Microeconomics Final Exam ECO102
In the United States, venture capital firms invested __________ in 2009.
$21 billion
Under current U.S. copyright legislation, works produced on a for-hire basis and owned by firms enjoy monopoly protection for
95 years from the date of publication.
The United States has approximately ___________ credit card holders.
180 million
Josh's weekly budget for lunch is $24. He eats only pizza and burgers. Each pizza costs $6 and each burger costs $3. Josh knows that 2 pizzas and 4 burgers will give him a utility of 8. What is Josh's utility-maximizing point?
2 pizzas, 4 burgers
Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is:
All points on the production possibilities frontier are equally efficient.
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
Which of the following is the best example of a tariff?
a $1000-per-car fee imposed on all small cars imported
Refer to Table 4-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then:
a 10 unit shortage will result.
Poverty is measured by the number of people who fall below
all the above are correct.
If a firm is producing so that the point chosen along the production possibility frontier is socially preferred, then that firm is said to have reached its
allocative efficiency
Who of the following is credited with having once written: "No one pretends that democracy is perfect or all-wise"?
Sir Winston Churchill
Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it?
analysis using numerical tools.
Changes in weather patterns are increasing administrative costs for insurance companies. These added costs often exceed the amount of the premiums coming in and claim payments going out. To address this problem, insurance companies typically
build up the amount of their reserves.
Which of the following may be legal and even common practice in a market economy?
bundling several products together and selling them as a package
Refer to the diagram. What is the significance of the point marked L1 at the bottom upward-sloping portion of the individual labor supply (2) curve?
as wages increase over this range, the quantity of hours worked also increases.
In order to determine ____________, the firm's total costs must be divided by the quantity of its output.
average cost
Market-oriented environmental tools _______________ for firms to take the social costs of pollution into account and ____________________ in reacting to these incentives.
create incentives; allow firms some flexibility
In recent years, the U.S. labor market has experienced a __________ in the earnings gap between men and women. One of the main factors behind this is ____________________ .
decline; women's' career focus and rewards gained with top-level job expertise
In competitive settings, profits will lead firms to _________________ and losses will lead firms ___________, so the incentives for producing at low cost and coming up with new ways of pleasing customers are strong.
enter the market; to exit
If the North American newsprint paper market has barriers to entry, then
entry will be blocked even if firms are earning high profits.
The law of ____________________________ explains why people and societies rarely make all-or-nothing choices.
diminishing marginal utility
Substitution and income effects of a change in price of a good may be used to explain the:
direct relationship between income and demand.
In the investment industry, the principle of _______________ supports investing in a wide range of companies to reduce the level of risk.
diversification
When the U.S. Congress begins to draft laws and regulations that attempt to reduce the harmful effects of environmental pollution, industry lobbyists will
do all of the above in order to influence legislation in their favour.
According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will
do so regardless of what type of competition exists in a market.
When nations increase production in their area of _________________ and trade with each other, both sides can benefit.
comparative advantage
_____________________ identifies the area where a producer's absolute advantage is relatively greatest, or where the producer's absolute disadvantage in productivity is relatively least.
comparative advantage
What matters most in determining the efficient distribution of production over the world is:
comparative advantage.
Which of the following is a reason the Supreme Court was asked to rule on various provisions and interpretations of the Bipartisan Campaign Reform Act of 2002?
conflicts with the free speech provisions of the U.S. Constitution
In the U.S. political arena, ______________________ may tend to emphasize the virtues of markets and the limitations of government, while _____________ may tend to emphasize the shortcomings of markets and the need for government programs.
conservatives; liberals
The concept of restrictive practices in the U.S. market economy is ____________________.
continually evolving
In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.
government
Economies of scale may arise from all but one of the following. Which one is it?
government economic subsidies protect firms from competition to avoid losses.
According to international trade theory, a country should:
import goods in which it has a comparative disadvantage.
A manufacturer would likely make an ___________ in a market following the long-run process of beginning and expanding production in response to ________________ .
entry; a sustained pattern of profits
An agreement between a manufacturer and a distributor stipulating that a dealer will only distribute that manufacturer's products would be classified as a form of
exclusive dealing.
How can parties who find themselves in a prisoner's dilemma situation avoid the undesired outcome and cooperate with each other?
find effective ways to penalize firms who do not cooperate
Economists would say tariffs:
limit voluntary exchanges.
In the ________, the perfectly competitive firm will react to profits by __________________________ .
long run; increasing its production
If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.
lower costs of production
The term _________________ refers to the additional utility provided by one additional unit of consumption.
marginal utility
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.
A method often used by economists to look at distribution of income in a society's economy involves
quintiles, or dividing a whole group into fifths.
In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely
raise prices, cut production, and realize positive economic profits.
Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.
normative statement
Property rights are the legal rights of ownership on which others are
not allowed to infringe without paying compensation.
The theory of comparative advantage shows that the gains from international trade do not just result from the absolute advantage of producing at lower cost, but also from pursuing comparative advantage and producing at a lower ________________.
opportunity cost
The underlying reason why trade benefits both sides of a trading arrangement is rooted in the concept of __________________.
opportunity cost
When a firm uses retained profits to invest in more energy efficient equipment, an economist would calculate the _________________ of investing in physical capital.
opportunity cost
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible.
opportunity set
The ownership in a company is represented by ________________ and those who are legally recognized as having ownership in a company are called _____________.
ownership of shares in the company's stock; shareholders
Government ______________ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for ______________ .
patent; a limited time
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
I'maGoldMiner 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.
An individual whose income level is just above the poverty line would most likely be classified as being a member of the _____________ .
near-poor
What do an optician and a lawyer share in common?
need for a valid occupational license from government regulators
The first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decide what price to charge is to
select the profit maximizing quantity to produce
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
Fixed costs are important because, at least in the ___________, the firm _______________.
short run; cannot alter them
If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ .
shutdown point
The most famous restrictive practices case of the last several decades involved a series of lawsuits by the U.S. government against Microsoft. These particular lawsuits were encouraged by
some of Microsoft's competitors.
Mark's annual after tax income earnings are $50,000. His $40,000, 3-year CD is maturing in the near future and he is planning to spend the interest on a 6 week holiday after that. His investments can earn a total of 10% before he starts his trip. If Mark's "present consumption" is the time he spends working and his "future consumption" is his trip, his optimal choice from the table below is to:
spend $10,000 now and consume $44,000 in the future.
The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.
sunk costs
Which of the following should typically be ignored because spending has already been made and cannot be changed?
sunk costs
For a perfectly competitive firm, the marginal cost curve is identical to the firm's ________________ .
supply curve
A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ .
supply curve to the right
As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.
technology
The chef at a high-end French cuisine restaurant has accepted a job on a cruise liner. The restaurant owner must advertise for a replacement chef, but is concerned about reducing the amount of imperfect information respondents to the career ad will provide. This concern can best be addressed by
requiring current resumes and recommendations.
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:
rise and the equilibrium quantity to stay the same.
Price elasticity of demand is defined as:
the percentage change in quantity demanded divided by the percentage change in price.
If one firm operating in an oligopoly raises its price and other firms do not do so,
the sales of the firm that increased its price will decline sharply.
If unions help workers secure pension benefits, so that those workers are less dependent on government social assistance after their retirement, then
the union is economically beneficial.
If cola and iced tea are good substitutes for consumers, then it is likely that:
their cross price elasticities are greater than zero.
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.
In the highly competitive setting in which oligopoly firms operate, which of the following are considered to be typical temptations each may face?
to cooperate to act as a single monopoly and all of the above
The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern.
utility
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.
A ______________ is a promise to fix or replace the good, at least for a certain period of time.
warranty
In the U.S., government support programs that are focused specifically on the poor include which of the following?
welfare
If oligopolists compete hard against each other,
zero profits result for all.
In order to produce 100 oatmeal cookies, Goodie Cookie Co incurs an average total cost of $0.25 per cookie. The company's marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is
$20
Why is there scarcity?
Because our unlimited wants exceed our limited resources
_________ arises when firms act together to reduce output and keep prices high.
Collusion
How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans?
Consumer Expenditure Survey
____________ means selling goods below their cost of production.
Dumping
_____________ are numerical limitations on the quantity of products that can be imported.
Import quotas
________________ occurs when a group of legislators all agree to vote for a package of otherwise unrelated laws that they individually favor.
Logrolling
Under which of the following antipoverty programs does the federal government give a fixed amount of money to each state?
TANF
Which of the following would legally qualify you to be registered as a shareholder of Microsoft Corporation?
buying the stock on the New York Stock Exchange
Which of the following is most likely to cause variation in American household spending patterns?
each of the above will cause a variation
Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change.
economy
The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on:
elective surgery due to its lower marginal return rate.
In the ______________, households receive goods and services and pay firms for them.
goods and services market
Economists readily admit that in settings that involve a monopoly or negative externalities, a potential role exists for _______________________.
government intervention
The bottom line on investing in individual stocks is: _______________ on average over lengthy periods of time; ________________, especially in the short run; _______________, since stock does need to be sold to turn gains into spendable money.
high rate of return; high risk; moderate liquidity
The price elasticity of demand for tickets to local baseball games is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:
increasing the price of game tickets because demand is inelastic.
Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price.
inelastic
Which of the following best describes a monetary policy tool?
interest rates
Saving money is a(n) ____________________, because it involves less consumption in the present, but the ability to consume more in the future.
intertemporal choice
The ______________ of all firms can be broken down into some common underlying patterns.
cost structure
Certain schools of economic thought suggest that a _____________ would reduce pollution in a __________________, when compared to command-and-control regulation.
pollution tax; flexible, more cost-effective way
The major problems caused by imperfect information in insurance markets are
moral hazard and adverse selection.
The term _______________ is used to describe circumstances where government takes over ownership of a business.
nationalization
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 order to be classified as a _______________, a firm must be owned by the people who run it on a day-to-day basis.
private company
For a negative externality, the __________________________ than the costs imposed on society as a whole.
private costs of an action are less
Refer to the graph shown above. Based on the information illustrated in the graph, which of the following is correct?
producing a marginal unit is increasing average costs overall
Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?
physical space for the gallery
Which of the following represents one of the methods that the government uses to promote technology?
protection of intellectual property
Why are politicians more likely to focus their political actions on individuals with higher incomes and higher levels of education?
research shows this group has greater informed voter participation
If new manufacturers enter the computer industry, then (ceteris paribus):
the supply curve shifts to the right.
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 U.S. immigration consists of mainly low-skilled workers, then an increase in immigration __________ the wages of low-skilled workers.
will reduce
The International Ecotourism Society estimates that international tourists interested in seeing nature or wildlife spend over
$450 billion per year.
Which of the following is used to describe the full spectrum of animal and plant genetic material?
biodiversity
According to the law of supply:
there is a direct relationship between price and the quantity supplied.
A situation where the level of output, scale and average costs are all rising is called
both a and b are correct
Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:
both the equilibrium price and quantity will rise.
Crystal is a single mother with 2 children. She can earn $10 per hour and can work up to 1,800 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling $18,000 per year. For every $1 of income she earns, her level of government support is reduced by $1. Crystal's labor-leisure opportunity set
is larger with the government support program
When Marietta chooses to only purchase a combination of goods that lie within her budget line, she:
is maximizing utility.
Norway's government nationalized the country's oil resources, and it has been accumulating a massive sovereign wealth fund worth billions of dollars ever since. This sovereign fund is used as a monetary source for government funded national education and healthcare. This is because the wealth generated by nationalized industries
is used to serve the citizens of the country.
In economics, a firm that faces no competitors is referred to as _________________.
a monopoly
Which of the following would a market competition regulator be most likely to assign the maximum HHI valuation to?
a monopoly
Since stock prices will shift in response to unpredictable future news, these prices will tend to follow what mathematicians call _________________.
a random walk with a trend
After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:
a shift of the demand curve for beef to the left.
Economic theory offers ____________________ about the full range of possible events and responses, which can prevent __________________ about how households will respond to changes in prices or incomes.
a systematic way of thinking; misguided conclusions
The problem of ________________ in insurance markets is that insurance companies are unable to ______________ .
adverse selection; differentiate those with low and high risks
A ___________________ arrangement exists when medical care providers are paid according to the services they provide.
fee-for-service
International trade currently involves about ______________ worth of goods and services thundering around the globe.
$20 trillion
The table below shows a monopolist's demand curve and cost information for the production of its good. What quantity will it produce?
1,000
Suppose that Mimi plays golf 5 times per month when the price is $40 and 4 times per month when the price is $50. What is the price elasticity of Mimi's demand curve?
1.0
In the United States, a pharmaceutical company's exclusive patent rights last for
20 years
A study by the Environmental Protection Agency looked at the costs and benefits of the Clean Air Act from 1970 to 1990. This study found that a middle-range estimate of the health and other benefits from cleaner air was $22 trillion. This amount was about __________________ than the costs of reducing the pollution.
44 times higher
As measured in 2008, about _________ of U.S. trade and ________ of European trade is intra-industry trade.
60%; 60%
_______________ of well-to-do individuals often put their own money into small new companies at an early stage of development, in exchange for owning some portion of the firm.
A network
__________________ involves active efforts to improve the job opportunities or outcomes of minority groups or women.
Affirmative action
______________ give government the power to block certain mergers, and in some cases, to break up large firms into smaller ones.
Antitrust laws
It is sometimes argued that nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________.
National Interest Argument
Are markets always in equilibrium?
No, but if there is no outside interference, they tend to move toward equilibrium.
Refer to Figure 4-1. The movement from __________ to __________ is consistent with a decrease in the price of cotton (a substitute).
Point A; Point H
____________________ is a particular type of spending that mainly benefits a single political district.
Pork-barrel spending
______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.
Price floors
Which of the following is a true statement?
The government approves most proposed mergers.
Which of the following would be expected if the tariff on foreign-produced automobiles were increased?
The supply of foreign automobiles to the domestic market would be reduced, causing auto prices to rise.
Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?
There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.
_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.
Total revenue
Treasury bonds are issued by the federal government through the _____________________ .
U.S. Department of the Treasury
Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 - however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 - however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. In the absence of any agreement, the outcome of this game will be
Wisconsin not cleaning the lake, Illinois cleaning the lake
Which of the following best denotes the reason for the existence of substantial black markets?
a command economy
Which of the following is most likely a topic of discussion in macroeconomics?
a decrease in the unemployment rate
Bringing the nations of the world to act together in addressing environmental issues that spill over national borders requires _______________ between countries with _________________ .
a difficult set of negotiations; different income levels and sets of priorities
Regardless of how many services are provided, a health maintenance organization provides health care and is paid ___________________ per person enrolled in the plan.
a fixed amount
Which of the following is the best example of a quota?
a limit imposed on the number of men's suits that can be imported from a foreign country
Why are the underlying economic meanings of the perceived demand curves for a monopolist and monopolistic competitor different?
a monopolist faces the market demand curve and a monopolist competitor does not
A rule that every imported product must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________.
a non-tariff barrier
Antipoverty programs that are set up so that the amount of government benefits will decline substantially as poor people earn more income typically create ______________.
a poverty trap
A firm that holds a monopoly position in the market place is
a price maker
Union members earn ______________ than non-union members, even after adjusting for factors such as _____________________________ .
about 20% more; years of work experience and education level.
Suppose the government of Taiwan subsidized its watch-making industry, enabling Taiwanese producers to undersell foreign watch producers. The law of comparative advantage indicates that watch-importing nations would best take advantage of the Taiwanese subsidization policy by:
accepting the subsidy of the Taiwanese government, making the appropriate adjustment for the resources temporarily displaced from the domestic watch-making industry.
An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________________ .
accounting profit; excluding opportunity cost
In the U.S., the amount in savings contributed to IRAs rose from $239 billion in 1992 to $3,667 billion by 2005, while overall savings actually dropped from low to lower. Evidence suggests that, in the economy as a whole, increased savings in these retirement accounts:
are being offset by negative savings or less savings in other kinds of accounts.
In the U.S., the command-and-control environmental laws of the early 1970s, together with the ensuing amendments and updates that have been made to them over time,
are given considerable credit for cleaner air and water in recent decades.
Through the process of exit, monopolistically competitive firms remaining in the market
are no longer earning losses
If an externality of pollution exists for all manufacturers in a given industry, then all related
are no longer represented in their supply curves.
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.
budget constraint
Which of the following is not an ironclad rule in the financial markets?
banks fund small business loans and large firms issue bonds to raise money
Occasionally, _________________ may lead to pure monopoly; in other market conditions, they may limit competition _________________ .
barriers to entry; to a few oligopoly firms
A positive externality arises in a situation where a third party, outside the transaction,
benefits from a market transaction by others.
The nature of demand indicates that as the price of a good increases:
buyers desire to purchase less of it.
The opportunity cost of an action:
is a subjective valuation that can be determined only by the individual who chooses the action.
Specialization:
can lead to an increase in overall production.
A _________ refers to a group of firms colluding with one another to produce at the monopoly output and sell at the monopoly price.
cartel
Since 1960, the earnings gap between men and women in the U.S. labor market has
continued to narrow.
Which of the following would be classified as a positive externality?
converting a derelict empty lot to a public vegetable garden
Intellectual property law is a body of law that includes
copyright legislation, as well as all of the above
A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:
cross-price elasticity of demand for iced tea is +2.
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that:
cross-price elasticity of demand for soda is -3.
If immigration consists of mainly high-skilled workers, then a(n) ________ in immigration will ________ the wages of high-skilled workers.
decrease, increase
The concept of _________________ means that as the measure of output goes up, average costs of production decline—at least up to a point.
economies of scale
Demand is said to be ___________ when the quantity demanded is very responsive to changes in price.
elastic
When economists are sketching examples of a demand or supply curve that is close to horizontal, they refer to that demand or supply curve as ____________.
elastic
The ___________ is the only price where quantity demanded is equal to quantity supplied.
equilibrium price
Refer to Table 4-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then:
equilibrium price increases from $6 to $8
Why do U.S. economists commonly refer to externalities as an example of market failure?
externalities present a case where markets only consider some social costs
If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to:
fall and the equilibrium quantity to stay the same.
Once the U.S. government opened its domestic markets to international trade, the competition from imported cars, steel, and other products caused demand for similar U.S. goods to
fall, leading to lower output, fewer workers, and an overall decline in union membership.
An inferior good is a product:
for which demand decreases as income increases.
Even with wage increases, the supply curve of labor is most often inelastic for which of the following?
full-time workers
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.
If the 2014 poverty line is based on the amount of money an individual has earned as income, then
government programs that provide non-cash assistance to the poor are not considered.
With regard to the provision of health insurance in the United States, which of the following is regarded as a way of addressing moral hazard and adverse selection problems?
greater government involvement
If a firm's efforts to be technologically innovative will create a positive externality, then that firm will likely
have less incentive to innovate to the extent that the whole of society desires.
Which of the following would an economist identify as a difficulty relating to environmental command-control regulations?
high degree of inflexibility
A perfectly competitive industry is a
hypothetical extreme.
A buyer confronted with _______________will often believe that the price being charged reveals something about the ____________ of the product.
imperfect information; quality
The presence of _____________________ in transactions involving goods can easily cause a ______________________ if the result is only a relatively small number of buyer and sellers communicating enough information so that they can agree on a price.
imperfect information; thin market
Raising an existing tariff on grapes from Argentina will:
increase American consumption of domestically produced grapes.
Introducing a tariff on vitamin Z would:
increase American consumption of domestically produced vitamin Z.
Improvements in the productivity of labor will tend to:
increase wages.
After the USA introduces a tariff in the market for gigastraps, the price of gigastraps in the USA will:
increase.
Import tariffs generally ________ the output of domestic producers of the affected products and also _________ the output of domestic exporters.
increase; decrease
An import quota does which of the following?
increases the price of the domestic goods to consumers
If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.
increases; fall
The demand schedule for a good:
indicates the quantities that will be purchased at alternative market prices.
The _________________ budget constraint shows the tradeoff between present and future consumption.
intertemporal choice
If an alternative policy could encourage both _____________________, instead of ________________________, consumers would benefit.
invention and competition; invention and monopoly
How does being caught in a poverty tap affect an individual's future job prospects?
it creates the outcomes presented in both a and b
When a monopolist increases sales by one unit,
it loses some marginal revenue and all of the above.
Kate's 24-Hour Breakfast Diner menu offers one item, a $5.00 breakfast special. Kate's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies and business license average out to $1.25 per meal. Since the market is highly competitive, Kate should
keep the business open in the short-run, but plan to go out of business in the long-run.
If the CEO of I'MaBigBank is playing prisoner's dilemma then, from his perspective, the gains to be had from cooperation are
larger than the rewards from pursuing self-interest.
In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.
market-oriented economy
The main categories of market-oriented approaches to pollution control are
marketable permits; better-defined property rights; pollution charges.
The basic difference between macroeconomics and microeconomics is:
microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
The basic difference between macroeconomics and microeconomics is that:
microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).
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
Each year banks typically offer a wide range of ____________ comprised of ______________________from a variety of different companies.
mutual funds; a range of stocks or bonds
Why did Thomas Edison vow that he would work only on ideas for things that people would buy?
no government would buy his first patented invention.
The reasons that nations trade includes the fact that:
no one country produces all of what citizens within the country want.
It is commonly understood that every invention
often results in new technology and all of the above.
Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be.
positive statements
The "law of supply" functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.
price
_________________ refers to the total number of units that are purchased at that price.
quantity demanded
Splitting up a the natural monopoly held by a public utility that produces and provides electricity would
raise the average cost of production and force consumers to pay more.
A straightforward example of a _______________, often used for simplicity, is the interest rate.
rate of return
Government has a variety of policies that allow inventors to _____________________ , such as the granting patents and _________________.
receive an increased rate of return; subsidization of research and development
The term ______________ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow.
regulatory capture
The comprehensive environmental laws adopted during the late 1960s and early 1970s by the United States government
stipulated mandatory use of particular pollution-control technologies.
The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.
substitution effect
Which of the following has become the least willing to sacrifice their environmental quality for some additional economic output?
the European Union
When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.
the quantity demanded of financial capital at any given interest rate will shift to the right.
In order to determine the average variable cost, the firm's variable costs are divided by _______________________.
the quantity of output
Whenever there is a shortage at a particular price, the quantity sold at that price will equal:
the quantity supplied at that price.
Which of the following completes the argument against deregulation of U.S. banks that began with the phrase: "if banks competed to pay higher rates of interest",
they might also compete to make riskier loans, potentially imperiling the safety of the banking system.
If each of two competing monopolists undertakes equal advertising efforts to attract consumers away from the other, the total result is
they will simply neutralize one another's efforts.
Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?
to produce the profit-maximizing quantity of output at the lowest possible average cost
The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________.
upward-sloping; more costly to produce
If a comparison between average cost and price reveals whether a firm is earning profits, then a comparison between average variable cost and price reveals
whether the firm is earning profit if fixed costs are left out of the calculation.
International trade is fundamentally a ________________________.
win-win situation
The marginal utility of two goods changes ______________.
with the quantities consumed
If the government altered its invention patent policy from a monopolistic policy to a competitive policy, then consumers
would benefit from the lower price and greater quantity sold.