Refer to Exhibit 34-12. PW is the price that exists in a free world market. With the
imposition of a quota that limits imports to Q4 – Q3, consumers lose more than
producers and importers gain. The result of the quota is a (net) loss represented by the
area(s)
Exhibit 34-12
a. LGK + JHI.
b. KGHJ.
c. GCH + JHI.
d. LGK.
e. none of the above
Refer to Exhibit 31-l. If the exhibit represents a negative externality situation, the
private cost of expanding output from Q2 to Q1 is the area of
Exhibit 31-1
a. ABC.
b. Q2BCQ1.
c. Q2BAQ1.
d. Q2EAQ1.
If the demand curve for a good shifts leftward,
a. quantity demanded is less at each price.
b. quantity demanded remains constant at each price.
c. quantity demanded is greater at each price.
d. demand is greater at each price.
Given a 10 percent decrease in wages, firm A hires more labor than firm B. It follows
that, ceteris paribus,
a. the elasticity of demand for the product that firm A produces is likely lower than the
elasticity of demand for the product that firm B produces.
b. firm A likely has a lower labor cost-total cost ratio than firm B.
c. firm A likely has more substitutes for labor than firm B.
d. firm A likely has higher per-unit costs than firm B.
e. none of the above
Refer to Exhibit 22-2. Diminishing marginal returns set in with the addition of which
unit of the variable input?
Exhibit 22-2
a. the first
b. the second
c. the third
d. the fourth
e. the fifth
Refer to Exhibit 3-13.Fill in blanks (E) and (F) respectively with the market quantity
demanded at each given price.
Exhibit 3-13
—————————–Quantity Demanded————————————-
Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market.
a. 12; 6.75
b. 25; 19
c. 75; 64
d. 48; 27
e. none of the above
A person’s labor income is equal to the __________ times __________. The return on
savings that a person receives is referred to as __________.
a. wage rate a person earns; number of hours the person works; transfer income
b. wage rate a person earns; number of hours the person works; asset income
c. price divided by number of units sold; number of hours worked; liabilities income
d. wage rate a person earns; number of hours the person works; labor income
e. annual salary a person earns; number of days a year the person works; asset income
Refer to Exhibit 24-7. If D represents the demand curve facing a perfectly
price-discriminating monopolist, the price it charges for the last unit sold exceeds the
marginal cost of the last unit by
Exhibit 24-7
a. $30.
b. $15.
c. $0.
d. an amount that cannot be determined without the average cost curve.
In long-run competitive equilibrium, firms
a. earn positive economic profits.
b. have no incentive to make any changes.
c. earn losses on some units of the good they produce and sell.
d. do not produce the quantity of output at which MR = MC.
e. b and c
When price = $16, quantity demanded = 200. When price = $14, quantity demanded =
225. When the firm lowered price from $16 to $14, it discovered that demand is
__________ and total revenue __________ by ____________,
a. elastic; increased; $3,200
b. elastic; decreased; $3,150
c. inelastic; increased; $50
d. inelastic; decreased; $50
e. inelastic; decreased; $3,150
Average variable cost equals
a. average total cost minus average fixed cost.
b. total variable cost divided by the change in output.
c. total variable cost divided by output.
d. price of the variable input times the quantity of the variable input.
e. a and c
Rational ignorance exists primarily because
a. voters are apathetic.
b. politicians tend to voice the same general views, so there is no reason to learn more
about the issues.
c. the costs of becoming informed outweigh the benefits of doing so.
d. any of the above
If the price of good X is $50 and the price of good Y is $25, it follows that the relative
price of one unit of good X is _____________ unit(s) of good Y.
a. 1.00
b. 2.00
c. 0.75
d. 1.33
e. 0.50
Which of these statements is false?
a. There are no fixed costs in the long run.
b. Total costs are equal to total fixed costs plus total variable costs.
c. In the short run, all inputs are fixed inputs.
d. A fixed cost is a cost that does not change as output changes.
If you were to rank the four market structures in terms of lowest concentration ratio to
highest concentration ratio, which of the following rankings would be correct?
a. oligopoly, monopoly, perfect competition, monopolistic competition
b. monopoly, oligopoly, monopolistic competition, perfect competition
c. perfect competition, monopolistic competition, oligopoly, monopoly
d. monopolistic competition, perfect competition, oligopoly, monopoly
e. monopolistic competition, oligopoly, perfect competition, monopoly
What is the Herfindahl index of an industry made up of ten equal-sized firms?
a. 1,800
b. 10,000
c. 100
d. 1,000
Promoting from within should __________ be regarded as an act of discrimination
because the information costs of inside versus outside employees are __________.
a. always; the same
b. always; higher for the insiders
c. sometimes not; the same
d. sometimes not; higher for the outsiders