Econ Final Exam
If they maximize their profits, what will their revenue equal?
$54,000
The following table shows a monopolist's demand curve and cost information for the production of its good. What quantity will it produce?
30
Say that All and can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?
Alland has an absolute advantage in producing food but will not trade with Georgeland.
Say that All and can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 16 units of food per year or 8 units of clothing. Which of the following is true?
Alland has an absolute advantage, but not comparative advantage, in producing food.
Which of the following would be classified as a differentiated product produced by a monopolistic competitor?
Channel No. 5
In India one person can produce 330 pounds of rice or 110 shirts in one year. In China one person can produce 400 pounds of rice or 200 shirts in one year. Which of the following statements is true?
India has a comparative advantage in the production of rice.
_____________ and __________________ refer to the quantity and price at a point in time.
Productive; allocative efficiency
Jethro has a(n) __________________ in all aspects of camping: he is faster at carrying a backpack, gathering firewood, paddling a canoe, setting up tents, making a meal, and washing up.
absolute advantage
When one nation can produce a product at lower cost relative to another nation, it is said to have a(n) __________________ in producing that product.
absolute advantage
The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead
are two stark realities any business firm must recognize.
If the price that a firm charges is lower than its ____________ of production, the firm will suffer losses.
average cost
The two primary factors determining monopoly market power are the firm's
demand curve and its cost structure
When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting
entry into the market.
When I'MaGoldMiner chooses what quantity of gold each of it/s mines will produce over the next 12 months, this quantity, along with the prices prevailing in the market for output and inputs, will
determine the company's total revenue, total costs, and its profits.
Monopolistic competitors in the food industry will often include a recyclable symbol on packaging used for their product as a means to
differentiate their product.
If oligopolistic firms banded together with the intention of acting like a monopoly, it would likely result in their being able to
divide up the monopoly level of profit amongst themselves.
A labor union seeks to _________ between employers and workers.
change the balance of negotiations
The U.S. government strongly encouraged unions to be formed in the early 1940s because they held the view that unions would help to
co-ordinate the all-out production efforts needed during World War II.
Negotiations between unions and a firm or firms is called .
collective bargaining
The existence of labor unions forces employers to deal with workers _________.
collectively, rather than as individuals
When nations increase production in their area of _________________ and trade with each other, both sides can benefit.
comparative advantage
What matters most in determining the efficient distribution of production over the world is:
comparative advantage.
The presence of organized labor in the U.S. labor market creates a situation that resembles a _________
government acting as a negotiator between workers and employers.
The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is
game theory.
Which of the following firms is most likely to be a monopoly?
local electricity distributor
In the ________,the perfectly competitive firm will react to losses by __________________________ .
long run; reducing production or shutting down
Trade allows each country to take advantage of _________________ in the other country.
lower opportunity costs
In economics, the term "shutdown point" refers to the point where the
marginal cost curve crosses the average variable cost curve.
If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then
marginal cost is below average variable cost.
Under perfect competition, any profit-maximizing producer faces a market price equal to its
marginal costs
In economic terms, a practical approach to maximizing profits requires an examination of how changes in production affect ________________ and ________________ .
marginal revenue; marginal cost
I'm a Gold Miner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is highly influenced by market speculation, if it wants to increase production to take advantage of the current profit-maximizing opportunity, the company
must accept market price for its physical capital inputs.
The idea behind comparative advantage reflects the possibility that one party:
may be able to produce something at a lower opportunity cost than another party.
The single most common form of competition in the U.S. is
monopolistic competition among firms with differentiated products.
The largest cattle rancher in a given region will be unable to have a __________ when sufficient numbers of smaller cattle ranchers provide sources of competition.
monopoly
Idaho farmers can sell as large a quantity of their potato crop as they wish,
provided each is willing to accept the prevailing market price.
In monopolistic competition, the end result of entry and exit is that firms end up with a price that lies
on the downward-sloping portion of the average cost curve.
The underlying reason why trade benefits both sides of a trading arrangement is rooted in the concept of __________________.
opportunity cost
Perfect competition and monopoly stand at _____________ of the spectrum of competition.
opposite ends
Roughly speaking, patent law covers __________ and __________ law protects an author's original books.
original inventive creations; copyright
In order to provide its workforce with an alternative to forming a union, the U.S. government passed laws about work conditions, namely, _________
overtime and all of the above
When exit occurs in a monopolistically competitive industry the
perceived demand and marginal revenue curves will shift to the right.
Firms operating in a market situation that creates ___________________, sell their product in a market with other firms who produce identical or extremely similar products.
perfect competition
When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is
preparing to exit operations.
If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?
price of competing products
The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.
price taker
In the United States, the share of wage and salary for workers who belong to unions _________
rose sharply in the 1930s and 1940s.
There is little evidence that countries with high union membership _________, and also very little evidence that the reduction in U.S. union membership over time has brought _________ for the U.S. economy as a whole.
tend to suffer economic damage as a result; broad benefits or costs
The figure below shows the average cost curve, demand curve, and marginal revenue curve for a monopolist.
the area of rectangle BDEG
Which of the following will present the least amount of concern to a firm that has a monopoly over a particular industry?
the competitive actions of other business firms
In the _________, the perfectly competitive firm will seek out ________________________ .
short run; the quantity of output where profits are highest
The perceived demand for a monopolistic competitor
takes competitors into account.
When entry occurs in a monopolistically competitive industry,
the perceived demand and marginal revenue curves for each firm will shift to the left.
If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then,
the firm should keep expanding production.
Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 2 oranges, then:
there are no incentives for Alpha to specialize and trade with Beta
Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. If the terms of trade are established as 1 apple for 4 oranges, then:
there are no incentives for Beta to engage in international specialization and trade with Alpha.
The opportunity cost of producing a pair of pants in the USA is 5 bushels of wheat, while in China, it is 2 bushels of wheat. As a result:
there can be mutual gains from trade to the two countries if the USA exports wheat to China in exchange for pants.
For a pure monopoly to exist,
there is a single seller in a particular industry
The proportion of workers in a number of the world's high-income economies who belong to unions, when compared to unionized workers in the U.S., is
very high.
In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?
what quantity to produce
If a monopolistic competitor raises its price, it _________ customers than a perfectly competitive firm, but ________________ customers compared to the number that a monopoly that raised its prices would.
will lose fewer; it will lose more
From a competitive firms' point of view, the key question regarding the higher wages paid to union workers is whether the higher wage level _________
is matched with higher productivity.
Please refer to the diagram above. Based on the information illustrated in this graph, which of the following is an accurate statement?
profits will be reduced by production in the zone where MC exceeds MR
Labor unions can:
protect workers' pensions and all of the above.
Given the data provided in the table below, what will the amount of profit be for production at quantity (Q) level 7?
-$10.00
Copyright protection legislation provides protection for original works
during the author's life plus 70 years
The table below shows a monopolist's demand curve and the cost information for the production of its good. What will their profits equal?
$1,200
This table shows a monopolist's demand curve and cost information for the production of its good. What price will it charge?
$15
Given the data provided in the table below, the total revenue (TR) for production at quantity (Q) level 4 equals
$20.00
The table below shows the quantity demanded and supplied in the labor market for Economics professors at the I'M a State University, where all the professors belong to a union.Annual Salary Quantity of workers demanded Quantity of workers supplied$50,000 95 20$60,000 80 30$70,000 65 40$80,000 50 50$90,000 35 60$100,000 20 70If no union existed, the equilibrium salary for economics professors will be _________
$80,000
Given the data provided in the table below, what will the fixed costs equal for production at quantity (Q) level 4?
$9.00
This table below shows a monopolist's demand curve and cost information for the production of its good. What quantity will it produce?
1,000
In the United States, a pharmaceutical company's exclusive patent rights last for
20 years.
Alternate Outputs from One Day's Labor Input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. The opportunity cost of one bushel of wheat in India is:
4 yards of textiles.
Which of the following is true?
A nation cannot have a comparative advantage in the production of every good
_____________ occurs when circumstances have allowed several large firms to have all or most of the sales in an industry.
An oligopoly
The town of Bookville has a massive public library system. Bookville's municipal government faces a trade-off between retaining its current level of library workers and replacing some of them with computers. The four options available to the government are given in table below.Number of workers Number of computers Choice A 30 50Choice B 20 100Choice C 10 150Choice D 5 300After the introduction of a strong union, the annual salary for workers increases to $30,000. In these circumstances, the optimal choice from a cost perspective for the city government is
Choice C
Say that All and can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 36 units of food per year or 18 units of clothing. Which of the following is true?
Georgeland has an absolute but not a comparative advantage in producing clothing.
Say that All and can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 24 units of food per year or 12 units of clothing. Which of the following is true?
Georgeland has an absolute disadvantage, but not a comparative disadvantage, in producing clothing.
Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following statements is true?
If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.
A firm that holds a monopoly position in the market place is
a price maker
Through the process of exit, monopolistically competitive firms remaining in the market
are no longer earning losses.
Members of labor unions are able to use their _________ to achieve better economic outcomes.
bargaining power
Oligopoly firms acting individually may seek to gain profits ___________________________ .
by expanding levels of output and cutting prices
Say the average increase in pay for non-union workers in 2011 is 2% across the U.S. If a workers' union successfully negotiates a 3 year collective agreement that provides a 4.5% raise in 2011, and a 4.3% raise in 2013, then the for-profit employer will typically _________
curtail expansion of labor as a trade-off.
The slope of the demand curve for a monopoly firm is
downward sloping
As a result of the American workers' ability to sell their labor though a union, profit-making firms must pay wages _________
exceeding the equilibrium wage those firms would otherwise have selected
The table below shows the quantity demanded and supplied in the labor market for economics professors at I'mAStateUniversity, where all the professors belong to a union. All of the economics professors could also work as economic consultants, but the market for economic consultants is not unionized.Annual Salary Quantity of workers demanded Quantity of workers supplied$50,000 95 20$60,000 80 30$70,000 65 40$80,000 50 50$90,000 35 60$100,000 20 70If the union negotiates an annual salary increase for economics professors that is $20,000 higher than the market wage rate for economic consultants, then the market wage rate for the consulting positions will _________ and the quantity of economic consultants employed will _________.
fall, rise
If a perfectly competitive firm raises its price, the quantity demanded of its product _____________.
falls to zero
Alternate Outputs from One Day's Labor Input: USA: 12 bushels of wheat or 3 yards of textiles. India: 3 bushels of wheat or 12 yards of textiles. From the data, the USA:
has an absolute advantage over India in the production of wheat.
In the U.S. manufacturing sector, unionized jobs have _________ in recent years.
have trended down
If a nation has a comparative disadvantage in the production of some commodity:
it can still gain from international trade in that commodity, by getting it at a lower opportunity cost than if it produced it domestically.
Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call ________________________.
monopolistic competition
A __________________ exists when the quantity demanded in the market is less than the quantity at the bottom of the long-run average cost curve.
natural monopoly
A _________ refers to a group of firms colluding with one another to produce at the monopoly output and sell at the monopoly price
prisoner's dilemma
A monopolist is able to maximize its profits by
producing output where MR = MC and charging a price along the demand curve.
Monopolistic competitors can make a _____________ in the short-run, but in the long run, ______________ will drive these firms toward _______________________ .
profit or loss; entry and exit; a zero-profit outcome
In the Unites States, worker membership in labor unions has been _________
steadily declining for 50 years.
Which of the following arguments would most likely be presented by a critic of labor unions?
unions can prohibit economic growth if new technology is blocked
If a monopoly or a monopolistic competitor raises their prices, the quantity demanded ____________.
will decline
