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Question;Question 1;A firm that emerges as the only seller in an industry with;economies of scale is a(n);Answer;Monopoly;Oligopoly;Natural oligopoly;Natural monopoly;Question 2;The profit maximizing rule MR = MC applies to;Answer;All firms;Monopolists only;Perfect competitors only;Oligopolistic firms;Question 3;Suppose that the total cost curve for a firm is given by the;equation TC = a + bQ, where 'a' and 'b' are positive numbers. This firm's;average costs will then;Answer;Rise over the entire range of;output;Fall at first and then rise;as output rises;Fall over the entire range of;output;Rise at first and then fall;as output rises;Question 4;Constant returns to scale occur when a doubling of all inputs;Answer;Doubles the price of outputs;More than doubles output;Less than doubles output;Exactly doubles output;Question 5;If a firm triples all its inputs and output triples as a result;then the firm;Answer;Has increasing returns to;scale;Has economies of scale;Has constant returns to scale;Will have lower total costs;Question 6;The termnatural monopoly refers to;Answer;Government ownership of parks;The desire of all firms to be;monopolists;Industries with small fixed;costs;Industries with economies of;scale;Question 7;Suppose both a competitive firm and a monopolist firm are charging;$5 for their respective outputs. One can infer that;Answer;Marginal revenue is $5 for;both firms;Marginal revenue is $5 for;the competitive firm and less than $5 for the monopolist firm;Marginal revenue is less than;$5 for both firms;Both firms are earning;profits;Question 8;The use of game theory is necessary under which of the following;conditions?;Answer;Buyers and sellers have;limited information.;Economists take time into;account in their analysis.;Consumers maximize their;utility.;There is interdependency;between firms' decisions.;Question 9;The assumption that individuals act out of narrow self-interest;is;Answer;A reasonable first;approximation;Justified only for monetary;decisions;Less justified today than 100;years ago;Rarely justified;Question 10;Which of the following is not a requirement of a game?;Answer;Players;Strategies;Dominant strategies;Knowledge of the payoffs;Question 11;The prisoner's dilemma refers to games;Answer;Without dominant strategies;Without a Nash equilibrium;With one dominant strategy;Where the playing of dominant;strategies leads to a less desirable equilibrium;Question 12;In the U.S., drug pushers and cartels face the same problem;Answer;That the product they sell is;illegal;What to do with their excess;profits;Not enough consumers;No legal remedy for;violations of their agreements;Question 13;According to the textbook, standing at a concert and talking;loudly at parties are examples of;Answer;Material solutions to a;commitment problem;Unpleasant but frequent behaviors;Undesirable outcomes stemming;from a prisoner's dilemma;Psychological solutions to a;commitment problem;Question 14;InThe Scarlet Letter, the punishment for adultery is;to always wear a large, red letterA. This is an example of;Answer;Unenlightened punishment;Using public ridicule to;solve the commitment problem in marriage;Overbearing control by the;church;Using material incentive to;solve the commitment problem in marriage;Question 15;If the external benefit of an activity is added to the private;benefits, then the;Answer;Demand curve shifts left;Quantity demanded rises;Supply curve shifts right;Demand curve shifts right;Question 16;When some fraction of the benefit of an activity is received by;people not participating in the activity, it is called a(n);Answer;Winner's curse;Positive externality;Negative externality;Efficient allocation;Question 17;Which of the following is not an example of a positional arms;control agreement?;Answer;Campaign spending limits;Roster limits for;professional sports teams;Contracts containing a;binding arbitration clause in case of breach;Air pollution limits;Question 18;In the case of either an external cost or an external benefit, the;invisible hand fails to generate the efficient outcome because;Answer;The model is not capable of;incorporating externalities;Buyers and sellers take only;their self-interests into account;Too much is produced;Too little is produced;Question 19;Which of the following is an example of a governmental solution to;an external benefit?;Answer;Requiring autos to meet;minimum emissions regulation;Building-safety requirements;for office buildings;Public service ads;discouraging smoking;Public service ads;encouraging exercise and good nutrition;Question 20;If, after an externality is corrected, the equilibrium price rises;and the equilibrium quantity falls, the externality must have been a(n);Answer;External benefit;Internal cost;External cost;Positive externality;Question 21;Which of the following is an example of an external benefit?;Answer;Honeybees providing honey for;beekeepers;Beekeepers providing honey;for consumers;Apple trees providing shelter;for honeybees;Honeybees pollinating apple;trees;Question 22;Given the typical shapes of the marginal costs and marginal;benefits of collecting information;Answer;There is no equilibrium;amount;Consumers tend to become experts;about most goods;Consumers remain completely;ignorant about most goods;The equilibrium is somewhere;between complete ignorance and becoming an expert;Question 23;Markets in which asymmetric information is present lead to the;Answer;Asymmetric model;Risk adverse model;Limes model;Lemons model;Question 24;In which of the following markets is the presence of asymmetric;information most critical for the buyers?;Answer;The market for haircuts;The market for used books;The market for pants;The market for existing;houses;Question 25;The relevance of expected value to the search decision of the;consumer is;Answer;That the outcome of a;particular search is certain;That one may not be able to;purchase the good after it is found;That the outcome of a;particular search is uncertain;That one always knows the;value of the next search;Question 26;The difference between the price of electronic equipment in a;retail store and at an Internet store reflects in part;Answer;The extent to which middlemen;drive the price up for extra profit;The lack of competition;between brick-and-mortar stores and online stores;The value of personal;attention and support at a retail store;That online stores do not;profit maximize;Question 27;The invisible hand will lead to __________ information than is;socially optimal because of __________.;Answer;more, free riders;less, external benefits;more, external costs;less, free riders;Question 28;The reason a warranty on a used car communicates credible;information is because;Answer;Everyone offers one;It indicates the car is of;below average quality;Only those cars that are of;better than average quality will be warranted;It indicates the car is of;average quality;Question 29;Marginal product is;Answer;The extra output associated;with hiring an extra worker;The average output associated;with the total number of workers hired;The total output associated;with hiring an extra worker;The average output associated;with hiring an extra worker;Question 30;Marginal labor cost is;Answer;Identical to the wage rate;Labor costs divided by the;number of workers;The extra labor cost;associated with hiring an extra worker;Less than the wage rate;Question 31;In a competitive labor market, it is observed that both the;equilibrium wage rate and employment level have risen. One can infer that;Answer;The supply of labor has;increased;The demand for labor has;fallen;The supply of labor has;decreased;The demand for labor has;increased;Question 32;According to the textbook, after adjusting for differences in;human capital stocks between union and nonunion workers, the union wage premium;is approximately;Answer;50%;40%;30%;10%;Question 33;The union wage premium refers to;Answer;The dues one must pay in;order to join a union;The union wage rate minus;union membership dues;The deduction for union;insurance;The amount by which union;wages exceed nonunion wages;Question 34;A group of workers who collectively bargain with employers for higher;wages and better working conditions is called a(n);Answer;Labor monopsony;Labor union;Labor collective;Open shop;Question 35;Food stamps and Medicaid are examples of;Answer;Cash transfers;In-kind transfers;Welfare programs that have;been eliminated;Programs created by the New;Deal;Question 36;One difficulty with the exploitation view of workplace injuries is;that in order for it to be successful overtime, firms must;Answer;Maximize profit;Act independently;Act collusively;Encourage worker mobility;Question 37;The growth of lawsuits seeking compensation from firms when a;worker is injured should serve to;Answer;Simply line the pockets of;opportunistic lawyers;Increase the worker's;incentive to get injured;Increase the firm's incentive;to improve safety;Encourage outrageous;settlements;Question 38;The major characteristic of a health maintenance organization;(HMO) is;Answer;Emphasis on acute medical;treatment;Medical treatment is provided;for a fixed annual payment;Freedom to see nonmember;physicians;A lack of profit maximization;motives;Question 39;The growth of medical insurance in general and first-dollar;coverage specifically has reduced the marginal cost of treatment to the;consumer. Therefore, the current level of medical treatment in the United;States is;Answer;Greater than the efficient;level;Equal to the efficient level;Less than the efficient level;Less than or equal to the;efficient level;Question 40;The major difficulty with using a tax on pollution instead of a;fixed percentage reduction regulation is;Answer;Nonpayment of the tax;Establishing the optimal size;of the tax;That it works only in theory;That it would cause prices to;rise;Question 41;If workers' compensation premiums accurately reflected the social;costs of workplace injuries, then;Answer;Many firms would be forced;out of business;The premium would function;like a tax on injuries;Injury rates would rise;Firms would still exploit;workers;Question 42;Safety in the workplace is overseen by the;Answer;Occupational Safety and;Health Administration (OSHA);Department of Labor (DOL);World Health Organization;(WHO);International Labor;Organization (ILO);Question 43;If it's impossible or highly costly to prevent consumers from;consuming a good when they have not paid for it, the good would be classified;as a __________ good.;Answer;nonexcludable;pure public;private;common;Question 44;A tax that results in a larger fraction of income being paid in taxes;as income rises is a ________ tax.;Answer;regressive;head;progressive;proportional;Question 45;National Public Radio (NPR) and the Public Broadcasting Service;(PBS) rely, in part, on which of the following private methods of raising;revenues?;Answer;Scrambling their signal to;exclude nonpayers;Donations from private;citizens and corporations;Contracting with private;firms;Lobbying Congress for;additional tax revenues;Question 46;Yellowstone National Park is a jointly consumed good in the sense;that;Answer;The size and beauty of the;park is available for all visitors;Typically only families visit;the park;While the government owns the;park, private firms provide the lodgings;All taxpayers pay for its;upkeep even if they don't visit the park;Question 47;The problems of externalities and poorly formed property rights;are;Answer;Minor in modern economies;Additional rationales for the;existence of government;Better solved by private;rather than government action;Easily solved by individuals;Question 48;Radio and broadcast television are examples of;Answer;Collective goods;Pure public goods provided by;the government;Rival yet nonexcludable goods;Pure public goods provided by;private firms;Question 49;The best example of a pure public good is;Answer;Cable TV;A national park;National defense;Education;Question 50;Government subsidizes education because;Answer;It is a pure public good;Private firms will not;provide education;Of custom and tradition;Education is thought to have;positive externalities


Paper#55720 | Written in 18-Jul-2015

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