Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
85 Cards in this Set
- Front
- Back
|
(MA) Jack Sparrow values his boat at $4,000, and Hector Barbossa values it at $9,000. If Barbossa buys it from Jack for $7,000, which of the following is true? a. Barbossa loses $7000. b. Barbossa gains $2000. c. Barbossa gains $5000. d. Barbossa gains $9000. e. Jack loses $4000. f. Jack loses $7000. g. Jack gains $3000. h. Jack gains $7000. |
b. Barbossa gains $2000 g. Jack gains $3000 |
|
|
When property rights are clearly defined and enforced, private owners will a. use their property for selfish ends because they have little or no incentive to consider the desires of others. b. develop and direct their property toward uses that others value highly because the market will generally reward them for doing so. c. have little or no incentive to take care of their property or conserve it for the future. d. be unable to derive personal gain if they are sensitive to the desires of others when deciding how to use their property. |
b. develop and direct their property toward uses that others value highly because the market will generally reward them for doing so. |
|
|
Suppose that in Australia, the government allows private ownership of chickens but not of cows. If the people of Australia permanently increase their desire to purchase more chicken and beef, in the long run, we would expect: a. the population of chickens to rise and the population of cows to fall. b. the population of cows to rise and the population of chickens to fall. c. the populations of both chickens and cows to increase.
d. both chickens and cows to become extinct in Australia unless the government places the animals on the endangered species list. |
a. the population of chickens to rise and the population of cows to fall. |
|
|
Over time, an increase in a nation's stock of physical capital will a. shift the production possibilities curve inward. b. cause an economy to operate inside its production possibilities curve. c. shift the production possibilities curve outward. d. eliminate the basic economic problem of scarcity. |
c. shift the production possibilities curve outward. |
|
|
According to the law of comparative advantage, both individuals and nations will be able to produce a larger joint output if each productive activity is undertaken by a. the high opportunity cost producer. b. the low opportunity cost producer. c. the producer who is able to hire workers at the lowest wage. d. the party that can complete the productive activity most rapidly. |
b. the low opportunity cost producer. |
|
|
Thor can produce 10 swords or 20 hammers in one hour while Loki can produce 15 swords or 5 hammers in one hour. Which of the following statements is correct? a. Loki has a comparative advantage over Thor in the production of hammers. b. Loki has a comparative advantage over Thor in the production of swords. c. Thor has a comparative advantage over Loki in the production of swords. d. Loki and Thor cannot gain from specialization and exchange. |
b. Loki has a comparative advantage over Thor in the production of swords. |
|
|
(PMA) Consumers buy less of a good as its price increases because a. production costs have risen. b. substitute goods are now relatively cheaper. c. substitute goods are now relatively more expensive. d. the income of consumers has effectively risen. e. the income of consumers has effectively decreased. f. the higher price will make the good more valuable to each consumer. |
b. substitute goods are now relatively cheaper. e. the income of consumers has effectively decreased. |
|
|
When economists say the demand for a product has increased, they mean the a. demand curve has shifted to the right. b. price of the product has fallen, and consequently, consumers are buying more of it. c. cost of producing the product has risen. d. amount of the product that consumers are willing to purchase at various prices has decreased. |
a. demand curve has shifted to the right. |
|
|
When economists say the quantity demanded of a product has decreased, they mean the a. demand curve has shifted to the left. b. demand curve has shifted to the right. c. price of the product has fallen, and consequently, consumers are buying more of it. d. price of the product has risen, and consequently, consumers are buying less of it. |
d. price of the product has risen, and consequently, consumers are buying less of it. |
|
|
If air travel and bus travel are substitutes a. an increase in the price of bus travel will decrease the demand for air travel. b. a decrease in the price of bus travel will decrease the demand for air travel. c. an increase in the price of bus travel will generally have no effect on the demand for air travel. d. an increase in the price of bus travel will shift the demand curve for air travel to the left. |
b. a decrease in the price of bus travel will decrease the demand for air travel. |
|
|
If coffee and cream are complements, an increase in the price of coffee will cause a. the demand for cream to increase. b. the demand for cream to fall. c. the demand for coffee to fall. d. no change in the demand for cream; only quantity demanded would be affected. |
b. the demand for cream to fall. |
|
|
According to the law of supply a. producers are willing to supply larger amounts of a good as its price increases. b. a direct relationship exists between the price of a good and the amount buyers choose to buy. c. an inverse relationship exists between the price of a good and the amount buyers wish to buy. d. an inverse relationship exists between the price of a good and the amount producers supply. |
a. producers are willing to supply larger amounts of a good as its price increases. |
|
|
When economists say the supply of a product has increased, they mean the a. price of the product has risen, and consequently, suppliers are producing more of it. b. supply curve has shifted to the left. c. amount of the product that consumers are willing to purchase at various prices has increased. d. supply curve has shifted to the right. |
d. supply curve has shifted to the right. |
|
|
When economists say the quantity supplied of a product has decreased, they mean the a. supply curve has shifted to the left. b. supply curve has shifted to the right. c. price of the product has risen, and consequently, suppliers are producing more of it. d. price of the product has fallen, and consequently, suppliers are producing less of it. |
d. price of the product has fallen, and consequently, suppliers are producing less of it. |
|
|
How will an increase in lumber prices influence the home construction market? a. The demand for newly constructed homes will increase.
b. The demand for newly constructed homes will decrease. c. The supply of newly constructed homes will increase. d. The supply of newly constructed homes will decrease. |
d. The supply of newly constructed homes will decrease. |
|
|
If the demand for a good decreased, what would be the effect on the equilibrium price and quantity? a. Price would increase and quantity would decrease. b. Price would decrease and quantity would decrease. c. Price would increase and quantity would increase. d. Price would decrease and quantity would increase. |
b. Price would decrease and quantity would decrease. |
|
|
If Georgia experiences a late frost that damages the peach crop, we should expect the a. supply curve for peaches to shift to the right and the price of peaches to fall. b. supply curve for peaches to shift to the left and the price of peaches to rise. c. demand curve for peaches to shift to the left and the price of peaches to fall. d. demand curve for peaches to shift to the right and the price of peaches to rise. |
b. supply curve for peaches to shift to the left and the price of peaches to rise. |
|
|
(PMA) If there is a simultaneously an increase in demand and an increase in supply, we would expect: a. An increase in equilibrium price and an increase in equilibrium quantity. b. A decrease in equilibrium price and an increase in equilibrium quantity. c. An increase in equilibrium price and a decrease in equilibrium quantity. d. A decrease in equilibrium price and a decrease in equilibrium quantity. |
a. An increase in equilibrium price and an increase in equilibrium quantity. b. A decrease in equilibrium price and an increase in equilibrium quantity. |
|
|
Which of the following is a major implication of the invisible hand concept? a. When directed by competitive market prices, the actions of self-interested individuals will tend to promote overall economic prosperity. b. Prosperity cannot be achieved unless the selfish nature of people can be changed. c. Competition is harmful to the health of an economy because it results in wasteful duplication. d. Government-operated firms tend to have higher efficiency and lower costs than private sector firms. |
a. When directed by competitive market prices, the actions of self-interested individuals will tend to promote overall economic prosperity. |
|
|
If a large percentage increase in the price of a good results in a small percentage reduction in the quantity demanded of the good, demand is said to be aunitary elastic. b. relatively inelastic. c. relatively elastic. d. perfectly elastic. |
b. relatively inelastic. |
|
|
Suppose the elasticity of demand is estimated to be 0.50. The firm is trying to increase sales by 15%. By how much does price need to change in order to achieve that goal? a. Price needs to rise by 30% b. Price needs to fall by 30% c. Price needs to rise by 7.5% d. Price needs to fall by 7.5% e. Price needs to rise by 50% f. Price needs to fall by 50% |
b. Price needs to fall by 30% |
|
|
Members of Alpha fraternity have developed a strong liking for Coca-Cola. Beta fraternity members buy the same amount of Coke but believe Pepsi is just about as good. From this, we can infer that a. Alpha members will not care what the price of Coke is. b. compared to Alpha members, Betas will have a smaller price elasticity of demand for Coke.
c. compared to Alpha members, Betas will have a larger price elasticity of demand for Coke. d. Alpha members will increase their purchases by a larger amount of Pepsi than Beta members in response to a "50 cents off" sale on a case of Pepsi. |
c. compared to Alpha members, Betas will have a larger price elasticity of demand for Coke. |
|
|
Suppose ε = 0.52 and the firm raises price. What happens to TR? a. TR rises b. TR falls c. TR remains constant |
a. TR rises |
|
|
Suppose the firm wants to raise TR and it knows demand is elastic. What should the firm do? a. Lower price b. Raise price c. Keep price the same |
a. Lower price |
|
|
(MA) In which of the following cases will the total spending on a good decrease? a. Demand is elastic and price decreases. b. Demand is elastic and price increases. c. Demand is inelastic and price increases. d. Demand is inelastic and price decreases. |
b. Demand is elastic and price increases. d. Demand is inelastic and price decreases. |
|
|
Which of the following is most likely to be true of economic and accounting profits? a. Economic profits are less than accounting profits. b. Accounting profits are less than economic profits. c. Economic profits plus accounting profits equal zero. d. Accounting profits minus economic profits equal zero. |
a. Economic profits are less than accounting profits. |
|
|
If most businesses in an industry are earning a 23 percent rate of return on their assets, but your firm is earning 13 percent, your rate of economic profit is: a. 3 percent. b. 10 percent. c. 23 percent. d. 36 percent. |
a. 3 percent. |
|
|
The short run is a time period such that: a. the existing firms in the market do not have sufficient time to change the amounts of any of the inputs that they employ. b. the existing firms in the market do not have sufficient time to either increase or decrease their current rate of output. c. the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory. d. new firms may build plants and enter the industry. |
c. the existing firms in the market do not have sufficient time to increase the size of their existing plant or build a new factory. |
|
|
The long run is a period of: a. at least one year. b. sufficient length to allow a firm to expand output by hiring additional workers. c. sufficient length to allow a firm to alter its plant size and capacity and all other factors of production. d. sufficient length to allow a firm to transform economic losses into economic profits by hiring better workers. |
c. sufficient length to allow a firm to alter its plant size and capacity and all other factors of production. |
|
|
If average fixed costs equal $60 and average total costs equal $120 when output is 100, the total variable cost must be: a. $40 b. $60 c. $6000 d. $8000 |
c. $6000 |
|
|
Which of the following about costs is always true? a. When marginal costs are less than average total costs, average total costs will be decreasing.
b. When average fixed costs are falling, marginal costs must be less than average fixed costs. c. When average fixed costs are rising, marginal costs must be greater than average total costs. d. When marginal costs are greater than average total costs, average total costs will be decreasing. |
a. When marginal costs are less than average total costs, average total costs will be decreasing. |
|
|
As output is expanded, if MC is greater than ATC a. ATC must be at its minimum. b. ATC must be at its maximum. c. ATC must be increasing. d. the firm must be earning economic profit. |
c. ATC must be increasing. |
|
|
The short run average total cost (ATC) curve of a firm will tend to be U-shaped because a. larger firms always have lower per unit costs than smaller firms. b. at small output rates, AFC will be high while at large output rates MC will be high as the result of diminishing returns. c. diminishing returns will be present when output is small while high AFC will push per unit cost to high levels when output is large. d. increasing marginal returns will be present at both small and large output rates. |
b. at small output rates, AFC will be high while at large output rates MC will be high as the result of diminishing returns. |
|
|
A downward-sloping portion of a long-run average total cost curve is the result of a. economies of scale. b. diseconomies of scale. c. diminishing returns. d. the existence of fixed resources. |
a. economies of scale. |
|
|
In the long run, a firm might experience rising per unit costs due to a. economies of scale. b. diseconomies of scale. c. the law of supply. d. the law of diminishing marginal returns. |
b. diseconomies of scale. |
|
|
(MA) An increase in the number of students attending college would tend t: a. decrease the demand for college professors. b. increase the demand for college professors. c. decrease the number of college professors employed. d. increase the number of college professors employed. e. increase wages of college professors. f. decrease wages of college professors. |
b. increase the demand for college professors. d. increase the number of college professors employed. e. increase wages of college professors. |
|
|
What would happen in a market where a price ceiling was set above equilibrium price? a. A surplus would occur b. The shortage would become larger c. Equilibrium price would become the market price |
c. Equilibrium price would become the market price |
|
|
When a shortage of a good is present due to a price ceiling a. the amount supplied will be greater than the amount demanded. b. the quality of the good will generally improve. c. non-price factors, such as discrimination or waiting in line, will play a greater role in the allocation of the good. d. the demand for the product will increase and, thereby, eliminate the shortage. |
c. non-price factors, such as discrimination or waiting in line, will play a greater role in the allocation of the good. |
|
|
If the government imposes a price floor on the market for milk, which of the following will most likely happen? a. The quantity of milk demanded will increase. b. The quantity of milk supplied will decrease. c. There will be a surplus of milk. d. There will be a shortage of milk. |
c. There will be a surplus of milk. |
|
|
Both price floors and price ceilings lead to a. shortages. b. surpluses. c. reductions in quality. d. a reduction in the quantity traded. |
d. a reduction in the quantity traded. |
|
|
If a $5,000 tax is placed legally (statutorily) on the sellers of new automobiles and as a result the price of automobiles to consumers rises by $4,000, then the actual burden of the tax: a. falls completely on automobile buyers.
b. falls completely on automobile sellers. c. is $4,000 on automobile buyers and $1,000 on sellers. d. is $1,000 on automobile buyers and $4,000 on sellers. |
c. is $4,000 on automobile buyers and $1,000 on sellers. |
|
|
The burden of a tax will fall primarily on sellers when the a. demand for the product is highly inelastic and the supply is relatively elastic. b. demand for the product is highly elastic and the supply is relatively inelastic. c. tax is legally (statutorily) imposed on the seller of the product. d. tax is legally (statutorily) imposed on the buyer of the product. |
b. demand for the product is highly elastic and the supply is relatively inelastic. |
|
|
According to the Laffer curve, a. an increase in tax rates will always cause tax revenues to increase. b. when marginal tax rates are high, an increase in tax rates is likely to cause tax revenues to increase. c. when marginal taxes are low, an increase in tax rates will probably cause tax revenues to decline. d. when marginal tax rates are high, a reduction in tax rates may increase tax revenue. |
d. when marginal tax rates are high, a reduction in tax rates may increase tax revenue. |
|
|
The actual benefit of a government subsidy is determined primarily by a. the elasticities of demand and supply. b. the legal (or statutory) assignment of the subsidy c. the number of exchanges that are made possible as a result of the subsidy. d. whether the subsidy is paid by cash or check. |
a. the elasticities of demand and supply. |
|
|
If a $50 subsidy is legally (statutorily) granted to the sellers of exercise equipment and as a result the price of exercise equipment to consumers falls by $30, the actual benefit of the subsidy a. goes completely to buyers of exercise equipment. b. goes completely to sellers of exercise equipment. c. is $30 to buyers and $20 to sellers. d. is $20 to buyers and $30 to sellers. |
c. is $30 to buyers and $20 to sellers. |
|
|
When economists say that an activity meets the criterion for economic efficiency, they mean a. a majority of citizens favor the activity. b. the benefits that result from the activity exceed the costs. c. the number of people who gain from the activity exceeds the number on whom costs are imposed. d. the costs that result from the activity exceed the benefits. |
b. the benefits that result from the activity exceed the costs. |
|
|
Which of the following is true? a. Consumption of a public good by one individual reduces the availability of the good for others. b. It is extremely difficult to limit the benefits of a public good to only the people who pay for it. c. Public goods are free to a society when they are produced by the government. d. From an efficiency standpoint, a market economy will generally supply too much of a public good. |
b. It is extremely difficult to limit the benefits of a public good to only the people who pay for it. |
|
|
A competitive market economy is unlikely to provide an efficient quantity of some public goods because: a. only the government has the vast resources necessary to produce public goods. b. the nature of public goods makes it difficult for producers to withhold them from nonpaying consumers. c. the technology involved in the production of public goods makes it difficult for private firms to produce them even though, once produced, they could be marketed efficiently. d. private production of public goods generally results in a large amount of profit, which is difficult for a firm to effectively pay out to shareholders. |
b. the nature of public goods makes it difficult for producers to withhold them from nonpaying consumers. |
|
|
Suppose the actions of the producers of a good impose an external cost which results in the actual market price of $25 and market output of 1,000 units. How does this outcome compare to the efficient, ideal equilibrium? a. The efficient price would be higher than $25 while the efficient output would be less than 1,000 units. b. The efficient price would be higher than $25 while the efficient output would be greater than 1,000 units. c. The efficient price would be lower than $25 while the efficient output would be less than 1,000 units. d. The efficient price would be lower than $25 while the efficient output would be greater than 1,000 units. |
a. The efficient price would be higher than $25 while the efficient output would be less than 1,000 units. |
|
|
Suppose the actions of the producers of a good impose an external cost which results in the actual market price of $25 and market output of 1,000 units. How does this outcome compare to the efficient, ideal equilibrium? a. The efficient price would be higher than $25 while the efficient output would be less than 1,000 units. b. The efficient price would be higher than $25 while the efficient output would be greater than 1,000 units. c. The efficient price would be lower than $25 while the efficient output would be less than 1,000 units. d. The efficient price would be lower than $25 while the efficient output would be greater than 1,000 units. |
a. The efficient price would be higher than $25 while the efficient output would be less than 1,000 units. |
|
|
Suppose the actions of the producers of a good generate an external benefit which results in the actual market price of $15 and market output of 614 units. How does this outcome compare to the efficient, ideal equilibrium? a. The efficient price would higher than $15 while the efficient output would be less than 614 units. b. The efficient price would be higher than $15 while the efficient output would be greater than 614 units. c. The efficient price would be lower than $15 while the efficient output would be less than 614 units. d. The efficient price would be lower than $15 while the efficient output would be greater than 614 units. |
b. The efficient price would be higher than $15 while the efficient output would be greater than 614 units. |
|
|
When the consumption of a good generates an external benefit a. the private benefit consumers receive from the good will be higher than the true social benefit. b. too much of the good will tend to be produced from the viewpoint of economic efficiency. c. the community generally suffers an exactly offsetting external cost from the production of the good. d. the market demand curve will understate the total benefits derived from consumption of the good, and as a result, too little of it will be produced and consumed. |
d. the market demand curve will understate the total benefits derived from consumption of the good, and as a result, too little of it will be produced and consumed. |
|
|
Who was the original scholar to propose “fixing it with taxes”? a. Joe Calhoun b. Adam Smith c. David Ricardo d. A.C. Pigou e. John Locke f. Ronald Coase |
d. A.C. Pigou |
|
|
Fixed costs - $20,000 Variable costs - $30,000 Total revenue - $40,000If the firm closes, how much is profit?
a. $20,000 b. $10,000 c. $0 d. -$20,000 |
d. -$20,000 |
|
|
Fixed costs - $20,000 Variable costs - $30,000 Total revenue - $40,000If the firm stays open, how much is profit?
a. $20,000 b. $10,000 c. -$10,000 d. -$20,000 |
c. -$10,000 |
|
|
When the marginal cost of a firm is greater than the market price of its product, the firm should a. expand output. b. reduce output. c. maintain output. d. charge more than the market price. |
b. reduce output. |
|
|
If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months, which of the following would be the best alternative? a. raise its prices during the winter months. b. lower its prices during the summer months. c. operate during the summer, but shut down during the winter months. d. operate during all months of the year as long as its profits during the summer exceed its losses during the winter. |
c. operate during the summer, but shut down during the winter months. |
|
|
The dynamic process of competition a. is hindered by the self-interest of business decision makers. b. puts the profit motive of sellers to work for buyers. c. conflicts with the interest of consumers when businesses pursue profit rather than the public interest. d. will permit business decision makers to earn long-run economic profit unless they are regulated by government. |
b. puts the profit motive of sellers to work for buyers. |
|
|
If firms in a competitive price-searcher market are currently experiencing economic profits, then over time, a. new firms will enter the market, and the current firms will experience a decrease in demand for their products. b. new firms will enter the market, and the current firms will experience an increase in demand for their products. c. some existing firms will exit the market, and the remaining firms will experience an increase in demand for their products. d. some existing firms will exit the market, and the remaining firms will experience a decrease in demand for their products. |
a. new firms will enter the market, and the current firms will experience a decrease in demand for their products. |
|
|
The fact that barriers to entry are low in competitive price-searcher markets means that if current firms are making economic losses, a. these losses will remain in the long run because no firms can exit the market. b. current firms will exit the market, causing the demand curves that face the remaining firms to increase. c. new firms will enter the market, causing the demand curves that face the existing firms to decrease. d. new firms will enter the market, causing no change in the demand curves that face the existing firms in the market. |
b. current firms will exit the market, causing the demand curves that face the remaining firms to increase. |
|
|
When a competitive price-searcher market is in long-run equilibrium, the firms will a. earn economic profit. b. operate at an output level that minimizes long-run average total cost. c. charge a price that is equal to average total cost. d. operate at an output level where price is equal to marginal cost. |
c. charge a price that is equal to average total cost. |
|
|
If a price searcher is producing at a level of output such that its marginal cost is $5 and its marginal revenue is $3, the firm should: a. increase output in order to reduce per-unit costs. b. decrease the price of its product and expand output. c. increase price and reduce its rate of output. d. reduce both price and output. |
c. increase price and reduce its rate of output. |
|
|
In order to be successful in a competitive market economy, an entrepreneur must: a. provide buyers at least as much satisfaction per dollar spent as the buyer could get elsewhere. b. supply consumers with goods and services valued less highly than the resources necessary to produce them. c. take resources from other producers, thus reallocating wealth but not creating new wealth. d. gain government grants and subsidies. |
a. provide buyers at least as much satisfaction per dollar spent as the buyer could get elsewhere. |
|
|
Economic analysis suggest that in a competitive market economy, when an entrepreneur has made a large profit, a. consumer benefits must have been reduced by at least the amount of the profit. b. other producers have lost profits of the same size. c. economic progress for society as a whole has normally been enhanced. d. luck or chance, rather than productive activity, has nearly always been the largest factor. |
c. economic progress for society as a whole has normally been enhanced. |
|
|
(MA) Compared to the outcome when the firms are price takers, competitive price-searcher markets will result in: a. a wider variety of products. b. less product variety. c. lower prices. d. higher prices. |
a. a wider variety of products. d. higher prices. |
|
|
Some economists argue that competitive price-searcher markets are inefficient because a. the firms earn economic profits in the long run. b. the firms' marginal costs and marginal revenues are not always equal. c. firms do not produce the output rate that would minimize their average total costs. d. barriers to entry are high. |
c. firms do not produce the output rate that would minimize their average total costs. |
|
|
If a movie theater is going to gain by charging students a dollar less than other customers, a. the demand of students must be more elastic than that of other customers b. the demand of students must be less elastic than that of other customers c. students must have higher incomes than other customers. d. other customers must enjoy movies more than students. |
a. the demand of students must be more elastic than that of other customers |
|
|
(MA) Which of the following are necessary conditions for effective price discrimination? a. The firm must face a downward-sloping demand curve. b. There must be at least two distinguishable groups of consumers. c. The producer must be a pure monopolist. d. The seller must be able to prohibit buyers from easily reselling the product to other potential buyers. |
a. The firm must face a downward-sloping demand curve. b. There must be at least two distinguishable groups of consumers. d. The seller must be able to prohibit buyers from easily reselling the product to other potential buyers. |
|
|
A monopoly is most likely to emerge in a market when
a. the producers in the market have U-shaped average total cost curves. b. the price elasticity of demand for the product is high. c. the cost of entry and exit into the market is low. d. economies of scale are large relative to market demand. |
d. economies of scale are large relative to market demand. |
|
|
The U.S. Postal Service has a monopoly on the delivery of first-class mail due to a. economies of scale. b. a lack of initiative on the part of competing firms. c. legal barriers limiting entry. d. control over an essential resource. |
c. legal barriers limiting entry. |
|
|
Because monopolists are protected by high barriers to entry, a. they may be able to earn long-run economic profits. b. they will minimize the per-unit cost of producing their output. c. they will price their product at marginal cost. d. they seek economic profit; however they are not able to earn it in the long run. |
a. they may be able to earn long-run economic profits. |
|
|
When members of an oligopolistic industry agree to collude, raising their product price substantially above average cost, the passage of time (months and years) a. is usually needed for the members to solidify their cooperation. b. usually results in finer control of prices and markets by the group and larger profit margins. c. is likely to erode the agreement, as ways to cheat are developed by some participants and new entry is encouraged by the high price. d. seldom has any impact on the agreement, as long as the participants maintain high profit levels as a result of the agreement. |
c. is likely to erode the agreement, as ways to cheat are developed by some participants and new entry is encouraged by the high price. |
|
|
The two conflicting tendencies that a firm has in an oligopolistic industry are a. the incentive to cheat to maximize joint profits and the incentive to raise prices. b. the incentive to cheat and avoid collusion and the incentive to raise price to maximize the firm's share of profits. c. the incentive to increase output in order to minimize per-unit costs and the incentive to reduce price in order to maximize joint profit. d. the incentive to cooperate to maximize joint profits and the incentive to cheat on the agreement in order to increase the firm's share of the profit. |
d. the incentive to cooperate to maximize joint profits and the incentive to cheat on the agreement in order to increase the firm's share of the profit. |
|
|
Most millionaires are college graduates. a. True b. False |
a. True |
|
|
Which of the following most clearly illustrates the concept of "derived demand"? a. An increase in the price of steak causes the demand for poultry to increase. b. An increase in the demand for new houses leads to an increase in the demand for construction workers. c. An increase in consumer income leads to an increase in the demand for services provided by the government. d. An increase in the demand for new cars causes the demand for used automobiles to rise. |
b. An increase in the demand for new houses leads to an increase in the demand for construction workers. |
|
|
An increase in the price of a resource would cause a. producers to substitute other inputs for the resource. b. consumers to increase consumption of the goods that increase in price as the result of the higher resource price. c. an increase in the demand for products that use the resource intensely. d. A reduction in the price of goods produced with the resource. |
a. producers to substitute other inputs for the resource. |
|
|
Assume that skilled labor costs twice as much as unskilled labor, a profit-maximizing firm will a. always hire more skilled labor because it is more productive. b. always hire more unskilled labor because it is cheaper. c. hire until it equalizes the two marginal products. d. hire until the marginal product of unskilled labor is one-half that of skilled labor. e. hire until the marginal product of unskilled labor is two times that of skilled labor. |
d. hire until the marginal product of unskilled labor is one-half that of skilled labor. |
|
|
A profit-maximizing restaurant owner will hire more buspersons to keep more tables clean and quickly available to new customers, as long as a. the marginal product of buspersons exceeds the marginal product of other employees. b. the hourly wage of buspersons is lower than that of cashiers and cooks. c. the marginal revenue product of buspersons exceeds their wage rate. d. the wage of buspersons exceeds the wage of other employees. |
c. the marginal revenue product of buspersons exceeds their wage rate. |
|
|
If an advance in computer technology reduces the need for businesses to hire accountants, students majoring in accounting should expect a a. lower rate of return on their human capital investment. b. an increase in their employment prospects. c. a higher wage rate than they were expecting when they selected their major. d. an increase in the demand for accountants. |
a. lower rate of return on their human capital investment. |
|
|
Which of the following is most likely to result from an increase in the demand for computer technicians? a. An increase in the wages of computer technicians, which will attract additional technicians in the long run. b. An increase in the employment of computer technicians, which will depress current wage rates but eventually lead to higher wage rates for technicians. c. A decline in the number of persons preparing themselves for careers as computer technicians. d. Lower wage rates and a shortage of computer technicians. |
a. An increase in the wages of computer technicians, which will attract additional technicians in the long run. |
|
|
An individual who possesses a specialized skill that is difficult to execute will a. necessarily receive wages considerably higher than those who lack this skill. b. receive a wage determined by the number of other persons possessing this skill. c. receive a high wage only when this skill is in great demand relative to its supply. d. receive a wage rate that is lower than similarly productive individuals who lack this skill. |
c. receive a high wage only when this skill is in great demand relative to its supply. |
|
|
Low-skill workers earn a lower wage than more experienced, higher skilled workers because the a. low-skill workers lack the intelligence necessary to do any other form of work. b. low-skill workers were never given the opportunity to invest in human capital. c. supply of low-skill workers is large relative to the demand for workers in this skill category. d. low-skill worker is too lazy to search for other employment opportunities. |
c. supply of low-skill workers is large relative to the demand for workers in this skill category. |
|
|
Wages in the United States are higher than those in Mexico primarily because a. output per worker is higher in Mexico than in the United States. b. output per worker is higher in the United States. c. the human and physical capital of American workers is lower than that of their Mexican counterparts. dall of the above are correct. |
b. output per worker is higher in the United States. |
|
|
The real wages of workers will tend to be high when
a. output per worker is high. b. capital is scarce. c. industries are automating at a slow rate. d. profits are low. |
a. output per worker is high. |
|
|
The linkage between high productivity and high earnings is vitally important because a. it provides individuals with a strong incentive to develop skills and engage in activities that others value highly. bhigh productivity (a large output per hour worked) is the key to high living standards. c. it brings the self interest of individuals into harmony with economic progress. dAll of the above are true. |
d All of the above are true. |
