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Econom
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Questions in this quiz (151)
1Economics is best defined as the study of
of how people, businesses, governments, and societies make choices to cope with scarcity- Ahow the government can stop the harm from unchecked self-interest.
- Bhow to predict inflation, unemployment, and stock prices.
- Chow to run a business most profitably.
- Dhow society manages its scarce resources.
2 Your opportunity cost of going to a movie is
- Azero, as long as you enjoy the movie and consider it a worthwhile use of time and money.
- Bthe total cash expenditure needed to go to the movie plus the value of your time.
- Cthe price of the ticket plus the cost of any soda and popcorn you buy at the theater.
- Dthe price of the ticket.
3A marginal change is one that
- Athat incrementally alters an existing plan.
- Bvvvvvvvvvvv
4Adam Smith’s “invisible hand” refers to
- Athe ability of free markets to reach desirable outcomes, despite the self-interest of market participants.
- Bo
5Governments may intervene in a market economy in order to
- AAll of the above.
- Bachieve a more equal distribution of income.
- Ccorrect a market failure due to externalities.
- Dprotect property rights.
6Government policies designed to promote efficiency:
- Arequire very high taxes.
- Balways fail.
- Ctend to cause the economy to grow more slowly.
- Dusually do so at the expense of equity.
7All of the following can be considered a student's costs of going to college, EXCEPT:
- Athe student's time, which can no longer be devoted to earning a salary.
- Broom and board (that costs her about the same as she was paying before entering college).
- Ctuition and fees.
- Dtextbooks.
8When two persons trade goods:
- Athe overall well being of the two persons remains unchanged.
- Bone person usually gains at the expense of the other.
- Cboth persons usually gain from the exchange.
- Done person always gains at the expense of the other.
9In a market economy, the decisions of what and how much to produce are made by:
- Anon governmental agencies.
- Bthe government only.
- Call producers and consumers.
- Dvoters in elections.
10Even though markets do a great job in organizing economic activity, governments are needed to do all of the following EXCEPT:
- Adecide what and how much should be produced.
- Bintervene when markets fail due to market power.
- Cintervene when markets fail due to externalities.
- Destablish and enforce property rights.
11An economic model is
- Aa simplified representation of some aspect of the economy.
Because including every detailed, realistic aspect of an economy would result in something that isn't tractable and informative, economists use models to learn about the world. Just as an airplane model does not include all of the interior details of a plane, an economist's model does not include every feature of the economy. - Bo
- Aa simplified representation of some aspect of the economy.
1212. The circular-flow diagram illustrates that, in markets for the factors of production….
o A-
o B-
o C-
o D-- Ahouseholds and firms are both sellers.
- Bhouseholds and firms are both buyers.
- Chouseholds are buyers, and firms are sellers.
- Dhouseholds are sellers, and firms are buyers.
13A point inside the production possibilities frontier is
- Afeasible, but not efficient
- Bo
14An economy produces hot dogs and hamburgers. If a discovery of the remarkable health benefits of hot dogs were to change consumers’ preferences, it would (как это повлияет на production possibilities frontier )
- Amove the economy along the production possibilities frontier.
- Bo
15All of the following topics fall within the study of microeconomics EXCEPT
- Athe influence of the government budget deficit on economic growth
- Bo
16Which of the following is a positive, rather than a normative, statement?
- AThe President should veto law X.
- BCongress ought to pass law X
- CLaw X is a good piece of legislation.
- DLaw X will reduce national income.
17Which of the following is FALSE, regarding economics as a science?
- AEconomic theories represent irrefutable facts.
- BEconomists pay close attention to natural experiments resulting from historical events.
- CIt is difficult to conduct experiments in economic matters.
- DEconomic knowledge is obtained through the scientific method, just as in any other science.
18Economists use assumptions in order to:
- Amake their theories more realistic.
- Bsimplify economic theories, so as to make it possible to answer economic questions.
- Cavoid dealing with issues they would rather not talk about.
- Drecreate real situations accurately, with all their complexity.
19Economic models are:
- Aall of the other options are true.
- Busually composed of diagrams and equations.
- Ccreated by making assumptions.
- Dsimplified versions of economic theories
20All of the following are characteristics of the Circular Flow Model of the economy, EXCEPT:
- Athe two flows described by the model move in opposite directions.
- Bthe model describes two circular flows: one for inputs and one for resources.
- Cthe model includes two sectors: the Firms sector and the Households sector.
- Dthe model has two markets: one for goods and services and one for factors of production
21The circular flow model of the economy demonstrates that:
- Agovernment is the source of revenue for households to purchase goods and services from firms.
- Bfirms produce and provide factors of production.
- Cdollars in the economy are used over and over in an endless cycle.
- Dthe economy actually has only two sectors: firms and households.
22 Which of the following is true regarding the Production Possibilities Frontier Model of the economy?
- AIncreases in the resources available for production will cause the PPF to shift towards the origin
- BThe opportunity cost of producing one more unit of one of the goods represented in the PPF remains the same at any point along the PPF.
- CAny point in the area below the PPF represents a combination of production that is not feasible.
- DAny point along the PPF represents an efficient level of production.
23Economic growth in the economy can be portrayed in the Production Possibilities Frontier model as a:
- Ashift of the PPF towards the origin.
- Bmovement down and to the right along the PPF.
- Cshift of the PPF away from the origin.
- Dmovement up and to the left along the PPF.
24Microeconomics is the study of:
.- Ahow governments can reduce inflation.
- Bhow households and firms make decisions and how they interact in markets.
- Ceconomy-wide phenomena, including inflation, unemployment, and economic growth.
- Dhow governments can get the economy out of a recession.
25Which of the following is an example of a normative statement?
- AOver the past 50 years, the number of women that participate in the labor force has increased dramatically.
- BWhen the price of a good increases, consumers respond by reducing the quantity that they want to purchase of the good.
- CThe government should increase spending during recessions, so that the economy recovers quickly.
- DHigher interest rates will cause people to borrow and invest less.
26Economists tend to disagree with each because:
- Aall the other options are true.
- Bdifferent economists have different values and priorities in economic matters.
- Cdifferent economists make different assumptions, leading them to different conclusions in economic matters.
- Ddifferent economists espouse different theories, so they believe different things are going on in the economy.
27In an hour, David can wash 2 cars or mow 1 lawn, and Ron can wash 3 cars or mow 1 lawn. Who has the absolute advantage in car washing, and who has the absolute advantage in lawn mowing?
- ARon in washing, neither in mowing.
- BDavid in washing, neither in mowing.
- CRon in washing, David in mowing
- DDavid in washing, Ron in mowing.
28Once again, in an hour, David can wash 2 cars or mow 1 lawn, and Ron can wash 3 cars or mow 1 lawn. Who has the comparative advantage in car washing, and who has the comparative advantage in lawn mowing?
- ARon in washing, neither in mowing.
- BDavid in washing, neither in mowing.
- CRon in washing, David in mowing.
- DDavid in washing, Ron in mowing.
29When two individuals produce efficiently and then make a mutually beneficial trade based on comparative advantage,
- Aeach individual consumes a point on her own production possibilities frontier
- Bone individual consumes inside her production possibilities frontier, while the other consumes outside hers.
- Cthey both obtain consumption inside their production possibilities frontier.
- Dthey both obtain consumption outside their production possibilities frontier.
30Which goods will a nation typically import?
- Athose goods in which other nations have a comparative advantage
- Bthose goods in which other nations have an absolute advantage
- Cthose goods in which the nation has a comparative advantage
- Dthose goods in which the nation has an absolute advantage
31Suppose that in the United States, producing an aircraft takes 10,000 hours of labor and producing a shirt takes 2 hours of labor. In China, producing an aircraft takes 40,000 hours of labor and producing a shirt takes 4 hours of labor. What will these nations trade?
- AThere are no gains from trade in this situation.
- BBoth nations will export shirts.
- CChina will export shirts, and the United States will export aircraft.
- DChina will export aircraft, and the United States will export shirts.
32Mark can cook dinner in 30 minutes and wash the laundry in 20 minutes. His roommate takes half as long to do each task. How should the roommates allocate the work?
- AThere are no gains from trade in this situation.
- BMark should do more of the washing based on his absolute advantage.
- CMark should do more of the washing based on his comparative advantage.
- DMark should do more of the cooking based on his comparative advantage
33The production possibilities frontiers used to explain trade in the text are straight lines because:
- Athe gains of trade will benefit both farmers.
- Bone farmer is better than the other in producing both goods.
- Cthat's how it turns out to be when the same person produces the two goods.
- Dthe author assumes the farmers can switch at a constant rate from producing meat to producing potatoes.
34The principle of Absolute Advantage refers to the situation in which one producer:
.- Ahas access to more resources than other producers.
- Bis able to produce exactly the same quantity of a good as other producers.
- Ccan produce a good using fewer resources than other producers.
- Dcan produce a good in greater quantities than other producers.
35The principle of Comparative Advantage refers to the situation in which one producer:
- Acan produce a good using fewer resources than other producers.
- Bhas access to more resources than other producers.
- Ccan produce a good in greater quantities than other producers.
- Dhas a lower opportunity cost than other producers in the production of a good.
36Which of the following is true regarding the principle of Absolute Advantage?
- ANations should export goods for which they have a higher opportunity cost.
- BNations should specialize in producing those goods for which they have an Absolute Advantage.
- CNations should export goods for which they do not have an Absolute Advantage.
- DNations should specialize in producing those goods for which they have a lower opportunity cost.
37Which of the following is true regarding the principle of Comparative Advantage?
- AA nation has nothing to gain from trade if it uses more resources than other nations to make any good.
- BA nation has nothing to gain from trade if it uses fewer resources than other nations to make any good.
. - CNations should specialize in producing those goods for which they have the lowest opportunity cost.
- DNations should specialize in producing those goods for which they use the least amounts of resources.
38The boy next door has offered to mow Tiger Woods' lawn. It will take this boy twice as long as Tiger Woods to mow the lawn. Would Tiger Woods let the boy mow his lawn, instead of doing it himself?
- ANo, because Tiger Woods has better things to do with his money than pay the boy to mow the lawn.
- BNo, because it will be more efficient if Tiger Woods mows his own lawn, since he can do it faster.
- CYes, because the boy next door needs the money and Tiger Woods can help him out that way.
- DYes, as long as the boy's opportunity cost is less than half of Tiger Woods' opportunity cost.
39 Suppose that engaging in free trade means we have to stop making cars, which will cause bankruptcies and will make people lose their jobs. Is it still worth having free trade?
- ANo, because our wages would have to fall drastically to make us remain competitive with low wage countries.
- BNo, because we need to protect our jobs.
- CYes, because the gains outweigh the losses: new businesses and new jobs will flourish in other industries.
- DYes, because in spite of the lost jobs, we still want to get along with other nations.
40 Suppose that Jill can type 10 pages per hour in the computer, while Jim can only type 8. Further suppose that Jill can review 5 articles per hour while Jim can only review 2. If they are working on a final project together, who should specialize in what task in order to be as productive as possible?
- AJim should perform both tasks, since he is better at both than Jill.
- BJill should perform both tasks, since she is better at both than Jim.
- CJill should specialize in reviewing articles and Jim in typing.
- DJill should specialize in typing and Jim in reviewing articles.
41Suppose that Jill can type 10 pages per hour in the computer, while Jim can only type 8. Further suppose that Jill can review 5 articles per hour while Jim can only review 2. Based on this, we can say that:
- AJill has a comparative advantage over Jim in typing.
- BJim has an absolute advantage over Jill in typing.
- CJill has an absolute advantage over Jim in reviewing articles.
- DJim has a comparative advantage over Jill in reviewing articles.
42The principle of Comparative Advantage argues all of the following, EXCEPT:
- Aas producers specialize, overall production increases, making everybody better off.
- Bfree trade allows producers to specialize.
- Cfree trade tends to cause bankruptcies and high unemployment in the long run.
- Dspecialization allows producers to produce goods for which they have a lower opportunity cost.
43Which of the following is NOT a characteristic of a perfectly competitive market?
- AIt is difficult for new firms to enter the market.
- BBuyers and sellers are price takers.
- CBuyers and sellers are very numerous.
- DThe goods being offered for sale are all the same.
44A market with only one firm is known as a:
- Anormal market.
- Bperfectly competitive market.
- Ccomplementary market.
- Dmonopoly.
45An increase in demand means that:
- Aconsumers make the price drop by buying greater quantities of the good.
- Bwhen the price rises, consumers are willing to purchase greater quantities of the good.
- Cconsumers are willing to purchase greater quantities of the good at any given price
- Dwhen the price drops consumers are willing to purchase greater quantities of the good
46If good B is a substitute for good A, and the price of good B increases:
- Athe quantity demanded of good B will increase
- Bthe price of good A will tend to decrease.
- Cthe demand for good A will increase.
- Dthe quantity demanded of good A will decrease.
47When the price of a good increases:
- Athe supply curve of the good will shift to the left.
- Bthe supply curve of the good will shift to the right.
- Cthe quantity supplied of the good will decrease.
- Dthe quantity supplied of the good will increase.
48A new technology that helps firms reduce production costs will cause a:
- Ashift to the left of the supply curve.
- Bshift to the right of the supply curve.
- Cmovement up and to the right along the supply curve.
- Dmovement down and to the left along the supply curve.
49If the price in a market happens to be below equilibrium, there will be a ________ in the market, and the price will tend to ________.
- Ashortage, rise
- Bshortage, drop
- Csurplus, rise
- Dsurplus, drop
50If the price in a market happens to be above equilibrium, there will be a ________ in the market, and the price will tend to ________.
- Ashortage, rise
- Bshortage, drop
- Csurplus, rise
- Dsurplus, drop
51Suppose that a scientific study just published demonstrates that eating apples makes people much healthier. How will this affect the equilibrium price and quantity in the market?
- ABoth the equilibrium quantity and price will decrease.
- BBoth the equilibrium quantity and price will increase.
- CThe equilibrium price will decrease and the equilibrium quantity will increase.
- DThe equilibrium price will increase and the equilibrium quantity will decrease.
52Suppose the price of corn syrup increases. Given that corn syrup is a major ingredient in the production of soft drinks, how will this affect the equilibrium price and quantity in the soda market?
- ABoth the equilibrium quantity and price will decrease
- BBoth the equilibrium quantity and price will increase.
- CThe equilibrium price will decrease and the equilibrium quantity will increase.
- DThe equilibrium price will increase and the equilibrium quantity will decrease.
53A good will tend to have an inelastic demand if:
- Athe time horizon is long.
- Bthe market is defined very broadly.
- Cthe good is a luxury.
- Dthe good has many close substitutes.
54A perfectly elastic demand is represented graphically by a:
- Ahorizontal demand curve
- Bvertical demand curve.
- Crelatively flat demand curve.
- Drelatively steep demand curve.
55What effect will an increase in the price have on Total Revenue, if demand is elastic?
- ATotal Revenue will remain unchanged
- BTotal Revenue will first decrease and then increase.
- CTotal Revenue will decrease.
- DTotal Revenue will increase.
56The price elasticity of demand tends to be more elastic:
- Awhen the demand curve is vertical
- Bwhen the demand curve becomes steeper.
- Cat points further down and to the right along the demand curve.
- Dat points further up and to the left along the demand curve.
57Suppose that General Cars increases the price of its Cadiclap model from $13,500 to $16,500. As a result of this, the quantity demanded of the Cadiclap model decreases from 600,000 to 400,000 per year. Find the price elasticity of demand of the Cadiclap using the Mid-Point method.
- A-0.3
- B-2.0
- C-0.5
- D-3.0
58If a firm needs to increase its Total Revenue, the firm should ________ the price, if the demand for its product is ________.
- Adrop, unit elastic
- Bdrop, elastic
- Craise, elastic
- Ddrop, inelastic
5959. Suppose that consumers' incomes rise by 3%, and that this causes the quantity demanded for a good to increase by 4.5%. What is the income elasticity of demand?
- A-0.67
- B-1.50
- C0.67
- D1.50
60Suppose that a good has an income elasticity of demand of -2.0. This means that the good is:
- Aa complement.
- Ba substitute.
- Cinferior
- Dnormal.
61If two goods have a cross-price elasticity of demand of -0.8. This means that these goods are:
- Acomplements.
- Bsubstitutes.
- Cinferior.
- Dnormal.
62The price of good A increases from $4.50 to $5.50. This causes the quantity demanded of good B to increase from 900 to 1100 units per month. Find the cross price elasticity of demand using the Mid-Point method.
- A-2.0
- B+1.0
- C+2.0
- D-1.0
63Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is above the equilibrium price in the market, this would be an example of a:
- Anot binding price floor.
- Bbinding price floor.
- Cnot binding price ceiling.
- Dbinding price ceiling.
64Suppose that a regulation is in place that does not allow the price of a good to fall below $10. If this price is above the equilibrium price in the market, this would be an example of a:
- Anot binding price floor.
- Bbinding price floor.
- Cnot binding price ceiling.
- Dbinding price ceiling.
65Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is below the equilibrium price in the market, this would be an example of a:
- Anot binding price floor.
- Bbinding price floor.
- Cnot binding price ceiling.
- Dbinding price ceiling.
66If a price floor is in place and it is binding, the market will:
- Aadjust its equilibrium point toward the price floor.
- Bexperience a surplus.
- Cexperience a shortage.
- Dremain in equilibrium, unaffected by the price floor.
67If a price ceiling is in place and it is binding, the market will:
- Aadjust its equilibrium point toward the price floor.
- Bexperience a surplus.
- Cеxperience a shortage.
- Dremain in equilibrium, unaffected by the price floor.
68If a price floor is in place and it is not binding, the market will:
- Aadjust its equilibrium point toward the price floor.
- Bexperience a surplus.
- Cexperience a shortage.
- Dremain in equilibrium, unaffected by the price floor.
69If a price ceiling is in place and it is not binding, the market will:
- Aadjust its equilibrium point toward the price floor.
- Bexperience a surplus.
- Cexperience a shortage.
- Dremain in equilibrium, unaffected by the price floor.
70If a tax is imposed on buyers of a good, the ________ curve of the good will shift ________ by the amount of the tax.
- Asupply, downward
- Bsupply, upward
- Cdemand, downward
- Ddemand, upward
71If a tax is imposed on sellers of a good, the ________ curve of the good will shift ________ by the amount of the tax.
- Asupply, downward
- Bsupply, upward
- Cdemand, downward
- Ddemand, upward
72If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the sellers than on the buyers, this will be because:
- Athe tax was imposed on the sellers of the good.
- Bthe tax was imposed on the buyers of the good.
- Cdemand is less elastic than supply for that good.
- Ddemand is more elastic than supply for that good.
7373. If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the buyers than on the sellers, this will be because:
o a.
o b.
o c.
o d.- Athe tax was imposed on the sellers of the good.
- Bthe tax was imposed on the buyers of the good.
- Cdemand is less elastic than supply for that good.
- Ddemand is more elastic than supply for that good.
74Consumer surplus is the:
- Aexcess number of units firms produce over and above what consumers want to purchase.
- Bexcess number of goods consumers purchase over and above what they really need.
- Csurplus of goods the consumer has after consuming all he/she needs from them.
- Ddifference between what the consumer is willing to pay and what the consumer has to pay.
75The consumer surplus can be expressed graphically as the area:
- Abelow the demand curve and above the price of the good.
- Bbelow the supply curve and above the horizontal axis.
- Cabove the supply curve and below the demand curve.
- Dabove the supply curve and below the price.
76The producer surplus can be expressed graphically as the area:
- Abelow the demand curve and above the price of the good.
- Bbelow the supply curve and above the horizontal axis.
- Cabove the supply curve and below the demand curve
- Dabove the supply curve and below the price.
77The producer surplus represents the:
- Aleft over of the good that remains unsold after the Holiday season.
- Bleft over of raw materials and other inputs that firms have after producing the good.
- Cdifference between the price of the good and the cost to the seller.
- Dproduction in a market over and above what consumers wish to purchase.
78A price increase will cause consumer surplus to ________.
- Aincrease or decrease
- Bstay the same
- Cdecrease
- Dincrease
79A price increase will cause producer surplus to ________.
- Aincrease or decrease
- Bstay the same
- Cdecrease
- Dincrease
80Total Surplus can be calculated as follows:
- AValue to buyers minus cost to sellers.
- BCost to sellers minus value to buyers.
- CAmount received by sellers minus cost to sellers.
- DValue to buyers minus amount paid by buyers.
81Total surplus in a market is usually maximized when:
- Athe market is in equilibrium.
- Bthe maximum amount possible is produced
- Cconsumers pay the lowest possible price.
- Dfirms obtain the biggest possible profit.
82If the quantity traded in a market is less than the equilibrium quantity:
- Atotal surplus is larger than in equilibrium.
- Bthe market will decrease its total surplus if more units are produced.
- Cthe value to consumers for additional units is greater than the cost to sellers of producing those units.
- Dthe value to consumers for additional units is less than the cost to sellers of producing those units.
83If a market is not very competitive and/or if there are externalities, we can expect the market outcome:
- Anot to be efficient, and total surplus will not be maximized.
- Bnot to be efficient, but the total surplus will still be maximized.
- Cto be efficient, but total surplus will not be maximized.
- Dto be efficient, and total surplus to be maximized.
84Which of the following statements is true regarding externalities?
- APositive externalities occur when the good benefits those who consume it.
- BNegative externalities occur when the good harms those who consume it.
- CNegative externalities lead to inefficiencies in markets, but positive externalities do not.
- DBoth negative and positive externalities lead to inefficient outcomes in markets.
85Positive externalities cause the market to trade a quantity:
- Athat can be greater, or smaller than the optimal quantity.
- Bthat is exactly the optimal.
- Csmaller than the optimal quantity.
- Dgreater than the optimal quantity.
86Negative externalities cause the market to trade a quantity:
- Athat can be greater, or smaller than the optimal quantity.
- Bthat is exactly the optimal.
- Csmaller than the optimal quantity.
- Dgreater than the optimal quantity.
87Markets with positive externalities do not trade the optimal quantity because:
- Abystanders are not important members of society.
- Bconsumers fail to consider the external benefit in their decision making process.
- Cproducers fail to consider the external cost in their decision making process.
- Dthe government fails to provide markets with all the information needed for an efficient outcome.
88Markets with negative externalities do not trade the optimal quantity because:
- Abystanders are not important members of society.
- Bconsumers fail to consider the external benefit in their decision making process.
- Cproducers fail to consider the external cost in their decision making process.
- Dthe government fails to provide markets with all the information needed for an efficient outcome.
89The Coase Theorem states that:
- Athe government cannot solve externality problems without the intervention of private parties
- Bthere is a cost to negotiating externalities.
- Cefficient outcomes can be accomplished by private parties, even when externalities are present, as long as there are no bargaining costs.
- Dit is impossible to solve externality problems without the aid of government
90Private solutions to externalities are not always possible because:
- Aexternalities affect other people who are not participating in the market.
- Bsometimes there are simply too many people involved for them to be able to reach a negotiated solution.
- Cprivate parties are simply not good at negotiating problems related to externalities.
- Dthe government has a vested interest in the outcome and will always intervene.
91Which of the following statements is true about regulating externalities?
- ARegulation is a command and control policy that can be used to deal with externalities.
- BRegulation is a method used by the government to let the market reach on its own an efficient outcome.
- CRegulation only works in dealing with positive externalities.
- DRegulation only works if the government does not get involved.
92Which of the following is false regarding Pigovian subsidies?
- AA Pigovian subsidy can be given to either the sellers or the buyers of the good with the externality.
- BAn ideal Pigovian subsidy is equal to the positive externality.
- CApplying Pigovian subsidies can lead a market with positive externalities to trade an optimal quantity.
- DPigovian subsidies can only be applied effectively in situations with negative externalities.
93Which of the following is false regarding a Pigovian tax?
- AA Pigovian tax can only be applied effectively in situations with positive externalities
- BA Pigovian tax can be given to either the sellers or the buyers of the good with the externality.
- CAn ideal Pigovian tax is equal to the negative externality.
- DApplying a Pigovian tax can lead a market with negative externalities to trade an optimal quantity.
94Which of the following would be a good example of an implicit cost incurred by Superior Airways?
- AThe rent that could be earned on an aircraft that is owned and used by Superior.
- BThe purchases of parts needed for maintenance of the aircraft.
- CThe jet fuel bills.
- DThe salaries paid to the pilots.
95Everything that needs to be given up whenever a choice is made is called:
- Avariable cost.
- Ban opportunity cost.
- Can explicit cost.
- Dan implicit cost.
96Accounting profit is ________ compared to economic profit, because accountants ________ implicit costs in their calculations.
- A.smaller, do not consider
- Bsmaller, consider
- Cbigger, do not consider
- Dbigger, consider
9797. The property of diminishing marginal product of labor states that:
o a.
o b.
o c.
o d.- Aevery additional worker hired contributes a smaller increase in total costs than previously hired workers.
- Bevery additional worker hired contributes a smaller increase in production than previously hired workers.
- Cevery additional worker hired contributes to diminish the total costs of the firm.
- Devery additional worker hired contributes to diminish the quantity produced by the firm.
98The cost of raw materials will fall under the category of:
- Aaverage fixed costs.
- Blong-run costs.
- Cvariable costs.
- Dfixed costs.
99The lease payments made by a firm fall under the category of:
- Aaverage fixed costs.
- Bshort-run costs.
- Cvariable costs.
- Dfixed costs.
100Based on the table, if the Fixed Cost is $500, what is the Marginal Cost of the 10th
- A300
- B250
- C200
- D50
101Based on the table, if the Fixed Cost is $500, what is the Average Total Cost of the 5th unit?
- A$100
- B$240
- C$140
- D$250
102Based on the table, if the Fixed Cost is $500, what is the Average Variable Cost of the 4th unit?
- A$100
- B$240
- C.$125
- D$250
103Economies of scale occur when the ________ as the quantity of output increases.
- A.long-run Average Total Cost rises
- Blong-run Average Total Cost falls
- Cshort-run Average Total Cost rises
- Dshort-run Average Total Cost falls
104Which of the following is NOT a characteristic of a competitive market?
- AFirms set the price.
- BThe products traded are identical
- CIt has many sellers.
- DIt has many buyers.
105A perfectly competitive firm
- Apicks the price that yields the largest market share
- Btakes its price as given by market conditions.
- Csets its price to undercut other firms selling similar products.
- Dchooses its price to maximize profits.
106Use the table to find the Total Revenue when the quantity is 8 units.
- A.$7
- B$56
- C$60
- D$10
107Use the table to find the Marginal Revenue when the quantity is 5.
- A$7
- B$56
- C$60
- D.$10
108Which of the following statements is true, regarding the revenues of a firm?
- AThe Total Revenue is less than the Average Revenue.
- BThe Marginal Revenue is greater than the Total Revenue.
- C.The Marginal Revenue is greater than the Average Revenue.
- DThe Marginal Revenue and the Average Revenue are equal to the price.
109A firm will maximize profits when its:
- ATotal Cost is greater than Total Revenue.
- BThe difference between Marginal Revenue and Marginal Cost is the greatest.
- CMarginal Revenue is equal to its Marginal Cost.
- DTotal Revenue is equal to its Total Cost.
110Which is the profit maximizing quantity according to the graph?
- A1000
- B850
- C700
- D500
111Based on the graph, which of the following statements is FALSE?
- AThe firm maximizes its profits by producing 700 units.
- BThe firm minimizes its Average Variable Cost when producing 500 units.
- CThe firm breaks even when producing 1000 units.
- DThe firm breaks even when producing 200 units.
112The short-run supply curve of a firm in perfect competition is the segment of its:
- Amarginal revenue curve that lies above the minimum average variable cost.
- Bmarginal cost curve that lies above the minimum average variable cost.
- Cmarginal revenue curve that lies above the minimum average total cost.
- Dmarginal cost curve that lies above the minimum average total cost.
113Which of the following is an example of a barrier to entry into a monopoly market?
- ADiseconomies of scale restrict the ability of firms to grow and remain competitive.
- BA restaurant at the top of the cliff possesses the only location in town with a spectacular view.
- CThe government does not allow firms to merge in an industry.
- DNew technology allows ever more firms to compete ever more fiercely in information services markets.
114The demand curve faced by a monopoly is:
- Adownward sloping.
- Bupward sloping.
- Chorizontal
- Dvertical.
115A monopoly is a ________, therefore the demand curve it faces is ________.
- Aprice setter, horizontal
- Bprice setter, downward-sloping
- Cprice taker, horizontal
- Dprice taker, downward-sloping
116As output increases in a monopoly, the firm's total revenue:
- Adecreases continuously.
- Bincreases continuously.
- Cfirst decreases and then increases.
- Dfirst increases and then decreases.
117Marginal revenue in a monopoly is:
- Asometimes greater and sometimes smaller than the price.
- Balways smaller than the price.
- Calways equal to the price.
- Dalways greater than the price.
118Which of the following statements is true, regarding the monopoly described by the graph?
- AThe firm will have losses if the quantity produced is 16 units.
- BThe profit per unit is $7.
- CThe firm will charge a price of $11.
- DThe optimal quantity is 20 units.
119Use the diagram to calculate the profit of the monopoly.
- A$32
- B$60
- C$112
- D$80
120A monopoly tends to sell a ________ quantity at a ________ price than perfect competition.
- Asmaller, lower
- Bsmaller, higher
- Cgreater, higher
- Dgreater, lower
121Which of the following statements is true regarding a profit maximizing monopoly?
- AAll of the above.
- BIt will sell at a higher price than perfect competition.
- CIt will produce less than perfect competition.
- DIt will cause a deadweight loss.
122122. Which of the following are government policies designed to deal with monopolies?
i. Try to make monopolized industries more competitive.
ii. Regulate the behavior of monopolies.
iii. Turn some private monopolies into public enterprises.
iv. Do nothing at all.- Aall four policies
- Bonly i, ii, and iii
- Conly ii and iii
- Donly i and ii
123Which of the following is NOT a characteristic of monopolistic competition?
- AThe goods are identical
- BEverybody is perfectly informed.
- CThere are many buyers.
- DThere are many sellers.
124Which of the following statements is FALSE?
- AMonopolistic competition is an industry with only a few sellers.
- BPerfect competition is an industry with many sellers.
- CAn oligopoly is an industry with only a few sellers.
- DA monopoly is an industry with only one seller.
125The diagram depicting monopolistic competition in the short run:
- Ais completely different to the diagrams of all the other types of markets.
- Bis very similar to the short run oligopoly diagram.
- Cis very similar to the short run perfect competition diagram.
- Dis very similar to the short run monopoly diagram.
126If the Average Total Cost curve of a firm in monopolistic competition happens to be above the demand curve, it means:
- Athat firms in that industry will be incurring losses in the short run.
- Bother firms are performing better in the market than the firm depicted in the diagram.
- Cthe firm will have to sell at a very high price in order to make a profit.
- Dthe firm will have to sell a lot in order to make a profit.
127In the long run, firms in monopolistic competition will see their price:
- Abecome equal to their Marginal Cost.
- Bremain well above their Average total Cost.
- Cbecome equal to their Average Total Cost.
- Dbecome equal to their Average Variable Cost.
128If firms in monopolistic competition are enjoying positive economic profits, in the long run:
- Athe government will have to step in and regulate the price.
- Bthis will attract new firms into the industry, causing prices to drop and profits to disappear.
- Cconsumers will cease wanting to buy such expensive goods and will switch to cheaper alternatives.
- Dthey will continue enjoying such profits, since new firms will be unable to enter the industry.
129Firms in monopolistic competition in long run equilibrium ________ than firms in perfect competition.
- Ahave lower costs
- Bhave bigger profits
- Ccharge a lower price
- Dproduce less
130In monopolistic competition in long run equilibrium, the price will be equal to:
- Aaverage total cost.
- Baverage variable cost.
- Cmarginal revenue.
- Dthe marginal cost.
131A major critique of advertising is that:
- Ait is usually linked to promotions, which undermine the market's price.
- Bit promotes excessive competition among firms in the industry.
- Cit manipulates people's tastes, leading people to make bad choices.
- D.it provides information to consumers that they would be better off without.
132A major argument in favor of advertising is that:
- Ait is usually linked to promotions, which help lower the market's price.
- Bit reduces competition among firms in the industry, leading to lower prices.
- Cit helps people reaffirm their tastes and preferences.
- Dit provides information to consumers that allows them to make better choices.
133Branding can be good for society because:
- Ait helps firms enjoy higher prices and profits.
- Bit provides useful information to consumers about the quality of branded goods.
- Cit keeps generic goods from taking over the market.
- Dit allows people to show off the branded goods they use or wear.
134Which of the following statements is FALSE?
- AMonopolistic competition is an industry with only a few sellers
- BPerfect competition is an industry with many sellers.
- CAn oligopoly is an industry with only a few sellers.
- DA monopoly is an industry with only one seller
135Which of the following statements is true?
- AAn oligopoly charges a lower price than a perfectly competitive market.
- BAn oligopoly sells more output than a monopoly.
- CAn oligopoly charges a higher price than a monopoly.
- DAn oligopoly sells more output than a perfectly competitive market.
136When a non-colluding oligopoly is in Nash equilibrium, which of the following will be true?
- AFirms will choose not to change their price or output
- BIf a firm increases its output, other firms wiil see their profits decrease
- CIf a firm increases its price, its profits will increase.
- Dif a firm decreases its output, its profits will increase.
137The larger the number of firms in an oligopoly, the ________ the price and the ________ the output of the industry.
- Alower,smaller
- Bhigher,greater
- Chigher,smaller
- Dlower, greater
138A strategy that is best for a player in a game regardless of the strategies chosen by the other players is called a(n):
- Adominant strategy.
- Boligopoly strategy
- Cgame theory strategy.
- Dprisoner's dilemma strategy.
139In the case of the prisoner's dilemma, the dominant strategy for both prisoners is to:
- Aconfess only if the other confesses, remain silent if the other remains silent.
- Bdelay confessing as much as possible
- CNot confess.
- Dconfess.
140The prisoner's dilemma shows us that:
- Adecision makers should always follow a logical self-interested strategy.
- Bfollowing a logical self-interested strategy may not result in the best outcome for decision makers.
- Cthe dominant strategy will always be the same for both decision makers.
- Dthe dominant strategy will always provide the best outcome for both decision makers
141The prisoner's dilemma helps us understand:
- Awhy a Nash equilibrium generally fails to be achieved
- Bwhy firms in an oligopoly agree to set up a cartel
- Cwhy collusive agreements often fall apart through cheating.
- Dwhy monopolies charge a higher price than perfectly competitive markets.
142Cartels are sometimes able to continue working in the long run. This tends to occur when the firms involved consider playing the game ________, and there ________ a credible threat involved with cheating.
- Aonly once, is not
- Bonly once, is
- Crepeatedly, is not
- Drepeatedly, is
143Which of the following is NOT one of the controversies listed in the text regarding antitrust policy?
- Atying
- Bpredatory pricing
- Cimport tariffs
- DResale price maintenance
144Factors of production are:
- Athe outputs from a production function.
- Bthe inputs used to produce goods and services.
- Cthe characteristics of a market that determine how much is produced.
- Dthe coefficients in a production function.
145Which of the following statements is FALSE?
- AThe value of the marginal product of labor is the same thing as the marginal product of labor.
- BThe value of the marginal product of labor diminishes as more workers are hired.
- CThe value of the marginal product of labor curve represents the firm's demand for labor curve.
- DThe value of the marginal product of labor represents the benefit to the firm from hiring an additional worker.
146All of the following will cause the value of the marginal product of labor to increase, EXCEPT:
- Aan increase in the number of workers employed by the firm.
- Ban increase in the quantity of other factors of production used by the firm.
- Ca new production technology is developed and implemented by the firm.
- Dan increase in the price of the good sold by the firm.
147If the supply curve for labor is backward bending, and if the wage of a worker increases, she might choose to work:
- A.more hours per week, since she needs to work more hours to earn the same income.
- Bfewer hours per week, since every hour of leisure is cheaper than before.
- Cmore hours per week, since she can earn the same income working fewer hours.
- Dfewer hours per week, since she can earn the same income working fewer hours.
148All of the following are things that can make the labor supply curve shift, EXCEPT:
- Achanges in immigration laws.
- Bchanges in alternative job opportunities.
- Cchanges in tastes of workers.
- Dchanges in the number of customers buying a good.
149If many students choose to study to become pharmacists, when all of these students eventually graduate, we can expect pharmacist's wages to ________, and the equilibrium number of pharmacists will ________.
- Adrop, decrease
- Brise, decrease
- Cdrop, increase
- Drise, increase
150If there is a permanent increase in the demand for cars, car manufacturers will want to hire ________ workers, which will cause wages in the industry to ________.
- A.less, drop
- Bless, rise
- Cmore, drop
- Dmore, rise
151As firms gradually acquire ever more technology, machinery and equipment, workers' productivity gradually ________, and workers wages gradually ________.
- Arises, increase
- Bdiminishes, increase
- Cdiminishes, decrease
- Drises, decrease
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- Quiz on Econom, created by Very İnteresting on 28/05/2017.
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- Very İnteresting
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