Quiz#5-18
effort and natural ability.
Certain factors that are probably important in determining wages are nevertheless difficult to measure. Consequently, labor economists find those factors difficult to incorporate into their studies of labor markets and wages. Those factors include
People care about fairness.
"Thousand Friends" Social Networking firm had a remarkably profitable year. As a result, its employees expect to receive bonus checks. Which of the following insights into human behavior do the employees exhibit?
$8
A consumer is currently spending all of her available income on two goods: music CDs and DVDs. At her current consumption bundle, she is spending twice as much on CDs as she is on DVDs. If the consumer has $120 of income and is consuming 10 CDs and 2 DVDs, what is the price of a CD?
do not allow poor families to make purchases based on their preferences.
A disadvantage associated with in-kind transfers to reduce poverty is that they
imprecise in their ability to help the working poor.
Critics of raising the minimum wage argue that minimum-wage laws are
inertia.
Evidence from studies of workers' choices on whether to participate in 401(k) plans suggests that the workers' behavior appears to exhibit
an in-kind transfer.
Government vouchers to purchase food, also known as food stamps, are an example of
This program reduces the incentive to work to earn any wage up to $25,000.
If the government decided that each family needs a minimum income of $25,000 and promised to make up the difference between whatever a family earned and $25,000, which of the following is correct?
reflexivity.
In his 1951 book Social Choice and Individual Values, Arrow argues that a perfect voting system satisfies all of the following properties except
it should not try to reach complete equality in income.
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,
median voter theorem.
Majority rule will produce the outcome most preferred by the median voter, as demonstrated by the
incorporate the assumption of rational behavior on the part of economic actors.
Most economic models
People are reluctant to change their minds.
People interpret evidence to confirm beliefs they already hold. This statement is an example of which of the following systematic mistakes that people make?
A.
Refer to Figure 21-11. Assume that the consumer depicted in the figure has an income of $20. The price of Skittles is $2 and the price of M&M's is $4. The consumer's optimal choice is point
Graph (b)
Refer to Figure 21-2. Which of the graphs in the figure reflects a decrease in the price of good X only?
$1.50
Refer to Figure 21-6. If the price of good Y is $5, what is the price of good X?
receive higher marginal utility from donuts than from cake.
Refer to Figure 21-7. A person who chooses to consume bundle C is likely to
Bundle A provides the same utility as bundle C.
Refer to Figure 21-7. Which of the following statements is correct?
decreases.
Refer to Figure 21-8. As the consumer moves from A to B to C, the marginal rate of substitution
2
Refer to Figure 21-8. What is the consumer's marginal rate of substitution as she moves from A to B?
They would oppose both tax policies because both redistribute income.
Refer to Scenario 20-1. What would libertarians think of the tax two policies?
Liberals, because of the maximin criterion
Refer to Scenario 20-1. Which group would be most in favor of the switch from the current progressive tax policy to the new policy?
there is a positive externality.
Refer to Table 10-3. The table represents a market in which
$36
Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. How much tax revenue is collected from these four skiers?
$5.
Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. The deadweight loss associated with the tax is
$185
Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. What is the value of the surplus that accrues to all four skiers from their weekend trip?
$120.00
Refer to Table 13-10. What is the average fixed cost for the month if 9 instructional modules are produced?
2
Refer to Table 13-2. At which number of workers does diminishing marginal product begin?
300 units
Refer to Table 13-2. What is the marginal product of the first worker?
$100
Refer to Table 13-7. What is the value of B?
$100
Refer to Table 13-7. What is the value of C?
$150
Refer to Table 13-7. What is the value of F?
$120
Refer to Table 14-4. What is the marginal revenue from selling the 3rd unit?
$480
Refer to Table 14-4. What is the total revenue from selling 4 units?
2 units
Refer to Table 14-9. Consider a competitive market with 50 identical firms. Suppose the market demand is given by the equation QD = 200 − 10P and the market supply is given by the equation QS = 10P. How many units should a firm in this market produce to maximize profit?
Industry C
Refer to Table 16-1. Based on the concentration ratio, which industry is the most competitive?
Industry A
Refer to Table 16-1. Which industry has the highest concentration ratio?
$9,000
Refer to Table 17-1. If and Alec operate as a profit-maximizing monopoly in the market for water, how much profit will each of them earn, assuming that the two producers split the market equally?
1,200 gallons
Refer to Table 17-1. If the market for water were perfectly competitive instead of monopolistic, how many gallons of water would be produced and sold?
800
Refer to Table 17-1. Suppose the town enacts new antitrust laws that prohibit Rochelle and Alec from operating as a monopoly. How many gallons of water will be produced and sold once Rochelle and Alec reach a Nash equilibrium?
The 2nd worker
Refer to Table 18-6. The marginal product of labor begins to diminish with the addition of which worker?
$551
Refer to Table 18-7. Suppose the firm sells each box of envelopes that it produces for $6. The firm would not be interested in hiring a third worker unless the wage fell from its current level of $600 to what level?
almost 13 times as much income as the bottom quintile of families.
Refer to Table 20-4. In 2017, the top quintile of families have
"Baseball game" wins the first vote and "movie" wins the second vote, so they go to a movie.
Refer to Table 22-2. If (1) the first vote pits "baseball game" against "golf," and (2) the second vote pits "movie" against the winner of the first vote, then
"Movie" wins the first vote and "golf" wins the second vote, so they play golf.
Refer to Table 22-2. If (1) the first vote pits "baseball game" against "movie," and (2) the second vote pits "golf" against the winner of the first vote, then the outcome is as follows:
In a vote between A and B, B wins getting 85% of the total vote.
Refer to Table 22-4. The table shows the preferences for three types of voters over three possible outcomes: A, B, and C. The table also shows the percentage of voters of each type. Based on this information, which of the following statements is true?
47
Refer to Table 22-5. Suppose the voters are asked to choose between $1 million and $2.5 million. If all voters cast a vote for the spending amount closest to their own preference, how many votes will the $1 million spending amount receive?
required to pay a tax of $0.45 per gallon of gasoline sold.
Scenario 10-1The demand curve for gasoline slopes downward and the supply curve for gasoline slopes upward. The production of the 1,000th gallon of gasoline entails the following: • a private cost of $3.10;• a social cost of $3.55; • a value to consumers of $3.70. Refer to Scenario 10-1. Suppose the dollar amount of the externality, per gallon of gasoline, is constant, regardless of how much gasoline is produced. Then the externality could be internalized if producers of gasoline were
Any price less than $20
Scenario 11-1 Becca is a single mother of two young children who spend their days at a daycare center while Becca goes to work. The daycare center closes at 5:30. If parents do not pick up their children at or before 5:30, the daycare center charges a late fee of $5 per child for every 10 minutes the parent is late. Refer to Scenario 11-1. Due to traffic, Becca expects to be 20 minutes late to pick up her children. Which of the following most accurately describes the set of prices that she would be willing to pay for a variable toll road that would get her to the daycare center on time?
fallen by more than the tax revenue, the tax has a deadweight loss
Scenario 12-1 Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15. Refer to Scenario 12-1. Suppose the government levies a tax of $3 on each cigar, and the equilibrium price of a cigar increases to $18. Because total consumer surplus has
an average tax rate of 22.0 percent when her income is $50,000.
Scenario 12-3A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income;30 percent of all her income above $40,000. Refer to Scenario 12-3. The taxpayer faces
20 percent when her income rises from $30,000 to $30,001.
Scenario 12-3A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income;30 percent of all her income above $40,000. Refer to Scenario 12-3. The taxpayer faces a marginal tax rate of
Yes, because the marginal revenue exceeds the marginal cost.
Scenario 14-2 The information below applies to a competitive firm that sells its output for $40 per unit. • When the firm produces and sells 150 units of output, its average total cost is $24.50. • When the firm produces and sells 151 units of output, its average total cost is $24.55. Refer to Scenario 14-2. Suppose the firm is currently producing and selling 150 units of output. Should the firm increase its output to 151 units?
$18.00.
Scenario 14-2 The information below applies to a competitive firm that sells its output for $40 per unit. • When the firm produces and sells 150 units of output, its average total cost is $24.50. • When the firm produces and sells 151 units of output, its average total cost is $24.55. Refer to Scenario 14-2. Suppose the firm is producing 150 units of output and its fixed cost is $975. Then its average variable cost amounts to
if the lifeguard job has a requirement for special training or certification, the wage offer will be higher than otherwise.
Scenario 19-1 Ferris B., a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for lifeguards to patrol the beach at an exclusive island resort in the Caribbean. Recruiter B is looking for workers to staff positions at a summer youth camp. Refer to Scenario 19-1. Ferris is carefully considering the options that each recruiter presents. On the basis of knowledge obtained in his economics class, Ferris concludes that
being overconfident.
Some of the systematic mistakes that people make include
inconsistent over time.
Students of microeconomic principles often say they are going to study "tonight," because the only way to pass the exam is to study some every night. When "tonight" comes, some students choose to do something else. Come exam day, these students do not do well on their exam. This observation is an example of how people are
people are reluctant to change their minds.
Studies of human decision-making show that
labor to be variable and capital to be fixed.
Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers
$400.
Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $20 each, the value of marginal product of the ninth worker is
to fall and the equilibrium quantity of labor to rise.
Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage
excise taxes.
Taxes on specific goods such as gasoline and alcoholic beverages are called
all voting systems are flawed as a mechanism for social choice.
The Arrow impossibility theorem shows that
transitivity of preferences.
The Condorcet voting paradox demonstrates that democratic outcomes do not always obey the property of
demand for a firm's product.
The theory of consumer choice provides the foundation for understanding the
median voter theorem.
When Republicans and Democrats offer similar platforms in an election campaign, a likely explanation is the
higher income and therefore can afford more consumption.
When a consumer spends less time enjoying leisure and more time working, she has
consumers maximize utility.
When economists assume that people are rational, they assume that
You continue studying for your economics exam until you believe you'll get a score that's good enough.
Which of the following is an example of satisficing behavior?
It helps the disabled who cannot work.
Which of the following is not a characteristic of the Earned Income Tax Credit (EITC)?
A normal life-cycle pattern causes inequality in the income distribution but may not reflect inequality in living standards.
Which of the following represents a problem in measuring inequality?
Maddy likes C more than A, B more than D, A more than B, and D more than C.
Which of the following would violate transitivity?
give too much weight to a small number of vivid observations.
Your city newspaper publishes a "Best of" poll that lists its readers' favorite restaurants. Mundo Bar and Grill is ranked as the best casual restaurant. Your best friend had dinner at Mundo Bar and Grill last week and commented that the food was mediocre and the service was slow. You decide not to have dinner at Mundo Bar and Grill based on your friend's experience. Your decision illustrates that people
social cost = private cost = private value < social value.
A benevolent social planner would prefer that the output of good x be increased from its current level if, at the current level of output of good x,
a common resource when it is congested, but it is a public good when it is not congested.
A city street is
will have difficulty estimating the value of the highway.
A cost-benefit analysis of a highway is difficult to conduct because analysts
If left unregulated, the lobster population will likely increase.
A regional lobster management board recently proposed a five-year moratorium on lobster fishing in the Atlantic waters south of Cape Cod based on a study of the lobster population. Which of the following statements is not correct?
not rival in consumption.
A television broadcast is an example of a good that is
demand for female labor to be higher than the demand for male labor.
Assume men, on balance, have lower amounts of human capital than women have. Then we would expect the
Bev's economic profit is $3,700.
Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?
production of the 100th unit of output increases the firm's profit by $1.
For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the
change in profit.
For a firm, marginal revenue minus marginal cost is equal to
average revenue and the price for all levels of output.
For an individual firm operating in a competitive market, marginal revenue equals
Hanna has less human capital than Metta.
Hanna and Metta are identical twins who attended elementary school through high school together. Hanna got a job after high school, and Metta got a job after graduating from college. Hanna earns $36,000 a year, and Metta earns $69,000 a year. Select the best explanation for this wage difference.
exactly triple.
If a firm in a perfectly competitive market triples the quantity of output sold, then total revenue will
multiple firms would likely each have to pay large fixed costs to develop their own network of pipes.
If the distribution of water is a natural monopoly, then
a lump-sum tax.
If the government imposes a tax of $3,000 on everyone, the tax would be
lower due to a lower demand for workers in that group.
If there is systematic discrimination against a group of workers, then the wage paid to those workers likely will be
has many competitors.
In both perfect competition and monopolistic competition, each firm
lower its price.
In order to sell more of its product, a monopolist must
discriminatory wage differentials can exist, even in the absence of discriminatory practices by firms or by government.
In the presence of discrimination by customers,
The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?
6,000
Refer to Table 17-2. The socially efficient level of output supplied to this market is
excludable and rival in consumption.
Private goods are both
Q2
Refer to Figure 10-2. The socially optimal quantity would be
Q3
Refer to Figure 10-2. Without government intervention, the equilibrium quantity would be
W
Refer to Figure 15-4. How much output will the monopolist produce in order to maximize profit?
(K − B) × W
Refer to Figure 15-4. What area measures the monopolist's profit?
K
Refer to Figure 15-4. What price will the monopolist charge in order to maximize profit?
$980.
Refer to Figure 15-5. Based upon the information shown, what is total revenue for Bearclaws, given that it maximizes profits?
$280.
Refer to Figure 15-5. Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?
in the short run and earning a positive economic profit.
Refer to Figure 16-2. Assuming the firm is maximizing profit, this firm is operating
$200
Refer to Figure 16-2. How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?
20 units
Refer to Figure 16-2. How much output will the monopolistically competitive firm produce in this situation?
Firms will enter this industry.
Refer to Figure 16-2. Which of the following will occur in the long run in this industry?
beyond 133.33 units.
Refer to Figure 16-5. Efficient scale is reached
$675
Refer to Figure 18-1. Suppose the firm hires each unit of labor for $600 per week, and each unit of output sells for $9. What is the value of the marginal product of the third worker?
90 units of output.
Refer to Figure 18-1. The marginal product of the second worker is
Demand decreases from D2 to D1.
Refer to Figure 18-2. Each August many high school and college students visit a doctor's office to have a sports physical. If the price of sports physicals falls, what happens in the market for nurses?
$5 and 250
Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what are the equilibrium wage and quantity of labor?
3 units.
Refer to Table 10-3. The market equilibrium quantity of output is
$26.
Refer to Table 10-3. The social value of the 4th unit of output that is produced is
5 or 6 is the answer
Refer to Table 10-3. The socially optimal quantity of output is
Each seller will sell 30 gallons and charge a price of $5.
Refer to Table 17-5. If there are exactly five sellers of gasoline in Driveaway and if they collude, then which of the following outcomes is most likely?
use a mix of taxes and fees to generate revenue.
State and local governments
less market power than it would otherwise have.
Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has
can only be provided to a limited number of customers in a year, but Saoirse's work is sold to millions of individuals in a year—i.e., to anyone who has the willingness and ability to pay for admission to her movies.
Suppose that Philip is the best contractor in town, and he makes $400,000 a year. Suppose that Saoirse Ronan is the best and highest paid actress in Hollywood, and she makes $13 million per movie. Both are the best in their respective fields of work. One reason for the significant difference in incomes has to do with the nature of the service each offers. Philip's contracting services
20 percent and 12 percent, respectively
The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Karen paid $6,000 in taxes. What were her marginal and average tax rates?
profit is maximized.
The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which
$110
Tom's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $80 for 10,000 tents. At that level of output, the firm's average total costs equal
Social and private incentives differ, and common resources are not excludable but are rival in consumption.
What causes the Tragedy of the Commons?
A study comes out showing that brunettes are more likely to work harder than blondes, so employers prefer hiring brunettes.
Which of the following scenarios exhibits statistical discrimination?
Monopolistic competition is similar to monopoly because both market structures are characterized by firms being price makers rather than price takers.
Which of the following statements is correct?
average total cost curve is downward sloping.
When a firm has a natural monopoly, the firm's
the firm may be incurring economic losses
When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost,
A college student plays loud music on his new stereo system at 2:00 a.m.
Which of the following illustrates the concept of a negative externality?
Taxes
Which of the following is NOT a way of internalizing technology spillovers?
The government lacks information about the value people place on the good.
Which of the following is a disadvantage of government provision of a public good?
The government wants to attract the brightest researchers away from private research firms.
Which of the following is not a reason why government agencies subsidize basic research?
Tablet computer, national defense
Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is not excludable and not rival in consumption?
When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price.
Which of the following statements is true?
An increase in immigration
Which of the following would shift a market labor supply curve to the right?
There is a cost advantage for firms that do not discriminate.
Why would a wage differential due to discrimination in hiring be unlikely to persist in a competitive labor market?
backward sloping.
Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is
$20
Refer to Table 17-1. Suppose the town enacts new antitrust laws that prohibit Rochelle and Alec from operating as a monopoly. What will be the price of water once Rochelle and Alec reach a Nash equilibrium?
$16,000
Refer to Table 17-2. Assume there are two profit-maximizing internet radio providers operating in this market. Further assume that they are able to collude on the quantity of subscriptions that will be sold and on the price that will be charged for subscriptions. If the firms divide the market evenly, how much profit will each company earn?
sell 3,000 subscriptions and charge a price of $40 for each subscription.
Refer to Table 17-2. Suppose there is only one internet radio provider in this market and it seeks to maximize its profit. The company will
$2.0 million for Lopes and by $2.5 million for HomeMax.
Refer to Table 17-6. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimize growth-related profit. If they both agree to cooperate on a strategy that maximizes their joint profits, annual profit will grow by
2
Refer to Table 18-4. How many workers should the firm hire?
$2.
Refer to Figure 17-1. Suppose this market is served by two firms who each face the marginal cost curve shown in the diagram and have zero fixed cost. The marginal revenue curve that a monopolist would face in this market is also shown. If the firms are able to collude successfully, each firm should earn a profit equal to