1)
Refer to the diagram for a pure monopolist. Suppose a regulatory commission is created
to determine a legal price for the monopoly. If the commission seeks to provide the
monopolist with a “fair return,” it will set price at:
A.P1.
B.P3.
C.P2.
D.P4.
2) Which of the following is characteristic of DVCs?
A.A large percentage of the labor force is in agriculture.
B.High levels of saving and investment.
C.High labor productivity.
D.High levels of training.
3) The price of pork may increase as a result of:
A.A decrease in the cost of feed for pigs
B.Decreased advertising of pork
C.An increase in the cost of producing beef
D.A subsidy to pork producers
4) Jimmy fishes for salmon at a profit of $6000 for his 1000 ITQ. David has one ITQ
and fishes for a cost of $5 per ton, but would like to buy more ITQ. The current market
price is $10 per ton. What amount could David pay Jimmy to induce him to sell his
ITQ?
A.$3000
B.$3500
C.$4000
D.$4500
5) A competitive employer should hire additional labor as long as:
A.the MRP exceeds the wage rate.
B.the wage rate is less than MP.
C.average product exceeds MP.
D.MC exceeds MR.
6) If Kelly deposits $10,000 into an account that pays 8 percent interest, compounded
annually, and she makes no further deposits or withdrawals, how much will Kelly have
in her account at the end of 5 years?
A.$14,000.
B.$14,482.
C.$14,693.
D.$15,000.
7) The difficulties in managing government in a market economy include the following,
except:
A.The need for complex bureaucracy of various levels
B.The need for detailed paperwork and inflexibility
C.The close resemblance of government to the “invisible hand”
D.The lack of accountability in government
8) A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to
all of its employees to attract a seventh worker. The marginal wage cost of the seventh
worker is:
A.$9.
B.$10.
C.$15.
D.$21.
9) To practice long-run price discrimination, a monopolist must:
A.Be a natural monopoly
B.Charge one price to all buyers
C.Permit the resale of the product by the original buyers
D.Be able to separate buyers into different markets with different price elasticities
10) Critics of social regulation would argue that it:
A.Decreases prices
B.Increases output
C.Increases competition
D.Decreases product innovation
11)
Refer to the above graph showing the revenue curves for a monopolist. At what output
level is demand inelastic?
A.Q1
B.Q2
C.Q3
D.Q4