Questions and Answers of Introduction To Economics

Cameron is a bright high school senior who is thinking about going to college. The figure illustrates the marginal benefits and marginal costs of going to college. Cameron's community derives
Which of the following scenarios would you expect to yield the greatest private marginal benefit?a. Bob, who is a slob, takes a class in organization.b. Art, who is smart, returns to school to obtain
Total revenue minus total cost is equal to a. The rate of return.b. Marginal revenue. c. Profit.d. Net cost.
Why is the price for a perfectly competitive firm equal to marginal revenue but the price for a monopoly firm greater than marginal revenue?
The profit maximizing level of output for firms occurs where a. TR = MC. b. P = MC.c. Q = P. d. MC MR.e. TR= MR.
Can a monopolist charge whatever it wants for its product? Why or why not?
At Elliott's dog-walking service, the only input is labor. Elliott's labor costs are $300 per day and his service walks 30 dogs per day. To walk 31 dogs per day, his labor costs would increase to
Why is monopoly associated with deadweight loss?
For Amelia's Recycling, the marginal cost of producing the first unit of output is $20, the marginal cost of producing the second unit of output is $16, and the marginal cost of producing the third
The accompanying table shows costs for a perfectly competitive firm. The marginal cost of producing the sixth unit of output is_______.a. $31b. $36c. $5.16d. $5e. $4 Quantity of Output Per
Assume that the costs and revenues in the accompanying table apply to a perfectly competitive firm. a. Find the marginal cost, total revenue, marginal revenue, and profit associated with each level
What is the difference between normal profit and economic profit?
The table shows costs for a perfectly competitive firm. If the market price of the output is $7.00, the profit-maximizing quantity of output is ______ units per period and profits at that level of
The table shows the demand and marginal costs for a monopolist.a. Find the total revenue, marginal revenue, total cost, and profit associated with each level of output for the firm.b. Graph the
A monopolist observes that at a given output level, marginal cost exceeds marginal revenue but total revenue exceeds total cost. To maximize profit, the monopolist should: a. Go out of business.b.
Assume there are 24 million workers in the economy. Half are men and half are women. The workers supply their labor to three occupations (A, B, and C). Occupations A and B are men's occupations (they
Suppose that labor market experience is the only characteristic that influences wages. Suppose also that males and females have different levels of experience and have different "wage functions"
Suppose that labor market experience is the only characteristic that influences wages. Suppose also that males and females have different levels of experience and have different "wage functions"
Suppose that labor market experience is the only characteristic that influences wages. Suppose also that males and females have different levels of experience and have different "wage functions"
Suppose that in country A the 90:10 ratio is 2, while in country B the 90:10 ratio is 4. Discuss the relative income inequality within the two countries. Do the 90:10 ratios tell you anything about
In 2009, those in the top 20th______ percentile of the U.S. income distribution earned about of the total U.S. income earned. a. 4 percent b. 20 percent c. 50 percent d. 75 percent e. 80 percent
What is the 80:20 ratio? What are the implications for income inequality when the 80:20 ratio increases within a country?
The poverty rate is the a. Percentage of rich people in the population divided by the percentage of poor people in the population. b. Income of the poor divided by the income of the rich.c.
How do poverty rates differ across demographic and education groups in the Unites States? What are some possible sources of these differences?
The U.S. income distribution shows the a. Different income levels in the U.S. and the percentage of households earning each income level. b. Percentage of the population in poverty. c. Value of
One feature of monopoly that leads to unfavorable consequences for society is that monopolies tend toa. Set marginal cost equal to price.b. Produce more output than would a perfectly competitive
In the monopoly described in the accompanying graph, the profit-maximizing quantity of output is ______ per period, and the profit-maximizing price is ________ per unit.a. 9; $11b. 3; $15c. 6;
In the monopoly described in the graph, the dead- weight loss from the monopoly is _________ per period. a. $0b. $4.50c. $9.00d. $13.50 Price
List and explain three reasons why we observe a wage differential when comparing the average wages of males and females.
An employer who is willing to pay higher wages to avoid employing persons from some group that he is prejudiced against is said to havea. A taste for discrimination. b. No business sense.c. A taste
What is an earnings ratio? What does it mean if the female/male earnings ratio is equal to 1? What does it mean if the black/white earnings ratio declines?
The taste-based discrimination model implies that employer discrimination could be reduced ifa. It is against the law.b. Discriminating employers are at a cost disadvantage when compared to
How has the black/white earnings ratio changed since the Civil Rights Act was passed? How has the female/ male earnings ratio changed? Offer some possible explanations for these changes.
The effects of discrimination include a. Lower incomes for minorities, but not women. b. Lower incomes for men, but not Hispanics.c. Higher profits of discriminating employers.d. Lower profits for
In their research paper "Beauty, Productivity, and Discrimination: Lawyers' Looks and Lucre" [Journal of Labor Economics, 16(1) (January 1998): 172-201], economists Jeff Biddle and Daniel Hamermesh
Among the following, which is most likely an instance of discrimination? a. A male orthopedic surgeon earns more than a female pediatrician. b. The university president's male secretary earns more
In the early 1900s, many states passed legislation designed to "protect" women workers. In California, for example, a 1916 law prohibits women from employment in jobs that involve lifting "any
Data comparing average earnings by gender and racea. Provide proof that discrimination exists b. Provide proof that no discrimination exists c. Must be interpreted cautiously because people's
Suppose a commonly held but unfounded belief is that people with blue eyes are not as smart as people with brown eyes. What would you expect to happen to the relative wages between the two groups as
Statistical discriminationa. Is clearly illegal and almost never practiced.b. Involves judging people on the basis of group rather than individual characteristics.c. Increases the costs to the
Suppose that a direct payment welfare program provides a base payment of $10,000 per year to poor families. At the same time, however, the value of the base payment is reduced by $1.00 for every
Over the past 40 years, the U.S. income distribution hasa. Become more equalized across income groups.b. Become less equal across income groups.c. Not really changed much.d. Had a larger share of
Maria is a single mother of two living in San Francisco. She had her first child two weeks after graduating from high school and was unable to attend college due to lack of time and money. Dustin is
The portion of a given population that falls below the poverty line a. Is called the poverty rate. b. Does not change during economic downturns.c. Is no different for populations with higher versus
Over the past 40 years, the richest 20 percent of the U.S. population has earneda. Less income than the poorest fifth of the U.S. population. b. A declining share of total money income in the
The major source of increased income inequality in the world over the past 100 years. a. Within country inequality. b. Between country inequality. c. Increased world tax rates.d. Increased
If the U.S. uses a relative poverty measure to determine its poverty ratea. Poverty will be more easily eliminated. b. Poverty will never be eliminated. c. Poverty will be eliminated, but only
The town council of Glendale is considering a "living wage" law to raise the standard of living of all of its citizens. The new law will require businesses to pay each of their employees at least $14
U.S. income inequality hasa. Decreased over the past 40 years.b. Remained the same over the past 40 years.c. Increased over the past 40 years.d. Become similar to that of socialist countries over the
The CPI was 217.2 in December 2009 and 220.2 in December 2010. This means that the inflation rate between 2000 and 2010 was a. 3 percent.b. 1.38 percent.c. 1.36 percent.d. 2 percent.
Make a list of three different ways to divide a bag of candy bars among a group. What are the pros and cons of each method you list? If this were the way that all resources in an economy were
Which of the following systems allows for the most liberty and more likely generates efficient outcomes? a. Market capitalist systems b. Command socialist systems c. Command capitalist systems d.
Describe how market capitalist systems tend to generate efficient allocations of resources. Is efficiency an important goal for economic systems and policy makers?
The motto "take from the rich, give to the poor" is an example of which resource allocation priority? a. Equityb. Libertyc. Efficiencyd. Austeritye. All of the above
When the price of flour was $10 per unit, total spending on flour was $100,000 per day. When the price of flour fell to $8 per unit, total spending on flour rose to $125,000 per day. In this price
The price elasticity of demand is a measure of the a. Relative change in the demand curve in response to a change in price.b. Responsiveness of demand to a change in the price of a substitute
When the price of ski lessons rises by 1 percent, the quantity of ski lessons demanded falls by 3 percent. This implies that the price elasticity of demand for ski lessons isa. -1/3, elastic. b.
Name-brand medicines have fewer close substitutes than do generics. This means that the price elasticity of demand for generics is________ the price elasticity of demand for name-brand medicines. a.
The price of corn in Mexico has fallen more than 70 percent 1994, which some attribute to an increase in the supply of corn from the U.S. to Mexico. If the incomes of corn farmers in Mexico have
What are the major components of GDP? Provide an example of each.
The calculation of gross domestic product would include a. The purchase of a new automobile.b. Unemployment compensation benefits received by a former steel worker. c. The money Alice receives when
Why are only final goods and services included in the computation of GDP?
If a newspaper headline indicates that U.S. net exports were $190 billion in 2011, it likely means that a. U.S. exports were $190 billion and U.S. imports were zero. b. U.S. imports were $190
Why can GDP per capita be a misleading indicator of the economic standard of living in a country?
In the calculation of GDP, which of the following purchases is included as household consumption expenditure?a. A new apartment building purchased by a landlordb. A new calculator required for a
Why can GDP be measured using the income approach or the expenditures approach?
The value of the bricks purchased by a contractor to build a fireplace in a new home is not counted in GDP because a. Business spending of any type is excluded from GDP. b. It would be double
Why do increases in government spending generate increases in GDP? Are there any tradeoffs involved with increased government spending as a means of increasing economic output?
In the AD/AS model, an increase in aggregate demand will cause a. An increase in GDP and an increase in the price level.b. A decrease in GDP and an increase in the price level.c. An increase in GDP
How will each of the following affect the GDP and the price level of the U.S. economy? a. The government drastically cuts its spending on goods and services.b. The UK bans all U.S. imports.c. The
Per capita GDP is criticized as a measure of the economic well-being in a country becausea. It does not take the size of the country's population into account. b. It does not measure the level of
Which of the following is not a function of money? a. Unit of accountb. Store of valuec. Protection against inflationd. Medium of exchange
The CPI was 220.2 in December 2010 and 174.6 in December 2000. This means that the inflation rate between 2000 and 2010 was a. 21 percent.b. 26 percent.c. 46 percent.d. 79 percent.
During 2011, many citizens in the Middle East called for governmental reform. In some countries, oil production was reduced in the face of protests. Use an AD/AS diagram to illustrate the potential
Inflation is important because a. It affects the value of one's income.b. It affects the real return one earns on investments.c. It affects the real interest rate.d. It often affects the negotiation
If the CPI in a given year is 300, this means that a. Prices are 200 percent higher than in the base year. b. Prices have fallen since the base year. c. Prices are three times higher than in the
Your income was $25,000 in 2009 and $25,500 in 2010. The CPI was 217.2 in 2009 and 220.2 in 2010. This means that a. Your real income has fallen. b. Your real income has risen.c. Your real income
Why is equity not necessarily an outcome of market capitalist systems?
An economic system characterized by private resource ownership and public resource allocation decisions is a________ economic system.a. Market capitalistb. Market socialistc. Command capitalistd.
How does emphasizing security versus liberty affect the size of government? How does emphasizing efficiency versus equity affect the size of government?
Government-provided financial aid that is given to college students based on their income level would be an example of a__________ economic system. a. Market capitalist b. Market socialistc.
China and many of the countries in Central and Eastern Europe are classified as "transition economies" because they are in the process of moving from centrally planned, command socialist economic
A startup company developing customers is an example of aa. Market capitalist b. Market socialist c. Command capitalist d. Command socialist and selling e-readers to economic system.
The members of a college fraternity pooling their money to buy and then share an economics textbook is an example of a___________ economic system. a. Market capitalistb. Market socialistc. Command
Economists are fond of saying that "there is no such tiling as a free lunch." Use opportunity cost to explain the meaning of this saying.
The branch of economics that is concerned with broad choices and the overall performance of the economy is a. Resource economics. b. Contemporary economics. c. Macroeconomics. d. Microeconomics.
In his book The Wealth of Nations, Adam Smith noted the contradiction that, "Nothing is more useful than water: but it will purchase scarce anything; scarce anything can be had in exchange for it. A
Dave loves sushi. There are always sushi rolls that Dave is willing to try (or eat for a second or third time!). The left side of the table above shows Dave's total benefits (or total willingness to
Assuming that rational people are motivated by incentives, what would occur if the average salary of education majors falls by 30 percent and the average salary of economics majors rises by 10
It is common for people trying to lose weight to notice that the first 10 pounds are much easier to lose than the last 10 pounds. Use the concept of increasing marginal cost of explain why this is
Suppose that you have 6 hours per day to devote to studying economics and accounting. You estimate your benefits of studying for each subject as follows:What is the best way for you to divide up your
Using the table above, suppose that sushi rolls are on sale for $2.50. How many rolls will Dave choose to buy in a night? a. 1b. 2c. 3d. 4e. 5 Number of Sushi Rolls 1 2 3 4 5 Total
Tom Riddle is planning to use rare magic wands to attack wizards in London. He needs to buy many wands because their powers work differently on certain wizards. The table above reflects Tom's total
Based on the table above, the marginal cost of the fourth wand for Tom is: a. $5,000b. $3,500c. $3,400d. $2,000e. $500 Total number of Wands 1 2 3 4 Total Benefit ($) 1,800 3,300 4,500 5,400 Total
Based on information in the table above, the optimal number of wands for Tom to buy is: a. 1b. 2c. 4d. 5e. More than 7 Total number of Wands 1 2 3 4 Total Benefit ($) 1,800 3,300 4,500 5,400 Total
Use a graph to demonstrate how a country's PPF will shift if additional resources become available to the country.
Use a graph to demonstrate how an improvement in technology used for the production of one good but not the other will affect the PPF.
Which of the following is true of production possibility frontiers (PPFs)? a. The slope of the PPF reflects the opportunity costs of producing different combinations of two goods.b. Combinations of
When economic policies such as price floors or price ceilings generate nonequilibrium prices, which of the following can occur? a. Market surplus b. Market shortage c. Deadweight loss d. All of
The first hour you study on Thursday night for your Friday morning Economics 101 final exam will improve your grade on the final exam from a score of 50 percent to a score of 70 percent. The next

Showing 200 - 300 of 352