60.

(06.05 MC)

Which of the following policies will most likely help a government to achieve a goal of reducing the wealth gap between those with great wealth and those with no wealth? (1 point)

Increasing the interest rate on bank loans

Increasing taxes on income from interest earned on investments

Increasing the nation's per capita income

Encouraging actions that yield increased returns to entrepreneurs

Switching from a progressive tax system to a regressive tax system

56.

(06.03 MC)

Private investors complain that the "free rider problem" makes investment in public goods and services inefficient and less profitable. Which of the following statements explains why? (1 point)

Public goods are rivalrous.

Public goods are excludable.

Public goods are non-rivalrous.

Public goods are non-affordable.

Public goods are non-excludable.

57.

(06.04 MC)

What is the most likely goal of a government that enacts a per-unit subsidy? (1 point)

To increase market competition

To correct for a positive externality

To correct for a negative externality

To encourage production of private goods

To increase profit and encourage production

52.

(06.01 MC)

In long-run equilibrium, the marginal social cost equals the marginal private cost, and the marginal social benefit equals the marginal private benefit. This describes which of the following markets? (1 point)

Oligopoly with no externalities

Monopoly with perfect information

Perfect competition with externalities

Perfect competition with asymmetric information

Perfect competition with no externalities

53.

(06.02 MC)

A market has a cost or benefit not internalized, unclear property rights, and high transaction costs. This describes (1 point)

monopolistic competition

a natural monopoly

an externality

an oligopoly

a monopsony

48.

(05.04 MC)

Which of the following is correct about a monopsonistic factor market? (1 point)

Resources are efficiently allocated.

There is one seller and many buyers.

The monopsony has the same quantity transacted as in a perfectly competitive input market.

The demand curve is downward sloping and above the marginal cost curve.

The marginal benefit to suppliers will be less than the marginal cost to the buyer.

49.

(06.01 MC)

Which of the following describes a situation where the marginal social cost is greater than the marginal private cost at equilibrium? (1 point)

Oligopoly

Monopoly

Positive externality

Allocative efficiency

Market inefficiency

50.

(06.01 MC)

A market in which private consumers are not the only beneficiaries of their purchase represents a ________ and will result in ________ than the socially optimal quantity. (1 point)

negative externality; less

negative externality; more

positive externality; more

positive externality; less

natural monopoly; less

45.

(05.02 MC)

Assume that all cell phone company workers are less productive because of a decline in human capital. How does this affect the demand for labor in the telecommunications industry? (1 point)

The market labor demand curve shifts to the left.

The quantity demanded of labor shifts to the left.

The market labor demand curve shifts to the right.

The slope of the market labor demand curve increases.

The slope of the market labor demand curve decreases.

46.

(05.03 MC)

If the wage in a perfectly competitive labor market is $16 and the firm can sell all the output it wants at $2 per unit, then the marginal product of the last worker employed must be (1 point)

8 units

14 units

18 units

32 units

indeterminate

40.

(04.03 MC)

A monopolist engages in perfect price discrimination. What will happen to the consumer surplus? (1 point)

It significantly increases as it absorbs the producer surplus.

It disappears and becomes deadweight loss.

It decreases based on the elasticity of demand.

It is unchanged.

It is entirely converted to producer surplus.

41.

(04.04MC)

At 120 units of output, a monopolistically competitive firm's demand is $12, marginal revenue is $8, its marginal cost is $8, and its average total cost is $12. Based on this, which of the following is true? (1 point)

The firm will produce more than 120 units of output.

The firm will produce fewer than 120 units of output.

The firm is earning normal profit at its profit-maximizing quantity.

The firm will earn $960 in profit.

The firm will earn $480 in profit.

42.

(04.05 MC)

In the context of oligopoly, which of the following describes a situation in which a firm should take the same action regardless of the action of the other firm? (1 point)

Price collusion

Prisoner's dilemma

Nash equilibrium

Dominant strategy

Game theory

36.

(03.07 MC)

Farm2U produces its product in a perfectly competitive market that is producing where MR = MC and price is higher than average variable costs. Farm2U is earning economic losses. What should the Farm2U do? (1 point)

Increase output to reduce economic losses

Shut down immediately

Reduce output below minimum efficient scale

Decrease price to increase revenue

Leave the market in the long run

37.

(04.01 MC)

If barriers to entry ________ or product differentiation ________, competition in a market will ________. (1 point)

increase; increases; decrease

increase; increases; increase

increase; decreases; increase

decrease; increases; increase

decrease; decreases; decrease

38.

(04.02 MC)

Which of the following distinguishes a natural monopoly from all other market structures, including non-natural, or classic, monopolies? (1 point)

A single firm with market power

Multiple suppliers having higher production costs than a single supplier

An insurmountable barrier to entry protecting persistent positive economic profits

Productive and allocative inefficiency at the profit-maximizing quantity and price

A unique product

1.

(01.01 MC)

Why might salt be a resource with a high cost in one market and a very low cost in another market? (1 point)

Trade could affect costs.

Its supply could be scarce in one market and very great in another.

The higher cost market might have a much lower demand for salt than its supply.

The higher cost market might have no demand for salt.

The lower cost market might have more trade-offs for salt harvesting.

2.

(01.02 LC)

Which of the following is a basic question that must be answered in resource allocation? (1 point)

How much education should workers have?

What goods and services should be produced?

What is a fair price for a particular good or service?

How much should a good or service cost the consumer?

What sort of technology should be used to produce goods?