A) Which of the following is an effective government response to a natural monopoly's tendency to produce less output at a higher cost than the socially optimal quantity?

1. A per-unit subsidy
2. A patent
3. A lump-sum subsidy and price ceiling
4. Antitrust legislation
5. A per-unit tax

B) A bicycle taxi in the historic district of a city has room for one seat, available for anyone to rent. What type of good best describes this taxi seat?

1. Public good
2. Private good
3. Survival good
4. Artificially scarce good
5. Common pool resource

C) Which of the following prevents private market negotiations from adequately addressing an externality?

1. Perfect competition
2. Allocative efficiency
3. High transaction costs
4. Perfectly symmetric information
5. Clearly defined property rights

D) One way that externalities can be eliminated is to

1. increase competition
2. increase transaction costs
3. ensure perfect information
4. properly define property rights
5. relax enforcement of property rights

E) If a good's price elasticity of supply is inelastic and its quantity supplied decreased by 20%, which of the following must be true?

1. Price must have decreased by exactly 20%.
2. Price must have decreased by more than 20%.
3. Price must have decreased by less than 20%.
4. Quantity supplied must have decreased by 20 units.
5. Quantity supplied must have increased by 10 units.

F) The number of units of output that an acre of land will produce increases, ceteris paribus. How will this change in productivity affect demand for the land?

1. Demand will increase.
2. Demand will decrease.
3. There will be no change in demand.
4. Demand will not change, but quantity demanded will decrease.
5. Demand will not change, but quantity demanded will increase.

G) The purchase of an additional unit increases the price of the unit and of the existing units being purchased. This describes

perfect competition

1. perfect competition
2. monopolistic competition
3. an oligopoly
4. a monopoly
5. a monopsony

H) Robots become a strong substitute factor for human workers in producing Good A. At the same time, the licensing fees increase for human workers who produce Good A. What would happen to the market equilibrium quantity of labor and wage rate for specialized labor to produce A?

1. The quantity of labor increases, and the wage rate increases.
2. The quantity of labor decreases, and the wage rate increases.
3. The effect on the quantity of labor is indeterminate, and the wage rate decreases.
4. The quantity of labor decreases, and the effect on the wage rate is indeterminate.
5. The quantity of labor and the wage rate both remain constant.

I) A firm pays $10 per unit of labor in a perfectly competitive labor market and produces sprockets, which sell at $4 per unit. The marginal product of the 12th unit of labor is 25 sprockets. What is its marginal revenue product of labor, and should the firm hire more labor?

1. $100; yes it should
2. $100; no it should not
3. $120; no it should not
4. $250; no it should not
5. $480; yes it should

J) Which of the following accurately describes how a profit-maximizing firm determines its wage in a perfectly competitive labor market?

1. It increases its wage until it intersects the marginal revenue product curve.
2. It decreases its wage until it intersects the marginal revenue product curve.
3. It changes its wage until marginal physical product equals marginal resource cost.
4. It changes its wage until marginal revenue product equals marginal resource cost.
5. It must accept the market wage because it is a wage-taker.