Economists assume that individualsbehave in unpredictable ways.will never take actions to help others.prefer to live in a society that values fairness above all else.are rational and respond to incentives.Question 2. Question :In the first six months of 2003, branches of Commerce Bank in New York City were robbed 14 times. The New York City Police recommended steps the bank could take to deter robberies, including the installation of plastic barriers called “bandit barriers.” The police were surprised the bank did not take their advice. According to a deputy commissioner of police, “Commerce does very little of what we recommend. They’ve told our detectives they have no interest in ever putting in the barriers.”It would seem that Commerce bank would have a strong incentive to install “bandit barriers” to deter robberies. Why wouldn’t they do it?The banks would rather delay installation of any theft deterring equipment in anticipation of new lower cost innovations in the security devices market.The banks must have weighed the cost of installing bandit barriers against the benefits and decided that they have “no interest in ever putting in the barriers”.The banks are concerned that “bandit barriers” would send the wrong message to customers — that the bank is unsafe.The banks probably resent any interference from the police department.Question 3. Question :Which of the following statements is true about scarcity?Scarcity refers to the situation in which unlimited wants exceed limited resources.Scarcity is not a problem for the wealthy.Scarcity is only a problem when a country has too large a population.Scarcity arises when there is a wide disparity in income distribution.Question 4. Question :The revenue received from the sale of an additional unit of a productis a marginal benefit to the called called gross called a net gain.:Question 5. Question :Cassie’s Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt “as is” now for $900. What is the marginal cost of completing the task?$200$500$1,000$1,000 plus the value of her timeQuestion 6. Question :Figure 2-6German auto producer, BMW currently produces two types of automobiles sports utility vehicles (SUVs) and coupes in its US plant. Since it opened in 1994, the company had made and continues to make several strategic production decisions. Figure 2-6 shows changes to its production possibilities frontier in response to some of these production strategies.Refer to Figure 2-6.6.Question :Figure 2-6” alt=””>Student Answer: movement from E to F in Graph A. movement from G to H in Graph B. movement from K to L in Graph C. movement from J to H in Graph B.Points Received:1 of 1Comments:Question 7.Question :Figure” alt=””>Refer to Figure 2-1. Point Cis Point C is: technically efficient.unattainable with current resources.inefficient in that not all resources are being the equilibrium output combination.Question 8. Question :All of the following are examples of spending on factors of production in the circular flow model exceptBima hires two students to work at his ice-cream store.”Get Fit Together'” purchases 3 new treadmills for its gym.Iris buys a dozen roses for her mother’s birthday.The Banyan Tree rents a much larger property so that it can add a restaurant to its facilities.Question 9. Question :Figure 2-3Refer to Figure 2-3. Carlos Vanya grows tomatoes and strawberries on his land. A portion of his land is more suitable for growing tomatoes and the other portion is better suited for strawberry cultivation. Which of the graphs in Figure 2-3 represent his production possibilities frontier?Graph AGraph BGraph Ceither Graph A or Graph Beither Graph B or Graph CQuestion 10. Question :An example of a factor of production isa car produced by an auto manufacturer.a worker hired by an auto manufacturer.a loan granted to an auto manufacturer.the automobiles exported by an auto manufacturer.All of the following can be used to compute average profit except marginal profit minus marginal cost. total profit divided by quantity. average revenue minus average total cost price minus average total cost.Points Received:1 of 1Comments:Question 2.Question :Figure” alt=””>Refer to Figure 11-1. If the firm is producing 700 units, what is the amount of its profit or loss? loss of $280 loss equivalent to the area A. profit equivalent to the area A. There is insufficient information to answer the question.Points Received:1 of 1Comments:Question 3.Question :Assume that price is greater than average variable cost. If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximize profits the firm should continue producing at the current output. produce a larger level of output. produce a smaller level of output. not enough information given to answer the question.Points Received:1 of 1Comments:Question 4.Question :For a perfectly competitive firm, at profit maximization market price exceeds marginal cost. total revenue is maximized. marginal revenue equals marginal cost. production must occur where average cost is minimized.Points Received:1 of 1Comments:Question 5.Question :How will an increase in the price of land for housing development affect apple growers who must use land to produce apples? Apple growers will experience persistent losses if they do not sell their land to housing developers. It raises the opportunity cost of apple production. Apple growers will earn higher profit because their land is now more valuable. It will raise the price of apples.Points Received:1 of 1Comments:Question 6.Question :The Aluminum Company of America (Alcoa) had a monopoly until the 1940s because it was a public enterprise. it had a patent on the manufacture of aluminum. the company had a secret technique for making aluminum from bauxite. it had control of almost all available supply of bauxite.Points Received:1 of 1Comments:Question 7.Question :Economic efficiency requires that a natural monopoly’s price be equal to average total cost where it intersects the demand curve. equal to marginal cost where it intersects the demand curve. equal to average variable cost where it intersects the demand curve. equal to the lowest price the firm can charge and still make a normal profit.Points Received:1 of 1Comments:Question 8.Question :A monopoly is characterized by all of the following except there are only a few sellers each selling a unique product. entry barriers are high. there are no close substitutes to the firm’s product. the firm has market power.Points Received:1 of 1Comments:Question 9.Question :Figure” alt=””>Figure 14-7 shows the cost and demand curves for the Erickson Power Company.Refer to Figure 14-7.Why won’t regulators require that Erickson Power produce the economically efficient output level? because there is insufficient demand at that output level because at the economically efficient output level, the marginal cost of producing the last unit sold exceeds the consumers’ marginal value for that last unit because Erickson Power will earn zero profit because Erickson Power will sustain persistent losses and will not continue in business in the long run.Points Received:1 of 1Comments:Question 10.Question :If a monopolist’s marginal revenue is $25 a unit and its marginal cost is $25, then to maximize profit the firm should increase output. to maximize profit the firm should decrease ou
tput. to maximize profit the firm should continue to produce the output it is producing. Not enough information is given to say what the firm should do to maximize profit.quiz 5able” alt=””>Table 12-3 shows the firm’s demand and cost schedules for a firm in monopolistic competition.Refer to Table 12-3.What is the amount of the firm’s loss at its optimal output level? $0 $31 $45 $50Points Received:1 of 1Comments:Question 2.Question :You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants. Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce. What is likely to happen to your business in the long run? Your competitors are likely to change their menus to make their products more similar to yours. Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero. If your success continues, you will be likely to establish a franchise and expand your market size. If you continue to maintain consistent quality, you will be able to earn profits indefinitely.Points Received:1 of 1Comments:Question 3.Question :Table” alt=””>Eco Energy is a monopolistically competitive producer of a sports beverage called Power On. Table 12-2 shows the firm’s demand and cost schedules. Refer to Table 12-2.What is likely to happen to the product’s price in the long run? It will fall. It will increase. It will remain constant. Cannot be determined without information on its long run demand curve.Points Received:1 of 1Comments:Question 4.Question :In the long run, if price is less than average cost, there is an incentive for firms to exit the market. there is profit incentive for firms to enter the market. the market must be in long-run equilibrium. there is no incentive for the number of firms in the market to change.Points Received:1 of 1Comments:Question 5.Question :Figure” alt=””>Figure 12-3 shows short run cost and demand curves for a monopolistically competitive firm in the market for designer watches.Refer to Figure 12-3.What is the area that represents the total revenue made by the firm?Student Answer: 0P0aQa” alt=”CORRECT”> 0P2cQa 0P3dQaPoints Received:1 of 1Comments: 6.Figure 13-4” alt=””>Rainbow Writer (RW) is a small online company selling a highly rated software package for printing color labels directly onto CDs. The firm currently earns a profit of $2 million per year selling its package exclusively on its website. Odeon, the producer of the most popular software package for editing and burning CDs and DVDs, has expressed interest in bundling Rainbow Writer’s product into its own package. Odeon expects that bundling would further boost its sales and allow it to sell the new bundled product at a higher price, thus raising its profits beyond its current profit of $12 million. Figure 13-4 shows the decision tree for the Rainbow Writer-Odeon bargaining game.Refer to Figure 13-4.In a real world situation involving Rainbow Writer and Odeon, what scenario below might permit Rainbow Writer to rationally refuse an offer from Odeon of $40 per copy of the software package? Odeon is also negotiating with Swift Colors, Rainbow Writer’s chief rival. Odeon’s competitors are also interested in bundling Rainbow Writer’s software. Odeon hires a software developer to begin developing its own proprietary color labeling software. Odeon is considering new distribution outlets for its products.Points Received:0 of 1Comments:Question 7.Question :In an oligopoly market the pricing decisions of all other firms have no effect on an individual firm. individual firms pay no attention to the behavior of other firms. advertising of one firm has no effect on all other firms. one firm’s pricing decision affects all the other firms.Points Received:1 of 1Comments:Question 8.Question :The “Discount Department Stores” industry is highly concentrated. What does this mean? There are many large stores such as Wal-Mart, Target, Kohl’s, in this industry. A few large stores account for a significant portion of industry sales. There is cut-throat competition in this industry because there are no entry barriers. The sales volume in this industry is consistently high.Points Received:1 of 1Comments:Question 9.Question :A reason why there is more competition among restaurants than among large discount department stores is that restaurants have to cater to a variety of consumer tastes while department stores do not. unlike department stores, have to abide by government sanitation rules. unlike department stores, do not have significant economies of scale. have more elastic demand for their product compared to department stores.Points Received:1 of 1Comments:Question 10.Question :A key part of Sam Walton’s business strategy for Wal-Mart involved placing stores in small towns where the main competition was from small, locally owned stores. What is the rationale behind this strategy? to increase consumer welfare by offering consumers in small towns a wider variety of goods and services to create employment opportunities for those living in small towns to maintain a competitive edge – small stores cannot compete with Wal-Mart’s prices because Wal-Mart is able to pass to consumers some of its cost savings from economies of scale locating in small towns requires a lower financial outlay than locating in big citiesquiz 6According to the marginal productivity theory of income, the greater the quantity of resources owned by an individual, the greater his incentive to increase productivity and his income. the average income received by an individual who supplies resources is influenced by the resources owner’s marginal productivity. the income received by an individual who supplies labor services equals the incremental benefit generated to the firm by that individual’s labor. the income received by an individual who supplies labor services equals the profit generated to the firm by that individual’s labor.Points Received:1 of 1Comments: 2.Scenario: In academia, professors in some disciplines receive higher salaries than others. For example, professors teaching in business schools receive higher salaries than professors in the English department. Suppose in Unity College, assistant professors in the business school earn $Wbwhile assistant professors in the English department earn $We < Wb. Now suppose the government passes comparable worth legislation that requires academic institutions to pay all faculty the same salaries.Following the passage of comparable worth legislation, Unity College responds by placing salaries at $Wabetween the two existing salaries. Which of the following is the result of the legislation? The supply of English professors increase and the supply of business professors decrease. The demand for English professors decrease and the demand for business professors increase. There will be a surplus in the market for English professors and a shortage in the market for business professors. There will be a surplus in the market for English professors and the market for business professors will not be affected.Points Received:1 of 1Comments:Question 3.Question :Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If, hiring another worker would increase output by three units per hour, then to maximize profits the firm should not change the number of workers it currently hires. not hire an additional worker. hire another worker. There is not enough information to answer the question.Points Received:1 of 1Comments:Question 4.Question :Table m_170916149/f16g1q26g1.gif" alt="">Refer to Table 16-2. The marginal profit from hiring the second unit of labor is $4,200. $1,960. $1,800. $1,450.Points Received:1 of 1Comments:Question 5.Question :Worker discrimination occurs when workers refuse to perform risky tasks. workers refuse to work with persons of a different race. customers refuse to buy products produced by a racially diverse workforce. employers pay different employees different wages based on race.Points Received:1 of 1Comments:Question 6.Question :The marginal revenue product of capital is the cost to the firm of renting an additional unit of capital. the change in the firm’s revenue as a result of employing one more unit of capital, such as a machine. the economic rent received by hiring an additional unit of capital. the revenue generated by substituting capital for labor in the production process.Points Received:1 of 1Comments:Question 7.Question :Which of the following is a reason why some firms donot use commission pay? It gives workers incentive to produce more. It increases firm profits. It is difficult to measure the output and attribute output to a particular worker. The best workers stay and less productive workers leave.Points Received:1 of 1Comments:Question 8.Question :Which of the following statements about commission systems of compensation is false? They increase the risk to workers because sometimes output declines for reasons not connected to the worker’s effort. During sluggish periods, an employer’s payroll expenses will decline along with sales. If workers are paid on the basis of the number of units produced, they may become less concerned about quality. The lack of income stability will induce the more productive workers to leave in search of more secure employment.Points Received:1 of 1Comments:Question 9.Question :Which of the following is a reason why it is difficult to estimate the extent of economic discrimination in the labor market? Employers who discriminate are likely to do so in overt ways such as awarding some workers with benefits-in-kind. Ultimately, employers who discriminate cannot remain profitable. Employers who discriminate pay an economic penalty. Differences in wages can be attributed to many other factors as well, such as differences in productivity and preferences.Points Received:1 of 1Comments:Question 10.Question :An increase in the supply of capital, which is a complement to labor, will lead to a decrease in the quantity demanded of labor. an increase in the demand for labor. a decrease in the demand for labor. an increase in the quantity demanded of labor.quiz 7    Gross domestic product understates the total production of final goods and services because of the omission of exports. inflation. intermediate goods. nonmarket household production.Points Received:1 of 1Comments:Question 2.Question :Which of the following is not a durable good? furniture automobile clothing refrigeratorPoints Received:1 of 1Comments:Question 3.Question :Increases in real GDP wouldoverstatethe increase in the well-being of a country over time if, over that time period, the average hours worked per week increased. amount of pollution decreased. price level increased. crime rate decreased.Points Received:1 of 1Comments:Question 4.Question :The best measure of the income households actually have available to spend is personal income. disposable personal income. national income. net national income.Points Received:1 of 1Comments:Question 5.Question :Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP? GDP will decrease. GDP will increase. GDP will not change. GDP may increase or may decrease depending on inflation.Points Received:1 of 1Comments:Question 6.Question :Under which of the following circumstances would the government be running a deficit? G = $5 trillionT = $5 trillionTR = $1 trillion G = $5 trillionT = $7 trillionTR = $1 trillion G = $7 trillionT = $7 trillionTR = $0 G = $7 trillionT = $10 trillionTR = $3 trillionPoints Received:1 of 1Comments:Question 7.Question :What two factors are the keys to determining labor productivity? the business cycle and the growth rate of real GDP the growth rate of real GDP and the interest rate technology and the quantity of capital per hour worked the average level of education of the workforce and the price levelPoints Received:1 of 1Comments:Question 8.Question :The response of firm investment to an increase in the government budget deficit is called expansionary investment. private dissaving. crowding out. income minus net taxes.Points Received:1 of 1Comments:Question 9.Question :A firm can fund an expansion of its operations by issuing bonds. buying stock. paying dividends. loaning money.Points Received:1 of 1Comments:Question 10.Question :If consumers decide to be more frugal and save more out of their income, then this will cause a shift in the supply for loanable funds to the right. a shift in the supply for loanable funds to the left. a movement along the supply for loanable funds curve to the right. a movement along the supply for loanable funds curve to the left.1 of 1