Post eco202/ eco202 final exam may 2015 - 96554

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Question Question 1 0 out of 2 points Suppose that every customer in a market wants to enjoy the good supplied by the best producer, and the good is produce with technology such that the best producer can supply to every customer at a low cost. This is an example of Answers: the superstar phenomenon. human capital. efficiency wages. signaling. Question 2 0 out of 2 points The larger the number of firms in an oligopoly, the Answers: lower the price and the smaller the output of the industry. higher the price and the greater the output of the industry. lower the price and the greater the output of the industry. higher the price and the smaller the output of the industry. Question 3 2 out of 2 points Signaling in labor markets and advertising are examples where an informed party uses the signal to convince the uninformed party that the informed party is offering something of high quality. Answers: True False Question 4 2 out of 2 points Discrimination in the labor market occurs when employers pay different wages to workers who differ only by race, ethnicity, sex, age, or other personal characteristics. Answers: True False Question 5 2 out of 2 points A strategy that is best for a player in a game regardless of the strategies chosen by the other players is called a(n) Answers: game theory strategy. dominant strategy. prisoner's dilemma strategy. oligopoly strategy. Question 6 2 out of 2 points Movies and novels are examples of products sold in monopolistically-competitive industries. Answers: True False Question 7 0 out of 2 points Hidden characteristics typically lead to Answers: efficient outcomes. adverse selection. hidden actions. moral hazard. Question 8 0 out of 2 points Hidden actions typically lead to Answers: efficient outcomes. adverse selection. hidden characteristics moral hazard. Question 9 2 out of 2 points The effect of an increase in interest rates on consumer savings in the current period is ambiguous. Answers: True False Question 10 2 out of 2 points The slope of the budget constraint will change whenever the Answers: income of the consumer changes. slope of the consumer's indifference curve changes. preferences of the consumer changes. price of one of the two goods changes. Question 11 2 out of 2 points Economists measure the social cost of a monopoly by calculating monopoly profits. Answers: True False Question 12 0 out of 2 points Antitrust laws, regulation, public ownership, and doing nothing are all potential strategies that a government can use to deal with the problem of monopoly. Answers: True False Question 13 2 out of 2 points Human capital is Answers: machinery and equipment designed by humans. the premium wages earned by highly-skilled workers. labor resources earned by firms. training. Question 14 2 out of 2 points Economic mobility refers to the willingness of people to migrate across the United States to search for better jobs. Answers: True False Question 15 2 out of 2 points A Nash equilibrium is a strategy that is best for a player in game regardless of the strategies chosen by the other players. Answers: True False Question 16 2 out of 2 points Which of the following is not a controversial business practice that may be prohibited by antitrust laws? Answers: import tariffs predatory pricing resale price maintenance tying Question 17 0 out of 2 points Which of the following is not a characteristic of a monopolistically-competitive market? Answers: The goods offered for sale are identical. There is free entry and exit There are many sellers. There are many buyers. Question 18 0 out of 2 points For a monopolist, as output increases, the firm's total revenue Answers: increases. decreases. first increases, then decreases. first decreases, then increases. Question 19 0 out of 2 points If there is a permanent increase in the demand for hybrid cars, hybrid car manufacturers will want to hire Answers: fewer workers, which will cause wages in the industry to increase. more workers, which will cause wages in the industry to decrease. more workers, which will cause wages in the industry to increase. fewer workers, which will cause wages in the industry to decrease. Question 20 0 out of 2 points Which of the following statements is not an example of a compensating differential? Answers: Older, more experienced workers are paid more than younger, less experienced workers. Law professors are paid less than practicing lawyers because their working conditions are more pleasant. Night-shift workers are paid more than day-shift workers because workers prefer to work during the daytime. Coal miners are paid more than other workers with similar skills because coal mining is risky. Question 21 2 out of 2 points The prisoner's dilemma game shows us that Answers: the dominant strategy will always be the same for both decision makers. following a logical, self-interested strategy may not result in the best outcome for decision makers. the dominant strategy will always provide the best outcome for both decision makers. cooperation among decision makers is common and easy to maintain. Question 22 0 out of 2 points According to the Condorcet paradox, majority rule will produce the outcome most preferred by the median voter. Answers: True False Question 23 0 out of 2 points An increase in the price of gasoline will likely lower the wages of oil workers. Answers: True False Question 24 2 out of 2 points Factors of production are the inputs used to produce goods and services. Answers: True False Question 25 2 out of 2 points An example of adverse selection is a parent who installs a hidden camera in the living room to observe the behavior of the family's nanny. Answers: True False Question 26 2 out of 2 points For which of the following market structures does a profit-maximizing firm charge a price greater than marginal cost? (i) Perfect competition (ii) Monopolistic competition (iii) Monoply Answers: (ii) and (iii) only (i), (ii), and (iii) (i) only (ii) only Question 27 2 out of 2 points Of all the income earned in the United States before taxes in 2008, the richest fifth of households earn about Answers: half. one-tenth. one-third. three-fourths. Question 28 0 out of 2 points A major critique of advertising is that it Answers: promotes excessive competition among firms in the industry. undermines the market price. provides information to consumers that they would be better off without. manipulates people's tastes and preferences. Question 29 2 out of 2 points Which of the following is an example of signaling in the labor market? Answers Wages increase due to an increase in the demand for labor. Earning a college degree demonstrates that the worker has high ability. Earning a college degree increases a worker's human capital, which increases the wages earned by that worker. Wages increase due to a decrease in the supply of labor. Question 30 2 out of 2 points A cartel is an example of collusion among firms. Answers: True False Question 31 0 out of 2 points Which of the following is not an example of screening to uncover private information? Answers: A man gives a woman cash for her birthday because "everyone likes cash." An automobile insurer charges a higher rate to drivers with more speeding tickets than to drivers with no speeding tickets. Sarah is considering buying a used car from Alison. Before Sarah writes a check, she takes the car to an auto mechanic to inspect it. A life insurance company requires that potential policy holders take a physical exam before being issued a policy. Question 32 0 out of 2 points Which of the following would not increase the value of the marginal product of labor? Answers: an increase in the price of the good sold by the firm an increase in the number of workers available a labor-augmenting technological advance an increase in the supply of a factor of production used by workers Question 33 2 out of 2 points Minimum-wage laws tend to Answers: increase the unemployment of unskilled labor increase the annual income levels of all unskilled workers. increase the unemployment of skilled labor. affect all workers similarly. Question 34 0 out of 2 points The theory of efficiency wages predicts that firms will pay their workers a wage exactly equal to the value of the marginal product of labor. Answers: True False Question 35 0 out of 2 points Which of the following would not shift the labor-supply curve for the cranberry industry? Answers: an increase in the price of cranberries a decrease in the wages paid to workers in the strawberry industry a change in worker tastes that causes women to supply more labor to the labor market an increase in immigration Question 36 2 out of 2 points Answers: Studies of sports teams suggest that customer discrimination may Answers: be reflected in the prices of old baseball cards. have been present in Major League Baseball in the 1960s. be present in the National Basketball Association. All of these choices are correct. Question 37 2 out of 2 points Answers: The price paid for any factor of production should equal the Answers: average cost of production. marginal revenue of the product sold by the firm. value of the marginal product of the input. price of the product sold by the firm. Question 38 2 out of 2 points Which of the following statements is not an example of human capital? Answers: Older, more experienced workers are paid more than younger, less experienced workers. Law professors are paid less than practicing lawyers because their working conditions are more pleasant. College graduates in developing countries earn substantially higher wages, on average, than workers with only a high school degree. Graduates of higher-ranked MBA programs earn more than graduates of lower-ranked MBA program. Question 39 0 out of 2 points A monopoly sells a higher quantity and charges a higher price than a competitive market. Answers: True False Question 40 0 out of 2 points The change in consumption that results when a price change moves the consumer to a higher or lower indifference curve is called the Answers: income effect. indifference effect. price effect. substitution effect. Question 41 0 out of 2 points The long-run equilibrium for firms in a monopolistically-competitive market is characterized by Answers: prices equal to average total costs. negative profits. prices equal to average variable costs. positive profits. Question 42 0 out of 2 points Jumbo Jet Airways charges customers a lower fare for an airline ticket from Chicago to New York City if the customer purchases the ticket online rather than calling JumboJet Airways customer service agents. This is an example of Answers: monopoly pricing. deadweight loss. arbitrage. price discrimination. Question 43 2 out of 2 points The political philosophy according to which the government should choose policies to maximize the total well-being of everyone in society is called Answers: libertarianism. Keynesianism. utilitarianism. liberalism. Question 44 2 out of 2 points If firms in monopolistic competition are enjoying positive economic profits, in the long run this will attract new firms into the industry, causing prices for fall and profits to disappear. Answers: True False Question 45 2 out of 2 points Many antipoverty programs have the unintended consequence of Answers: increasing employment through minimum-wage laws. discouraging work. encouraging addictions through food stamps. lowering family incomes through the negative income tax. Question 46 2 out of 2 points Suppose that canned spaghetti is an inferior good. A decrease in income will decrease the optimal consumption of canned spaghetti. Answers: True False Question 47 0 out of 2 points A monopoly must earn zero economic profit in the long run. Answers: True False Question 48 0 out of 2 points A cartel most closely resembles the market structure of Answers: monopolistic competition. monopoly. perfect competition. Nashopoly. Question 49 2 out of 2 points In-kind transfers complicate the measurement of inequality. Answer: True False Question 50 0 out of 2 points For a Giffen good, the income effect Answers: is stronger than the substitution effect. results in a very steep, downward-sloping demand curve. and the substitution effect move in the same direction. exactly equals the substitution effect.
Solution Description

Question

Question 1

0 out of 2 points

Suppose that every customer in a market wants to enjoy the good supplied by the best producer, and the good is produce with technology such that the best producer can supply to every customer at a low cost. This is an example of

Answers:

the superstar phenomenon.

human capital.

efficiency wages.

signaling.

Question 2

0 out of 2 points

The larger the number of firms in an oligopoly, the

Answers:

 lower the price and the smaller the output of the industry.

higher the price and the greater the output of the industry.

lower the price and the greater the output of the industry.

higher the price and the smaller the output of the industry.

Question 3

2 out of 2 points

Signaling in labor markets and advertising are examples where an informed party uses the signal to convince the uninformed party that the informed party is offering something of high quality.

Answers:

True

False

Question 4

2 out of 2 points

Discrimination in the labor market occurs when employers pay different wages to workers who differ only by race, ethnicity, sex, age, or other personal characteristics.

Answers:

True

False

Question 5

2 out of 2 points

A strategy that is best for a player in a game regardless of the strategies chosen by the other players is called a(n)

Answers:

game theory strategy.

dominant strategy.

prisoner's dilemma strategy.

oligopoly strategy.

Question 6

2 out of 2 points

Movies and novels are examples of products sold in monopolistically-competitive industries.

Answers:

True

False

Question 7

0 out of 2 points

Hidden characteristics typically lead to

Answers:

efficient outcomes.

adverse selection.

hidden actions.

moral hazard.

Question 8

0 out of 2 points

Hidden actions typically lead to

Answers:

efficient outcomes.

adverse selection.

hidden characteristics

moral hazard.

Question 9

2 out of 2 points

The effect of an increase in interest rates on consumer savings in the current period is ambiguous.

Answers:

True

False

Question 10

2 out of 2 points

The slope of the budget constraint will change whenever the

Answers:

income of the consumer changes.

slope of the consumer's indifference curve changes.

preferences of the consumer changes.

price of one of the two goods changes.

Question 11

2 out of 2 points

Economists measure the social cost of a monopoly by calculating monopoly profits.

Answers:

True

False

Question 12

0 out of 2 points

Antitrust