Given the information in the figure, which of the following statements must be true? More equal crews are fiercer fighters. The Gini coefficient on pirate ships was much lower than the Gini coefficient on navy ships. Pirate crewmen earned higher incomes than pirate captains. Pirate crewmen earned higher incomes than navy crewmen.

The Gini coefficient on pirate ships was much lower than the Gini coefficient on navy ships.

The figure below is the Lorenz curve of a population. Based on this figure, which of the following statements are correct? 2.2 2: 50% of the population owns 100% of the land. The wealthiest 30% of the population owns 70% of the land. The wealthiest 1% of the population owns 5% of the land. 80% of the population owns no land.

50% of the population owns 100% of the land.

The figure shows the Lorenz curve for market income and disposable income in the Netherlands in 2010. What can be inferred from this?

The poorest fifth of the Dutch population has virtually no market income.

Select the correct statement regarding the Gini coefficient.

The Gini coefficient takes the value of 1 when a single individual receives all income.

Which of the following statements is true? A firm is an institution that decentralizes economic power. A labor contract transfers ownership of the employee from the employee to the employer. In a labor contract, one side of the contract has the power to issue orders to the other side. The office where the employee works is a relation-specific asset, because the employee cannot use it after leaving the firm.

In a labor contract, one side of the contract has the power to issue orders to the other side.

Which of the following statements regarding Karl Marx are correct? He thought that the power wielded by employers over workers was a core strength of capitalism. He did not acknowledge that the capitalist economy was the most productive economic system in human history. He observed that the transactions in the labor market were between equals: nobody is in a position to order anyone else to employ or be employed. He argued that capitalism created atomised individuals instead of integrated communities.

He argued that capitalism created atomised individuals instead of integrated communities.

Which of the following statements regarding employment contracts is correct? The firm is required to state exactly what it needs the employee to do in an employment contract., An hourly wage contract is a complete contract, because workers only get paid for the hours they work., Employees typically receive no employment rent., Employees' effort levels cannot be the basis of an enforceable contract.

Employees' effort levels cannot be the basis of an enforceable contract.

Which of the following statements regarding employment rents is correct? Higher employment rents make workers more likely to quit their job. A worker's hourly employment rent is equal to their hourly wage. A worker's employment rent is the cost workers have to pay to acquire employment. Employment rents give employers power over workers.

Employment rents give employers power over workers.

Consider an employee with a reservation wage of $6 an hour. The employee chooses an effort level between zero and one. Which of the following statements regarding her best response curve is correct? The average effort per dollar is constant along the best response curve. The best response curve describes the effort that the employee would choose for any hourly wage. The curve crosses the horizontal axis at the origin. The best response curve is upward-sloping and convex.

The best response curve describes the effort that the employee would choose for any hourly wage.

The following figure depicts an employee's best response to wage when the expected unemployment duration is 44 weeks. Which of the following statements is correct? A fall in the unemployment rate would reduce the reservation wage. An hourly wage of $24 will still result in an effort level of 0.8 if the unemployment benefit increases. The slope of the best response curve is the employer's marginal rate of transformation of higher wages into worker effort. The employer can always increase worker effort by 0.1 by increasing the hourly wage by $3.

The slope of the best response curve is the employer's marginal rate of transformation of higher wages into worker effort.

In which of the following cases would maximize a firm's profits? The firm selects the point on best response curve the least steep isocost line. The firm minimizes the cost per unit of effort. The firm hires no workers. The firm pays its employees their reservation wage.

The firm minimizes the cost per unit of effort.

Which of the following statements is correct regarding the equilibrium wage and effort level in a labor discipline model? At A the worker exerts an effort of 0.5, so the firm pays them an hourly wage of $12. The worker receives no rent when the firm pays the profit-maximizing wage. The employer makes profits by coercing the worker to put in effort. At A the firm pays an hourly wage of $12, so the worker exerts an effort of 0.5.

At A the firm pays an hourly wage of $12, so the worker exerts an effort of 0.5.

In their study of a firm during 2006-2010 that includes the financial crisis, Lazear and his co-authors found that the firm's productivity increased dramatically as unemployment rose, and the wage level was kept unchanged. Based on this information, which of the following statements are correct? The labor discipline model predicts that a rise in unemployment would have no impact on the wage level. The rise in productivity is inconsistent with the predictions of the labour discipline model. The increase in the productivity primarily reflects that the least productive workers were fired in the downturn. (1) is consistent with the labor discipline model but (2) is not.

(1) is consistent with the labor discipline model but (2) is not.

Which of the following factors contribute to a firm's dis economies of scale? Fixed costs such as political lobbying. The difficulty of monitoring workers' effort as the number of employees increases. Network effects of its output goods. Doubling the capacity of a pipe to transport fuel when the production level is doubled.

The difficulty of monitoring workers' effort as the number of employees increases.

The figure shows a demand curve for Cheerios. Based on this figure, which of the following statements is correct? The demand curve suggests that halving the price doubles the pounds sold, If the firms want to sell 24,000 pounds then they should charge $2., If the price was $2 then the total demand would be 40,000 pounds., There is no demand if the price is set above $7.20.

There is no demand if the price is set above $7.20.

The diagram depicts the demand curve for a product. Assume that there are 100 potential buyers who can choose to purchase one unit each. Based on this graph, which of the following statements is correct? Half of the potential buyers are not willing to pay more than £2,000 for the product. The firm should sell all 100 units in order to maximise its profits. At an output of 20, the willingness to pay of all 20 consumers who buy the product is £8,000. The diagram demonstrates the Law of Demand.

The diagram demonstrates the Law of Demand.

Suppose that the unit cost of producing a t-shirt is $5, regardless of the level of output and there are no fixed costs. Which of the following statements is correct? The marginal cost curve is upward sloping, The marginal cost curve is downward sloping, the marginal cost intersects the average cost at the minimum average cost, The marginal cost curve is a horizontal line

The marginal cost curve is a horizontal line

A firm’s fixed cost is $0 and marginal cost is $20. P is the price of the unit and Q represents the number of units produced. Which of the following statements is correct? Producing 2,000 units with a price of $40 (Q=2000, P=40) and producing 20,000 units with a price of $22 (Q=20,000, P=22) are both points on the same isoprofit curve. Producing 25 units with a price of $60 (Q=25, P=60) lies on a higher isoprofit curve than producing 100 units with a price of $35 (Q=100, P=35). Producing 1,000 units with a price of $100 (Q=1,000, P=100) is on the isoprofit curve representing the profit level of $8,000. Producing 25 units with a price of $60 (Q=25, P=60) and producing 100 units with a price of $35 (Q=100, P=35) are both points on the same isoprofit curve.

Producing 2,000 units with a price of $40 (Q=2000, P=40) and producing 20,000 units with a price of $22 (Q=20,000, P=22) are both points on the same isoprofit curve.

Refer to the figure in question 6. Which of the following statements is correct? A profit-maximising firm would select the quantity at which the average cost is minimized. At D, the price equals the marginal cost and therefore the firm makes no profit. At B, the decrease in price that keeps profits constant when one extra car is sold is larger than the decrease in price required to sell one extra car. The profit margin is the highest at C.

At B, the decrease in price that keeps profits constant when one extra car is sold is larger than the decrease in price required to sell one extra car.

Based on the figure depicting the demand curve of a firm producing cars, which of the following statements is correct? The producer surplus in the Pareto efficient outcome is $112,960. The deadweight loss in the profit-maximizing outcome is $23,580. The consumer surplus in the profit-maximizing outcome is $97,500. The firm's profit in the Pareto efficient outcome is $100,000.

The deadweight loss in the profit-maximizing outcome is $23,580.

For an allocation to be efficient, all the following must be true except: the surplus must be maximized, no one can be better off without making someone worst off, no one has an incentive to change behavior, no pareto improvement if possible.

no one has an incentive to change behavior

Capitalist Firms pay worker

the wage that maximizes effort per dollar

price setting firms set a price that ensures

profits are maximized, marginal revenue equals marginal cost, the demand curve is tangent to an

ECon Colol

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FLASHCARD QUESTION

Front

In economics, institutions refer to

Back

the rules of the game.

FLASHCARD QUESTION

Front

Which of the following statements regarding bargaining power is correct? In a dictator game, the Proposer has all the bargaining power. In an ultimatum game, increasing the number of Responders reduces the Proposer's bargaining power. In an ultimatum game, the Proposer has all of the bargaining power. In a dictator game, increasing the number of Responders reduces the Proposer's bargaining power.

Back

In a dictator game, the Proposer has all the bargaining power.

FLASHCARD QUESTION

Front

Which of the following statements regarding Pareto efficiency is correct? There is only one Pareto-efficient allocation., A Pareto-efficient allocation maximizes the total surplus., At a Pareto-efficient allocation, it is possible to make one person better off without making another person worse off., A Pareto-efficient allocation is a fair allocation.

Back

A Pareto-efficient allocation maximizes the total surplus.

FLASHCARD QUESTION

Front

Bruno is a landowner and Angela is a farmer who pays a share of her grain output to Bruno as rent for the use of the land. Consider the following figure, which shows Angela's and Bruno's combined feasible set and the interpretation of the allocation at point E. Angela prefers G to F.

Back

Angela prefers G to F.

FLASHCARD QUESTION

Front

Which of the following statements is correct? 2.1 6
The economically feasible set is the area between Angela's biological survival constraint and the feasible frontier.
The economically feasible set is a subset of the technically feasible set.
Angela is indifferent between all points on her biological survival constraint.
Angela's reservation indifference curve can be below her biological survival constraint.

Back

The economically feasible set is the area between Angela's biological survival constraint and the feasible frontier.

FLASHCARD QUESTION

Front

Based on the figure, which of the following statements is correct? 2.1 7
If Bruno cannot coerce Angela but has all the bargaining power he will offer Angela allocation D.
Bruno is indifferent between allocation C and D since both are Pareto Efficient.
If Bruno can coerce Angela he will choose allocation E.
If Bruno cannot coerce Angela but has all the bargaining power he will offer Angela allocation B.

Back

If Bruno cannot coerce Angela but has all the bargaining power he will offer Angela allocation D.

FLASHCARD QUESTION

Front

Based on this information, which of the following statements is correct? 2.1 8
Options:
Moving from F to any point on line CD is Pareto-improving.
The relative bargaining power of Bruno and Angela determines the number of hours worked along the Pareto efficiency curve.
Both Bruno and Angela are better off at F than at D.
F is not Pareto efficient because the surplus is not maximized.

Back

F is not Pareto efficient because the surplus is not maximized.

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