1) For a competitive, profit-maximizing firm, the labor demand curve is the same as the
a.marginal cost curve.
b.value of marginal product curve.
c.production function.
d.profit function.
2) Barb and Jim run a business that sets up and tests computers. Assume that Barb and
Jim can switch between setting up and testing computers at a constant rate. The
following table applies.
Which of the following points would not be on Jim’s production possibilities frontier,
based on a 40-hour week?
a.(0 computers set up, 60 computers tested)
b.(40 computers set up, 30 computers tested)
c.(60 computers set up, 12 computers tested)
d.(72 computers set up, 6 computers tested)
3) In 2012, in The Wall Street Journal, economists Peter Diamond and Emmanuel Saez
wrote that, according to their analysis, the federal government’s tax revenue would be
maximized if the marginal income tax rate on individuals with the highest earnings
were in or near the range of
a.10 percent to 30 percent.
b.30 percent to 50 percent.
c.50 percent to 70 percent.
d.70 percent to 90 percent.
4) If the cross-price elasticity of two goods is positive, then the two goods are
a.substitutes.
b.complements.
c.normal goods.
d.inferior goods.
5) Suppose a market has the demand function Qd=20-0.5P. At which of the following
prices will total revenue be maximized?
a.$10
b.$20
c. $30
d.$40
6) a.
b.450.
c.600.
d.750.
7) Profit maximization by firms ensures that the equilibrium wage always equals the
value of the marginal product of capital.
a.True
b.False
8) If firms are competitive, then labor-market discrimination
a.cannot exist in either the short run or the long run.
b.will be more of a problem than if the market were monopolistic or imperfectly
competitive.
c.likely will not be a long-run problem unless customers exhibit discriminatory
preferences or government maintains discriminatory policies.
d.likely will be more of a problem in the long run than in the short run due to the
zero-profit condition that characterizes long-run equilibrium for competitive firms.
9)
If, holding the supply curve fixed, there were an increase in demand that caused the
equilibrium price to increase from $6 to $7, then sellers’ total revenue would
a.increase.
b.decrease.
c.remain unchanged.
d.The effect on total revenue cannot be determined from the given information.
10) In a long-run equilibrium,
a.excess capacity applies to monopolistically competitive firms but not to competitive
firms.
b.zero economic profit applies to competitive firms but not to monopolistically
competitive firms.
c.markup over marginal cost applies to both monopolistically competitive and
competitive firms.
d.product variety externalities apply to both perfectly competitive firms and
monopolistically competitive firms.