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1) In a market economy the distribution of output will be determined

Customer Question

1) In a market economy the distribution of output will be determined primarily by:

A. consumer needs and preferences.

B. the quantities and prices of the resources that households supply.
C. government regulations that provide a minimum income for all.

D. a social consensus as to what distribution of income is most equitable.


2) If the demand for farm products is price inelastic, a good harvest will cause farm revenues to:

A. increase

B. decrease

C. be unchanged.

D. either increase or decrease, depending on what happens to supply.


3) In a competitive market economy firms will select the least-cost production technique because:

A. such choices will result in the full employment of available resources.
B. to do so will maximize the firms' profits.

C. this will prevent new firms from entering the industry.

D. "dollar voting" by consumers mandates such a choice.



4) If price is above the equilibrium level, competition among sellers to reduce the resulting:

A. surplus will increase quantity demanded and decrease quantity supplied.
B. shortage will decrease quantity demanded and increase quantity supplied.
C. surplus will decrease quantity demanded and increase quantity supplied.
D. shortage will increase quantity demanded and decrease quantity supplied.


5) Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement:

A. suggests that the supply of DVD players has increased.

B. suggests that the demand for DVD players has increased.

C. constitutes an exception to the law of demand in that they suggest an upward sloping demand curve.
D. constitutes an exception to the law of supply in that they suggest a downward sloping supply curve.


6) Which of the following statements is true about productive and allocative efficiency?

A. Realizing allocative efficiency implies that productive efficiency has been realized.

B. Productive efficiency can only occur if there is also allocative efficiency.

C. Society can achieve either productive efficiency or allocative efficiency, but not both simultaneously.
D. Productive efficiency and allocative efficiency can only occur together; neither can occur without the



7) If a firm is selling in an imperfectly competitive product market, then:

A. A. average product will be less than marginal product for any number of workers hired.
B. the marginal products of successive workers must be sold at lower prices.

C. the marginal products of successive workers can be sold at higher prices.

D. the marginal products of successive workers can be sold at a constant price.



8) If a profit-seeking competitive firm is producing its profit-maximizing output and its total fixed costs fall by 25 percent, the firm should:

A. use more labor and less capital to produce a larger output.
B. not change its output.

C. reduce its output.

D. increase its output.



9) A firm is producing an output such that the benefit from one more unit is more than the cost of producing that additional unit. This means the firm is:

A. producing more output than allocative efficiency requires.

B. producing less output than allocative efficiency requires.

C. achieving productive efficiency.

D. producing an inefficient output, but we cannot say whether output should be increased or decreased.


10) In which of the following industries are economies of scale exhausted at relatively low levels of output?

A. aircraft production

B. concrete mixing

C. automobile manufacturing
D. newspaper printing



11) Which of the following represents a long-run adjustment?

A. a farmer uses an extra dose of fertilizer on his corn crop

B. a steel manufacturer cuts back on its purchases of coke and iron ore

C. unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants
D. a supermarket hires four additional clerks



12) In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs:

A. are $2.50.

B. are $750.

C. are $1,250.
D. are $1,100.


13) Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason they do this is to:

A. restrict the supply of construction workers.

B. increase the demand for construction workers.

C. increase the elasticity of demand for construction workers.
D. increase the price of substitute inputs.



14) The real wage will rise if the nominal wage:

A. falls more rapidly than the general price level.

B. increases more rapidly than the general price level.
C. increases at the same rate as labor productivity.
D. falls at the same rate as the general price level.



15) Paying an above-equilibrium wage rate might reduce unit labor costs by:

A. permitting the firm to attract lower-quality labor.

B. increasing voluntary worker turnover.

C. increasing the cost to workers of being fired for shirking.
D. increasing the supply of labor.


) Other things equal, a decrease in the real interest rate will:

A. shift the investment demand curve to the right.

B. shift the investment demand curve to the left.

C. move the economy downward along its existing investment demand curve.
D. move the economy upward along its existing investment demand curve.



35) If the Fed were to purchase government securities in the open market, we would anticipate:

A. lower interest rates, an expanded GDP, and depreciation of the dollar.
B. lower interest rates, an expanded GDP, and appreciation of the dollar.
C. lower interest rates, a contracted GDP, and appreciation of the dollar.
D. higher interest rates, a contracted GDP, and depreciation of the dollar.


36) In a fractional reserve banking system:

A. bank panics cannot occur.

B. the monetary system must be backed by gold.

C. the Federal Reserve has no control over the amount of money in circulation.
D. banks can create money through the lending process.



37) An increase in interest rates in the United States will lead to:

A. Depreciation of the dollar.

B. Outflows of capital from the United States.

C. A decrease in the demand for dollar-denominated financial assets.
D. Capital inflows into the United States.



38) Suppose that US prices rise 4 percent over the next year while prices in Mexico rise 6%. According to the purchasing power parity theory of exchange rates, what should happen to the exchange rate between the dollar and the peso?

A. The dollar should depreciate.
B. The peso should appreciate.

C. The dollar will be revalued.

D. The peso should depreciate.



39) The quantity theory of the demand for money states that a country’s money supply is proportional to:

A. The domestic interest rate.

B. The real level of gross domestic product.

C. The money value of gross domestic product.
D. The exchange rate.


28) Suppose that nominal wages fall and productivity rises in a particular economy. Other things equal, the aggregate:

A. demand curve will shift leftward.

B. expenditures curve will shift downward.
C. supply curve will shift rightward.

D. supply curve will shift leftward.



29) An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the:

A. net export effect.

B. multiplier effect.

C. wealth effect.

D. real-balances effect.


30) Inflation is undesirable because it:

A. arbitrarily redistributes real income and wealth.
B. reduces everyone's standard of living.

C. invariably leads to hyperinflation.

D. usually is accompanied by declining real GDP.


31) Real GDP measures:

A. current output at current prices.

B. base year output at current exchange rates.
C. current output at base year prices.

D. base year output at current prices.



32) Expansionary fiscal policy is so named because it:

A. involves an expansion of the nation's money supply.
B. is designed to expand real GDP.

C. necessarily expands the size of government.

D. is aimed at achieving greater price stability.



33) Given the annual rate of inflation, the "rule of 70" allows one to:

A. determine whether the inflation is demand-pull or cost-push.

B. calculate the number of years required for the price level to double.
C. calculate the accompanying rate of unemployment.

D. determine when the value of a real asset will approach zero.


) Price is constant or given to the individual firm selling in a purely competitive market because:

A. the firm's demand curve is downsloping.

B. each seller supplies a negligible fraction of total supply.
C. of product differentiation reinforced by extensive advertising.
D. there are no good substitutes for its product.



17) A competitive firm will maximize profits at that output at which:

A. total revenue exceeds total cost by the greatest amount.

B. price exceeds average total cost by the largest amount.

C. total revenue and total cost are equal.

D. the difference between marginal revenue and price is at a maximum.


18) An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions is called:

A. monopolistic competition.
B. pure monopoly.

C. oligopoly.

D. pure competition.



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

C. price increases by a firm that are ignored by its rivals.

D. reductions in production costs that are not reflected in price reductions.



20) The practice of price discrimination is associated with pure monopoly because:

A. it can be practiced whenever a firm's demand curve is downsloping.
B. monopolists usually realize economies of scale.

C. monopolists have considerable ability to control output and price.
D. most monopolists sell differentiated products.



21) Which of the following is not a possible source of natural monopoly?

A. large-scale network effects

B. rent-seeking behavior

C. simultaneous consumption

D. greater use of specialized inputs


22) Assume the several manufacturers of ceramic tile in a city reach a verbal agreement to establish the price of their product at 55 cents per tile. This best describes:

A. multiproduct pricing.

B. price leadership.

C. a cartel.

D. an informal understanding.


23) Suppose that an industry is characterized by a few firms and price leadership. We would expect that:

A. price would equal marginal cost.

B. marginal revenue would exceed marginal cost.

C. price would equal average total cost.

D. price would exceed both marginal cost and average total cost.


24) The term oligopoly indicates:

A. a one-firm industry.

B. an industry whose four-firm concentration ratio is low.

C. many producers of a differentiated product.

D. a few firms producing either a differentiated or a homogeneous product.


25) The profit-maximizing output of a pure monopoly is economically inefficient because in equilibrium:

A. price equals minimum average total cost.
B. price exceeds marginal cost.

C. marginal revenue equals marginal cost.
D. marginal cost exceeds price.



26) Those who contend that oligopolists are less likely than more competitive firms to engage in R&D say that:

A. Oligopolists have little incentive to introduce costly new technology and produce new products when they currently are earning large economic profit using existing technology and selling existing products.
B. the large size of oligopolists' R&D departments allow them to use very specialized, expensive R&D equipment and employ teams of specialized researchers.
C. the undistributed profits of oligopolists give them a source of readily available, relatively low cost funds for financing R & D.
D. entry barriers enable oligopolists to sustain the profits they gain from innovation.



27) Other things equal, a price discriminating monopolist will:

A. realize a smaller economic profit than a nondiscriminating monopolist.
B. produce a smaller output than a nondiscriminating monopolist.

C. produce a larger output than a nondiscriminating monopolist.

D. produce the same output as a nondiscriminating monopolist.
Submitted: 3 years ago.
Category: Homework
Expert:  SmartTutor replied 3 years ago.

SmartTutor :

1) B. the quantities and prices of the resources that households supply.; 2) B. decrease; 3) B. to do so will maximize the firms' profits.; 4) A. surplus will increase quantity demanded and decrease quantity supplied.; 5) A. suggests that the supply of DVD players has increased.; 6) A. Realizing allocative efficiency implies that productive efficiency has been realized.; 7) B. the marginal products of successive workers must be sold at lower prices.; 8) B. not change its output.; 9) C. achieving productive efficiency.; 10)A. aircraft production; 11) C. unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants; 12) C. are $1,250.; 13) B. increase the demand for construction workers.; 14) B. increases more rapidly than the general price level; 15) D. increasing the supply of labor.; ) C. move the economy downward along its existing investment demand curve. 35) A. lower interest rates, an expanded GDP, and depreciation of the dollar.; 36) D. banks can create money through the lending process; 37) D. Capital inflows into the United States.; 38)D. The peso should depreciate.; 39) C. The money value of gross domestic product.; 28) C. supply curve will shift rightward.; 29) D. real-balances effect; 30) D. usually is accompanied by declining real GDP.; 31) C. current output at base year prices.; 32) B. is designed to expand real GDP.; 33)B. calculate the number of years required for the price level to double.;) ; B. each seller supplies a negligible fraction of total supply.; 17) A. total revenue exceeds total cost by the greatest amount; 18) C. oligopoly; 19)B. advertising, product promotion, and changes in the real or perceived characteristics of a product.; 20) C. monopolists have considerable ability to control output and price.; 21) B. rent-seeking behavior; 22) D. an informal understanding.; 23) D. price would exceed both marginal cost and average total cost.; 24) D. a few firms producing either a differentiated or a homogeneous product; 25) B. price exceeds marginal cost.; 26) A. Oligopolists have little incentive to introduce costly new technology and produce new products when they currently are earning large economic profit using existing technology and selling existing products.; 27)C. produce a larger output than a nondiscriminating monopolist.

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SmartTutor, Graduate Student
Category: Homework
Satisfied Customers: 204
Experience: B.S. in Business Management w/ 3.49 GPA. Over 4 years of experience in tutoring variety subjects
SmartTutor and 3 other Homework Specialists are ready to help you
Customer: replied 3 years ago.
Thanks for the help. I will be working on a timed assignment. Will you be available to assist if I have questions?
Expert:  SmartTutor replied 3 years ago.
Sorry, but I have to run out soon. Please have another expert to help you. Thanks!

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