The law of diminishing marginal utility implies that
the marginal utility of a product is negative.
the total utility from a product is also diminishing.
the rate of change of total utility is diminishing.
the rate of change of marginal utility is diminishing.
Bobby consumes only chocolate and vanilla ice cream and he is spending all of his
income. His marginal utility of chocolate is 120 and his marginal utility of vanilla is
270, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.25 per
scoop. To maximize his utility, Bobby should
buy more chocolate and less vanilla.
buy more vanilla and less chocolate.
buy more chocolate and more vanilla.
not change his purchases between chocolate and vanilla.
Which of the following will cause a change in the slopes of your indifference curves
between gasoline and movie rentals?
a change in your preferences for either of the two goods.
only a change in the price of either of the two goods.
only a change in your income.
both a change in the price of either good and a change in income will change the
slopes of your indifference curves.
A firm has achieved economic efficiency whenever it has
produced the given output using the fewest inputs.
produced the given output at the lowest cost.
fully depreciated all its assets.
fully utilized all its capacity of assets.
In part, the principal-agent problem is to
find ways for managers to get people to buy stock in their company.
devise compensation rules to induce principals to act in the best interest of agents.
devise compensation rules to induce agents to act in the best interest of principals.
find efficient agents who will negotiate fair compensation rules for a firm’s principal
managers.
The Herfindahl-Hirschman Index mainly measures an industry’s concentration of
number of employees.
sales.
economic profits.
productive capital.
An industry with a high concentration ratio may still be competitive if
there are no close substitutes for its product.
its production is geographically concentrated.
it has a high ratio of value added to sales.
its barriers to entry are low.
When the average product of labor is greater than the marginal product of labor.
the marginal product of labor must be increasing.
the rate of change in the total product of labor must be positive.
the marginal product of labor must be at its maximum.
the average product of labor must be deceasing.
A firm’s long-run average cost curve
tells the firm which plant size to use and which quantity of labor to use to minimize
the cost of producing any level of output.
shows the lowest attainable average total cost of producing any level of output
when capital and labor are fixed.
is the sum of all of its short-run average cost curves.
All of the above.
Diseconomies of scale definitely means that as the firm increases its output, its
long-run average total cost decreases.
long-run average total cost increases.
short-run average total cost decreases.
short-run average total cost increases.
Which of the following is not a barrier to entry for a monopolist?
Economies of scale for the relevant range of output.
A patent on the product being sold.
The ability to charge a price that is above marginal cost.
Receiving a government authorized monopoly.
Which of the following is true of a monopoly?
It can always increase its revenue by increasing the price to its customers.
It will always operate somewhere along the elastic portion of the demand curve.
Its marginal cost curve is always downward sloping.
A single-price monopolist’s demand curve is the same as its marginal revenue
curve.
Which of the following is always true for a single-price monopolist in equilibrium?
P > MC
P > MR
MR = MC
All of the above are always true.
If a monopolist can perfectly price discriminate, then
it will charge just two different prices in two different markets.
it will not give a discount to those who buy in bulk.
the deadweight loss is larger than if it cannot price discriminate.
there will be no consumer surplus.
Relative to perfect competition, a single-price monopolist that maximizes its profits
would offer a greater quantity at a lower price if
it can exploit economies of scale or scope.
it earns zero profit.
there are no barriers to entry.
it sets marginal revenue equal to marginal cost.
In monopolistic competition, there are
many firms making a differentiated product.
few firms making a differentiated product.
many firms making an identical product.
few firms making an identical product.
In monopolistic competition, the demand curve for a firm’s product is negatively
sloped because of
barriers to entry.
highly fierce competition.
product differentiation.
excess capacity.
The kinked demand curve model assumes that a firm’s rivals will
follow the firm’s price increases but not its price decreases.
follow the firm’s price decreases but not its price increases.
follow any price change the firm makes.
not follow any of the firm’s price change.
A cost of economic growth is
a more equal income distribution.
lower current consumption.
higher spending for environmental protection.
a lower level of future living standards.
Estimates of GDP are used for
business cycle forecasting.
adjusting for household production.
estimating the CPI.
the calculation of consumption per person.
During a recession,
real GDP decreases and unemployment decreases.
deflation occurs and real GDP declines.
unemployment rises and inflation does not occur.
inflation occurs and may result in a decline in economic growth rate.
The cost of inflation to society includes
the opportunity costs of resources used by people to protect themselves against
inflation.
the predictable increase in the value of money.
the focus of productive resources on production.
the decreasing spending when people do have enough money.
If the interest rate increases, the
investment demand investment decreases.
amount of investment decreases.
money supply decreases.
demand curve for real money shifts right.
If the level of government spending rises and the central bank decreases the money
supply, then
the interest rate will fall.
the interest rate will rise.
real GDP will rise.
real GDP will fall.
A reduction in the expected inflation rate shifts the
short-run Phillips curve to left.
short-run Phillips curve to right.
long-run Phillips curve to left.
long-run Phillips curve to right.
You are a labor economist trying to evaluate whether the labor marker for
computer scientists is competitive or monoposonistic. Based on previous
research you know that the production function for computers depends only on
labor input:
Y = −0.5L2 +10L
where Y is the output of computers and L is the quantity of labor used. The price of a
computer is p = 2. You also know that the labor supply, as a function of the wage, for
computer scientists is the following, where w is the wage per unit of labor;
L = −10 + w
Find the equilibrium wage and employment (wC , LC ) that would prevail if the market
for computer scientists were competitive.
You are a labor economist trying to evaluate whether the labor marker for
computer scientists is competitive or monoposonistic. Based on previous
research you know that the production function for computers depends only on
labor input:
Y = −0.5L2 +10L
where Y is the output of computers and L is the quantity of labor used. The price of a
computer is p = 2. You also know that the labor supply, as a function of the wage, for
computer scientists is the following, where w is the wage per unit of labor;
L = −10 + w
Find the equilibrium wage and employment (wM, LM ) that would prevail if the
market was dominated by a single computer producer that acts as a monoposonist in
the labor market for computer scientists.
You are a labor economist trying to evaluate whether the labor marker for
computer scientists is competitive or monoposonistic. Based on previous
research you know that the production function for computers depends only on
labor input:
Y = −0.5L2 +10L
where Y is the output of computers and L is the quantity of labor used. The price of a
computer is p = 2. You also know that the labor supply, as a function of the wage, for
computer scientists is the following, where w is the wage per unit of labor;
L = −10 + w
Show the marginal cost curve for labor faced by the monoposonist and draw a graph
that shows the two equilibria you found.
You are a labor economist trying to evaluate whether the labor marker for
computer scientists is competitive or monoposonistic. Based on previous
research you know that the production function for computers depends only on
labor input:
Y = −0.5L2 +10L
where Y is the output of computers and L is the quantity of labor used. The price of a
computer is p = 2. You also know that the labor supply, as a function of the wage, for
computer scientists is the following, where w is the wage per unit of labor;
L = −10 + w
Compare the two equilibria and discuss the reasons why they differ.
You are a labor economist trying to evaluate whether the labor marker for
computer scientists is competitive or monoposonistic. Based on previous
research you know that the production function for computers depends only on
labor input:
Y = −0.5L2 +10L
where Y is the output of computers and L is the quantity of labor used. The price of a
computer is p = 2. You also know that the labor supply, as a function of the wage, for
computer scientists is the following, where w is the wage per unit of labor;
L = −10 + w
To facilitate your study, Congress agrees to suddenly raises the minimum wage for
computer scientists to wmin = 14 . What would you expect to observe after the
introduction of the minimum wage under each of the two marked structures
(competitive and monoposonistic)? Provide the mathematical answer and explain.
True/False/Uncertain with a short argument. The scored depends on the correctness of
explanation.
High unemployment implies that the labor market is inefficient.
True/False/Uncertain with a short argument. The scored depends on the correctness of
explanation.
When output is below the natural level of output, the actual price level is lower than the
expected price level.
True/False/Uncertain with a short argument. The scored depends on the correctness of
explanation.
Suppose there is a decrease in the price level and given the stock of nominal money,
this leads to an increase in the real money stock. This implies that the aggregate
demand curve shifts to the right.
True/False/Uncertain with a short argument. The scored depends on the correctness of
explanation.
In terms of changing output, monetary policy is relatively more effective when the
aggregate supply curve is relatively flat, while fiscal policy is more effective when the
aggregate supply curve is relatively steep.
True/False/Uncertain with a short argument. The scored depends on the correctness of
explanation.
The neutrality of money means that monetary policy cannot affect output.
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