Question 1

A craft union attempts to increase wage rates by:

a) equating the MRP and the MRC curves.



b) shifting the labor supply curve to the left.



c) shifting the labor supply curve to the right.



d) shifting the MRP curve to the right.

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Question 2

The oligopolist's kinked demand curve


a) is more inelastic to the left of the kink



b) reflects rivals' decision not to lower prices when one oligopolist lowers price



c) reflects rivals' decisions to raise prices when one oligopolist raises price



d) is more inelastic to the right of the kink

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Question 3



Refer to the above data. The four-firm concentration ratio for this industry is:


a) 90 percent.



b) 95 percent.



c) 100 percent.



d) indeterminate, because we don't know which four firms are included.

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Question 4

The lowest quintile of households in the income distribution receives about:


a) 2.2 percent of the total income.



b) 3.4 percent of the total income.



c) 8.5 percent of the total income.



d) 10 percent of the total income.

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Question 5



Refer to the above diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium
entailing economic loss is shown by:


a) diagram a only.



b) diagram b only.



c) diagram c only.



d) both diagrams a and c.

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Question 6

Human capital is best defined as:


a) the productive skills and knowledge that workers acquire from education and training.



b) the substitution of labor for machinery in the production process.



c) any piece of machinery that must be combined with labor to be productive.



d) the exchange of money for real assets.

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Question 7

Under monopolistic competition entry to the industry is:


a) completely free of barriers.



b)
more difficult than under pure competition but not nearly as difficult as under pure
monopoly.



c) more difficult than under pure monopoly.



d) blocked.

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Question 8

Increases in the productivity of labor result partly from:


a) the law of diminishing returns.



b) improvements in technology.



c) reductions in wage rates.



d) increases in the quantity of labor.

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Question 9

Which of the following would likely reduce income inequality?


a) A reduction in the number of high school dropouts.



b) A reduction in social security benefits.



c) Greater inequality in the distribution of wealth.



d) More stringent requirements to obtain occupational licenses.

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Question 10

The U.S. poverty rate for:


a) Hispanics is higher than that for African-Americans.



b) children under 18 years of age is higher than for the overall population.



c) African-Americans has increased since 1993.



d)
foreign-born individuals who are not citizens is below the poverty rate for the general
population.

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Question 11

The market supply curve for labor is upsloping because:


a) of diminishing returns.



b) of the opportunity cost of labor in housekeeping, leisure, or alternative employments.



c) of declining MRC.



d) each employer is a "wage taker."

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Question 12

A major difference between social insurance and welfare is that social insurance:


a)
exclusively involves older Americans whereas welfare is confined mainly to mothers with
young children.



b) forces recipients to demonstrate need while welfare does not.



c)
is normally financed by earmarked payroll taxes while welfare is financed out of general tax
revenues.



d) provides cash transfers while welfare does not.

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Question 13



Refer to the above diagrams. The firm:


a) is a monopsonist in the hiring of labor.



b) must be selling its product in an imperfectly competitive market.



c) is a "wage taker."



d) must pay a higher marginal resource cost for each successive worker.

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Question 14

Mutual interdependence means that each oligopolistic firm:


a) faces a perfectly elastic demand for its product.



b) must consider the reactions of its rivals when it determines its price policy.



c) produces a product identical to those of its rivals.



d) produces a product similar but not identical to the products of its rivals.

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Question 15

The productivity and real wages of workers in industrially advanced economies have risen historically
partly because:


a) workers have acquired less education and training over time.



b) workers have been able to use larger quantities of capital equipment.



c) over time the capital equipment used by workers has deteriorated in quality.



d) the supply of labor has increased.

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Question 16

The crowding model of discrimination suggests that:


a)
women and selected minorities are systematically excluded from high-paying occupations
and crowded into low-paying occupations, decreasing their wages and reducing domestic
output.



b)
employers having high discrimination coefficients will be crowded out by nondiscriminating
employers in the long run.



c)
firms will base hiring decisions on group averages, rather than on individual characteristics
and productivity.



d)
occupational segregation is largely the result of freely made rational choices of women and
minorities.

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Question 17

The equality-efficiency tradeoff refers to:


a) the conflict between risk averters and risk takers.



b)
the willingness of Congress to abandon existing welfare programs in favor of a
comprehensive plan to increase education and training for low-income persons.



c) possible conflicts between the goals of economic efficiency and greater income equality.



d) the difference between the goals of income equality and equality of economic opportunity.

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Question 18

Since its inception in 1996, the Temporary Assistance for Needy Families (TANF) program has:


a) increased, rather than reduced, the number of people on welfare.



b) reduced the number of people on welfare by more than one-half.



c) aided the poor by automatically increasing welfare payments when inflation occurs.



d) greatly increased the unemployment rate.

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Question 19

Since 1980, labor union membership in the United States has been:


a) increasing absolutely and as a percentage of the labor force.



b) increasing absolutely but declining as a percentage of the labor force.



c) decreasing absolutely and as a percentage of the labor force.



d) decreasing absolutely but increasing as a percentage of the labor force.

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Question 20



Refer to the above data. The Herfindahl Index for this industry is:


a) 95.



b) 1,000.



c) 2,925.



d) 2,950.

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Question 21

Assume the Ajax Mining Company hires 80 percent of the nonunion labor force of Mother Lode, New
Mexico. Also, suppose that this labor force is highly immobile. Economists would describe this employer
as a:


a) monopolist.



b) oligopolist.



c) monopsonist.



d) monopolistic competitor.

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Question 22

Nonprice competition refers to:


a)
competition between products of different industries, for example, competition between
aluminum and steel in the manufacture of automobile parts.



b) price increases by a firm that are ignored by its rivals.



c)
advertising, product promotion, and changes in the real or perceived characteristics of a
product.



d) reductions in production costs that are not reflected in price reductions.

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Question 23



Refer to the above diagram for a monopolistically competitive firm. Long-run equilibrium price will be:


a) above A.



b) EF.



c) A.



d) B.

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Question 24



Refer to the above diagram. In short-run equilibrium, the monopolistically competitive firm shown will
set its price:


a) below ATC.



b) above ATC.



c) below MC.



d) below MR.

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Question 25

The study of how people (or firms) behave in strategic situations is called:


a) cost-benefit analysis.



b) recursive analysis.



c) normative economics.



d) game theory.