question
Eden, a country, produces just two output goods: apples and snakeskin handbags. In 2014 the prices of apples and handbags were $10 and $24, respectively. In 2015, the prices increased to $12 and $25. The quantities produced of the two goods were 100 and 20, respectively, in both 2014 and 2015. From this information, we can conclude that (select all that are correct):
answer
The nominal GDP in 2014 is $1,480.
The real GDP is unchanged between 2014 and 2015.
The nominal GDP growth rate between 2014 and 2015 is 14.9%.
The real GDP is unchanged between 2014 and 2015.
The nominal GDP growth rate between 2014 and 2015 is 14.9%.
question
You are given the following graph of Gini coefficients over the past three centuries for three capitalist economies: Britain, the United States, and the Netherlands. The information in the figure suggests that:
answer
Over time, capitalist economies can become less as well as more equal.
question
Which of the following statements is correct? According to Friedrich Hayek:
answer
The advantage of capitalism is that it provides the right information to the right people.
question
A factory is situated next to a dormitory for nurses who work night shifts. The factory produces 120 units of humanoid robots a day. The production process is rather noisy, and the nurses often complain that their sleep is disturbed. The following graph depicts the MPC and MSC of the robot factory production. The robot market is competitive and the market price is $340. Based on this information, which of the following statements is correct? Select one answer.
answer
At Q = 120, both the factory and the nurses would benefit from the nurses paying a fee less than 120 to the factory to reduce output.
question
Which of the following statements is correct regarding involuntary unemployment?
answer
There must be involuntary unemployment in an efficiency wage equilibrium.
question
The following is a table of the total cost (TC) of producing output Q for a particular firm. Based on this information, which of the following statements is correct?
answer
The marginal cost curve intersects the average cost curve at Q = 60.
question
The following diagram depicts the production function of the farmers, where diminishing average product of labor is assumed. At A the average product of labor is 500,000/800 = 625 kg of grain per farmer. At B the average product of labor is 732,000/ 1,600 = 458 kg of grain per farmer. If you know that the grain output for 2,800 farmers is 894,000 kg, then which of the following statements are correct? (Select all correct answers)
answer
The slope of the rays from the origin to the production function decrease along the curve, indicating that the average product of labor is decreasing.
If the production function curve is an upward-sloping straight line, then there is no diminishing average product of labor.
If the production function curve is an upward-sloping straight line, then there is no diminishing average product of labor.
question
The following diagram shows the consumer and producer surplus in the market for bread. Consider changes in the elasticity of the demand and supply curves. Assuming that the market equilibrium output and price are unchanged, which of the following statements is correct?
answer
A less elastic supply curve will lead to a larger producer surplus.
question
The average product of labor is diminishing when (Select all correct answers):
answer
The production function is concave.
The marginal product of labor is smaller than the average product of labor.
The marginal product of labor is negative.
The marginal product of labor is smaller than the average product of labor.
The marginal product of labor is negative.
question
Consider an individual's indifference curves for the consumption of two goods (things you would like to have more of). In this case, which of the following statements are true?
answer
The indifference curves are downward-sloping.
question
The figure depicts the labor market model. Ceteris paribus, in which of the following cases would the equilibrium real wage level rise? (Select all correct answers)
answer
Higher labor productivity.
Higher competition in the output goods market.
Higher competition in the output goods market.
question
Consider indifference curves for the consumption of milk and chocolates (you may assume that both are "goods"). The indifference curves are drawn with the number of chocolate bars on the horizontal axis and pints of milk on the vertical axis. Suppose consumer A has a flatter indifference curve than consumer B. In this case, we can conclude that:
answer
Given the same amount of chocolates, consumer A is willing to swap one bar of chocolate for a smaller amount of milk than consumer B.
question
Bruce owns a cooperative project with two other members. Any member that chooses to put in a full day of work faces a cost of £50 but produces a total income of £120, which is shared amongst the three. So, for example, if Bruce and one other member do a full day of work, then the income per member is (£120 x 2)/3 = £80, leaving Bruce with a net income of £80 - £50 = £30. Assume that a member must either put in a full day of work or none at all. Based on this information, we can conclude that:
Select all that are correct
Select all that are correct
answer
The socially optimal outcome (one with the highest total net income) is when all work.
The dominant strategy equilibrium of this public goods game is when no one works.
Bruce is better off not working, irrespective of the actions of the other members.
The dominant strategy equilibrium of this public goods game is when no one works.
Bruce is better off not working, irrespective of the actions of the other members.
question
Which of the following statements regarding bargaining power are correct?
answer
In a dictator game, the Proposer has all the bargaining power.
question
Peter, John and James are discussing how to share three apples and three oranges. Which of the following statements regarding Pareto efficient allocations is correct?
answer
Assuming that Peter likes both apples and oranges, there is no possible Pareto improvement to an allocation in which he has all the apples and oranges.
question
Figure 5.6 shows Angela and Bruno's feasible frontier, Angela's biological survival constraint, and her reservation indifference curve. Based on this figure, which of the following is correct?
answer
If the ration Angela gets from the government increases from 2 to 3 bushels of grain, her reservation indifference curve will be above her biological survival constraint whatever her working hours.
question
Figure 5.7a shows Angela and Bruno's feasible frontier, Angela's biological constraint and her reservation indifference curve. B is the outcome under coercion, while D is the outcome under voluntary exchange when Bruno makes a take-it-or-leave-it offer. Looking at this graph, we can conclude that:
answer
Which a take-it-or-leave-it offer, Bruno's economic rent is equal to the joint surplus.
question
Figure 5.8 shows the Pareto efficiency curve CD for the interaction between Angela and Bruno. Which of the following statements is correct?
answer
Angela's marginal rate of substitu- tion is equal to the marginal rate of transformation at all points on the Pareto efficiency curve.
question
Figure 5.15 shows the Lorenz curve for market income in the Netherlands in 2010. Which of the following is true?
answer
The Gini coefficient can be calculated as the proportion of area A to area A + B.
question
Which of the following statements is true?
answer
In a market, prices motivate and constrain people's actions, and are determines as a result of the actions of a large number of participants.
question
Which of the following statements is true?
answer
With the separation of ownership and control, decisions are made by managers while the benefits of the decisions accrue to the owners.
question
Which of the following statements regarding employment contracts are correct?
answer
Employees' effort levels cannot be the basis of an enforceable contract.
question
Consider a worker's best response curve in the labour discipline model. Currently the firm chooses to pay £12 per hour to minimise the cost of effort, which induces an effort level of 0.6 from the worker. Now consider a rise in the unemployment benefit. Then:
answer
The firm's new wage offer that minimises the cost of effort will be higher than £12.
question
Maria earns $12 per hour in her current job and works 35 hours a week. Her disutility of effort is equivalent to a cost of $2 per hour of work. If she loses her job, she will receive unemployment benefit equivalent to $6 per hour. Additionally, being unemployed has psychological and social costs equivalent
to $1 per hour. Then:
to $1 per hour. Then:
answer
Maria's employment rent if she can only get a job at a lower wage rate after 44 weeks of being unemployed is more than $7,700.
question
Figure 6.6 depicts the efficiency wage equilibrium of a worker and a firm. According to this figure:
answer
The slope of each isocost line is the number of units of effort per dollar.
question
The figure shows a demand curve for Cheerios. Based on this figure, which of the following statements is correct?
answer
There is no de- mand if the price is set above $7.20.
question
Consider the demand curve shown in the figure. Suppose that the unit cost (the cost of producing each pound of Cheerios) is C = $2. Based on the demand curve, which of the following statements is correct?
answer
The profit when P = 3 is $24,000.
question
The figure depicts isoprofits of firms selling Cheerios. Which of the following statements is correct?
answer
Isoprofit curve C goes through the point (Q, P) = (2,000, 9).
question
Which of the following are factors that contribute to a firm's diseconomies of scale?
answer
Difficulty of monitoring workers' effort as the number of employees increases.
question
Which of the following statements regarding average cost and marginal cost of a firm is correct?
answer
When marginal cost equals average cost, the slope of the average cost curve is zero.
question
A firm's cost of productions is $12 per unit of output. If P is the price of the output good and Q is the number of units produced, which of the following statements is correct?
answer
Points (Q, P) = (2,000, 20) and (4,000, 16) are on the same isoprofit curve.
question
Which of the following statements is correct?
answer
If a firm's technology exhibits constant returns to scale, doubling the inputs leads to doubling of the output level.
If a firm's technology exhibits economies of scale, costs per unit will fall as the firm expands its production.
If a firm's technology exhibits diseconomies of scale, doubling the inputs leads to less than doubling of the output level.
If a firm's technology exhibits economies of scale, costs per unit will fall as the firm expands its production.
If a firm's technology exhibits diseconomies of scale, doubling the inputs leads to less than doubling of the output level.
question
Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. At point E, the quantity-price combination is (Q, P) = (32, 5,440) and the profit is $63,360. Suppose that the firm chooses instead to produce Q = 32 cars and sets the price at P = $5,400. Which of the following statements is correct?
answer
The profit is re- duced to $62,080.
question
Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. Suppose that the firm decides to switch from P = $5,440 and Q = 32 to a higher price, and chooses the profit-maximizing level of output at the new price. Which of the following statements is correct?
answer
The quantity of cars produced is reduced.
question
Which of the following statements is correct?
answer
Consumer surplus is the difference between the consumers' willingness to pay and what they actually pay.
question
The figure shows the demand and supply curves in the salt market. The government now decides to impose a sales tax of 30% on the price of salt, to be paid by the suppliers. Which of the following statements is correct?
answer
Both consumer surplus and pro- ducer surplus decrease.
question
The following question is about the effect that demand and supply elasticities have on the consumer and producer surpluses. Assuming that the market equilibrium output and price remain unchanged, which of the following statements is correct?
answer
A less elastic supply curve will lead to a larger producer surplus.
question
The diagram shows the demand and the supply curves for a textbook. The curves intersect at (Q, P) = (24, 8). Which of the following is correct?
answer
At $8, the market clears.
question
Figure 8.5 shows a price-taking bakery's marginal and average cost curves, and its isoprofit curves. The market price for bread is P*= €2.35. Which of the following statements is correct?
answer
The marginal cost curve is the firm's supply curve.
question
There are two different types of producers of a good in an industry where firms are price-takers. The marginal cost curves of the two types are given below:Type A is more efficient than Type B: for example, as shown, at the output of 20 units, the Type A firms have a marginal cost of $2, as opposed to a marginal cost of $3 for the Type B firms. There are
10 Type A firms and 8 Type B firms in the market. Which of
the following statements is correct?
10 Type A firms and 8 Type B firms in the market. Which of
the following statements is correct?
answer
The market will supply 510 units at price $3.
question
Figure 8.8 shows the equilibrium of the bread market to be 5,000 loaves per day at price $2. A year later, we find that the market equilibrium price has fallen to $1.50. What can we conclude?
answer
The fall in price could have been caused by a shift in either curve.
question
Figure 8.14 shows the demand and supply curves for salt, and the shift in the supply curve due to the implementation of a 30% tax on the price of salt. Which of the following statements are correct?
answer
The deadweight loss is given by (1/2)(P1-P0(Q*-Q1).
As a result of the tax, the consumer surplus is reduced by (1/2)(Q1+Q)(P1-P).
As a result of the tax, the consumer surplus is reduced by (1/2)(Q1+Q)(P1-P).
question
Figure 8.17 shows the effect of a tax intended to reduce the consumption of butter. The before-tax equilibrium is at A = (2.0 kg, 45 kr) and the after-tax equilibrium is at B = (1.6 kg, 54 kr). The tax imposed is 10 kr per kg of butter. Which of the following statements is correct? (Just as a point of reference, 1 Swedish Krona (kr) equals 0.11 United States Dollar)
answer
The very elastic supply curve im- plies that the incidence of the tax
falls mainly on consumers.
falls mainly on consumers.
question
Look again at Figure 8.18, which shows the market for Choccos and for all chocolate bars. Based on the two diagrams, which of the following is correct?
answer
The market marginal cost (MC) curve is approximately the sum of the MC curves of all the producers of the chocolate bars.
question
Consider an economy with firms selling differentiated products, where the only input to production is labour. Which of the following statements is correct?
answer
The more inelastic the demand curve faced by the firm, the higher the markup set by the firm.
question
You are given the following information for a country: Participation rate = 75%, Unemployment rate = 10%, Employment rate = 67.5% and Number of employed = 27 million. Based on this information, which of the following is correct?
answer
The number of unemployed is 3 million.
question
The figures depict the wage-setting curve and how it is derived using the best response function of the employees and the isocost lines for effort of the employers. U1 and U2 are unemployment rates. Which of the following statements is correct?
answer
W5 is the Nash equilibrium wage when the unemployment rate is U2.
question
The following diagram depicts a firm's isoprofit curves and demand curve, given the economy-wide demand. Which of the following statements is correct?
answer
The isoprofit curves would be steeper for lower W.
question
The figure depicts the labor market model. Which of the following statements are correct at outcome X?
answer
The firms' wage offered us at the point of tangency between their isoprofit cost line and the workers' best persons function curve for effort.
The firms' price and output are at the point of tangency between their isoprofit curve and their demand curve.
The firms' price and output are at the point of tangency between their isoprofit curve and their demand curve.
question
Which of the following statements is correct?
answer
Unlike in the competitive goods market, the excercise of power affects outcomes in the labor market.
question
Which of the following statements is correct?
answer
Money allows purchasing power to be transferred between consumers.
question
Which of the following statements is correct?
answer
Depreciation is a flow variable.
question
Consider Esther's intertemporal choice of consumption (c1, c2), where c1 and c2 are the consumption level in periods 1 (horizontal axis variable) and 2 (vertical axis variable), respectively. You are given that her preferences exhibit diminishing marginal returns to consumption. Which of the following statements is correct?
answer
Esther prefers similar amounts of c1 and c2 compared to the extreme cases of consuming all of her income as c1 or c2.
question
The diagram depicts Mary's choice of consumptions in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. In scenario 1 the interest rate is 78%, while in scenario 2 it falls to 10%. Based on this information, which of the following statements is correct?
answer
The substitution and income effects of the interest rate fall work in the opposite directions for consumption in period 2.
question
The diagram depicts Marco's choice of consumptions in periods 1 and 2. He has $100 worth of grain in period 1 and no income in period 2. Marco has two choices. In scheme 1, he can sell the grain that he does not consume and lend the money at 10%. In scheme 2, he can invest the grain that he does not consume (e.g. planting as seed) for a return of 50%. Which of the following statements is correct?
answer
Marco can do better than consumption choice B by investing all of his grain and borrowing against his period 2 output.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
