The marginal product of labor is calculated using the formula
A) L/Q.
B) ΔL/ΔQ.
C) ΔQ/ΔL.
D) Q/L.
To maximize profit a monopolist will produce where
A) marginal revenue is equal to marginal cost.
B) demand for its product is unit elastic.
C) revenue per unit is maximized.
D) average total cost is equal to average revenue.
The application of economic analysis to human resources issues is called
A) resource economics.
B) personnel economics.
C) human economics.
D) labor economics.
Figure 15-4
Figure 15-4 shows the demand and cost curves for a monopolist.
Refer to Figure 15-4. What is likely to happen to this monopoly in the long run?
A) New firms will enter the market to eliminate its profits.
B) It will expand its output to take advantage of economies of scale so as to further
increase its profit.
C) As long as there are entry barriers, this firm will continue to enjoy economic profits.
D) It will be regulated by the government because of its excess profits.
Which of the following statements about rent seeking is false?
A) Rent seeking often involves governments because governments transfer huge
amounts of funds that economic agents must compete for.
B) A person is engaging in rent-seeking behavior when he uses the political process to
acquire ownership of a resource that belongs to the public.
C) Because rent seeking redistributes society’s resources, anyone engaging in such
behavior is violating the law.
D) If a firm can benefit from government intervention in the economy, it is more likely
to spend resources attempting to secure this intervention than toward innovating its
product to gain a competitive edge in the market.
Indicate whether each of the following situations would shift the supply curve to the
left, to the right, or not at all.
a. An increase in the number of firms in the market
b. An increase in the current price of the product
c. A decrease in productivity
d. An increase in the expected future price of a product
e. A decrease in the price of an input
All of the following products are likely to have significant network externalities except
A) cat food.
B) cell phones.
C) popular board games.
D) Twitter.
Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3
per unit. Assume that labor is the only input. If hiring another worker would increase
output by three units per hour, then to maximize profits the firm should
A) not change the number of workers it currently hires.
B) not hire an additional worker.
C) hire another worker.
D) There is not enough information to answer the question.
If the price elasticity of demand for canned soup is estimated at -1.62. What happens to
sales revenue if the price of canned soup rises?
A) It falls by 162 percent.
B) It rises by 1.62 percent.
C) It falls.
D) It rises.
Which of the following will shift the demand curve for a good?
A) a change in the technology used to produce the good
B) an increase in the price of the good
C) a decrease in the price of a complementary good
D) a decrease in the price of the good
The ________ the sale of an additional unit of a product is a marginal benefit to the
firm.
A) revenue received from
B) extra cost of
C) total value of
D) sales tax on
Figure 9-1
Figure 9-1 shows the U.S. demand and supply for leather footwear.
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into
the United States. What will be the domestic quantity supplied?
A) 5 units
B) 10units
C) 15 units
D) 20 units
Which of the following is evidence of a shortage of walnuts?
A) Firms lower the price of walnuts.
B) The price of cashews is lowered in order to make up for the walnut shortage.
C) The equilibrium price of walnuts falls due to a decrease in demand.
D) The quantity of walnuts demanded is greater than the quantity supplied.
Table 6-8
The town of Bloomfield is well known for its basketball team. The price of basketball
game tickets is determined by market forces. Table 6-8 above shows the demand and
supply schedules for basketball games tickets.
Refer to Table 6-8. What is the numerical value of the price elasticity of supply?
A) 1
B) greater than 0 but less than 1
C) 0
D) greater than 1
Figure 3-5
Refer to Figure 3-5. At a price of $15
A) there would be a surplus of 4 units.
B) there would be a shortage of 2 units.
C) there would be a surplus of 6 units.
D) there would be a shortage of 4 units.
Which of the following displays these two characteristics: nonrivalry and excludability?
A) public goods
B) private goods
C) quasi-public goods
D) common resources
Research has shown that most economic profits from selling a prescription drug are
eliminated 20 years after the drug is first offered for sale. The main reason for the
elimination of profits is
A) after 20 years most people who have taken the drug have passed away or are cured
of the illness the drug was intended to treat.
B) firms sell their patent rights to other firms so that they can concentrate on finding
drugs to treat new illnesses.
C) the quantity demanded of the drug has increased enough that the demand becomes
inelastic and revenue falls.
D) after 20 years patent protection is ended and other firms can produce less-expensive
generic versions of the drug.
Table 2-11
Table 2-11 shows the number of labor hours required to produce a motorcycle and a
guitar in Ireland and Scotland.
Refer to Table 2-11. Ireland has a comparative advantage in the production of
A) both products.
B) guitars.
C) motorcycles.
D) neither product.
Suppose Renee can increase her total utility from consuming video rentals and books by
buying one more book and renting one fewer video. Which of the following is true?
A) The marginal utility of video rentals is negative.
B) The marginal utility per dollar spent on books exceeds that of video rentals.
C) The marginal utility of the last book consumed exceeds the marginal utility of the
last video rental consumed.
D) The marginal utility of the last video rental consumed exceeds the marginal utility of
the last book consumed.
A restaurant sells a large soft drink at a fixed price of $1.79. A term used by economists
to describe the money received from the sale of an additional large soft drink is
A) marginal revenue.
B) gross earnings.
C) pure profit.
D) net benefit.
Which of the following is true for a firm with a downward-sloping demand curve for its
product?
A) Price, average revenue, and marginal revenue are all equal.
B) Price, average revenue, and marginal revenue are all different.
C) Price equals average revenue but is greater than marginal revenue.
D) Price equals average revenue but is less than marginal revenue.
Assume that price is greater than average variable cost. If a perfectly competitive seller
is producing at an output where price is $11 and the marginal cost is $14.54, then to
maximize profits the firm should
A) continue producing at the current output.
B) produce a larger level of output.
C) produce a smaller level of output.
D) There is not enough information given to answer the question.
Which of the following will not happen as a consequence of a monopolistically
competitive firm suffering economic losses in the short run?
A) The firm’s demand curve will shift to the right if it stays in business in the long run.
B) The firm will exit the industry if it continues to suffer economic losses.
C) The firm will break even if its stays in business in the long run.
D) In the long run the firm will be able to charge a price that is greater than its average
total cost.
Table 13-2
Eco Energy is a monopolistically competitive producer of a sports beverage called
Power On. Table 13-2 shows the firm’s demand and cost schedules.
Refer to Table 13-2. What is Eco Energy’s profit?
A) $125
B) $140
C) $145
D) $150
Table 4.7
Refer to Table 4-7. The equations above describe the demand and supply for Bubba’s
Fried Jellybeans. The equilibrium price and quantity for Bubba’s Fried Jellybeans are
$40 and 5 thousand units. What is the value of producer surplus?
A) $5 thousand
B) $12.5 thousand
C) $25 thousand
D) $37.5 thousand
If a worker can produce 20 units of output which can be sold for $4 per unit, what is the
maximum wage that firm should pay to hire this worker?
A) $80
B) $80 minus the firm’s profit markup
C) It depends on what the going wage rate is in the labor market.
D) There is insufficient information to answer the question.
All of the following countries come close to the free market benchmark except
A) Canada.
B) North Korea.
C) Germany.
D) Singapore.
Figure 3-6
Refer to Figure 3-6. The figure above represents the market for canvas tote bags.
Assume that the market price is $35. Which of the following statements is true?
A) There is a surplus that will cause the price to decrease; quantity demanded will then
increase and quantity supplied will decrease until the price equals $25.
B) There is a surplus that will cause the price to decrease; quantity supplied will then
increase and quantity demanded will decrease until the price equals $25.
C) There will be a surplus that will cause the price to decrease; demand will then
increase and supply will decrease until the price equals $25.
D) There is a surplus that will cause the price to increase; quantity demanded will then
decrease and quantity supplied will increase until the price equals $25.
Figure 6-10
Refer to Figure 6-10. A perfectly elastic supply curve is shown in
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
The decision about what goods and services will be produced in a market economy is
made by
A) lawmakers in the government voting on what will be produced.
B) workers deciding to produce only what the boss says must be produced.
C) producers deciding what society wants most.
D) consumers and firms choosing which goods and services to buy or produce.
E) consumers dictating to firms what they need most.
For a perfectly competitive firm, average revenue is equal to
A) marginal cost.
B) the market price.
C) total revenue.
D) average fixed cost.
Figure 15-9
Figure 15-9 shows the demand and cost curves for a monopolist.
Refer to Figure 15-9. At the profit-maximizing quantity, what is the difference between
the monopoly’s price and the marginal cost of production?
A) $8
B) $11.50
C) $21
D) There is no difference.
Households ________ final goods and services in the ________ market.
A) purchase; factor
B) purchase; product
C) sell; factor
D) sell; product
Figure 4-4
Refer to Figure 4-4. The figure above represents the market for pecans. Assume that
this is a competitive market. If the price of pecans is $3
A) economic surplus is maximized.
B) not enough consumers want to buy pecans.
C) the quantity supplied is less than the economically efficient quantity.
D) the quantity supplied is economically efficient but the quantity demanded is
economically inefficient.