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WorksheetsQuiz Test
Total questions: 195
Worksheet time: 2hrs 29mins
What is the Nash Equilibrium?
Both fast-food restaurants should choose to concentrate on fries.
Both fast-food restaurants should choose to concentrate on burgers.
Brewer’s should choose to concentrate on fries, and Royal’s should choose to concentrate on burgers.
Marginal cost is
Total cost
minimum cost
Change in TC
Average cost is
Total cost
Cost per unit
always zero
Average revenue is equal to
Price
Total revenue
Total cost
Total revenue -total cost=
average cost
Profit
Marginal cost
The shape of Average cost is
upward sloping
downward sloping
U shaped
Total cost is a sum of Fixed cost and
fixed revenue
variable cost
average cost
What is the goal of a firm?
to make profits
to maximize profits
to maximize revenue
none of the above
MR =
MC
NC
WC
KFC
The image above shows a firm making
Economic Profit
Economic loss
Breaking even
Shutting down
Should the following firm shutdown?
Yes
No
Not enough information present
Identify the profit maximizing level of output for this monopoly firm.
Identify the profit maximizing level of price for this monopoly firm.
Collusion most frequently occurs in industries that are
oligopolistic
monopolistically competitive
monopolistic
perfectly competitive
An oligopoly is a market structure in which many firms sell products that are similar but not identical
TRUE
FALSE
Collusion is difficult for an oligopoly to maintain
Because antitrust laws make collusion illegal
Because, in the case of oligopoly, self-interest is in conflict with cooperation
If additional firms enter of the oligopoly
For all the above reasons
Represents how goods, services, and money move through our economy.
Circular Flow Diagram
Supply Curve
Demand Curve
Supply and Demand Curve
Consumers will buy more of a good when its prices is lower and less when its price is higher.
Law of Demand
Law of Supply
Price Floor
Price Ceiling
The point at which the quantity demanded for a product or service is equal to the quantity supplied of that product or service.
Equilibrium
Price Stability
Shortage
Supply
A market in which a single seller dominates.
Monopolistic Competition
Monopoly
Oligopoly
Perfect Competition
A market structure in which a few large firms dominate a market.
Oligopoly
Monopoly
Monopolistic Competition
Perfect Competition
What is the difference between Accounting (Normal) Profit and Economic Profit?
Merchandise Costs
Opportunity Cost
Labor Cost
Expenses
According to the Profit Maximizing Formula, how many units should this firm produce?
2
3
4
5
Labor, utilities, and raw materials are an example of which of these?
Fixed Costs
Variable Costs
Does an increase in Fixed Costs affect a firm's output?
Yes
No
Maybe
With which worker does this firm begin to experience Diminishing Marginal Returns?
First
Second
Third
Fourth
What is the best definition for Short Run?
A period of time in which at lease one resource is fixed
A period of time in which all resources can change
A period of 1 to 5 years
A period of 5 or more years
Which of these is NOT a characteristic of Perfectly Competitive markets?
Many small firms
Virtually identical products
High barriers to entry
No need to advertise
Which of these best explains why Mr. Darp is horizontal?
Demand in that market is perfectly elastic
Demand in that market is perfectly inelastic
Firms can sell as many units as they want for the same price
Mr. Darp is taking a nap
If a firm's Marginal Costs increase, its output will...
Increase
Decrease
Stay the Same
Shut down
In the long run, a Perfectly Competitive Firm will..
Earn zero economic profit
Earn an economic profit
Make an economic loss
Shut down
A monopoly can price discriminate between two groups of consumers if each group has
a large consumer surplus.
a different willingness to pay.
the same willingness to pay.
the ability to resell the good to the other group.
Sue's Surfboards is the sole renter of surfboards on Big Wave Island. Sues demand and marginal revenue curves are illustrated in the figure above. Sue's Surfboards currently rents 15 surfboards an hour. Sue's total revenue from the 15 surfboards is
$300
$220
$150
$100
For the unregulated, single-price monopoly shown in the figure above, when its profit is maximized, output will be
4 units per year and the price will be $6.
4 units per year and the price will be $4.
6 units per year and the price will be $4.
None of the above answers is correct.
If this monopolist is given a lump-sum subsidy its output would
increase to M. A lump-sum subsidy shifts the firm's MC curve to the right.
increase to L. A lump-sum subsidy shifts the firm's MC curve to the left.
decrease by the amount of the subsidy.
remain at E. A lump-sum subsidy does not shift the firm's MC curve.
There is not enough information to answer the question.
If the monopolist were to produce at the socially optimal output, quantity and price would be
Q1, P4
For the graph shown here, what quantity will this firm produce and what price will it charge?
Q2 ; P2
Q2 ; P3
Q1 ; P1
Q1 ; P2
Q1 ; P4
All of the following are imperfectly competitive markets EXCEPT:
monopolistic competition
pure competition
monopoly
oligopoly
monopsony
Priya’s Party Supplies sells cake toppers in a market with many other sellers, but each seller has their own version of cake toppers.
Which of the following statements is true based on this information?
Priya produces a socially optimal quantity.
Priya produces in a perfectly competitive industry.
Priya’s marginal revenue curve is less than her demand curve.
Priya can charge whatever price she wants to for her cake toppers.
Priya’s average total cost curve is below her average variable cost curve.
Which of the following is true about production in an imperfectly competitive market?
Choose 1 answer:
The amount produced minimizes marginal cost.
Less is produced than is socially optimal.
The amount produced minimizes average total cost.
More is produced than is socially optimal.
The amount produced is the same as in perfect competition.
Firms in monopolistic competition do not attain allocative efficiency because at the long-run equilibrium
output, which of the following is true?
Price is greater than marginal cost.
Marginal cost is greater than minimum average total cost.
Marginal revenue is greater than marginal cost.
Products are homogeneous.
There is an overallocation of resources to the market.
Which of the following is true about an imperfectly competitive firm’s marginal revenue (MR) curve if it has a linear and downward-sloping demand curve?
MR decreases at an increasing rate.
MR increases at first, then decreases.
MR is constant.
MR decreases and is less than demand.
MR is greater than demand.
Price leadership and collusion often occur in this type of market structure
Laws that are meant to stop monopolies from forming are called?
Anti-Monopoly Laws
Anti-Trust Laws
When there is only one seller of a good or service, they are said to have a?
Monopoly
Oligarchy
Monopolistic Competition
Perfect Competition
If every consumers needs are being met perfectly and every good that is being made is being sold, what type of efficiency is being achieved?
Productive Efficiency
Allocative Efficiency
The amounts in the matrix represent potential profits to each player. What of the following correctly represents that game's nash equilibrium?
The cartel model of oligopoly predicts that
all firms in the industry act in unison to set monopoly price
each producer acts independently of others
firms follow the low-price firm in the industry
differences in cost of production discourage individual firms from cheating
the markup on marginal cost should be the same for all firms
If this graph is for a monopolistically competitive firm, it best represents
short run economic loss.
short run extra-normal profit.
long run economic profit.
long run equilibrium at normal profit.
short run accounting loss.
In the above figure, the monopolistically competitive will experience what change into the long run?
a right shift of it's demand curve.
a left shift of it's demand curve.
a right shift of it's supply curve.
a left shift of it's supply curve.
A monopolistically competitive firm maximizes profits or minimizes losses in the short run by
Setting price equal to marginal cost.
Producing at the output level where ATC is minimized.
Producing at the output level where MR equals MC.
Producing at the output level where MC equals ATC.
Which of the following characterizes monopolistic competition?
Price leadership.
Zero long-run profit.
Retaliation.
Marginal cost pricing.
If profits are negative in a monopolistically competitive market, then:
new firms will enter until profit returns to the optimal positive level.
new firms will enter the market until economic profits are zero.
firms will exit the market until economic profit returns to the optimal positive level.
firms will exit the market until economic profit returns to zero.
Game theory is used to explain
why firms price discriminate
how monopolies evolve into oligopolies
strategic behavior of firms in oligopoly
profit maximization in monopoly
price leadership of monopolistic competition
For the graph shown here, if the firm were regulated to the socially optimal / allocatively efficiency output and price the firm would produce at ___ and charge ___
Q2 ; P2
Q2 ; P3
Q1 ; P1
Q1 ; P2
Q1 ; P4
For the graph shown here, if this single price monopolist could now perfectly price discriminate the frim would produce at ___ and charge ___
Q2 ; P2
Q2 ; P3
Q1 ; P1
Q1 ; P2
Q1 ; P4
If this monopolist is given a per unit subsidy, what would happen to amount of consumer surplus?
increase due to MC shifting right and price falling
decrease due to MC shifting right and price rising
increase due to ATC shifting right and price falling
decrease due to ATC shifting right and price rising
not change
Assume the single price monopolist is producing at its profit maximizing output and price. If the monopolist raised its price, what would happen to its total revenues?
Total revenues would increase. The monopolist is producing in the inelastic portion of the demand curve.
Total revenues would increase. The monopolist is producing in the elastic portion of the demand curve.
Total revenues would decrease. The monopolist is producing in the elastic portion of the demand curve.
Total revenues would decrease. The monopolist is producing in the inelastic portion of the demand curve.
Total revenues would not change.
Firms in perfect and monopolistic competition will continue to produce in short run as long as
Price is greater than min ATC
Price is greater than min MC
Price is greater than min AVC
Price is greater than AVC
Price is greater than ATC
Consumers will buy more of a good when its price is lower and less when its price is higher.
Law of Demand
Law of Supply
Price Floor
Price Ceiling
The point at which the quantity demanded for a product or service is equal to the quantity supplied of that product or service.
Equilibrium
Price Stability
Shortage
Supply
A minimum price consumers are required to pay for a good or service.
Price Ceiling
Market Clearing Price
Equilibrium
Price Floor
A maximum price consumers are required to pay for a good or service.
Price Ceiling
Equilibrium
Market Clearing Price
Price Floor
A market in which a single seller dominates.
Monopolistic Competition
Monopoly
Oligopoly
Perfect Competition
A market structure in which a large number of firms all produce the same product and no single seller controls supply or prices.
Monopoly
Monopolistic Comeptition
Oligopoly
Perfect Competition
What is the Profit Maximizing Formula?
Revenue > Expenses
MR > ATC
MR = MC
AFC + AVC = ATC
What is the difference between Accounting (Normal) Profit and Economic Profit?
Merchandise Costs
Opportunity Cost
Labor Cost
Expenses
According to the Profit Maximizing Formula, how many units should this firm produce?
2
3
4
5
Which of the following is the best definition for Marginal Cost?
The cost of producing more units
The cost of producing one additional unit
Fixed costs
Variable Costs
A change in Fixed Costs affect which of the following? (check all that apply)
AFC
AVC
ATC
MC
Does an increase in Fixed Costs affect a firm's output?
Yes
No
Maybe
Does an increase in Variable Costs affect a firm's output?
Yes
No
Maybe
With which worker does this firm begin to experience Diminishing Marginal Returns?
First
Second
Third
Fourth
What is the best definition for Short Run?
A period of time in which at lease one resource is fixed
A period of time in which all resources can change
A period of 1 to 5 years
A period of 5 or more years
A firm expands its fixed resources and its overall costs of production go down. It is experiencing...
Increasing returns to scale
Constant returns to scale
Negative returns to scale
Which of these is NOT a characteristic of Perfectly Competitive markets?
Many small firms
Virtually identical products
High barriers to entry
No need to advertise
If a firm's Marginal Costs increase, its output will...
Increase
Decrease
Stay the Same
Shut down
In the long run, a Perfectly Competitive Firm will..
Earn zero economic profit
Earn an economic profit
Make an economic loss
Shut down
Which of the following best describes Allocative Efficiency?
D = ATC
D = AVC
D = MC
Run = DMC
What will happen when there is short-term PROFIT in a market?
Firms will enter the market, and prices will rise.
Firms will enter the market, and prices will fall.
Firms will leave the market, and prices will rise.
Firms will leave the market, and prices will fall.
The image above shows a firm making
Economic Profit
Economic loss
Breaking even
Shutting down
Should the following firm shutdown?
Yes
No
Not enough information present
The above figure shows a perfectly competitive firm. If the market price is more than $20 per unit, the firm
will definitely shut down to minimize its losses.
will stay open to produce and will make zero economic profit.
will stay open to produce and will incur an economic loss.
will stay open to produce and will make an economic profit.
might shut down but more information is needed about the fixed cost.
Scarcity is best defined as
the difference between limited wants and limited economic resources.
the difference between the total benefit of an action and the total cost of that action.
the difference between unlimited wants and limited economic resources.
the opportunity cost of pursuing a given course of action.
the difference between the marginal benefit and marginal cost of an action.
A linear production possibilities curve indicates which of the following?
Constant opportunity costs
Decreasing opportunity costs
Increasing opportunity costs
Diminishing marginal returns
Labor-intensive production
According to the graph above, if a country is currently producing at point X, the opportunity cost of producing another consumer good is
20 capital goods
more than 20 capital goods
fewer than 20 capital goods
20 consumer goods
fewer than 20 consumer goods
Beef has been increasing in price. As a result, what will happen to the demand for hamburger buns?
Increase
Decrease
The solid line on the graph represents a _______________, which when implemented cause shortages.
Price ceiling
Price floor
Total revenue -total cost=
average cost
Profit
Marginal cost
Perfectly Competitive, Normal Profit
Single-Price Monopoly, Economic Profit
Profit-Maximizing Quantity
Qf
Qa
Based on the table above, what is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?
150 burgers
225 burgers
300 burgers
450 burgers
The production possibilities curve (PPC) is a graph that shows the various combinations of output that an economy
should produce
demands
can produce
Production Possibilities Curves (PPCs) are usually bowed outward. This is because...
the more resources a society uses to produce one good, the fewer resources it has available to produce another good.
the opportunity cost of producing a good decreases as more and more of that good is produced
of the effects of technological change
resources are specialized; that is, some are better at producing particular goods rather than other goods. (Apples & Carrots example)
What is the opportunity cost to Footville of increasing production of shoes from 400 to 600?
400 socks
300 socks
200 socks
100 socks
Which of the following points on the PPC above represents a combination of Steel & Wheat that this economy could NOT produce?
A
G
D
F
Humphery Flobart is trying to decide whether to take a job as the manager at the local Wendy's (making $25,000/year) OR attend college. He cannot do both. For Humphery, the opportunity cost of attending college includes...
The money he will spend on food whether or not he attends college.
The money he will spend on dates with his girlfriend, whether or not he attends college.
The $25,000 Humphery could make managing the local Wendy's next year if he didn't go to college.
The cost that Humphery's college, Boptown University, just paid to construct a new International Studies building.
Timmy the Eskimo currently makes $20,000/year working as an igloo salesman. He's considering taking a new job as a polar bear preservation guard, where he would be $25,000/year. He can only work one of the two jobs. Which of the following is an opportunity cost of taking the Polar Bear Guard job?
The self-esteem boost Timmy will get when the Polar Bears compliment him on his attentiveness to their security
The excitement of working as a Polar Bear Guard
The $20,000/year he could be making as an igloo salesman
The money Timmy pays for his new coffee maker
Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only 3 choices, what is the opportunity cost of reading?
Watching TV AND Listening to Music
Watching TV
Listening to Music
The Price of the book
Generally, each successive unit of a good consumed will cause marginal utility to...
Increase at an increasing rate
Increase at a decreasing rate
Decrease (or "diminish")
Who knows? Life's a gamble!
According to economists, a consumer will maximize their total utility when...
Marginal Utility/Price is equal for all the goods/services they purchase
Marginal Utility is equal for all goods
Price/Marginal Utility is equal for all the goods/services they purchase
Marginal Utility is as high as possible for all the goods they purchase.
Tom has currently studied for AP Microeconomics for 4 hours and AP U.S. History for 4 hours. He's a hard worker. He has 1 more hour available for studying... how should he decide how to spend that hour?
He should compare the total benefit of 5 hours of studying for AP Microeconomics to the total benefit of 5 hours of studying for AP US History.
He should compare the marginal benefit of 1 more hour studying for AP Microeconomics to the marginal benefit of 1 more hour of studying for AP US History.
He should compare the total benefit of 9 hours of studying for AP Microeconomics to the total benefit of 9 hours of studying for AP US History.
Which of the following is the best definition of the word "marginal?"
Additional
Abstract
Econometric
Complicated
Which of the following is NOT an example of a public good?
Fireworks display
National Defense
Public transportation
Lighthouse
What is the problem with public goods?
Lacks rivalry
Lacks a excludability
Lacks consumer and producer surplus
None of the above
What is the free rider problem?
scarcity even when you pay for a good
Reaping all the benefits without contributing
Common goods that don't have a price
none of the above
What statement best explains why the government provides goods and services to its citizens?
To provide benefits to small groups of people in certain areas of the country.
To provide goods and services that would not be available if individuals had to provide them.
To compete with businesses in the private sector.
To make a large profit by providing certain goods and services to it's citizens.
The government pays for public goods and services through —
donations from wealthy politicians
donations from foreign nations
revenue from sales and income taxes
revenue from the lottery
The United States government provides the following services EXCEPT —
interstate highways
satellite radio
postal service
national defense
What is one reason that local law enforcement is considered a public good?
Everyone in the community benefits from it.
Nobody in the community has to pay for it.
Private firms make a profit from producing it.
Individual citizens pay directly for it.
Which of the following is an example of a positive externality resulting from an outdoor band concert?
An elderly woman in her apartment hears a song that she liked as a child.
A pair of endangered birds leave their nest in a nearby tree when the concert starts.
A pizza parlor closes early, because all of its customers are at the concert.
A traffic jam occurs as drivers hunt for parking spots near the concert.
The goal of government welfare programs is to
maintain a poverty threshold that matches the median income.
eliminate the dependence of people on the welfare system.
eliminate the income gap between the richest Americans and the poorest.
raise the standard of living of certain less-fortunate members of society.
Which of the following explains why a city fireworks display on the Fourth of July is provided as a public good?
Fireworks displays usually take place in a public area.
Fireworks are a scarce resource.
Nonpayers cannot be prevented from seeing the fireworks.
Each consumer pays a fee to see the fireworks.
Which of the following is an example of a private good?
School WiFi
Park bench
Netflix
Apples
What is the tragedy of the commons?
Finite resources of a private good
Finite resources, zero excludability
Unlimited resources, zero excludability
Never heard of it
Collin opens up a hot chocolate stand for two hours. He spends $10 for ingredients and sells $60 worth of tasty beverages. In the same two hours, he could have provided Uber services (illegally because he isn't 18) and earned $40. Collin's accounting profit is ____ and an economic profit of ____.
$50, $10
$90, $50
$10, $50
$50, $90
If marginal cost is less than the average total cost, then the average total cost curve will.
Increase
Decrease
Not change
Why does the average total cost curve decrease as production increases in the beginning?
Average variable costs are increasing.
Average fixed costs are decreasing.
Average fixed costs are the same.
Average fixed costs are increasing.
Why does average total cost eventually rise?
Average fixed costs eventually begin to rise at an increasing rate.
Average variable cost eventually begin to rise at an increasing rate.
Average marginal costs eventually decrease.
Which of the following graphs will always decrease?
Marginal cost
Average Variable Cost
Average Fixed Cost
Average total cost
Which of the following is a typical fixed cost?
utilities
rent
hourly labor
materials
Which of the following is an example of an implicit cost?
(i)the owner of a firm forgoing an opportunity to earn a large salary working for Amazon (ii) interest paid on the firm's debt (iii) rent paid by the firm to lease office space (iv) interest earned from savings that was used to purchase equipment for the firm.
i only
i and ii only
i and iii only
i and iv only
i, ii and iv
Economists normally assume that the goal of a firm is to
(i) sell as much of their product as possible.(ii )set the price of the product as high as possible.(iii) maximize profit.
i only
i and iii only
ii and iii only
iii only
i, ii and iii
The efficient scale of production occurs when
marginal cost is equal to average total cost.
marginal cost is less than average fixed cost.
marginal cost is less than average variable cost.
marginal cost is greater than average total cost
marginal cost is less than average total cost
Which RCHS teacher teacher says "Okay Folks" in order to help each the efficient scale of learning in their classroom?
Mr. Gross
Mr. Riley
Mr. Hicks
Mr. Shirlen
Mr. Jenkins
What is economics?
Microeconomics deals with
Government intervention
individual choice
All of the above
What is Demand?
Internal factors that influencing demand..
Consumer income
Population size
Price of goods itself
Expectation future price
What is definition of supply in economics?
Factors affecting price elasticity of demand
Income level
Nature of goods
Income level
Production cost
The law of demand says
the higher the price the greater the demand
the lower the price the greater the demand
none of the above
For inferior goods, Income Elasticity of Demand will typically be...…
Positive
Negative
Both
None of these
A firm’s demand curve for labor is equal to a segment of its
average variable cost curve
total revenue curve
marginal cost curve
marginal revenue product curve
average product curve
The graph above shows the marginal revenue product curve and supply curve of labor for a firm. The introduction of new management techniques dramatically increases workers productivity. Which of the following changes is most likely to occur?
The supply curve will shift to the left, increasing the wage rate.
The supply curve will shift to the right, increasing employment.
The marginal revenue product curve will shift to the right, increasing wage rate.
The marginal revenue product curve will shift to the left, reducing employment.
Neither the marginal revenue product curve nor the supply curve will shift, but the wage will increase and employment will fall.
Which of the following is most likely to shift the demand for aircraft mechanics to the right?
An increase in the demand for air travel
An increase in the price of a license necessary for aircraft mechanics
A decrease in the price of a license necessary for aircraft mechanics
A decrease in the demand for air travel
A decrease in the marginal productivity of aircraft mechanics
A profit-maximizing firm will hire
labor until its wage rate equals its average revenue product
labor until its wage rate equals its marginal revenue product
labor until its wage rate equals the interest rate
capital until the interest rate equals the wage rate
capital until the interest rate exceeds the wage rate
Assume a firm uses only two inputs, capital (K) and labor (L), to produce its output. Let the marginal product of capital be MPK , the marginal product of labor be MPL , the price of capital be PK , and the price of labor be PL . The least-cost combination of capital and labor needed to produce a given level of output is given by which of the following?
MPL /PL = MPK /PK
MPL /PL > MPK /PK
MPL /PK = MPK /PL
(MPL)PL = (MPK)PK
MPL = MPK
Marginal revenue product is defined as the
change in income that occurs when an individual works additional hours
change in total revenue that occurs when one additional unit of the good is produced
change in total revenue that occurs when one additional unit of an input is employed
total revenue divided by the quantity of labor employed
change in total cost that occurs when one additional unit of an input is employed
For a firm hiring labor in a perfectly competitive labor market, the marginal revenue product curve slopes downward after some point because as more of a factor is employed, which of the following declines?
Marginal product
Marginal factor cost
Marginal cost
Total output
Wage rates
Assume that a firm is hiring labor in a perfectly competitive labor market. If the marginal revenue product of labor is greater than the wage rate, which of the following will be true?
The firm must be losing money.
The firm should employ more workers.
The firm should replace workers with capital.
The firm is maximizing its profits.
The firm is experiencing diminishing marginal utility.
The wage rate is $10 per hour and the last worker hired by the firm increased output by 100 units. Computers rent for $100 per hour and the last computer rented by the firm increased output by 2,000 units. To minimize costs the firm should
hire more workers and rent more computers because the marginal revenue products of both workers and computers are greater than their respective prices.
hire more workers and reduce the number of computers rented because workers are cheaper than computers
lay off workers and rent more computers because computers produce more output per dollar of additional expenditure
lay off workers and rent more computers because computers produce more output
keep the same number of workers and computers because the marginal revenue products of both workers and computers are positive
An increase in the demand for automobiles will cause the demand for skilled automobile workers and the wage rate of skilled automobile workers to change in which of the following ways?
Demand - Decrease; Wage Rate - Increase
Demand - Decrease; Wage Rate - Not Change
Demand - Increase; Wage Rate - Decrease
Demand - Increase; Wage Rate - Increase
Demand - Not Change; Wage Rate - Increase
Which of the following will happen in the labor market if the price of the good produced by the workers decreases?
The marginal product of labor will increase.
The marginal product of labor will decrease.
The marginal revenue product of labor will increase.
The marginal revenue product of labor will decrease.
The demand curve for labor will shift to the right.
According to the information in the table above, the twelfth worker would increase the hourly profit by
$0.20
$1.10
$1.30
$2.40
$5.20
The concept of derived demand is described by which of the following?
A decrease in the demand for theater tickets will decrease the demand for actresses and actors.
If the salaries of basketball players increase, the quantity of basketball players demanded will decrease.
An increase in the income of consumers will increase the demand for opera tickets.
An increase in the demand for movie tickets will decrease the demand for video rentals.
A decrease in the price of movie tickets will increase the demand for movie tickets.
An individual's labor supply curve is derived from that person's preferences about the trade-off between income and
work
wealth
nominal wages
productivity
leisure
Suppose that a large number of unskilled workers enter a nation’s labor market. If the labor market is competitive, the number of unskilled workers hired and the wage rate will most likely change in which of the following ways?
Workers Hired - Increase; Wage Rate - Increase
Workers Hired - Increase; Wage Rate - Decrease
Workers Hired - Increase; Wage Rate - Not Change
Workers Hired - Decrease; Wage Rate - Increase
Workers Hired - Decrease; Wage Rate - Decrease
Given the production information in the table above, how many workers would be employed if the wage rate were $20.00 per day and if sandwiches sold for $0.50?
1
2
4
5
7
Assume that the last worker a firm hired produces 60 additional units of output per hour and the last machine rented produces 6,000 units of output per hour. A worker’s hourly wage rate is $12, and the rental cost of a machine is $1,000 per hour. In order to minimize the cost of its current output, the firm should
do nothing, because the costs of production are minimized
increase the use of labor and decrease the use of capital
increase the use of capital and decrease the use of labor
increase the use of labor and increase the use of capital
decrease the use of labor and decrease the use of capital
The graph above shows a monopsony labor market. In the absence of any regulations, which of the following represents the number of workers the firm will hire and the wage rate it will offer to those workers?
Workers - 15; Wage Rate - $30
Workers - 20; Wage Rate - $20
Workers - 20; Wage Rate - $40
Workers - 30; Wage Rate - $30
Workers - 40; Wage Rate - $40
A change in which of the following will NOT cause a shift in the demand curve for a factor of production?
Demand for the goods produced by the factor
Prices of the goods produced by the factor
Prices of substitute factors
Supply of the factor
Supply of substitute factors
For a certain firm, the marginal revenue product for the last unit of labor is $60, and the marginal revenue product for the last unit of capital is $100. Which of the following combinations of factor prices would be necessary for the firm to maximize profits?
PL - $2; PK - $5
PL - $3; PK - $20
PL - $10; PK - $10
PL - $2; PK - $25
PL - $60; PK - $100
