.
Monopolistic competition is an inefficient market structure because a. marginal revenue equals marginal cost. b. it has a deadweight loss, just as monopoly does. c. long-run profits are zero due to free entry. d. All of the above are correct.
b. it has a deadweight loss, just as monopoly does.
The prisoners' dilemma is an important game to study because a. most games present zero-sum alternatives. b. it identifies the fundamental difficulty in maintaining cooperative agreements. c. strategic decisions faced by prisoners are identical to those faced by firms engaged in competitive agreements. d. all interactions among firms are represented by this game.
b. it identifies the fundamental difficulty in maintaining cooperative agreements.
The political philosophy that views the redistribution of income as a form of social insurance is a. utilitarianism b. liberalism c. libertarianism d. welfarism
b. liberalism
The marginal product of labor is defined as the change in a. output per additional unit of revenue. b. output per additional unit of labor. c. revenue per additional unit of labor. d. revenue per additional unit of output.
b. output per additional unit of labor.
Factor markets are different from product markets in an important way because a. equilibrium is the exception, and not the rule, in factor markets. b. the demand for a factor of production is a derived demand. c. the demand for a factor of production is likely to be upward sloping, in violation of the law of demand. d. All of the above are correct.
b. the demand for a factor of production is a derived demand.
A college degree makes a person more productive according to a. both the human-capital and the signaling theories of education. b. the human-capital but not the signaling theory of education. c. the signaling but not the human-capital theory of education. d. neither the human-capital nor the signaling theory of education.
b. the human-capital but not the signaling theory of education.
Libertarianism identifies a redistribution of income role for government when a. individual incomes vary widely. b. the income distribution is altered by illegal means (e.g. theft). c. a social planner is needed to smooth out the transitory income stream. d. workers lose their jobs as a result of structural changes in the economy.
b. the income distribution is altered by illegal means (e.g. theft).
The labor supply curve is fundamentally a representation of the trade-off people face between which of the following? a. work and wages b. work and leisure c. wages and productivity d. technology and wages
b. work and leisure
In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. As long as the government only has "leaky buckets" at its disposal, a. the costs of welfare programs will exceed the benefits. b. it should not try to reach complete equality in income. c. income equality will be the best policy option. d. equality of economic opportunity will reduce society's utility.
benefits. b. it should not try to reach complete equality in income.
Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $10. The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired? a. $5 b. $10 c. $20 d. There is insufficient information to answer this question.
c. $20
What causes the labor demand curve to shift? (i) changes in productivity (ii) changes in wages (iii) changes in output prices a. (i) and (ii) b. (ii) and (iii) c. (i) and (iii) d. all of the above are correct
c. (i) and (iii)
Of the total income earned in the U.S. economy, approximately a. 25 percent is earned by workers, and 75 percent is earned by landowners. b. 50 percent is earned by workers, 25 percent is earned by landowners, and 25 percent is earned by owners of capital. c. 75 percent is earned by workers, and 25 percent is earned by owners of land and capital. d. 90 percent is earned by workers, and 10 percent is earned by owners of land and capital.
c. 75 percent is earned by workers, and 25 percent is earned by owners of land and capital.
Which of the following is not an argument made by critics of advertising? a. Advertising manipulates people's tastes. b. Advertising impedes competition. c. Advertising promotes economies of scale. d. Advertising increases the perception of product differentiation.
c. Advertising promotes economies of scale.
Which of the following events could increase the demand for labor? a. A decrease in output price b. A decrease in the amount of capital available for workers to use c. An increase in the marginal productivity of workers d. A decrease in the wage paid to workers
c. An increase in the marginal productivity of workers
Liberalism is the political philosophy espoused by a. Robert Nozick. b. John Stuart Mill. c. John Rawls. d. Jeremy Bentham.
c. John Rawls.
Which of the following statements is not correct? a. Monopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs. b. Monopolistic competition is similar to perfect competition because both market structures are characterized by free entry. c. Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry. d. Monopolistic competition is similar to perfect competition because both market structures are characterized by many sellers.
c. Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry
Firms that spend a large amount of money on advertising a particular product are likely to be provid- ing consumers with a. information about the availability of the product. b. information about product price. c. a signal of product quality. d. a good example of wasted resources.
c. a signal of product quality.
Economic mobility in the United States is a. uncommon. Over 50 percent of poor families remain poor for 8 or more years. b. uncommon. Over 75 percent of poor families remain poor for 8 or more years. c. common. Fewer than 3 percent of poor families remain poor for 8 or more years. d. common. Fewer than 1 percent of poor families remain poor for 8 or more years.
c. common. Fewer than 3 percent of poor families remain poor for 8 or more years.
If hiring more workers results in each additional worker contributing successively smaller amounts of output, then which of the following is present? a. diminishing profitability b. diminishing total product c. diminishing marginal product d. Both b) and c) are correct.
c. diminishing marginal product
A signaling theory of education suggests that a. people who attend college are more likely to capture a "beauty premium." b. education is a signal of social status. c. education does not necessarily increase productivity. d. education will sever the link between innate ability and compensation.
c. education does not necessarily increase productivity.
Based on U.S. data for 2008, the poverty rate is the highest for which group of people? a. children b. married couples c. female households, no spouse present d. the elderly
c. female households, no spouse present
José receives a pay raise at his part-time job from $9 to $11 per hour. He used to work 12 hours per week, but now he decides to work 15 hours per week. For this price range, his labor supply curve is a. vertical. b. horizontal. c. upward sloping. d. backward sloping.
c. upward sloping.
A firm that practices resale price maintenance a. has incentive to reduce competition between its retailers. Resale price maintenance can lead to more service. b. has incentive to reduce competition between its retailers. Resale price maintenance cannot lead to more service. c. has no incentive to reduce competition between its retailers. Resale price maintenance can lead to more service. d. has no incentive to reduce competition between its retailers. Resale price maintenance cannot lead to more service.
c. has no incentive to reduce competition between its retailers. Resale price maintenance can lead to more service.
Immigration of workers into the United States is often an important source of a. increases in the demand for labor in the United States. b. decreases in the demand for labor in the United States. c. increases in the supply of labor in the United States. d. decreases in the supply of labor in the United States.
c. increases in the supply of labor in the United States.
The ownership of human capital a. is typically embodied in related physical capital. b. may be subject to government restrictions on transferability. c. is not easily transferable. d. All of the above are correct.
c. is not easily transferable.
Which of the following is an example of a factor of production? a. rent b. interest c. land d. Social Security payments
c. land
"Equality of opportunities is more important than equality of incomes." This statement would be most likely attributed to which political philosophy? a. utilitarianism b. liberalism c. libertarianism d. welfarism
c. libertarianism
When a market is monopolistically competitive, the typical firm in the market can earn a. losses in the short run and profits in the long run. b. profits in the short run and the long run. c. losses in the short run and zero profit in the long run. d. zero profit in the short run and losses in the long run.
c. losses in the short run and zero profit in the long run.
Liberalism suggests that public policies should aim to a. maximize the sum of utility of everyone in society. b. maximize the well-being of the average person in society. c. maximize the well-being of the worst-off person in society. d. minimize the difference between the utility of the best-off person in the society and the utility of the worst-off person in society.
c. maximize the well-being of the worst-off person in society.
Economic mobility refers to the a. government's attempt to distribute monetary assistance to areas most in need. b. ability of families to freely relocate to find good jobs. c. movement of people among income classes. d. movement of resources from one country to another.
c. movement of people among income classes.
Which of the following is an example of a monopolistically competitive industry? a. computer operating systems b. tennis balls c. movies d. cable television
c. movies
A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following? a. marginal cost exceeds marginal revenue b. average revenue equals marginal cost c. price exceeds marginal cost d. All of the above are correct.
c. price exceeds marginal cost
If a market is a duopoly and additional firms enter and do not cooperate, then a. price and quantity fall. b. price and quantity rise. c. price falls and quantity rises. d. price rises and quantity falls.
c. price falls and quantity rises.
When we compare the income distribution of the United States to those of other countries, we find that the U.S. a. has one of the most unequal income distributions. b. has one of the most equal income distributions. c. ranks around the middle of the group. d. is second to China as the most unequal distribution.
c. ranks around the middle of the group.
The federal government sets the poverty line at roughly a. five times the cost of providing an adequate diet. b. four times the cost of providing an adequate diet. c. three times the cost of providing an adequate diet. d. two times the cost of providing an adequate diet.
c. three times the cost of providing an adequate diet.
From society's standpoint, cooperation among oligopolists is a. desirable, because it leads to less conflict among firms and a wider variety of products for consumers. b. desirable, because it leads to an outcome closer to the competitive outcome than what would be observed in the absence of cooperation. c. undesirable, because it leads to output levels that are too low and prices that are too high. d. undesirable, because it leads to output levels that are too high and prices that are too high.
c. undesirable, because it leads to output levels that are too low and prices that are too high
Based on U.S. income data from 2008, the bottom fifth of all families received approximately what percent of all in- come? a. 48 percent b. 21 percent c. 10 percent d. 4 percen
d. 4 percen
A concentration ratio... a. measures the percentage of total output supplied by the four largest firms in the industry. b. reflects the level of competition in an industry. c. is related to the control that each firm has over price. d. All of the above are correct.
d. All of the above are correct.
In game theory, a Nash equilibrium is a. an outcome in which each player is doing his best given the strategies chosen by the other players. b. an outcome in which no player wishes to change her chosen strategy given the strategies chosen by the other players. c. the outcome that occurs when all players have a dominant strategy. d. All of the above are correct.
d. All of the above are correct.
Two bottles of body wash sit side-by-side in a grocery store: Olay (a brand name) sells for $6.00, while Up and Up (not a brand name) sells for $3.00. Even defenders of brand names would have to admit that a. no rational consumer would spend twice as much for Olay as she would for Up and Up. b. the side-by-side presence of these two body washes conveys no useful information to consumers. c. Olay has no incentive to maintain the quality of its product just because of the Olay brand name. d. None of the above is correct.
d. None of the above is correct.
Economists have proposed which of the following hypotheses to explain the rising wage gap between skilled and unskilled workers? a. Increases in the role of unions in negotiating wages. b. Declines in the amount of international trade. c. There is no rising wage gap. d. Technological change.
d. Technological change.
U.S. income data over the last 75 years suggests that the distribution of income a. has gradually become more equal over the entire time period. b. has gradually become less equal over the entire time period. c. gradually became less equal until about 1970, then became more equal from 1970 to 2008. d. gradually became more equal until about 1970, then became less equal from 1970 to 2008.
d. gradually became more equal until about 1970, then became less equal from 1970 to 2008.
When the government taxes income as part of a redistribution program, a. the poor pay higher taxes. b. the rich always benefit more than the poor. c. the poor are encouraged to work. d. incentives to earn income are diminished.
d. incentives to earn income are diminished.
The poverty rate is based on a family's a. income, in-kind transfers, and other government aid. b. income and in-kind transfers. c. in-kind transfers only. d. income only.
d. income only.
In the United States, the earnings gap between workers with college degrees and workers with high school degrees a. has never been documented by reliable evidence. b. is evident, but it has remained roughly constant over the past several years. c. is evident, but it has diminished over the last several years. d. is evident, and it has widened over the last several years.
d. is evident, and it has widened over the last several years.
Monopolistically competitive firms have excess capacity. To maximize profits, firms will a. increase their output to lower their average total cost of production and eliminate the excess capacity. b. produce where price equals marginal cost to eliminate the excess capacity. c. produce where average revenue equals marginal cost to eliminate the excess capacity. d. maintain the excess capacity.
d. maintain the excess capacity.
The poverty rate is a. a measure of income inequality across families. b. the percentage of the population whose family income falls below a specified level. c. an absolute level of income set by the federal government for each family size. d. measured by the number of in-kind transfers that a family receives.
d. measured by the number of in-kind transfers that a family receives.
A family's ability to buy goods and services depends largely on the family's a. economic mobility. b. place in the economic life cycle. c. transitory income. d. permanent income.
d. permanent income.
Value of marginal product is defined as the additional a. output a firm would receive after hiring one more factor of production. b. cost of hiring one more factor of production. c. revenue earned from selling one more unit of product. d. revenue earned from hiring one more factor of production.
d. revenue earned from hiring one more factor of production.
A utilitarian government has to balance the gains from greater income equality against the losses from distorted work incentives. To maximize total utility, therefore, the government a. would never tax labor income. b. must always achieve a fully egalitarian society. c. enacts policies that only benefit the middle class. d. stops short of a fully egalitarian society.
d. stops short of a fully egalitarian society.
Inthe signaling theory of education, a. discrimination does not affect wage differentials. b. schooling makes workers more productive in the long-run. c. schooling makes workers more productive in the short-run. d. the worker signals to the employer that he is a valuable employee because he was willing to spend time to get an education.
d. the worker signals to the employer that he is a valuable employee because he was willing to spend time to get an education.
If a person can prove that she was damaged by an illegal arrangement to restrain trade, that person can sue and recover a. the damages she sustained, as provided for in the Sherman Act. b. the damages she sustained, as provided for in the Clayton Act. c. three times the damages she sustained, as provided for in the Sherman Act. d. three times the damages she sustained, as provided for in the Clayton Act.
d. three times the damages she sustained, as provided for in the Clayton Act.
Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage a. and the equilibrium quantity of labor to rise. b. and the equilibrium quantity of labor to fall. c. to rise and the equilibrium quantity of labor to fall. d. to fall and the equilibrium quantity of labor to rise.
d. to fall and the equilibrium quantity of labor to rise.
