Figure 13-18
The diagram demonstrates that
A) in the short run, the monopolistic competitor produces an output Q but in the long
run after it adjusts its capacity, it will produce the allocatively efficient output, Qa.
B) it is not possible for a monopolistic competitor to produce the productively efficient
output level, Qa, because of product differentiation.
C) it is possible for a monopolistic competitor to produce the productively efficient
output level, Qa, if it is willing to lower its price from Pto Pa.
D) in the long run, the monopolistic competitor produces the minimum-cost output
level, Qa, but in the short run its output of Qis not cost minimizing.
From an initial long-run macroeconomic equilibrium, if the Federal Reserve anticipated
that next year aggregate demand would grow significantly slower than long-run
aggregate supply, then the Federal Reserve would most likely
A) decrease interest rates.
B) increase interest rates.
C) decrease income tax rates.
D) increase income tax rates.
How does the owner of a sole proprietorship relate to the business?
A) The owner and the business are separate legal entities.
B) The owner and the business are not separate legal entities.
C) The assets of the owner are considered separate from the asset of the business.
D) None of these describe the legal relationship of the owner to the business.
A tariff is the same as a quota.
If Alan Shaw reduces his work hours when his salary increases, then
A) the income effect of his salary increase dominates the substitution effect.
B) the substitution effect of his salary increase dominates the income effect.
C) the income effect of his salary increase is completely offset by the substitution
effect.
D) leisure is an inferior good to Alan.
If labor productivity growth slows down in a country, this means that the growth rate in
________ has declined.
A) labor force participation
B) the quantity of goods or services that can be produced by one hour of work
C) the working-age population
D) nominal GDP
The marginal revenue product of labor is defined as
A) the change in the firm’s revenue as a result of selling one more unit of output.
B) the change in the firm’s output as a result of hiring one more worker.
C) the change in the firm’s profit as a result of hiring one more worker.
D) the change in the firm’s revenue as a result of hiring one more worker.
How would a decrease in the U.S. budget deficit affect the exchange rate in the market
for dollars?
A) The exchange rate will increase.
B) The exchange rate will decrease.
C) The exchange rate will not be affected by a change in the budget deficit.
D) The impact of the decrease in the budget deficit on the exchange rate cannot be
predicted.
Economic surplus
A) does not exist when a competitive market is in equilibrium.
B) is equal to the sum of consumer surplus and producer surplus.
C) is the Difference between quantity demanded and quantity supplied when the market
price for a product is greater than the equilibrium price.
D) is equal to the Difference between consumer surplus and producer surplus.
Which of the following explains the cause of the change in the unemployment rate at
the end of a recession?
A) Firms are hesitant to rehire laid off workers, as they continue to operate below
capacity.
B) Firms rapidly hire new workers at the first sign of an increase in demand for their
goods.
C) Discouraged workers return to the labor force, and this makes the unemployment
rate fall.
D) Discouraged workers leave the labor force, and this makes the unemployment rate
rise.
Which of the following is a normative economic statement?
A) The price of milk is too high.
B) The current high price of milk is the result of reduced worldwide supply.
C) When the price of milk rises, the quantity of milk purchased falls.
D) When the price of milk rises, the cost of milk-based products rises.
Despite evidence that companies will find it more profitable to use a commission
system of compensation rather than a salary system, many companies continue to pay
their workers salaries. Which of the following is one reason why firms choose a salary
system?
A) Most business owners and managers are not trained economists; therefore, they are
unaware of the research that shows a commission system is more profitable than a
salary system.
B) Firms often use salary systems to overcome their principal-agent problems.
C) Firms that have salary systems do not have to use compensating differentials to
attract employees to do hazardous jobs.
D) Many workers dislike risk and prefer to be paid a salary rather than to be paid by
commission.