Econ final exam

The production possibility curve (PPC) : A. Shows all combinations of goods that society most desires B. Indicated that any combination of goods lying outside the curve is attainable C. Shows only those combinations of two goods that reflect "full production" D. Indicated the maximum amount of one good achievable for a given amount of the other good

D

An economy that has achieved "full production" has achieved: A. Both allocative and productive efficiency B. Allocative but not productive efficiency C. Productive but not allocative efficiency D. Neither allocative nor productive efficiency

A.

In 2010, the wealthiest 1 percent of US household held about _______ percent of US household wealth A. 35 B. 77 C. 23 D. 32

A. 35

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

A. A few dominant firms and substantial entry barriers

The demand for a product is inelastic with respect to price if: A. Consumers are largely unresponsive to a per unit price change B. The Elasticity coefficient is greater than 1 C. A drop in price is accompanied by a decrease in the quantity demanded D. A drop in price is accompanied by an increase in the quantity demanded

A. Consumer are largely unresponsive to a per unit change

According to economists Krueger and Perri: A. Despites the fact that income inequality has increased in recent decades, consumption inequality has remained relatively constant B. Increases in income inequality over recent decades understate the growth in consumption inequality C. Both income and consumption inequality have increased at approximately the same rate over recent decades D. Both income and consumption are more equally distributed then they were 30 years ago

A. Despite's the fact that income inequality has increased in recent decades, consumption inequality has remained relatively constant

Which of the following statements applies to a purely competitive producer? A. It will not advertise its product B. In the long-run equilibrium it will earn an economic profit C. It's product will have a brand name D. It's product is slightly different from those of its competitors

A. It will not advertise its product

A monopsonist pays wage rate that is: A. Less than the MRP of labor B. Equal to the firm's marginal resource (labor) cost C. Equal to the MRP of labor D. Greater than the MRP of labor

A. Less than the MRP of labor

The scarcity problem is : A. Will persist so long as productive resoirces are limited B. Persist only in the developing countries C. Will be eliminated if full employment is acheived D. Can be eliminated if all countries adopt laissez-faire capitalism

A. Will persist so long as productive resources are limited

The law of diminishing returns indicates that: A. As extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point B. Because of economies and diseconomies of scale a competitive firm's long-run average total cost curve will be U-shaped C. The demand for goods produced by purely competitive industries is down-sloping D. Beyond some point the extra utility derived form additional untidy of a product will yield the consumer smaller and smaller extra amounts of satisfaction

A.As extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point

The invisible hand refers to the: A. Fact the US tax system redistributes income from rich to poor B. Notion that, under competition, decisions motivated by self-interest promote the social interest C. Tendency of monopolistic sellers to raise prices above competitive levels D. Fact that government controls the functioning of the market system

B.

A kinked-demand curve model of oligopoly: A. Assumed a firm's rivals will ignore a price cut but match a price increase B. Embodies the possibilities that changes in units costs will have no effect on equilibrium price and output C. Assumes a firm's rivals will match any price change it may initiate D. Assumes firm's rivals will ignore any price change it may initiate

B. Embodies the possibilities that changes in units costs will have no effect on equilibrium price and output

The purely monopolistic industry: A. Has no entry barriers B. Has a downward sloping demand curve C. Produces a product or service for which there are many close substitutes D. Earns only a normal profit in the long run

B. Has a downward sloping demand curve

To economists the main difference between the short run and the long run is the: A. The law of diminishing returns applies in the long run, but not the short run B. In the long run all resources are variable, while in the short run at least one resource is fixed C. Fixed costs are more important to decisions making in the long run than they are in the short run D. In the short run all resources are fixed, while in the long run all resources are variable

B. In the long run all resources are variable, while in the short run at least one resource is fixed

The greater the area between the Lorenz curve and the diagonal in the Lorenz curve diagram the: A. Smaller is the Gini ratio and the greater is the degree of income inequality B. Larger is the Gini ratio and the greater is the degree of income inequality C. Smaller is the Gini ratio and the lesser is the degree of income inequality D. Larger is the Gini ratio and the lesser is the degree of income inequality

B. Larger is the Gini ratio and the greater is the degree of income inequality

In the long run a pure monopolist will maximize profits by producing that output at which marginal cost is equal to: A. Average total cost B. Marginal revenue C. Average variable cost D. Average cost

B. Marginal revenue

To maximize utility a consumer should allocate money income so that the: A. Elasticity of Demand on all products purchased is the same B. Marginal utility obtained from the last dollar spent in each product is the same C. Total utility derived from each product consumed is the same D. Marginal utility of the last unit of each product consumed is the same

B. Marginal utility obtained from the last dollar spent in each product is the same

Ben is exhausting his money income consuming products A and B in such quantities that MUaIPa= 5 and MUbIPb= 8. Ben should purchase: A. More of A and less o B B. More of B and less of A C. More of both A and B D. Less of both A and B

B. More of B and less of A

In the short run a purely competitive seller will shut down if: A. It cannot produce at an economic profit B. Price is less than average variable cost at all outputs C. Price is less than average fixed cost at all outputs D. There is no point at which marginal revenue and marginal cost are equal

B. Price is less than average variable cost at all outputs

Non-price competition refers to: A. Low barriers to entry B. Product development, advertising, and product packaging C. The differences in information which consumers have regarding various products D. An industry or firm in long-run equilibrium

B. Product development, advertising, and product packaging

Real wages in the United States are: A. The highest in the world B. Relatively high, but not as high as in some other industrially advanced nations C. Much higher than output per worker D. Higher than nominal wages

B. Relatively high, but not as high as in some other industrially advanced nations

For which of the following income-maintenance programs is aggregate spending the greatest? A. Medicare B. Social security C. Unemployment compensation D. TANF

B. Social security

"Essential" water is cheaper than "nonessential" diamonds because: A. New industrial uses for diamonds have been discovered B. The supply of water is great relative to demand and the supply of diamonds is small relative to demand C. Although the total utility of diamonds is greater, their marginal utility is small D. The supply of diamonds is great relative to demand and the supply of water is small relative to demand

B. The supply of water is great relative to demand and the supply of diamonds is small relative to demand

In the short run a purely competitive firm that seeks to maximize profit will produce: A. Where the demand and the ATC curves intersects B. Where total revenue exceeds total cost by the maximum amount C. That output where economic profits are zero D. At any point where the total revenue and total costs curves intersect

B. Where total revenue exceeds total costs by the maximum amount

Economies and diseconomies of scale explain: A. The profit-maximizing level of production B. Why the firm's long-run average total cost curve is U-shaped C. Why the firm's short-run marginal cost curve cuts the short-run average variable cost curve at its minimum point D. The distinction between fixed and variable costs

B. Why the firm's long-run average total costs curve is U-shaped

In the demand and supply curves for product X are stable, a government-mandated increase in the price of X will: A. Increase the supply of X and decrease the demand of X B. Increase the demand for X and decrease the supply of X C. Increase the quantity supplied and decrease the quantity demanded of X D. Decrease the quantity supplied of X and increase the quantity demanded of X

C

Unions might support a higher minimum wage because: A. Their constitutions obligate them to do so. B. They feel a higher minimum wage will lower labor's yay payment for welfare programs C. A higher minimum wage makes less-skilled workers less substitutable for union workers D. The minimum wage is better than the alternative income-maintenance programs.

C. A higher minimum wage makes less-skilled workers less substitutable for union workers

Economic discrimination puts the economy inside its production possibilities curve because discrimination: A. Redistributes income from low-paid to high-paid persons B. Promotes presents consumption rather than production of capital good C. Arbitrary blocks women and certain minorities from higher-productivity, higher-wage jobs and thus keeps the economy from producing its maximum output D. Often causes inflation, which reduces the nation's real output

C. Arbitrary blocks women and certain minorities from higher-productivity, higher-wage jobs and thus keeps the economy from producing its maximum output

A single-price pure monopoly is economically inefficient: A. Only because it produces beyond the point of minimum average total cost B. Only because it produces short of the point of minimum average total cost C. Because it produces short of minimum average cost and price is greater than marginal cost D. Because it produces beyond minimum average total cost and marginal cost is greater than price

C. Because it produces short of a minimum average cost and price is greater than marginal cost

Marginal revenue product (MRP) of labor refers to the: A. Increase in total revenue resulting from the sale of an additional unit of output B. Amount by which a firm's total resource cost increases when it employs one more unit of labor C. Increase in total revenue resulting from the hire of one more unit of labor D. Price at which additional units of labor can be employed in a monopsonized labor market

C. Increase in total revenue resulting from the hire of one more unit of labor

The Gino ratio: A. Measures the relative extent of poverty in a nation B. Compares the income of persons, households, or households at the 90th percentile of the income distribution to the income at the 10th percentile C. Is a numerical measure of the overall dispersion of income in a nation D. Is found by dividing the entire area below and to the right of the diagonal in the Lorenz diagram by the area between the diagonal and Lorenz curve

C. Is a numerical measure of the overall dispersion of income in a nation

Monopolistic competition means: A. A market situation where competition is based entirely on product differentiation and advertising B. A large number of firms producing a standardized or homogeneous product C. Many firms producing differentiated products D. A few firms producing a standardized or homogeneous product

C. Many firms producing differentiated products

For an employee biased against minorities, the discrimination coefficient: A. Will decrease if the employee becomes more prejudiced against minorities B. Must equal the actual ratio of minority to white wage rates C. Measures the amount an employer is willing to pay to hire a white over hiring a minority worker D. Varies inversely with the actually minority-white wage ratio

C. Measures the amount an employer is willing to pay to hire a white over hiring a minority worker

Monopolistically competitive industries are inefficient because: A. They realize diseconomies of scale B. Advertising costs retard technological advance and product development C. Monopolistically competitive industries are overpopulated with firms whose plants are underutilized D. Monopolistically competitive sellers engage in misleading advertising

C. Monopolistically competitive industries are overpopulated with firms whose plants are underutilized

We would expect the cross Elasticity of Demand between Pepsi and Coke to be: A. Positive, indicating normal goods B. Positive, indicating inferior goods C. Positive, indicating substitute goods D. Negative, indicating substitute goods

C. Positive, indicating substitute goods

In terms of the circular flow model, firms receive revenue in the _________ market and incur costs in the ________ market. A. Product; financial B. Resource; product C. Product; resource D. Capital; resource

C. Product; resource

The term productive efficiency refers to: A. Any short-run equilibrium position of a competitive firm B. The production of the product-mix most desired by consumers C. The production of a good at the lowest average total cost D. Fulfilling the condition P= MC

C. The production of a good at he lowest average total cost

In monopsony: A. Each firm employs a small portion of the total supply of labor B. The work force is highly mobile C. The wage rate paid by the employer varies directly with the number of workers employed D. The employer is a "wage taker"

C. The wage rate paid by the employer varies directly with the number of workers employed

Which of the following is a distinguishable feature of a market system? A. Public ownership of all capital B. Central planning C. Wide-spread private ownership of capital D. A circular flow flow of goods, resources, and money

C. Wide-spread private ownership of capital

The long-run trend of real wages: A. Connor be determined from available data on normal wages and the price level B. Has been downward because the price level has risen faster than nominal wages C. Has been upward D. Has been downward because labor's share of the domestic income has fallen

C. has been upward

The supply of product X is inelastic if the price of X rises by: A. 5 percent and quantity supplied rises by 7 percent B. 8 percent and quantity supplied rises by 8 percent C. 10 percent and quantity supplied remains the same D. 7 percent and quantity supplied rises by 5 percent

D. 7 percent and quantity supplied rises by 5 percent

I'm the last few years, the demand for donuts has great decreases. The decrease in demand might best be explained by: A. An increase in the cost of making donuts B. An increase in the price of coffee C. Consumers expecting donuts prices to fall D. A change in buyer tastes

D. A change in buyer tastes

If you operate a small bakery, which of the following would be a variable cost in the short run? A. Baking ovens B. Interest in business loans C. Annual lease payment for use of the building D. Baking supplies (flour, salt, etc.) indicates

D. Baking supplies (flour, salt, etc.) indicates

Product differentiation is present in: A. Purely competitive markets only B. Monopolistically competitive markets only C. Oligopolistic markets only D. Both monopolistically competitive and oligopolistic markets

D. Both monopolistically competitive and oligopolistic markets

The man-made machine type resources used to produce goods and services are called: A. Labor B. Land C. Entrepreneurial ability D. Capital good

D. Capital good

Economic profits are calculated by subtracting: A. Explicit costs from total revenue B. Implicit costs form total revenue C. Implicit costs from normal profits D. Explicit and implicit costs form total revenue

D. Explicit and implicit costs from total revenue

In which of he following instances will total revenue decline? A. Price rises and supply is elastic B. Price falls and demand is elastic C. Price rises and demand is inelastic D. Price rises and demand is elastic

D. Price rises and demand is elastic

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

D. Some firms leaving an industry

When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes: A. An inferior good B. The rationing function of prices C. The substitution effect D. The income effect

D. The income effect

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers): A. Different prices to compensate for differences in the characteristics of the products B. The same price if per unit cost is constant for each unit of the product C. The price which equals the buyer's marginal cost D. The maximum price each would be willing to pay

D. The maximum price each would be willing to pay

Suppose the MRP of a firm's twelfth worker is $22 and the worker's marginal wage cost is $16. We can say with certainly that the firm: A. Is hiring labor in a competitive labor market at a wage rate of $16 B. Is hiring labor in a monopsonistic labor workers C. Will find it profitable to hire fewer workers D. Will find it profitable to hire more workers

D. Will find it profitable to hire more workers

Which of the following is an example of statistical discrimination? A. An employer hires only white workers even though there are otherwise identical African-American workers available at lower pay B. Women students in college business schools are overrepresented in human resource management courses and underrepresented in finance courses C. A young woman who plans to work for only five to seven years after graduating college decides that getting an advanced degree "just won't pay off" D. A firm hires a man rather than a woman for a specific job because, on average, women have higher rates of absenteeism than do men

D.A firm hires a man rather than a woman for a specific job because, on average, women have higher rates of absenteeism than do men