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Total questions: 130
Worksheet time: 1hrs 5mins
which of the following best defines OC?
it is the cost of producing those goods most desired by a given economy
it is the cost of the input mix that will lead to the greatest rate of growth for a given company
is it the amount of one product that must be given up in order to produce an additional unit of another product
it is the use of the least-cost method of production
which of the following explains why a PPC is often represented as concave (bowed out) from the origin?
the law of demand
constant returns to scale
decreasing OC
increasing OC
assume that consumers consider popcorn and pretzels to be subs. a significant decrease in the supply of popcorn will affect the pretzel market by
increasing the demand for pretzels and therefore the supply of pretzels
increasing the demand for pretzels and therefore the price of pretzels
decreasing the demand for pretzels and therefore the price of pretzels
increasing the supply for pretzels and therefore the price of pretzels
in the market depicted in the diagram above (4/2012), if the government imposes a price ceiling of $1.00 per gallon on gasoline, which of the following will result?
a surplus of 6 bill gallons
a shortage of 6 bill gallons
a surplus of 12 bill gallons
a shortage of 12 bill gallons
neither a surplus nor a shortage, bcz the price ceiling would not be effective
assume that Clark spends his entire income on the purchase of two goods, X and Y. if his income and the P of good X and Y all double, Clark will
double the purchase of goods X and Y
buy more of good X and less of good Y
buy less of good X and more of good Y
buy the same amounts of goods X and Y
suppose that a firm begins to hire workers for a newly completed plants with a fixed amount of machinery. as the firm hires additional workers, one would expect the marginal product to
fall initially but eventually rise
rise initially but eventually fall
rise consistently due to diminishing return
rise consistently due to the ads of specialization
in the SR, which of the following costs must continuously decrease as output produced increases
total variable cost
total fixed cost
AVC
AFC
ATC
if the firm produces 10 units of output, its economic profits will equal (8/2012)
0
50
100
150
which of the following is most likely to occur if the firm increases production beyond 10 units (9/2012)
consumers would be willing to purchase more than 10 units at the price of $20 per unit
the firm would definitely experience a loss
the firm would have to lower its price to sell more than 10 units
the firm's average cost of production would initially increase
the firm profits would increase
which of the following statements about a constant-cost perfectly competitive industry in long-run equilibrium must be true
an increase in demand will cause no change in the long run E price
an increase in demand will cause no change in the long run E quantity
the long run S curve is upward sloping
the long run S curve is perfecly inelastic
the total cost of production remains the same as output increases
in which of the following market structures do firms recognize the mutual interdependence
oligopoly
monopoly
perfect competition
unregulated natural monopoly
monopsony
assume that a profit-maximizing firm is perfectly competitive in both the output and the factor markets and is at its long run E. the firm's output is at 100 units, its TR is $600, and the fixed cost of production is $50. based on this info, which of the following is true for the firm
its MC = $5.50 and its ATC = $5.50
its MC = $5.50 and its AVC = $5.50
its MC = $6 and its ATC = $5.50
its MC = $6 and its AFC = $5.50
its MC = $6 and its AVC = $5.50
businesses employ workers from city neighborhoods and rural areas. these workers are perfect subs and cannot be relocate in the SR. the gov offers businesses a wage subsidy if they hire workers from city neighborhoods. what is the effect of the subsidy on the wage rate of rural workers and on the total hours they work (wage rate of rural workers/total hours worked by rural workers)
increase/decrease
no change/increase
no change/decrease
decrease/decrease
decrease/no change
a per-unit tax on pollution produced by a firm will affect the firm's output and pollution levels in which of the following ways (output/pollution)
increase/increase
increase/decrease
decrease/increase
decrease/decrease
no change/no change
which of the following will most likely lead to a more equal distribution of income
more regressive national sales tax
more progressive income taxes
an increase in the high school dropout rate
an increase in earnings for owners of capital
assume both italy and greece produce only two goods: wine and olive oil. if italy holds a comparative ad in the production of wine, then which of the following statements is NOT true
italy must hold an absolute ad in the production of wine
greece hold a comparative ad in the production of olive oil
italy's OC of producing one additional unit of wine is lower than greece's
greece's OC of producing one additional unit of olive oil is lower than italy's
if trade is open between them, these cons have an incentive to trade
following a prolonged power outage, the price of flashlights normally increases significantly. if cities had passed laws prohibiting price increases for flashlights, during power outages such laws would most likely
make flashlights more available
create a shortage of flashlights
shift the D curve for flashlights to the right
shift the S curve for flashlights to the left
have no effect on the availability of flashlights
(18/2012) what is the P paid by consumers and the net O received by producers after the tax is paid (paid by consumers/received by producers)
11/10.45
11/10
10.45/10
10.45/9.45
according to the diagram, what is the dollar amount of the unit tax (19/2012)
0
0.45
0.55
1
according to the law of diminishing marginal utility, which of the following is true
total satisfaction decreases as more units of a good are consumed
the additional satisfaction received from consuming extra units of a good decreases as consumption of the good increases
the additional satisfaction received from consuming extra units of a good decreases as consumption of the good decreases
when MU is decreasing, total utility is decreasing
within the range of market demand, which of the following is consistent witht he conditions of a natural monopoly
long run total cost decreases as output increases
long run ATC remains constant as output increases
long run ATC decreases as output increases
marginal cost exceeds average cost
as farmer grows wheat using two inputs: labor and land whose prices are constant. if she doubles her inputs, she finds that the quantity of wheat produced more than doubles. therefore, it must be true that in this output range her long run average total cost curve is
upward sloping
downward sloping
horizontal
vertical
u-shaped
a constant cost, perfectly competitive gadget industry is in long run E. an increase in the number of consumers of gadgets will most likely result in
higher SR and LR prices for gadgets
reduced SR profits, followed by the exit of some firms
an upward shift in all SR cost curves, followed by a higher LR price for gadgets
a higher SR price for gadgets, followed by an increase in the quantity produced
a decreasein the demand for gadgets, followed by a decrease in the supply of gadgets
the profit-maximizing firm depicted in the graph above should (24/2012)
exit if conditions do not improve in the LR
produce the output that minimized ATC
increase price to maximize profits
increase output to maximize profits
if the AVC of producing 5 units of a good is $100 and the AVC of producing 6 units is $150, the the MC of increasing output from 5 to 6 units is
50
250
300
400
how many workers would the coal company want to hire if the price of coal were competitively priced at $5 per ton and the wage rate were $40 per day (26/2012)
5
4
3
2
the marginal physical product of the second worker is (27/2012)
19
22
25
44
instead of being employed at a printing company at a salary of $25000 per year, Sally starts her own printing firm. rather than renting a building that she owns to someone else for $10000 per year, she uses it as the location for her company. her costs for workers, materials, ads, and energy during her first year are $125000. if the TR from her printing company is $155000, her total economic profit is
-$5000
$5000
$20000
$30000
if the production of a good generates a positive externality, the gov can increase allocative efficiency by
taxing the producer of the good
subsidizing the producer of the good
prosecuting firms that produce the good without proper permits
setting a price ceiling to encourage production of the good
setting a price floor to discourage production of the good
which of the following is the best example of pure public good
electricity from a public utility
mail delivery service by the post office
social security payments
national defense
according to the information in the table above, which of the following statements is true if both cons have the same num of workers
con A has both an absolute and comp ad in manufactured goods
con A has an absolute ad in manufactured goods but a comp ad in service goods
con B has a comp ad in service goods but a comp ad in manufactured goods
con A has an absolute ad in service goods but a comp ad in manufactured goods
which of the following would most likely result in a decrease in the E price of oranges
the weather during this orange-growing season is not as good as it was last year
the price of apples, a sub for oranges, is higher this year than last year
new studies suggest that oranges contain traces of cancer-causing substances due to pesticide residue
a tree-killing fungus spreads thru orange orchards across the country
is a severe drought destroys a significant portion of the peanut crop and peanut farmers' revenues increase, which of the following is true over the observed range of prices
the D for peanuts must be unit price elastic
the D for peanuts must be price elastic
the D for peanuts must be price inelastic
the S of peanuts must be price inelastic
promoters of a rock group know that if they charged $8 a ticket, 400 people would buy tickets for a concert, and if they charged $4 a ticket, 800 people would buy tickets. over this price range, the demand for the concert tickets for the rock group is
elastic
inelastic
unit elastic
perfectly elastic
perfectly inelastic
assume that people like onions on their hamburgers. if the supply of hamburgers decreases, the demand for onions will most likely
remain unchanged because hamburgers and onions are different goods
increase because burgers and onions are subs
increase because burgers and onions are comp
decrease because burgers and onions are comp
increase because burgers and onions are comp
if labor is the only variable input in the production process, the SR MC curve is upward sloping because which of the following occurs as more and more labor is added
output decreases, and thus MC increases
output increases, and thus MC increases
output increases at an increasing rate, and thus the cost of producing each additional output increases
output increases at a decreasing rate, and thus the cost of producing each additional output increases
output increases at a decreasing rate, and thus the cost of producing each additional output decreases
at a firm's current rate of output, the MC = $65, the AVC = $35, the AFC = $30, and the product price is $65. which of the following statements is true for the firm
economic profits are zero bc MR = MC
economic profits are negative bc TR is less than TC
economic profits are positive bc TR is greater then TC
economic profits are negative bc P > AVC
economic profits are zero bc P = ATC
the graph above shows the SR cost curves of a firm in a perfectly competitive market. which of the following are true at the firm's profit-maximizing output level
I. P exceeds ATC
II. Economic profits are zero
III. MC = ATC
IV. New firms are likely to enter the market in the LR
I and II only
I and III only
I and IV only
I, III and IV only
I, II, III and IV
which of the following best describes an oligopolistic market
many sellers with identical products and no barriers to entry
many seller, each with a clearly differentiated product, and no barriers to entry
a few competing sellers with similar products and high barriers to entry
a few competing sellers of identical products and no barriers to entry
no competition
the payoff matrix below shows the per-unit profits associated with the production strategies of two utility companies, UA and UB. each firm has two choices: to reduce production by 10% or by 20%. the first entry in each cell indicates the profits to UA, and the second, the profits to UB (40/2012).
based on the info, and assuming no cooperation, which of the following statements is true?
neither comps has a dominant strategy
both comps have an incentive to reduce production by 10%
both companies have an incentive to reduce production by 20%
only UA has an incentive to reduce production by 20%
in order to minimize SR losses, a profit-maximizing firm will necessarily shut down production under which of the following conditions
TR is less than TC
MC is greater than ATC
MC is less than MR
AR is less than AVC
AR is less than ATC
an increase in the effective minimum wage will have less of an impact on employment if the demand for labor is (vẽ hình)
a derived demand
decreasing
relatively elastic
relatively inelastic
unit elastic
if a firm employs only labor and capital in its production process, which of the following best describes the optimal combination of inputs for the firm in the LR
the marginal product per dollar spent on labor is equal to the marginal product per dollar spent on capital
the marginal product of labor = the marginal product of capital
the total product of labor = the total product of capital
the marginal product of labor and capital are both zero
all marginal products are equal to all average products
most economists argue that a monopoly is inefficient because it
has no incentive to minimize its cost
produces too little output and sets a price above MC
earns too much profit by charging consumers any price it wants
produces too much output and thus wastes scare resources
the table above shows the distribution of income in country X in 2010 before and after taxes and transfer payments. which of the following can be concluded about the effect of the gov's tax and transfer policies on income distribution in country X (45/2012)
the distribution of income is significantly less equal after accounting for the impact of gov policies
the distribution of income is about the same after accounting for the impact of gov policies
the largest gainers from gov policies are the third and fourth quintile group
the only quintile to benefit from gov policies is the lowest quintile
the major transfer of income is from the highest quintile to the two lowest quintiles
after graduating from high school, Peggy Smith decided to enroll in a two-year program at the local community college rather than to accept a job that offered a salary of $12000 per year. if the annual tuition and fees are $4600, the annual OC of attending the community college is
4600
7400
12000
16600
in which of the following situations is a good NOT scarce
consumers give up nothing to obtain more of the good
consumers can purchase as much of the good as they want at its current market price
large quantities of the good are available in the marketplace
there is a surplus of the good at some positive price
there is a shortage of the good at some positive price
suppose the market S curve for shoes is upward sloping and the market D curve is downward sloping. how will the imposition of a sales tax on shoes affect the CS, PS and TS
decrease/decrease/decrease
decrease/increase/increase
decrease/increase/decrease
increase/decrease/decrease
at her current level of consumption, a consumer is willing to pay up to $1.50 for a bottle of water and up to $1500 for a diamond ring because the
total utility of diamond ring > the total utility of water
total utility of water < MU of a diamond ring
MU of a bottle of water < MU of a diamond ring
MU of a bottle of water > MU of a diamond ring
consumer is irrational and does not understand that water is more important than a diamond
if a firm's production process exhibits economies of scale, which of the following will occur when the firm's output increases
its SR ATCs will rise
its LR ATCs will rise
its LR ATCs will fall
its SR TCs will fall
which of the following helps explain why the demand curve for a normal good is downward sloping
the income and subs effects move the quantity demanded in the same direction
the income effect moves the quantity demanded in the opposite direction of the subs effect
the income effect dominates the subs effect
the subs effect dominates the income effect
with an increase in income, the consumer decreases consumption of the good
the graph above shows the TR and TC curves for a firm in which type of market structure and what is the profit maximizing quantity (52/2012)
monopoly/Q2
monopoly/Q3
Perfect competition/Q1
Perfect competition/Q3
Perfect competition/Q4
if TR is increasing as output increases, MR is always
= AR
< AR
increasing
decreasing
> 0
in monopolistic competition, which of the following most accurately describes the LR E conditions for a firm
P > ATC
MR = MC
P > MC
P > ATC
MR > MC
P = MC
P = ATC
MR = MC
P > MC
P = ATC
MR = MC
P = MC
P > ATC
MR > MC
P > MC
in a perfectly competitive free market economy, a wage gap between two workers can be explained by differences in all of the following EXCEPT
years of schooling
occupations
marginal products
marginal revenue products
tastes for luxury goods
firm XYZ produces and sells corn in a perfectly competitive market and hires its workers in a perfectly competitive labor market. which of the following best describes the D curve for XYZ's corn and XYZ's D curve for labor (demand for XYZ's corn/XYZ's labor demand)
horizontal/horizontal
horizontal/downward sloping
horizontal/vertical
downward sloping/downward sloping
downward sloping/horizontal
a monopolistically competitive firm advertises to
shift the D curve for its product to the left
make the D for its product less price elastic
make its product more similar to its competitors'
increase its positive externalities
reduce industry's barriers to entry
a profit maximizing firm should hire and input up to the point at which
marginal physical product = marginal revenue product
MR = marginal factor cost
MRP = MR
MRP = MFC
marginal physical product = MFC
(59/2012) the socially optimal quantity and the per-unit tax that will achieve the socially optimal quantity are which of the following (socially optimal Q/per-unit tax)
Q1/P4-P2
Q2/P3-P2
Q3/P4-P2
Q2/P3-P1
Q3/P3-P2
given the position of the marginal social cost curve, one can conclude that (60/2012)
private cost of producing good X exceeds the social cost of production at all levels of output
production of good X creates a negative externality
production of good X occurs in an imperfectly competitive market
market quantity Q3, is the socially optimal quantity
free market will produce too little of good X
at a perfectly competitive firm's current output level, ATC = 15, AVC = 10, and marginal cost = 8, and increasing. if the product price is $15, what should this firm do to maximize profit
increase the Q of output produced
increase the product price
decrease the product price to increase sales
shut down immediately
continue to produce at its current output level
the gov must provide public goods such as national defense because
the production of public goods requires economies of scale that the private sector cannot provide
it is generally impossible to exclude individuals who value public goods but do not pay for them
public goods cannot be produced in private competitive markets since they have highly inelastic demand
private producers charge a price that is substantially greater than MC
no single individual should have to pay for public goods, since they benefit society as a whole
the table above shows the total benefit Toney gets from eating different quantities of apples. if apples cost $3 each, how many should he buy to maximize his consumer surplus? (9/2017)
1
2
3
4
5
given the D curve above (10/2017), if price decreases from 8 to 4 per unit, total consumer surplus will
increase by 4
increase by 8
increase by 12
increase by 18
remain constant at 24
the table below (13/2017) lists the monthly individual demand schedules for text messages for the only three buyers in the market: Allison, Bill and Chang. which of the following combinations of price and quantity lies on the market demand curve? (price/quantity)
4/1000
8/350
12/200
16/270
given the info above (17/2017), the AVC of 25 units of output is
2
6
25
50
(22/2017) the demand curves X and Y are shown in the graph above. which of the following offers the most accurate comparison of the price elasticities of demand curves X and Y at a price of $4 (curve X/curve Y)
perfectly elastic/perfectly inelastic
perfectly inelastic/perfectly elastic
perfectly inelastic/relatively elastic
relatively inelastic/perfectly elastic
relatively elastic/relatively inelastic
assume that the current market E price for milk is $2.80 per gallon and that 5 million gallons are sold per day. id the gov sets a price ceiling of $2 per gallon, which of the following is true
the demand for milk will increase
the supply of milk will decrease
there will be an excess supply of milk in the market
more than 5 million gallons of milk will be sold
less than 5 million gallons of milk will be sold
the table shows the long-run total cost function of a firm (28/2017). the firm's cost function exhibits
diseconomies of scale
constant returns to scale
economies of scale
decreasing MC
increasing MC
if a perfectly competitive market market with no gov interventions is allocatively efficient, which of the following must be true
consumer surplus + producer surplus is at its maximum
CS > PS
PS > CS
all surplus is PS
all surplus is CS
good X is produced in a perfectly competitive industry in long-run E. if the consumption of good X generates positive externalities, the private market will produce
less than the socially optimum amount of good X
more than the socially optimum amount of good X
the socially optimum amount of good X
good X only id the gov grants a subsidy for the production of good X
good X only if the gov levies a corrective tax on the production of good X
which of the following is true of a firm in a perfectly competitive industry
it faces a perfectly elastic demand curve
it faces a downward sloping demand curve
it will increase its TR if it increases the selling price of its product
its cost could be greatly reduced if it did not have to advertise its product
it sets the price of its product at the level at which profits are maximized or losses are minimized
as the population of a country ages, the demand for healthcare is projected to increase. as a result, the healthcare industry is likely to experience all of the following EXCEPT
an increase in demand for healthcare workers
an increase in demand for medicine
an increase in the quantity of healthcare workers supplied
an increase in the wages of healthcare workers
a decrease in the prices of medicine
when the MC curve lies below the ATC curve, it is true that as output increases
MC is decreasing
MC is increasing
ATC is decreasing
ATC is increasing
AVC is decreasing
(54/2017) assume that the gov imposes an excise tax on the consumption of a good. the tax will have the least impact on the market E quantity for which of the following combinations of the price elasticities of demand and supply (absolute value of elasticity of demand/elasticity of supply)
4/4
4/0.5
1/1
0.5/4
0.5/0.5
the monopsonist's marginal factor (resource) cost curve for labor is
above the S curve because the product price is found on the demand curve above where MC = MR
above the labor S curve because to hire more workers the firm must raise the wage for all workers
below the labor S curve because the firm is a wage taker
below the labor S curve because of diminishing marginal returns to labor
which of the following best demonstrates nonrivalry in consumption
occupying a seat in a sold-out movie theatre
sharing rent equally among roomates
catching fish in a local pond
playing golf on a crowded public golf course
listening to a radio program
the lorenz curve is used to study the
relationship between output and unemployment
relationship between income and consumption
extent of income inequality within a society
incidence of an excise tax on buyers and sellers in a market
an effective minimum wage policy in a competitive market will increase unemployment and increase the total earnings of labor only if the demand for labor is
relatively inelastic
relatively elastic
unit elastic
greater than the supply
compared with a perfectly competitive market, a sing-price monopoly with the same market demand and cost curves will
increase output and price
increase output and decrease price
decrease output and price
decrease output and increase price
produce the same level of output and increase price
in an effective rent ceiling is eliminated, which of the following is most likely to occur in the rental housing market
an increase in the demand for housing, resulting in a decrease in the quantity of housing supplied
an increase in rents, resulting in an increase in the quantity of housing supplied
an increase in the demand for housing, resulting in an increase in the quantity of housing demanded
a decrease in rents, resulting in an increase in the quantity of housing supplied
a decrease in the demand for housing, resulting in an increase in the quantity of housing supplied
assume that the market for lemonade is perfectly competitive and currently in E. lemons are key ingredients in lemonade. if the price of lemons decreases, how will the lemonade market affected
supply will shift leftward, increasing the E price and decreasing the E quantity of lemonade
supply will shift rightward, increasing the E price and increasing the E quantity of lemonade
supply will shift rightward, decreasing the E price and increasing the E quantity of lemonade
demand will shift leftward, decreasing the E price and decreasing the E quantity of lemonade
demand will shift rightward, increasing the E price and increasing the E quantity of lemonade
the reason that firms in perfect competition earn zero economic profit in the LR is that
firms are small
there are large number of sellers
firms cannot ads
there are no barriers to entry or exit
if the output if a firm doubles when the firm doubles all of its inputs, the firm must be experiencing
economies of scale
increasing returns to scale
constant returns to scale
decreasing returns to scale
the graph above (7/2016) shows the marginal product (MP) and the average product (AP) of labor for a firm that uses labor as the only variable input and hires its labor in a perfectly competitive market. at which quantity of labor does marginal cost change from decreasing to increasing
L1
L2
L3
L4
assume that a profit-maximizing, perfectly competitive firm has economic losses in the SR. if the firm continues to produce and sell its goods, then which of the following must be true
the firm is covering all of its fixed and variable costs of production
the firm is covering all of its fixed costs but not all of its variable costs of production
the firm is covering all of its variable costs but not all of its fixed costs of production
the firm is covering all of its implicit costs but not all of its explicit costs
the firm must have raised the price of its goods in order to minimize losses
the demand curve for a monopolistically competitive firm is downward sloping because
there are large number of firms
the product is produced by using scarce resources
the products produced by different firms are not identical
it is easy for firms to enter or exit
the MC rises as output produced increases
if the production of good X creates a positive externality then from society's perspective, the industry that produces good X tends to produce
less than the socially optimal amount of good X
greater than the socially optimal amount of good X
the socially optimal amount of good X
a surplus of good X, unless subsidized
if the goal of gov regulators of a natural monopoly is to reduce DWL without subsidizing the monopolist, gov regulators would set a P = ?
AVC
ATC
AFC
SR MC
LR MC
a country produces computers and rice, if resources are fully employed and there is technological progress only in the production of price, the OC of producing computers and rice will change in which of the following (computers/rice)
increase/increase
increase/decrease
no change/decrease
decrease/increase
in the graph above (18/2017), S1 is the S curve including an excise tax. the area representing the tax revenue to the gov is
P1P3VT
P2P4RZ
P2P4XU
P2UQ30
Shelby is an entrepreneur who has decided to open a small advertising firm. she rents office space at a cost of $25 000 per year, she has employed an assistant at a salary of $30 000 per year, and she incurs annual utility and office supply expenses of $20 000. her best alternative is to work elsewhere and to earn a salary of $50 000 per year. how much annual revenue must her firm receive so that Shelby earns zero economic profit
50k
75k
100k
125k
150k
if the monopolist could engage in perfect price discrimination, the monopolist's total output and the price charged for the last unit of output sold would be (26/2016)
Q1P1
Q1P2
Q1P4
Q2P3
if a large number of unskilled workers enter the labor market, which of the following is most likely to occur in the labor market for unskilled workers
the S curve will shift to the right and the wage rate will decrease
the S curve will shift to the left and the wage rate will increase
the D curve will shift to the right and the wage rate will increase
there will be movement up along the D curve and the wage rate will increase
the table above shows the maximum number of palm leaves or coconuts that Robert and Frank can pick respectively in a single day. which of the following is true
robert has a comparative ad in picking coconuts
frank has a comparative ad in picking palm leaves
robert and frank can both benefit from trade with each other if 1 coconut is traded for 1 palm leaves
robert and frank can both benefit from trade with each other if 1 coconut is traded for 3 palm leaves
if a 10% increase in the price of a good leads to a 25% decrease in the quantity demanded of the good, demand is
relatively inelastic
relatively elastic
unit elastic
perfectly elastic
which of the following will cause the D curve for good X to shift right
an increase in the P of good Z, a complement
an increase in the P of good Y, a substitute
an increase in the consumer's income, if good X is an inferior good
one reason consumers typically increase the quantity of a good they purchase when the price of the good decreases is that
the MU of the good increases
consumers' purchasing power increases
consumers increase their purchases of subs items
consumers increase their purchases of comps items
the D for the good increases
Reff Corp is a firm with TR = 1000, MC = 5, AVC = 4. both the output and input markets are perfectly competitive, and Reff Corp is currently in LR E. its output and total fixed cost of production must be equal to which of the following
250/500
250/400
200/200
200/400
based on the table for a perfectly competitive firm above, if the wage rate for labor is $15, how many units of labor should the firm hire (42/2016)
6
2
3
4
5
assume that the firms in an industry pollute a river. if there is no gov intervention, the firms will
produce more output than is socially efficient
pay production costs that are higher than social costs
charge a lower price than is necessary to maximize profit
charge a higher price to pay for the pollution
increase production to achieve allocative efficiency
the following table shows Kent's annual income over two years and the income taxes paid in each year (45/2016). with no changes in the marginal tax-rate schedule, which of the following is true about the tax rates
the marginal tax rate was equal to the average tax rate for both incomes
the marginal tax rate on the last $20k earned was greater than the marginal tax rate at $100k income, but the average tax rate decreased with the increase in income
the average tax rate when Kent earned $120k was less than the marginal tax rate on the last $20k he earned
the amount paid in income tax increased as income increased, so the tax is proportional
the amount paid in income tax increased as income increased, so the tax is regressive
in which of the following cases would a firm's TR increase
P increases and D is elastic
P decreases and S is inelastic
P decreases and D is elastic
P decreases and S is elastic
P decreases and D is inelastic
in the diagram above (48/2016) if there is a price ceiling set at P1, CS will be represented by the area
ABC
P2BP0
P3BP2
P3ACP1
a profit maximizing firm will shut down in the SR any time the firm's TR is less than its
TC
FC
TVC
explicit cost
implicit cost
suppose that the demand for soft drinks is price elastic and the supply is price inelastic. is the gov imposes a sales tax on soft drinks, which of the following will occur in the SR
the tax burden will fall equally on both consumers and producers
the tax burden will fall more on producers
the tax burden will fall more on consumers
the % increase in the P of soft drinks will be greater than the % increase in the quantity demanded
the last worker currently employed by a firm has a marginal product of 3 units/h and is paid $20/h. assuming that both the labor market and product market are perfectly competitive and that the product's price is $5/unit, the firm should do which of the following
decrease wages
increase wages
employ more workers
employ fewer workers
increase product's price
Hope Hospital is a monopolistic employer of nurses (58/2016). what wage-quantity combination does Hope Hospital choose to maximize profits
W1Q1
W1Q3
W2Q2
W2Q4
W3Q3
the table above shows the SR output for a perfectly competitive firm (59/2016). if the price of the product is $10, what is the marginal revenue product of the 3rd worker hired
24
27
40
240
300
the table above shows the quantity of gasoline supplied and demanded at various prices in a country. if the gov sets a price floor of $2.75 on a gallon of gasoline, what is the price per gallon (3/2015)
2.75
3.00
3.25
3.50
assume that labor is the only variable input. if the firm's SR MC is increasing as output rises, which of the following must be true
average product of labor is const
average product of labor is increasing
marginal product of labor > average product of labor
marginal product of labor is increasing
total product of labor is decreasing
suppose that the price in a perfectly competitive industry decreases and it is now below min ATC but remains above min AVC. which of the following will occur in the SR
new firms will enter the industry
firms will increase output so that MR = new P
Firm will produce the output at which ATC is at minimum
Firm will produce the output at which MC = new P
which of the following is true for both a monopolistically competitive firm and perfectly competitive firm in LR E
MC > MR
P > MC
P = ATC
P = MC
MR = AR
a perfectly competitive firm hires 3 workers in a perfectly competitive labor market (12/2015). which of the following will be true
each worker will receive a wage based on the marginal product of the last worker hired
each worker will receive a wage based on the marginal product of the first worker hired
each worker will receive a wage based on the average of the marginal products of the workers
worker 1 will receive the highest wage
worker 3 will receive the highest wage
which of the following is necessary in a well-functioning capitalist econ but not in a command econ
centralized decision making
scarcity of resources
monopolies
protection of property rights
is the demand for insulin is price inelastic, a 5% increase in the price of insulin will
have no effect on the TR of insulin producers
increase the TR of insulin producers
decrease the TR of insulin producers
decrease the total spending on insulin by consumers
cause the demand for insulin to be less elastic
assume that good X is a normal good. which of the following helps to explain why a decrease in the price of good X increases the quantity demanded of good X
good X becomes relatively less expensive than its subs, so consumers buy more of good X and fewer of the subs
the MU of consuming good X increases as more of good X is consumed
the lower price of good X decreases the MU/$; therefore, consumers buy more of good X
the D curve shifts left
the S curve shifts right
which of the following conditions is necessary for productive efficiency
the firm is producing at the point where the MPL > APL
the firm is producing a given level of output with a least-cost combination of inputs
CS is minimized
there are external costs
there is no gov regulation
which of the following indicates that a firm is experiencing economies of scale
the firm's LR S curve is horizontal
the firm's LR MC increases as output increases
the firm's LR ATC decreases as output increases
the firm's LR TC decreases as output increases
in the figure above (32/2015), at which given points is demand most elastic
X
Y
Z
the table above (36/2015) shows a firm's total cost of producing various units of output. what is the AVC of producing 3 units
4
7
10
17
assume that the corn market is initially in LR E at point R. what are the SR and LR prices of corn if more corn is used as a source of alternative energy (39/2015)
P/P1
P/P2
P2/P1
P2/P
the LR industry S curve for corn is (40/2015)
upward sloping
downward sloping
horizontal
downward sloping at first and then upward sloping
assume that the gov imposes an effective min wage in a perfectly competitive labor market. what will happen to employment and total wage payments
decrease/increase
decrease/decrease
decrease/indeterminate
increase/indeterminate
suppose that people who work in the paint industry face a great risk of developing an incurable disease. a medical breakthrough that eliminates the risk will most likely cause which of the following shifts (supply/demand)
right/no
left/no
left/left
left/right
no/left
assuming that all residents of the city of smallville prefer to have streetlights installed citywide, which of the following best explains why individual residents do not install the optimal number of streetlights
streetlights generate negative externalities
streetlights are nonexcludable
the marginal benefit of installing streetlights is zero
antitrust policy is designed to
encourage businesses to produce public goods
establish trust between the gov and the business community
prevent businesses from earning profits
maintain a competitive business environment
assume that a firm uses only one variable input. if a firm is experiencing diminishing returns, which of the following is true as more of the variable input is used
MC will decrease at a constant rate
MC will decrease at a diminishing rate
MC will increase
MP will increase at a diminishing rate
a firm sells its output in a perfectly competitive market and hires two inputs, capital and labor, in a perfectly competitive factor markets. the product price is $15/unit, the wage is $75/day, and the marginal product of capital is 3. if the firm is choosing the least-cost combination of labor and capital, the firm's marginal product of labor and the price of capital must be equal to which of the following (MPL/Pk)
25/5
25/45
5/15
5/25
5/45
in the monopolistic labor market shown in the diagram above (60/2015), which of the following indicates the number of workers the firm will hire and the wage rate it will pay
L1W1
L1W2
L1W3
L2W2
L2W4
