1) About two-thirds of U.S. electricity is generated at coal and gas plants.
2) A purely competitive firm that is earning positive profits in its short-run equilibrium
situation will continue to earn positive profits at the long-run equilibrium.
3) Education is a form of human capital and it helps explain wage differentials.
4) When total product is increasing at a decreasing rate, marginal product is positive,
but falling.
5) The self-serving bias causes people to act only in their self-interest.
6) Deregulation is seen as a solution to regulatory capture because it eliminates the
regulatory agency that can or has been captured.
7) Economic profit is found by subtracting accounting costs from total revenue.
8) In a natural monopoly case, the socially-optimal pricing policy rule will often result
in negative economic profits for the firm.
9) Nominal wage measures the purchasing power of a given amount of real wage.
10)
Refer to the diagram. This firm will maximize profits by producing output D.
11) In the price range where demand is elastic, if the seller of the good raises its price,
then total revenues will increase.
12) A ceiling price in a competitive market will result in persistent surpluses of a
product.
13) The following is a straight-line demand curve that confronts a single firm.
(a)In column 3, compute total revenue. In column 4, compute the coefficient for the
price elasticity of demand at each price using the midpoints formula.
(b)Describe the character of elasticity across the prices based on the total revenue test
and the elasticity coefficient.
(c)Does a straight-line demand curve have constant elasticity?
(d)Of what practical significance is your answer to (c)?
14) Wayne’s Jacket Shop sells Wayne’s jackets for $20 each. Wayne finds that when he
hires different numbers of workers, the corresponding total revenues are as follows:
Refer to the above table. What is the marginal revenue product of the fifth worker?
A.$160
B.$400
C.-$800
D.$2
15) A patent gives a firm the power to charge a price that:
A.Is below equilibrium
B.Is higher than marginal cost
C.Increases the consumer surplus
D.Results in overproduction of a product
16) There will be a surplus of a product when:
A.price is below the equilibrium level.
B.the supply curve is downward sloping and the demand curve is upward sloping.
C.the demand and supply curves fail to intersect.
D.consumers want to buy less than producers offer for sale.
17) A firm sells a product in a purely competitive market. The marginal cost of the
product at the current output of 800 units is $3.50. The minimum possible average
variable cost is $3.00. The market price of the product is $4.00. To maximize profits or
minimize losses, the firm should:
A.Continue producing 800 units
B.Continue production, but produce less than 800 units
C.Increase production to more than 800 units
D.Shut down
18) A union representative observed that if the union members’ wages were increased
by some proportion, the workers would eventually suffer a greater than proportional
decline in employment. This statement could best be explained if:
A.The new wages are to take effect immediately
B.Union labor can easily be replaced with capital
C.Union labor is an insignificant portion of the total cost of production
D.The demand for the final product the workers produce is relatively inelastic
19)
Refer to the above table. When output increases from 28 to 35 units, the marginal cost
of the product is:
A.$4.44
B.$5.71
C.$6.00
D.$6.67
20)
Refer to the cost table above. If a competitive firm faced with these costs finds that it
can sell its product at $60 per unit, it will:
A.Produce 5 units and incur a loss of $50
B.Produce 6 units and incur a loss of $30
C.Produce 7 units and realize a profit of $32
D.Close down in the short run
21) Entrepreneurs can generate economic profits by all of the following, except:
A.Developing popular new products
B.Reducing production costs below rivals’ costs
C.Creating and maintaining monopoly power
D.Laying off workers in order to cut costs
22) X-inefficiency is said to occur when a monopolist’s:
A.Average cost is greater than the minimum possible average cost at a given output
level
B.Marginal costs are greater than the minimum possible total costs of producing the
output
C.Total costs are greater than the minimum possible average costs at a given output
level
D.Short-run costs of producing any output are greater than the long-run costs
23) How do profit incentives and property rights affect the management of a renewable
resource such as a forest? Why do some nations have growing or sustainable forests and
other nations experience deforestation?
24) What effect might the depreciation of the U.S. dollar relative to the Japanese yen
have on imports and exports to and from each country?
25) What is the difference between legal and illegal immigration?
26) How do neoclassical economists and behavioral economists differ in their views on
how to improve human welfare?
27) Pollution should be completely eliminated. Evaluate. Support your answer using
MB and MC analysis.
28) Explain what is needed for optimal harvesting of a forest. How do changes in
economic incentives and structures affect present and future decisions?