Reference no: EM13375208
Question 1
A firm that emerges as the only seller in an industry with economies of scale is a(n):
Answer
Monopoly
Oligopoly
Natural oligopoly
Natural monopoly
Question 2
The profit maximizing rule MR = MC applies to:
Answer
All firms
Monopolists only
Perfect competitors only
Oligopolistic firms
Question 3
Suppose that the total cost curve for a firm is given by the equation TC = a + bQ, where 'a' and 'b' are positive numbers. This firm's average costs will then:
Answer
Rise over the entire range of output
Fall at first and then rise as output rises
Fall over the entire range of output
Rise at first and then fall as output rises
Question 4
Constant returns to scale occur when a doubling of all inputs:
Answer
Doubles the price of outputs
More than doubles output
Less than doubles output
Exactly doubles output
Question 5
If a firm triples all its inputs and output triples as a result, then the firm:
Answer
Has increasing returns to scale
Has economies of scale
Has constant returns to scale
Will have lower total costs
Question 6
The term natural monopoly refers to:
Answer
Government ownership of parks
The desire of all firms to be monopolists
Industries with small fixed costs
Industries with economies of scale
Question 7
Suppose both a competitive firm and a monopolist firm are charging $5 for their respective outputs. One can infer that:
Answer
Marginal revenue is $5 for both firms
Marginal revenue is $5 for the competitive firm and less than $5 for the monopolist firm
Marginal revenue is less than $5 for both firms
Both firms are earning profits
Question 8
The use of game theory is necessary under which of the following conditions?
Answer
Buyers and sellers have limited information.
Economists take time into account in their analysis.
Consumers maximize their utility.
There is interdependency between firms' decisions.
Question 9
The assumption that individuals act out of narrow self-interest is:
Answer
A reasonable first approximation
Justified only for monetary decisions
Less justified today than 100 years ago
Rarely justified
Question 10
Which of the following is not a requirement of a game?
Answer
Players
Strategies
Dominant strategies
Knowledge of the payoffs
Question 11
The prisoner's dilemma refers to games:
Answer
Without dominant strategies
Without a Nash equilibrium
With one dominant strategy
Where the playing of dominant strategies leads to a less desirable equilibrium
Question 12
In the U.S., drug pushers and cartels face the same problem:
Answer
That the product they sell is illegal
What to do with their excess profits
Not enough consumers
No legal remedy for violations of their agreements
Question 13
According to the textbook, standing at a concert and talking loudly at parties are examples of:
Answer
Material solutions to a commitment problem
Unpleasant but frequent behaviors
Undesirable outcomes stemming from a prisoner's dilemma
Psychological solutions to a commitment problem
Question 14
In The Scarlet Letter, the punishment for adultery is to always wear a large, red letter A. This is an example of:
Answer
Unenlightened punishment
Using public ridicule to solve the commitment problem in marriage
Overbearing control by the church
Using material incentive to solve the commitment problem in marriage
Question 15
If the external benefit of an activity is added to the private benefits, then the:
Answer
Demand curve shifts left
Quantity demanded rises
Supply curve shifts right
Demand curve shifts right
Question 16
When some fraction of the benefit of an activity is received by people not participating in the activity, it is called a(n):
Answer
Winner's curse
Positive externality
Negative externality
Efficient allocation
Question 17
Which of the following is not an example of a positional arms control agreement?
Answer
Campaign spending limits
Roster limits for professional sports teams
Contracts containing a binding arbitration clause in case of breach
Air pollution limits
Question 18
In the case of either an external cost or an external benefit, the invisible hand fails to generate the efficient outcome because:
Answer
The model is not capable of incorporating externalities
Buyers and sellers take only their self-interests into account
Too much is produced
Too little is produced
Question 19
Which of the following is an example of a governmental solution to an external benefit?
Answer
Requiring autos to meet minimum emissions regulation
Building-safety requirements for office buildings
Public service ads discouraging smoking
Public service ads encouraging exercise and good nutrition
Question 20
If, after an externality is corrected, the equilibrium price rises and the equilibrium quantity falls, the externality must have been a(n):
Answer
External benefit
Internal cost
External cost
Positive externality
Question 21
Which of the following is an example of an external benefit?
Answer
Honeybees providing honey for beekeepers
Beekeepers providing honey for consumers
Apple trees providing shelter for honeybees
Honeybees pollinating apple trees
Question 22
Given the typical shapes of the marginal costs and marginal benefits of collecting information:
Answer
There is no equilibrium amount
Consumers tend to become experts about most goods
Consumers remain completely ignorant about most goods
The equilibrium is somewhere between complete ignorance and becoming an expert
Question 23
Markets in which asymmetric information is present lead to the:
Answer
Asymmetric model
Risk adverse model
Limes model
Lemons model
Question 24
In which of the following markets is the presence of asymmetric information most critical for the buyers?
Answer
The market for haircuts
The market for used books
The market for pants
The market for existing houses
Question 25
The relevance of expected value to the search decision of the consumer is:
Answer
That the outcome of a particular search is certain
That one may not be able to purchase the good after it is found
That the outcome of a particular search is uncertain
That one always knows the value of the next search
Question 26
The difference between the price of electronic equipment in a retail store and at an Internet store reflects in part:
Answer
The extent to which middlemen drive the price up for extra profit
The lack of competition between brick-and-mortar stores and online stores
The value of personal attention and support at a retail store
That online stores do not profit maximize
Question 27
The invisible hand will lead to __________ information than is socially optimal because of __________.
Answer
more; free riders
less; external benefits
more; external costs
less; free riders
Question 28
The reason a warranty on a used car communicates credible information is because:
Answer
Everyone offers one
It indicates the car is of below average quality
Only those cars that are of better than average quality will be warranted
It indicates the car is of average quality
Question 29
Marginal product is:
Answer
The extra output associated with hiring an extra worker
The average output associated with the total number of workers hired
The total output associated with hiring an extra worker
The average output associated with hiring an extra worker
Question 30
Marginal labor cost is:
Answer
Identical to the wage rate
Labor costs divided by the number of workers
The extra labor cost associated with hiring an extra worker
Less than the wage rate
Question 31
In a competitive labor market, it is observed that both the equilibrium wage rate and employment level have risen. One can infer that:
Answer
The supply of labor has increased
The demand for labor has fallen
The supply of labor has decreased
The demand for labor has increased
Question 32
According to the textbook, after adjusting for differences in human capital stocks between union and nonunion workers, the union wage premium is approximately:
Answer
50%
40%
30%
10%
Question 33
The union wage premium refers to:
Answer
The dues one must pay in order to join a union
The union wage rate minus union membership dues
The deduction for union insurance
The amount by which union wages exceed nonunion wages
Question 34
A group of workers who collectively bargain with employers for higher wages and better working conditions is called a(n):
Answer
Labor monopsony
Labor union
Labor collective
Open shop
Question 35
Food stamps and Medicaid are examples of:
Answer
Cash transfers
In-kind transfers
Welfare programs that have been eliminated
Programs created by the New Deal
Question 36
One difficulty with the exploitation view of workplace injuries is that in order for it to be successful overtime, firms must:
Answer
Maximize profit
Act independently
Act collusively
Encourage worker mobility
Question 37
The growth of lawsuits seeking compensation from firms when a worker is injured should serve to:
Answer
Simply line the pockets of opportunistic lawyers
Increase the worker's incentive to get injured
Increase the firm's incentive to improve safety
Encourage outrageous settlements
Question 38
The major characteristic of a health maintenance organization (HMO) is:
Answer
Emphasis on acute medical treatment
Medical treatment is provided for a fixed annual payment
Freedom to see nonmember physicians
A lack of profit maximization motives
Question 39
The growth of medical insurance in general and first-dollar coverage specifically has reduced the marginal cost of treatment to the consumer. Therefore, the current level of medical treatment in the United States is:
Answer
Greater than the efficient level
Equal to the efficient level
Less than the efficient level
Less than or equal to the efficient level
Question 40
The major difficulty with using a tax on pollution instead of a fixed percentage reduction regulation is:
Answer
Nonpayment of the tax
Establishing the optimal size of the tax
That it works only in theory
That it would cause prices to rise
Question 41
If workers' compensation premiums accurately reflected the social costs of workplace injuries, then:
Answer
Many firms would be forced out of business
The premium would function like a tax on injuries
Injury rates would rise
Firms would still exploit workers
Question 42
Safety in the workplace is overseen by the:
Answer
Occupational Safety and Health Administration (OSHA)
Department of Labor (DOL)
World Health Organization (WHO)
International Labor Organization (ILO)
Question 43
If it's impossible or highly costly to prevent consumers from consuming a good when they have not paid for it, the good would be classified as a __________ good.
Answer
nonexcludable
pure public
private
common
Question 44
A tax that results in a larger fraction of income being paid in taxes as income rises is a ________ tax.
Answer
regressive
head
progressive
proportional
Question 45
National Public Radio (NPR) and the Public Broadcasting Service (PBS) rely, in part, on which of the following private methods of raising revenues?
Answer
Scrambling their signal to exclude nonpayers
Donations from private citizens and corporations
Contracting with private firms
Lobbying Congress for additional tax revenues
Question 46
Yellowstone National Park is a jointly consumed good in the sense that:
Answer
The size and beauty of the park is available for all visitors
Typically only families visit the park
While the government owns the park, private firms provide the lodgings
All taxpayers pay for its upkeep even if they don't visit the park
Question 47
The problems of externalities and poorly formed property rights are:
Answer
Minor in modern economies
Additional rationales for the existence of government
Better solved by private rather than government action
Easily solved by individuals
Question 48
Radio and broadcast television are examples of:
Answer
Collective goods
Pure public goods provided by the government
Rival yet nonexcludable goods
Pure public goods provided by private firms
Question 49
The best example of a pure public good is:
Answer
Cable TV
A national park
National defense
Education
Question 50
Government subsidizes education because:
Answer
It is a pure public good
Private firms will not provide education
Of custom and tradition
Education is thought to have positive externalities