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EC201 Final Exam
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Preguntas del test (130)
1Which of the following statements is associated with normative analysis, rather than positive analysis?
- AA tariff will lead to an increase in the price paid by consumers in the importing country.
- BThe elasticities of supply and demand in the tobacco market are such that consumers of tobacco products will bear most of the economic burden of tobacco taxes.
- CWhen a rent control is set below the equilibrium level of apartment rents, there will be a shortage in the rental housing market.
- DA cold winter will lead to increases in the price of home heating oil.
- EThe tax system should be progressive.
2Alan’s opportunity cost of producing good A is lower than Bob’s opportunity cost of producing good A. Bob’s opportunity cost of producing good B is lower than Alan’s opportunity cost of producing good B. This means that
- AAlan has comparative advantage in the production of good A.
- BAlan should specialize in the production of good A.
- CAlan should specialize in the production of good B.
- DNeither Alan nor Bob should specialize—each should produce both goods.
- EAlan has comparative advantage in the production of good A AND Alan should specialize in the production of good A.
3Which of the following is an example of a condition for an optimal decision by some kind of economic agent?
- AFor the consumer: Marginal utility is equal to price.
- BFor the producer: Price is equal to average variable cost.
- CFor the firm that is hiring workers: Marginal revenue product is equal to average revenue product.
- DAll of the above.
- E(a) and (b) only.
4Which of the following would push the production-possibilities frontier outward?
- ATechnological improvements.
- BIncreases in the size of the labor force.
- CCapital investments.
- DAll of the above.
- E(a) and (b) only.
5Which of the following is necessary for a firm to increase its profits by engaging in price discrimination?
- AThe firm must be a perfect competitor.
- BThe firm must face a demand curve that is unit elastic.
- CThe firm must have some way of distinguishing among its customers, to tell which ones have demand that is more elastic and which ones have demand that is less elastic.
- DAll of the above.
- ENone of the above.
6The supply curve for tarfsnods is perfectly inelastic. The demand curve shifts to the right. What will happen as a result?
- AEquilibrium price will rise; equilibrium quantity will rise.
- BEquilibrium price will rise; equilibrium quantity will stay the same.
- CEquilibrium price will stay the same; equilibrium quantity will rise.
- DEquilibrium price will fall; equilibrium quantity will stay the same.
- EEquilibrium price and quantity will both stay the same.
7The income elasticity of demand for commodity J is 0.6. On the basis of this information, we would say that J is
- Aelastic
- Binelastic
- Cinferior
- Dnormal
- E(b) and (d)
8Which of the following would be expected to shift the supply curve
for tomatoes to the left?- AAn increase in the prices of inputs used in production of tomatoes.
- BAn increase in the price of tomatoes.
- CFlooding in tomato-growing regions, which leads to crop damage.
- DAll of the above.
- EAn increase in the prices of inputs used in production of tomatoes and Flooding in tomato-growing regions, which leads to crop damage.
9Which of the following is an example of the “Tragedy of the Commons”?
- AA lot of hot air comes out of the House of Commons in London.
- BA monopoly will produce less than the socially optimal quantity.
- CWhen there is free access to a fishing ground, the stock of fish will be depleted.
- DIn a monopsony labor market, workers will be paid less than their marginal revenue product.
- EA tax on an elastically demanded good will generate a large excess burden.
10The elasticity of demand for thingamabobs is 1.0. The quantity demanded goes up from 30 per day to 50 per day. Assume that a change in price was the only reason for the change in quantity demanded. What must have happened to the price, in order to have caused quantity demanded to change in this way?
- APrice was unchanged.
- BPrice went down by 25%.
- CPrice went down by 40%.
- DPrice went down by 50%.
- EPrice went down by 100%.
11The payroll tax is a flat rate of labor earnings, but only up to a ceiling, above which the rate drops substantially. Also, the payroll tax does not apply to capital income. As a result,
the payroll tax is- Aprogressive at all income ranges.
- Bregressive at all income ranges.
- Cabout proportional over much of the income range,
but regressive at high incomes. - Dprogressive over much of the income range, but
about proportional at high incomes. - Eabout proportional over much of the income range,
but progressive at high incomes.
12The firms in a monopolistically competitive industry are
earning positive economic profits. What would we expect to
happen as a result?- ANew firms will enter the industry until zero economic profits are being earned.
- BThe firms will continue to earn positive economic profits indefinitely, because of barriers to entry.
- CNew firms will enter the industry until negative economic profits are being earned.
- DFirms will exit the industry until zero economic profits are being earned.
- ENone of the above.
- ANew firms will enter the industry until zero economic profits are being earned.
13Because of good growing conditions, there is an increase in the supply of asparagus. What will happen to the equilibrium price and quantity of asparagus?
- AEquilibrium price will rise; equilibrium quantity will rise.
- BEquilibrium price will rise; equilibrium quantity will fall.
- CEquilibrium price will fall; equilibrium quantity will rise.
- DEquilibrium price will fall; equilibrium quantity will fall.
- ENot enough information has been given to answer the question.
14Which of the following is/are a reason why the earnings of college-educated workers tend to be higher than the earnings of workers with less than a college education?
- ACollege-educated workers have higher marginal revenue product, so that the demand curve for their services is farther to the right than it would otherwise be.
- BA college education is costly to acquire, so that the supply curve of college-educated workers is farther to the left than it would otherwise be.
- CCollege-educated workers experience compensating wage-rate differentials, so that the demand curve for college-educated workers is farther to the right than it would otherwise be.
- DAll of the above.
- E(a) and (b) only.
15When the price of champagne goes up, the demand curve for zabaglione shifts to the left. This means that
- Achampagne and zabaglione are substitutes.
- Bchampagne and zabaglione are complements.
- Cthe cross-price elasticity of demand for zabaglione with respect to the price of champagne is positive.
- D(a) and (c) are both correct.
- ENone of the above is true.
16An import quota is instituted. As a result, consumers in the importing country are harmed, because they consume a smaller quantity, and they pay a higher price for the units they do consume. What is our best measure of the dollar value of the harm done to consumers by the import quota?
- AThe change in total expenditure.
- BThe change in quantity.
- CThe change in consumer surplus.
- DThe change in price.
- EIn order to answer the question, we would need information about the own-price elasticity of demand.
17Which of the following is a graph of the relationship between the cumulative proportion of the population and the cumulative proportion of income?
- AA Pigou curve
- BA Lorenz curve
- CA Gini curve
- DA Smith curve
- EA Keynes curve
18Investment projects tend to have a large portion of their costs early in the life of the project, with the revenues coming later. Because of this, and because of the need to discount future costs and revenues, we would be more likely to approve a project if
- Athe interest rate is higher.
- Bthe interest rate is lower.
- Cthe project can be completed quickly, so the revenues can begin to be realized sooner rather than later.
- Dnone of the above.
- E(b) and (c).
19The Gini coefficient for annual income is than the Gini coefficient for wealth, and the Gini coefficient for annual income is the Gini coefficient for lifetime income.
- Alarger than, larger than.
- Bsmaller than, larger than.
- Clarger than, smaller than.
- Dsmaller than, smaller than.
- Eabout the same as, identical to.
20If a natural monopoly were to charge a price equal to marginal cost,
- Athe firm would earn positive economic profits.
- Bthe firm would suffer economic losses.
- Cthe firm would earn zero economic profits.
- Dthe firm’s marginal cost would be greater than its average total cost.
- Ethe firm would turn into a giant banana slug.
21The price of a cotton handkerchief increases from $1.80 to $2.20. As a result, the quantity demanded decreases from 1100 per day to 900 per day. What is the own-price elasticity of demand?
- A0.0
- B0.5
- C1.0
- D2.0
- E10.0
22In the Empire of Lumpiness, every person pays $1000 per year of tax, regardless of his or her income. This tax system is
- Aregressive.
- Bproportional.
- Cprogressive.
- Dperfectly elastic.
- Eonly comprehensible to Ginny Weasley.
23Which of the following is believed to be the most important force leading to the recent trend in income inequality in the United States?
- AThe strong performance of the New England Patriots.
- BThe increase in transfer payments to poor people.
- CThe increase in the real value of the minimum wage.
- DIncreases in the demand for skilled workers.
- EIncreases in the rate of return on capital investments.
24The supply curve for good X is given by Qs = P. The demand curve is given by Qd = 20 - 3P. What is the equilibrium price of good X?
- A2
- B4
- C5
- D10
- E20
25What will be the effect of a price ceiling that is enforced above the equilibrium price?
- AA surplus will occur.
- BA shortage will occur.
- CThere will be no effect.
- DThere will be shortages on alternate Tuesdays, and surpluses on Sunday mornings between the hours of 2 and 5.
- EAll of the above.
26In an attempt to raise its revenues, Emily’s Bar & Grill increases the price of its onion soup. What does this imply about Emily’s beliefs regarding the elasticity of demand for its onion soup?
- ADemand is inelastic.
- BDemand is unit elastic.
- CDemand is elastic.
- DAll of the above.
- ENone of the above.
27Hezekiah is considering taking out a loan to make a new capital investment. The cost is $100. Exactly one year later, the project will generate revenue of $105, and the project will then self-destruct. The interest rate is 10%. Which of the following is true?
- AThe project has positive net present discounted value (PDV); Hezekiah should do it.
- BThe project has zero net PDV; Hezekiah should do it.
- CThe project has negative net PDV; Hezekiah should not do it.
- DThe project has positive net PDV; Hezekiah should not do it.
- EThe project has negative net PDV; Hezekiah should do it.
28Assume that the elasticity of labor supply is smaller than the elasticity of labor demand. A payroll tax is levied at exactly the same rate on employers and workers. Who will bear the economic burden of the tax?
- AEmployers will bear most of the burden.
- BWorkers will bear most of the burden.
- CThe tax will be borne equally by employers and workers.
- DNot enough information has been given.
- EAll of the above! Astonishingly, the tax will be borne mostly by employers, and it will be borne mostly by workers, and it will be evenly split between employers and workers, and we can't tell, all at the same time!
29If there is a positive externality, a competitive private market will produce _____ the socially optimal quantity. If there is a negative externality, a competitive private market will produce _______ the socially optimal quantity.
- Amore than, more than.
- Bmore than, less than.
- Cless than, more than.
- Dless than, less than.
- Eexactly, exactly.
30If the equilibrium interest rate is 10% and a usury ceiling is enforced at 5%,
- Aa shortage of credit will occur.
- Ba surplus will occur in the credit market.
- Cthe quantity of credit demanded will be larger than it would have been at the equilibrium.
- Dthere will be no effect.
- E(a) and (c).
31Which of the following policy issues would be classified as having to do with macroeconomics, rather than microeconomics?
- AThe effect of tariffs on the volume of exports.
- BThe effect of a minimum-wage law on the employment of low-skill workers.
- CThe effect of the Federal Reserve’s monetary policy on the rate of inflation.
- DThe effect of education on earnings.
- EThe effect of a drought on the price of corn.
32Which of the following is graphed as a horizontal line?
- AA perfectly inelastic demand curve.
- BAn average-fixed-cost curve.
- CAn average-total-cost curve for a natural monopoly.
- DA marginal-revenue curve for a monopoly.
- EA total-fixed-cost curve.
33For any firm for which price is greater than average variable cost, the profit-maximizing quantity of output will be the precise quantity at which
- Amarginal revenue equals marginal cost.
- Bdemand is inelastic.
- Cprice equals marginal cost.
- Dmarginal revenue is negative.
- E(a) and (b) are true.
34A point that is below and to the left of the production-possibilities frontier is
- Aassociated with inefficient use of the available resources.
- Bassociated with efficient use of the available resources.
- Cunattainable with the resources that are currently available.
- DAll of the above.
- ENone of the above.
35Huge Corporation is a monopolist. Its marginal costs decrease (i.e., its entire marginal-cost curve shifts downward). How will the firm change its price and quantity as a result?
- AHuge will increase price and leave quantity of output unchanged.
- BHuge will increase price and increase quantity of output.
- CHuge will increase price and reduce quantity of output.
- DHuge will reduce price and increase quantity of output.
- EHuge will reduce price and decrease quantity of output.
36In which of the following antitrust cases was a firm broken into more than one smaller firm?
- AStandard Oil
- BAmerican Tobacco
- CALCOA
- DAll of the above
- E(a) and (b) only.
37What is the marginal cost of the second unit (i.e., the marginal cost of going from Q=1 to Q=2)?
- A$1
- B$2
- C$3
- D$4
- E$5
38What is the average total cost when Q=4?
- A$1
- B$2
- C$3
- D$4
- E$5
39What type of firm could this be?
- AA perfectly competitive firm.
- BA monopoly firm.
- CA monopolistically competitive firm.
- DAny of the above.
- E(b) or (c).
40What is the firm's profit-maximizing quantity of output?
- A0
- B1
- C2
- D3
- E4
41Which of the following is/are consistent with the Law of Demand?
- AThe price of A goes up. As a result, and the quantity demanded of A goes down.
- BA and B are complements. The price of A goes up. As a result, there is a decrease in the demand for B.
- CA and B are substitutes. The price of A goes up. As a result, there is an increase in the demand for B.
- DAll of the above.
- E(a) and (b) only.
42Two markets have exactly the same net-of-tax supply curve. They also have exactly the same equilibrium price and quantity when there is no tax. Then each of the markets is subjected to exactly the same tax. The only difference between the two markets is that the demand for good X is more elastic than the demand for good Y. On the basis of this information, what can we say?
- AThe tax in market Y will generate more revenue.
- BThe tax in market Y will generate more excess burden.
- CBoth (a) and (b) are true.
- DNeither (a) nor (b) is true.
- ELord Voldemort is the only one who knows the answer to this question, and we’re too afraid to ask him.
43The benefit to the firm from hiring an extra unit of an input is called the marginal revenue product. Marginal revenue product is equal to
- Aprice divided by marginal product.
- Baverage product multiplied by marginal revenue.
- Cmarginal product multiplied by price.
- Dmarginal product multiplied by average revenue.
- Emarginal product multiplied by marginal revenue.
44Assume that the demand for low-skill labor is inelastic. The minimum-wage law succeeds in pushing the wage rate above its equilibrium level for a group of low-skill workers. As a result, what will occur?
- AThe number of these workers who are hired will decrease.
- BThere will be a labor shortage.
- CThe total payments to the affected group of workers will increase.
- DThe workers will go to the gym more often, and lift weights.
- E(a) and (c).
45The evidence suggests that the elasticity of men's labor supply with respect to the net wage rate is _________, while the elasticity of women's labor supply with respect to the net wage rate is ______.
- A1.56, 3.12
- Bpositive, negative
- Cstrongly negative, positive
- Dclose to zero, positive
- Epositive, close to zero
46The deadweight loss from monopoly is represented graphically by the area of ____, and the excess burden of a tax is represented graphically by the area of _____.
- Aa rectangle, a rectangle
- Ba trapezoid, a triangle
- Ca triangle, a rectangle
- Da rectangle, a trapezoid
- Ea triangle, a triangle
47All else equal, an increase in the demand for highly skilled labor will lead to _______ in the distribution of labor-market earnings, and an increase in the supply of highly skilled labor will lead to __________ in the distribution of labor-market earnings.
- Agreater inequality, greater inequality
- Bgreater inequality, less inequality
- Cless inequality, greater inequality
- Dless inequality, less inequality
- Enot enough information has been given to answer the question
48In Miftez, there is no international trade, and the price of good R is $10 per kilogram. In the rest of the world, the price of good R is $20 per kilogram. This suggests that
- AMiftez would benefit by importing good R from other countries, without any tariffs, quotas, or other interferences.
- BMiftez would benefit by importing good R, but only if a tariff is levied on imports of good R.
- CMiftez would benefit by exporting good R to other countries
- DMiftez would not benefit by either importing or exporting good R.
- ENot enough information has been given to answer the question.
49Which of the following statements is/are true, regarding the effect on labor supply, caused by an increase in the wage rate?
- AWhen the wage rate increases, the opportunity cost of leisure increases.
- BThe increase in the wage rate will create a substitution effect, such that the individual will work less.
- CThe increase in the wage rate will create an income effect, such that the individual will work more.
- DAll of the above.
- E(b) and (c) only are true.
50The market supply curve for beef jerky shifts to the right. At the same time, the market demand curve for beef jerky shifts to the left. As a result of these two changes, what will happen to the equilibrium price and quantity of beef jerky?
- APrice will rise; quantity will rise.
- BPrice will rise; the effect on quantity can’t be determined without more information.
- CPrice will fall; the effect on quantity can’t be determined without more information.
- DQuantity will rise; the effect on price can’t be determined without more information.
- EQuantity will fall; the effect on price can’t be determined without more information.
51In your textbook, the Prisoners’ Dilemma is used to study
- Athe deadweight loss of a sales tax.
- Bmonopsonistic exploitation of labor.
- Cthe effects of price ceilings.
- Dhow to saw through thick iron bars.
- Ethe interaction between firms in a duopoly.
52Rubeus Hagrid has received a promise that he will be paid $1000, exactly five years from now. There is no uncertainty: he is absolutely certain that he will receive the $1000. The interest rate is 10%. What is the present discounted value of the payment?
- A$1000
- B$1000 / 1.1
- C$1000 / 1.5
- D$1000 / 5
- E$1000 / (1.1)^5
53Consumer surplus is
- Athe difference between the amount consumers are willing to pay and the amount they actually have to pay.
- Bgraphically represented by the area under the demand curve but above the supply curve.
- Csomething that occurs when a price floor is enforced above the equilibrium price.
- DAll of the above.
- E(a) and (b) only.
- Athe difference between the amount consumers are willing to pay and the amount they actually have to pay.
54Inequality between countries is
- Agreater than the inequality within countries (that is, the Gini index for the world as a whole is larger than the Gini indexes for individual countries).
- Babout the same as the inequality within countries (that is, the Gini index for the world as a whole is about the same as the Gini indexes for individual countries).
- Csmaller than the inequality within countries (that is, the Gini index for the world as a whole is less than the Gini index for individual countries).
- Dall of the above.
- Enone of the above
- Agreater than the inequality within countries (that is, the Gini index for the world as a whole is larger than the Gini indexes for individual countries).
55The short-run supply curve for a perfectly competitive firm is
- Athe marginal-revenue curve.
- Bthe average-fixed-cost curve.
- Cthe marginal-cost curve for prices equal to or greater than average total cost. If price is less than average total cost, the quantity supplied is zero.
- Dthe marginal-cost curve for prices equal to or greater than average variable cost. If price is less than average variable cost, the quantity supplied is zero.
- Enone of the above. The perfectly competitive firm does not have a unique, well-defined supply curve.
56Which of the following will occur as a result of a tariff?
- AThe gross price paid by buyers in the importing country will increase.
- BThe net price received by sellers in the exporting country will decrease.
- CThe quantity of imports will be reduced.
- DAll of the above.
- E(a) and (c) only.
- AThe gross price paid by buyers in the importing country will increase.
57The Lorenz Curve in country A is closer to the horizontal axis than the Lorenz Curve for country B. In other words, the Lorenz Curve for country A is always below the Lorenz Curve for country B. This means that
- Athe Gini Ratio for country A is greater than the Gini Ratio for country B.
- Bthe Gini Ratio for country A is less than the Gini Ratio for country B.
- Cthe distribution of income is more equal in country A than in country B
- D(a) and (c).
- Enone of the above.
58Which of the following is a characteristic of a pure public good?
- ANonrival consumption, i.e., many people can enjoy the good at the same time.
- BNonexcludability, i.e., it is difficult or impossible to exclude those who don’t pay.
- CInelastic demand.
- DAll of the above.
- E(a) and (b) only.
59Which of the following is widely considered to be a violation of horizontal equity?
- AThe federal individual income tax is not neutral with respect to marital status, i.e., single persons sometimes experience a marriage penalty or marriage bonus.
- BThe federal individual income tax has graduated marginal rates.
- CThe federal individual income tax is associated with excess burden.
- DSales taxes are regressive.
- ETelephone poles are vertical, not horizontal.
60Tariffs, quotas, and VERs are all used to restrict imports. Which of the following statements is true regarding these policies that interfere with international trade?
- AAll three are explicit restrictions on the quantity of imports.
- BA tariff is a price mechanism, whereas a quota or a VER is an explicit restriction on the quantity of imports.
- CAll three are price mechanisms.
- DA tariff or a VER is a price mechanism, whereas a quota is an explicit restriction on the quantity of imports.
- EA VER raises revenue for the government of the importing country
61In one day, Abner can fix 6 bicycles, or he can sharpen 6 axes. In one day, Zebediah can fix 12 bicycles, or he can sharpen 8 axes. Between these endpoints, each person has a straight-line production possibilities frontier. Which of the following statements is true?
- AThe earth is flat.
- BZebediah has comparative advantage in both activities.
- CAbner has comparative advantage in fixing bicycles.
- DNeither person has comparative advantage in either activity.
- EZebediah has absolute advantage in both activities.
62 There is an increase in the demand for billiard balls (i.e., the demand curve for billiard balls shifts to the right). As a result,
- Athe equilibrium price will increase; the equilibrium quantity will increase.
- Bthe equilibrium price will increase; the equilibrium quantity will decrease.
- Cthe equilibrium price will decrease; the equilibrium quantity will increase.
- Dthe equilibrium price will decrease; the equilibrium quantity will decrease.
- Enothing will happen.
63Job A and Job B are identical in every way except one. The only difference between the two jobs is that the working conditions of Job A are pleasant, whereas the working conditions of Job B are unpleasant. As a result, the equilibrium wage rate for Job B will be higher than the equilibrium wage rate for Job A. Why does the wage difference occur?
- AThe demand curve for A labor is to the right of the demand curve for B labor.
- BThe demand curve for A labor is to the left of the demand curve for B labor.
- CThe supply curve for A labor is to the right of the supply curve for B labor.
- DThe supply curve for A labor is to the left of the supply curve for B labor.
- EA union has succeeded in pushing the B wage rate above its equilibrium level.
64Which of the following is restricted by the antitrust laws?
- ATariffs
- BPrice Fixing
- CImport quotas
- DEnvironmental externalities
- EAll of the above.
65The income tax in Koblenzia has an exemption, such that those with low incomes pay no tax. It also has graduated marginal rates. For a taxpayer whose income is greater than the exemption level,
- Athe average tax rate is greater than the marginal tax rate.
- Bthe marginal tax rate is greater than the average tax rate.
- Cthe marginal tax rate is equal to the average tax rate.
- Dnot enough information has been given to answer the question.
- Eit’s time for a nap.
66A price ceiling is imposed in the market for licorice. The price ceiling is below the equilibrium price, and this leads to shortages. We say that a shortage is larger if the difference between quantity demanded and quantity supplied is larger. All else equal, which of the following statements is/are true, regarding the relationship between the size of the shortage and the own-price elasticity of demand?
- AThe shortage will be larger if the elasticity is larger.
- BThe shortage will be larger if the elasticity is smaller.
- CThe elasticity will have no effect on the size of the shortage.
- DIf the elasticity is larger, the shortage will be larger on days of the week that begin with the letters T, W, or F, but smaller on days that begin with M or S.
- ENot enough information has been given to answer the question.
67If an individual receives non-labor income, he/she will work less. This means that
- Aleisure is a normal good.
- Bthe labor-supply curve is perfectly inelastic.
- Ca minimum-wage law will increase the total payments to low-wage workers.
- Dthe union threat effect is very small.
- Eno one knows anything about anything.
68The payroll tax in the United States is a flat-rate tax on earnings in the labor market, up to a ceiling. Most Americans receive most of their income from labor-market earnings, and the ceiling is much higher than the average wage earner makes in a year. Thus the payroll tax is approximately proportional over most of the income range. However, above a certain amount (which was $106,800 in 2011), the marginal rate of payroll tax decreases dramatically. As a result, what can we say about the payroll tax for those who earn more than the ceiling?
- AIt is progressive.
- BIt is proportional
- CIt is regressive
- DAll of the above are correct!! The tax is progressive, and proportional, and regressive, all at the same time!!
- ENot enough information has been given to answer the question.
69In the Republic of Fenwickia, every household has exactly the same income. The Gini Ratio for this country is
- A0
- B1
- C3.14159
- D100
- Ee. Not enough information has been given to answer the question.
70A demand curve is
- Aa graph of the relationship between quantity demanded and price, holding constant all other possible influences on buyers.
- BDownward sloping as we move from left to right, if it obeys the Law of Demand.
- CA graph of the information contained in a demand schedule.
- DAll of the above.
- ENone of the above.
71Which of the following is a normative statement?
- AWhen the demand curve shifts to the right, the equilibrium price rises and the equilibrium quantity also rises.
- BA monopoly will produce a lower quantity than an otherwise-comparable industry that is perfectly competitive.
- CThe United States should increase the degree of progressivity of its tax system.
- DA price ceiling that is below the equilibrium price will lead to shortages.
- EAll of the above.
72There is an increase in the equilibrium price of gasoline, and an increase in the equilibrium quantity of gasoline. Which of the following would be consistent with these changes?
- AA rightward shift in the supply curve of gasoline.
- BA leftward shift in the supply curve of gasoline.
- CA rightward shift in the demand curve for gasoline.
- DA leftward shift in the demand curve for gasoline.
- ENone of the above.
73Which of these is the best definition of economics?
- AThe study of shopping.
- BThe study of how society chooses to use its scarce resources to produce, consume, and exchange goods and services.
- CThe study of how to make money in the stock market.
- DThe study of inflation and unemployment.
- EThe study of hot dogs and mustard.
74In the Duchy of Gutereise, the economy is on its production-possibilities frontier in 2011. Then, by one year later (in 2012), the economy produces more of every good than it had produced in 2011. How could this occur?
- ABy reducing waste, so that the available resources are used more efficiently.
- BBy moving downward and to the right along the existing production-possibilities frontier.
- CBy moving upward and to the left along the existing production-possibilities frontier
- DBy adopting new technologies and increasing the size of the labor force.
- EAll of the above.
75For the exact same flight, American Airlines charges lower prices for passengers who stay over a Saturday night, and higher prices for passengers who do not stay over a Saturday night. This is an example of
- Aprice discrimination.
- Bmonopsonistic exploitation.
- Ccollusive oligopoly.
- Drent seeking.
- Enone of the above.
76Assume that the elasticity of labor supply is smaller than the elasticity of labor demand. A payroll tax is levied on employers. Who will bear the largest share of the burden of the tax?
- AEmployers.
- BWorkers.
- C The tax will be borne equally by employers and workers.
- DNot enough information has been given.
- EAll of the above! Astonishingly, the tax will be borne mostly by employers, and borne mostly by workers, and evenly split between employers and workers, and we can’t tell!
77What kind of curve could this be?
- AAn average-fixed-cost curve.
- BA perfectly elastic demand curve.
- CA perfectly inelastic demand curve
- DA marginal-revenue-product curve.
- EA total-fixed-cost curve.
78Assume that the elasticity of demand for green and white ball-point pens is 1.2. Due to a rightward shift in the supply curve for pompons, the price decreases by 50%. What will happen to the quantity of pompoms demanded?
- AQuantity demanded will increase by 6%.
- BQuantity demanded will increase by 12%.
- CQuantity demanded will increase by 24%.
- DQuantity demanded will increase by 50%.
- EQuantity demanded will increase by 60%.
79Consumer surplus is
- Athe difference between the amount consumers are willing to pay and the amount they actually have to pay.
- Bgraphically represented by the area under the demand curve but above the price line.
- Cused in calculating the deadweight loss of monopoly.
- DAll of the above.
- E(a) and (b) only.
- Athe difference between the amount consumers are willing to pay and the amount they actually have to pay.
80Malfoy Corporation is a monopolist. Its marginal costs decrease (i.e., its entire marginal-cost curve shifts downward). How will the firm change its price and quantity as a result?
- AMalfoy will reduce price and increase quantity of output.
- BMalfoy will reduce price and decrease quantity of output.
- CMalfoy will increase price and leave quantity of output unchanged.
- DMalfoy will increase price and increase quantity of output.
- EMalfoy will increase price and reduce quantity of output.
81If the social marginal cost of production of good Z is greater than the
private marginal cost, we would say that good Z is characterized by- Adecreasing returns to scale.
- Bleprosy, malocclusion, and poor gas mileage.
- Ca negative externality.
- Dopportunity cost.
- Epositive economic profit.
82If a Pigouvian tax is designed in the socially optimal way, it will
- Alead to equality between social marginal costs and private marginal costs.
- Bsolve the problem caused by an externality.
- Celiminate pollution.
- DAll of the above.
- E(a) and (b) only.
83For Hezekiah, total utility and marginal utility can be measured in dollars of willingness to pay. Hezekiah’s total-utility schedule for trips to the movie theater is given by:
Quantity Total Utility Marginal Utility
0 $0 --
1 8
2 15
3 21
4 26
5 30
The current market price of a movie ticket is $5. How many
movie tickets will Hezekiah buy?- A1
- B2
- C3
- D4
- E5
84The firms in a monopolistically competitive industry are
earning positive economic profits. What would we expect to
happen as a result?- ANew firms will enter the industry until zero economic profits are being earned.
- BThe firms will continue to earn positive economic profits indefinitely, because of barriers to entry.
- CNew firms will enter the industry until negative economic profits are being earned.
- DFirms will exit the industry until zero economic profits are being earned.
- ENone of the above.
- ANew firms will enter the industry until zero economic profits are being earned.
85Because of an improvement in agricultural technology, there is an increase in the supply of peaches. In other words, there is a rightward shift in the supply curve for peaches. What will happen to the equilibrium price and quantity of peaches?
- AEquilibrium price will rise, equilibrium quantity will rise.
- BEquilibrium price will rise, equilibrium quantity will fall.
- CEquilibrium price will fall, equilibrium quantity will rise.
- DEquilibrium price will fall, equilibrium quantity will fall.
- ENot enough information has been given to answer the question.
86What kind of firm could this be?
- AA monopoly.
- BA monopolistically competitive firm
- CAn oligopoly firm.
- DAny of the above.
- ENot enough information has been given to answer the question.
87What is average total cost when Q=4?
- A1
- B2
- C3
- D4
- E5
88What is the marginal revenue of the fifth unit (i.e., the marginal revenue associated with going from Q=4 to Q=5)?
- A5
- B4
- C3
- D2
- E1
89What is the firm's profit-maximizing quantity of output?
- A1
- B2
- C3
- D4
- E5
90Which of the following would be an example of the “Tragedy of the Commons”?
- AA lot of hot air comes out of the House of Commons in London.
- BA monopoly will produce less than the socially optimal quantity.
- CWhen there is free access to a fishing ground, the stock of fish will be depleted.
- DIn a monopsony labor market, workers will be paid less than their
marginal revenue product. - EA tax on an elastically demanded good will generate a large excess burden.
91Investment projects tend to have a large portion of their costs early in the life of the project, with the revenues coming later. Because of this, and because of the need to discount future costs and revenues,
we would be more likely to approve a project if- Athe interest rate is higher.
- Bthe interest rate is lower.
- Cthe project can be completed quickly, so the revenues can begin to be realized.
- Dnone of the above.
- E(b) and (c).
92Which of the following is true regarding nonrival consumption?
- ANonrival consumption is one of the characteristics of a public good.
- BNonrival consumption means that one person can enjoy the good without diminishing anyone else’s enjoyment of the good.
- CNonrival consumption is the reason why we add individual willingness-to-pay curves vertically, in constructing the social willingness-to-pay curve.
- DAll of the above are true.
- EOnly (a) and (b) are true.
93Different people have different wage rates, for a variety of reasons. One type of wage-rate differential is a compensating wage-rate differential. Why do we observe compensating wage differentials for some occupations?
- AThe workers in those occupations have very high levels of education.
- BThe workers in those occupations are members of unions.
- CThe workers in those occupations are helped by affirmative-action laws.
- DThe workers in those occupations have unusually large amounts of experience.
- EThe work in those occupations is dangerous or unpleasant.
94Which of the following could lead to higher prices for the consumers in the importing country?
- AA tariff.
- BAn import quota.
- CA voluntary export restraint.
- DAll of the above.
- ENone of the above.
95Which of the following is a reason why we might prefer Pigouvian remedies (such as emissions charges) to regulations, as a method of reducing pollution?
- APigouvian remedies take into account the differences among firms in the costs of pollution reduction.
- BPigouvian remedies are more effective in breaking up cartels.
- CPigouvian remedies raise revenue for the government, which can be used to reduce the reliance on other, more distortionary taxes.
- DAll of the above.
- E(a) and (c) only.
96The price of good A increases. As a result, there is a decrease in the demand for good B. This means that
- Agood A and good B are substitutes.
- Bgood A and good B are complements.
- Cthe demand for good A and the demand for good B are both elastic.
- Dgood A and good B are both normal goods.
- ENone of the above
97The price of geegaws falls from $18 to $14. As a result, the quantity demanded rises from 300 to 500. What is the elasticity of demand?
- A0.25
- B0.5
- C1.0
- D2.0
- E7.891234567890123456
98A point that is below and to the left of the production-possibilities frontier is
- Aassociated with inefficient use of the available resources
- Bassociated with efficient use of the available resources.
- Cunattainable with the resources that are currently available
- DAll of the above.
- ENone of the above.
99When the price of champagne goes up, the demand curve for zabaglione shifts to the right. This means that
- Achampagne and zabaglione are substitutes.
- Bchampagne and zabaglione are complements.
- Cthe cross-price elasticity of demand for zabaglione with respect to the price of champagne is positive.
- D(a) and (c) are both correct.
- ENone of the above is true.
100Two markets have exactly the same net-of-tax supply curve. They also have exactly the same equilibrium price and quantity when there is no tax. Then each of the markets is subjected to exactly the same tax. The only difference between the two markets is that the demand for good X is more elastic than the demand for good Y. On the basis of this information, what can we say?
- AThe tax in market Y will generate more revenue.
- BThe tax in market Y will generate more excess burden.
- CBoth (a) and (b) are true.
- DNeither (a) nor (b) is true.
- ELouie the Icepick is the only one who knows the answer to this question, and we're too afraid to ask him.
101If the net wage rate decreases, the income effect would move the individual toward ____ work, and the substitution effect would move the individual toward ______ work.
- Amore, more
- Bmore, less
- Cless, more
- Dless, less
- Eabout the same amount of, about the same amount of
102Which of the following is restricted by the antitrust laws?
- AAttempting to monopolize.
- BPrice fixing.
- CInterlocking directorates.
- DTie-in sales.
- EAll of the above.
103Which of the following would be expected to shift the supply curve
for tomatoes to the right?- AA decrease in the prices of inputs used in production of tomatoes.
- BAn increase in the price of tomatoes.
- CDiscovery of a new technology that makes it possible to produce more tomatoes without using more inputs.
- DAll of the above.
- E(a) and (c) only.
104The supply of rabmots is given by Qs = 3P. The demand for rabmots is given by
Qd = 40 - P. What are the equilibrium price and quantity of rabmots?- AP = $10, Q = 10
- BP = $16, Q = 24
- CP = $20, Q = 30.
- DP = $12, Q = 28.
- EP = $10, Q = 30.
105In the Empire of Lumpiness, every person pays $1000 per year of tax, regardless of his or her income. This tax system is
- Aregressive
- Bproportional
- Cprogressive
- Dperfectly elastic
- Eonly comprehensible to people with a Ph.D. in Sanskrit literature
106Which of the following policy issues could be studied with the tools of microeconomics?
- AThe effects of tariffs on the price of belts.
- BThe effects of the payroll tax on the net-of-tax wages received by workers.
- CThe effects of rent controls on the quantity of apartments
- DThe effects of unions on the wages of non-union workers.
- EAll of the above.
107The demand for pedicures increases (i.e., the demand curve for pedicures shifts to the right). As a result, what will happen to the equilibrium price and quantity of pedicures?
- AEquilibrium price will increase, equilibrium quantity will increase.
- BEquilibrium price will increase, equilibrium quantity will decrease.
- CEquilibrium price will decrease, equilibrium quantity will increase.
- DEquilibrium price will decrease, equilibrium quantity will decrease.
- ENothing will happen.
108For any firm (regardless of market structure), if the price is greater than average variable cost, the profit-maximizing quantity of output will be the quantity at which
- Amarginal revenue is equal to marginal cost.
- Bdemand is inelastic.
- Cprice is equal to marginal cost.
- Dmarginal revenue is negative
- E(a) and (c).
109Perfect competition and monopolistic competition are similar in some ways, and different in other ways. Which of these is a way in which perfect competition and monopolistic competition are similar?
- AFirms in each of these market structures will charge P=MC.
- BIn each of these market structures, the tendency will be toward zero economic profit.
- CFor firms in each of these market structures, the firm’s demand curve is perfectly elastic.
- DAll of the above.
- E(a) and (b) only.
110All else equal, an increase in the demand for highly skilled labor will lead to _______ in the distribution of labor-market earnings, and an increase in the supply of highly skilled labor will lead to __________ in the distribution of labor-market earnings.
- Agreater inequality, greater inequality
- Bgreater inequality, less inequality
- Cless inequality, greater inequality
- Dless inequality, less inequality
- Enot enough information has been given to answer the question
111Mr. Hagrid has received a promise that he will be paid $1000, exactly five years from now. There is no uncertainty: he is absolutely certain that he will receive the $1000. The interest rate is 10%. What is the present discounted value of the payment?
- A$1000
- B$1000 / 1.1
- C$1000 / 1.5
- D$1000 / 5
- E$1000 / (1.1)^5
112The Lorenz Curve in country A is closer to the horizontal axis than the Lorenz Curve for country B. In other words, the Lorenz Curve for country A is always below the Lorenz Curve for country B. This means that
- Athe Gini Ratio for country A is greater than the Gini Ratio for country B.
- Bthe Gini Ratio for country A is less than the Gini Ratio for country B.
- Cthe distribution of income is more equal in country A than in country B.
- D(a) and (c).
- Enone of the above.
113The marginal revenue product of labor is
- Athe change in the wage rate as a result of hiring one additional worker.
- Bthe quantity of output, divided by the number of workers.
- Cthe marginal product of labor, multiplied by the firm’s marginal revenue.
- Dan upward-sloping curve.
- EAll of the above.
114Assume that the individual consumer takes the market price as given. Then, the individual demand curve is
- Athe marginal-revenue curve.
- Bthe marginal-revenue-product curve.
- Cthe marginal-utility curve.
- Dthe average-variable-cost curve.
- Eall of the above.
115What will have happened if the Gini coefficient were to become smaller?
- AAn increase in inequality.
- BA movement toward the minimum point of the average-total-cost curve.
- CAn increase in incomes.
- DA decrease in inequality.
- EAn increase in the odds of winning the lottery.
116In the last quarter of the 20th century, there was a large increase in the demand for highly skilled labor (i.e., the demand curve for highly skilled labor shifted to the right). What happened as a result?
- AThere was an increase in the gap between the wages of highly skilled workers and the wages of less skilled workers.
- BThere was a decrease in the gap between the wages of highly skilled workers and the wages of less skilled workers.
- CThere was an increase in compensating wage differentials.
- DThere was an increase in the gender earnings gap.
- E(b), (c), and (d)
117The income elasticity of demand for good Z is negative. This indicates that good Z is
- Aa normal good.
- Ban inferior good.
- Can input in the production of slide guitars.
- Dinelastic.
- Ea good with negative marginal revenue.
118Assume that the United States enforces an import quota on imported cummerbunds. Which of the following groups would gain from the import quota?
- ADomestic consumers.
- BForeign producers.
- CThe holders of the license to import cummerbunds.
- DAll of the above.
- ENone of the above.
119The elasticity of demand for volleyballs is 0.5. The price of a volleyball decreases by 10%. What will happen to the quantity demanded?
- AQuantity demanded will rise by 1%.
- BQuantity demanded will rise by 5%.
- CQuantity demanded will rise by 10%.
- DQuantity demanded will rise by 20%.
- EQuantity demanded will rise by 50%.
120The opportunity cost of action A is
- Athe value of what must be given up, in order to pursue A
- Bmeasured by including only the explicit, out-of-pocket costs of A.
- Ca once-in-a-lifetime opportunity.
- Dsomething that comes knocking on your door.
- Eall of the above.
121The Law of Supply states that
- Athe supply curve will shift to the right when there is a decrease in the price of one of the inputs.
- Bthe supply curve will shift to the right when there is an improvement in technology.
- Cwhen the price increases, there will be an increase in the quantity supplied.
- DAll of the above.
- ENone of the above
122Arthur Weasley invests money in a savings account. The interest rate is 8%. If the interest rate stays at 8%, and if Arthur never makes a withdrawal, about how long will it take for him to double his money?
- A8 years
- B9 years
- C10 years
- D12 years
- E72 years
123In the diagram at right, the net-of-tax supply curve is at $5, and the gross-of-tax supply curve is at $8. The demand curve is the downward-sloping line with a horizontal intercept of 15. What is the deadweight loss of the tax?
- A$3
- B$5
- C$6
- D$10
- E$12
124The equilibrium price of karakasevs is $10. The government enforces a price ceiling in the market for karakasevs, at a price of $20. What will happen as a result of the price-ceiling law?
- AThe law will have no effect.
- BThe law will lead to a surplus.
- CThe law will lead to a shortage.
- DAll of the above.
- ENone of the above.
125If a tax is progressive,
- Ahigher-income people pay no taxes.
- Bhigher-income people pay a higher percentage of their incomes in tax.
- Chigher-income people pay less tax than lower-income people.
- Dhigher-income people pay a lower percentage of their incomes in tax.
- Eall people pay the same percentage of their incomes in tax.
126As quantity increases, average fixed cost
- Aalways decreases.
- Bis a horizontal line.
- Calways increases.
- Ddecreases at first, then reaches a minimum, and then increases.
- Ecaroms about wildly, in a completely chaotic way.
127The supply curve for beef shifts to the right. Assuming that the demand for beef is inelastic, what will happen to the total revenue received by cattle ranchers?
- ARevenue will increase.
- BRevenue will decrease.
- CRevenue will remain constant.
- DWe need more information to answer the question.
- EAll of the above! Amazingly, revenue will increase, and decrease, and remain constant, and we need more information to answer the question, all at the same time.
128Which of the following companies was broken up as a result of an antitrust action?
- AStandard Oil.
- BAmerican Tobacco.
- CALCOA.
- DAT&T.
- EAll of the above.
129Which of the following could lead to higher prices for the consumers in the importing country?
- AA tariff.
- BAn import quota that is enforced at a level below the equilibrium quantity.
- CA voluntary export restraint that is enforced at a level below the equilibrium quantity.
- DAll of the above.
- ENone of the above.
130Which of the following is/are a characteristic of a perfectly competitive industry, but not a characteristic of any other kind of industry? (That is, we are looking for characteristics that do not apply to either a monopoly or an oligopoly or a monopolistically competitive industry.)
- Aa. Price is equal to marginal cost at the profit-maximizing quantity.
- BFirms take the market price as given.
- CAs a result of entry and exit, the industry will tend toward zero economic profit.
- DAll of the above.
- E(a) and (b) only.
Información
- Descripción
- Sample 2007 Final Exam for EC201 Fall Semester 2014 with Professor Ballard
- Autor
- Zachariah Mann
- Idioma
- English
- Visitas
- 289
- Etiquetas
- Valoración
- Aún sin valoraciones Valora este test