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ECO FINAL
Chapters 15,18,23,24,28,29.2
| Question | Answer |
|---|---|
| When a firm operates under conditions of monopoly, its price is | constrained by demand. |
| In a natural monopoly, | if the government requires marginal cost pricing, it will likely have to subsidize the firm. |
| Refer to Figure 15-1. The shape of the average total cost curve in the figure suggests an opportunity for a profit-maximizing monopolist to take advantage of | economies of scale. |
| Monopolies are socially inefficient because the price they charge is | above marginal cost. |
| Refer to Figure 15-2. Profit can always be increased by increasing the level of output by one unit if the monopolist is currently operating at | Q1 or Q2 only. |
| Antitrust laws have economic benefits that outweigh the costs if they | prevent mergers that would decrease competition and raise the costs of production. |
| The social cost of a monopoly is equal to its | deadweight loss. |
| Suppose most people regard emeralds, rubies, and sapphires as close substitutes for diamonds. Then DeBeers, a large diamond company, has | less market power than it would otherwise have. |
| A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44. | $40. |
| Monopoly firms face | downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve. |
| If a monopolist is able to perfectly price discriminate, | consumer surplus and deadweight losses are transformed into monopoly profits. |
| A monopolist can sell 300 units of output for $50 per unit. Alternatively, it can sell 301 units of output for $49.60 per unit. The marginal revenue of the 301st unit of output is | -$70.40. |
| When a firm has a natural monopoly, the firm's | average total cost curve is downward sloping. |
| Refer to Figure 15-7. To maximize its profit, a monopolist would choose which of the following outcomes? | Q = 30 and P = 60 |
| Refer to Figure 15-3. A profit-maximizing monopoly will produce an output level of | Q3. |
| One problem with government operation of monopolies is that | the government typically has little incentive to reduce costs. |
| Refer to Figure 15-4. What area measures the monopolist's profit? | (B − Y) × O |
| The deadweight loss associated with a monopoly occurs because the monopolist | produces an output level less than the socially optimal level. |
| To maximize profit, a competitive firm hires workers up to the point of intersection of the | value of marginal product curve and the wage. |
| Refer to Figure 18-2. Each August many high school and college students visit a doctor's office to have a sports physical. If the price of sports physicals falls, what happens in the market for nurses? | Demand decreases from D2 to D1. |
| Refer to Figure 18-6. Which of the following is a possible explanation of the shift of the labor demand curve from D1 to D2? | The price of automobiles increased. |
| If the wages of a dentist increase, which of the following statements is not true? | Her opportunity cost of leisure decreases. |
| Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly describes what would happen in the market for labor in Minnesota? | The equilibrium wage would decrease, and the quantity of labor would increase. With more workers, the added output from an extra worker is smaller. |
| Rocchetta Industries manufactures and supplies bottled water in Mexico. As a result of a contamination of water supplies at many of Mexico's resort communities, the demand for bottled water has increased. | value of the marginal product of labor to be higher than it was before the increase in demand for bottled water. |
| Refer to Table 18-1. What is the marginal product of the second worker? | 9 |
| Refer to Table 18-3. Which firm's production function exhibits positive but diminishing marginal product? | Firm B |
| The marginal product of labor is defined as the change in | output per additional unit of labor. |
| Suppose that the market for labor is initially in equilibrium. An increase in worker productivity will cause the equilibrium wage | and the equilibrium quantity of labor to rise. |
| This graph illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes more attractive to young women and men because of a new reality television show, what happens in the market for bakers? | Supply increases from S1 to S2. |
| Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor. Event 2 An increasing number of students in U.S. primary and secondary schools increases the number | not be able to be determined without more information. |
| Which of the following is not an example of price discrimination by a firm? | A natural gas company charging all customers a higher rate in the winter than in summer |
| Refer to Figure 15-6. What is the area of deadweight loss? | The triangle 1/2[(X − Z) × (K − J)] |
| Refer to Figure 15-2. A profit-maximizing monopoly's total revenue is equal to | P5 × Q3. |
| Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product. Then the monopolist is engaging in | perfect price discrimination. |
| A benefit to society of the patent and copyright laws is that those laws | encourage creative activity. |
| Refer to Figure 15-7. To maximize total surplus, a benevolent social planner would choose which of the following outcomes? | Q = 45 and P = 45 |
| If the distribution of water is a natural monopoly, then | multiple firms would likely each have to pay large fixed costs to develop their own network of pipes. |
| Consider the market for medical doctors. Suppose the opportunity cost of going to medical school decreases for many individuals. Suppose, it generally takes about 10 years to become a practicing doctor. Holding all else constant, in 10 years the equilibri | decrease |
| If the demand curve for wedding cakes shifts to the right, then the value of the marginal product of labor for bakers will | rise |
| Consider the labor market for short-order cooks. A labor-augmenting technological change such as a faster food processor will cause | both equilibrium wages and equilibrium employment to increase. |
| Amari has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $18 per hour. During the summer, he drives a tour bus around the ski resort, earning $13 per hour. Refer to Scenario | has a backward-bending portion. |
| Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel 12 driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry | 10 |
| The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. Refer to Figure 18-3. The firm would choose to hire three workers if | the market wage for a day’s work is $220. |
| The table shows the number of bracelets that can be assembled per week by various numbers of workers. If the price per bracelet in a perfectly competitive product market is $8, how many workers would the firm employ if the weekly wage rate is $800? | 3 |
| Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, what effect did this process have on the labor market for computer pro | increased, and the equilibrium quantity of labor increased. |
| Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supp | backward sloping. |
| A monopolist's profits with price discrimination will be | higher than if the firm charged just one price because the firm will capture more consumer surplus. |
| When a production function exhibits a diminishing, but positive, marginal product of labor | output increases, but at a decreasing rate, as more workers are employed. |
| A competitive firm sells its output for $60 per unit. Assume that labor is the only input that varies for the firm. The marginal product of the 10th worker is 20 units of output per day; the marginal product of the 11th worker is 16 units of output per da | $960. |
| A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44. Refer to Scenario 15-1. At Q = 500, the firm's total revenue is | $40,000. |
| Sunshine's Organic Market sells organic produce. Assume that labor is the only input that varies for the firm. The store manager has determined that if she hires nine workers, the store can sell 225 pounds of produce per day. If she hires 10 workers, the | For the 10th worker, the marginal revenue product (value of the marginal product) is $250 per day. |
| Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel 12 driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry | $200 |
| Refer to Figure 18-5. Assume W1 = $15 and W2 = $10, and the market is always in equilibrium. A shift of the labor supply curve from S2 to S1 would | increase the value of the marginal product of labor by $5. |
| Refer to Figure 18-1. The marginal product of the second worker is | 6 units of output. |
| Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage | to fall and the equilibrium quantity of labor to rise. |
| Refer to Figure 18-3. Suppose the marginal product of the fifth unit of labor is 30 units of output per day. The figure implies that the | price of output is $4. |
| Refer to Table 18-1. Suppose that the firm pays its workers $46 per day. Each unit of output sells for $12. How many workers should the firm hire? | 4 |
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