Microeconomics Test 4 Quizzes - Assignment Essays %

question

A firm that charges a very low price would be practicing predatory pricing if

answer

the price would only be profitable if it succeeded in driving a rival out of the market

question

The Justice Department and the Federal Trade Commission are likely to oppose mergers

answer

which threaten to reduce competition

question

Economies of scale simply imply (i) a continuously falling AC curve; (ii) a larger output is more efficient than a smaller input

answer

i and ii

question

Setting price equal to marginal cost in a natural monopoly will lead to

answer

losses for the firm

question

One of the clear effects of deregulation was

answer

lower prices of many services

question

Which of the following holds true in a market when the invisible hand functions properly?

answer

MC=MU=P

question

If the marginal utility of a product exceeds its MC, we would want, on efficiency grounds, to

answer

increase production

question

A firm is generating detrimental externalities when

answer

MSC is greater than MPC

question

An appropriate government policy toward negative externalities is to

answer

impose a tax or fine on the activity that creates the negative externality

question

Government often finds it difficult to cope with externalities because

answer

costs and benefits are difficult to assess in monetary terms

question

Public goods are

answer

valuable socially, not deplettable and often not excludable, and subject to the "free rider" problem

question

Without government intervention, public goods would

answer

not be provided

question

A process through which a firm seeks to obtain earnings without contributing to production, thus wasting valuable resources, is known as

answer

rent seeking

question

Moral hazard is best described as

answer

the presence of insurance increasing the probability of a loss

question

A tax system under which an individual pays a higher fraction of his income in taxes at higher levels of income is formally described as

answer

progressive

question

The average tax rate is

answer

the ratio of taxes to income

question

Social security payroll taxes are examples of

answer

regressive taxation

question

An efficient tax is one that raises the desired tax revenue but creates the least possible

answer

excess burden

question

When a tax is imposed on an item, it can generally be said that the incidence of the tax is

answer

on both the buyer and seller

question

Horizontal equity is the concept that

answer

equally situated individuals should be taxed equally

question

On necessities, more of the incidence of a tax is

answer

borne by the consumer

question

Policies that redistribute income

answer

- reduce the rewards of high-income earners
- raise the rewards of low-income earners
- reduce the incentive to earn high income

question

Tax loopholes serve to

answer

erode the progressivity of the income tax

question

The interest rate is determined by

answer

the supply and demand of financial capital (loanable funds)

question

Firms will borrow to finance capital expansion until the MRP of the investment equals the

answer

interest payment charged for borrowing

question

The market level of rent

answer

is entirely determined by the demand side

question

Marginal land is land

answer

that is on the borderline of being used or not

question

The demand for labor is derived from the

answer

demand for final-output goods

question

The demand for labor is derived demand. Employers hire workers until the

answer

wage rate equals the marginal revenue product of labor

question

A decision to supply labor or not to supply it is also a decision to

answer

demand or forgo a certain amount of leisure

question

The income effect of a wage increase is expected to increase

answer

demand for leisure

question

The price of leisure is the

answer

wage rate

question

The substitution effect of an increase in the wage rate would lead most people to

answer

supply more labor and demand less leisure

question

One reason why nations trade is because

answer

resources are not equally distributed to all nations

question

A country has a comparative advantage over another in the production of widgets if it can produce

answer

widgets at a lower opportunity cost than can the other country

1 of 35

question

A firm that charges a very low price would be practicing predatory pricing if

answer

the price would only be profitable if it succeeded in driving a rival out of the market

question

The Justice Department and the Federal Trade Commission are likely to oppose mergers

answer

which threaten to reduce competition

question

Economies of scale simply imply (i) a continuously falling AC curve; (ii) a larger output is more efficient than a smaller input

answer

i and ii

question

Setting price equal to marginal cost in a natural monopoly will lead to

answer

losses for the firm

question

One of the clear effects of deregulation was

answer

lower prices of many services

question

Which of the following holds true in a market when the invisible hand functions properly?

answer

MC=MU=P

question

If the marginal utility of a product exceeds its MC, we would want, on efficiency grounds, to

answer

increase production

question

A firm is generating detrimental externalities when

answer

MSC is greater than MPC

question

An appropriate government policy toward negative externalities is to

answer

impose a tax or fine on the activity that creates the negative externality

question

Government often finds it difficult to cope with externalities because

answer

costs and benefits are difficult to assess in monetary terms

question

Public goods are

answer

valuable socially, not deplettable and often not excludable, and subject to the "free rider" problem

question

Without government intervention, public goods would

answer

not be provided

question

A process through which a firm seeks to obtain earnings without contributing to production, thus wasting valuable resources, is known as

answer

rent seeking

question

Moral hazard is best described as

answer

the presence of insurance increasing the probability of a loss

question

A tax system under which an individual pays a higher fraction of his income in taxes at higher levels of income is formally described as

answer

progressive

question

The average tax rate is

answer

the ratio of taxes to income

question

Social security payroll taxes are examples of

answer

regressive taxation

question

An efficient tax is one that raises the desired tax revenue but creates the least possible

answer

excess burden

question

When a tax is imposed on an item, it can generally be said that the incidence of the tax is

answer

on both the buyer and seller

question

Horizontal equity is the concept that

answer

equally situated individuals should be taxed equally

question

On necessities, more of the incidence of a tax is

answer

borne by the consumer

question

Policies that redistribute income

answer

- reduce the rewards of high-income earners
- raise the rewards of low-income earners
- reduce the incentive to earn high income

question

Tax loopholes serve to

answer

erode the progressivity of the income tax

question

The interest rate is determined by

answer

the supply and demand of financial capital (loanable funds)

question

Firms will borrow to finance capital expansion until the MRP of the investment equals the

answer

interest payment charged for borrowing

question

The market level of rent

answer

is entirely determined by the demand side

question

Marginal land is land

answer

that is on the borderline of being used or not

question

The demand for labor is derived from the

answer

demand for final-output goods

question

The demand for labor is derived demand. Employers hire workers until the

answer

wage rate equals the marginal revenue product of labor

question

A decision to supply labor or not to supply it is also a decision to

answer

demand or forgo a certain amount of leisure

question

The income effect of a wage increase is expected to increase

answer

demand for leisure

question

The price of leisure is the

answer

wage rate

question

The substitution effect of an increase in the wage rate would lead most people to

answer

supply more labor and demand less leisure

question

One reason why nations trade is because

answer

resources are not equally distributed to all nations

question

A country has a comparative advantage over another in the production of widgets if it can produce

answer

widgets at a lower opportunity cost than can the other country

Order an Essay Now & Get These Features For Free:

Place an Order