Question 1

what does marginal productivity theory of factor input prices state?

• under competition, factor inputs are paid their total revenue product
• under competition, factor inputs are paid their marginal revenue product
• under monopoly, factor inputs are paid the price set by government regulators
• under monopoly, factor inputs are paid their marginal revenue product

Question 2

why did people have so many children in the middle ages?

• the government grafted so many children into the army that it was necessary to have many so some would be available to work the farm
• most countries had a law that married couples had to have a certain minimum number of children
• there was no retirement plan and children often didn't reach adulthood. so the more kids you had the better retirement you would have with their support
• the government paid you for each child you had

Question 3

rational ignorance allows congressmen to do what?

• try to match policies to what pleases the median voter
• follow policies that help the average voter to the detriment of special interests
• vote against the interest of most voters in favor of special interest organizations, and fain votes
• avoid using television ads as the voter is ignorant of what he says in his TV adds anyway

Question 4

why do some people have higher income

• natural ability
• education
• discrimination
• all of the other 3 answers are correct

Question 5

which of the following is a nonexcludable good

• freeways
• electronics
• vehicles
• clothing

Question 6

what is the increase in total cost caused by buying one more input called?

• all of the other 3 answers are correct
• marginal factor cost
• public goods
• positive externalities

Question 7

what is logrolling

• the situation in which average voters all agree to vote for a package of otherwise unrelated laws that they individually favor
• the situation in which groups of legislators all agree to vote for a package of otherwise unrelated laws that they individually favor
• the study of political-choice-making using the same tools we use in the rest of economics: rational self-interest
• when one politician votes for a law that would affect the one who voted for him negatively, but that voter doesn't know about it because he would have had to have spent a lot of time researching to find out

Question 8

a person will continue to take more of a good as long as MU>0 for which type of goods?

• goods he has to pay for, but not free goods
• never
• freed goods
• both free goods and goods he has to pay for

Question 9

a shopper at the store buys the combination of goods that they will give them the highest what?

• public utility
• marginal utility
• private utility
• total utility

Question 10

which value for the benefit reduction rate of a welfare program gives the recipients the highest incentive to keep working?

• 20%
• 10%
• 30%
• 100%

Question 11

Which of these is an externality situation?

a) buying a hot at Sonic because you love hot dogs

b) studying hard on a test to get a good grade

c) speeding in your car on the freeway so that there is a good chance of an accident with another driver.

d) watching a scary movie on Netflix

Question 12

a) how does the government get around the free rider problem for public goods

it forces people to pay through the power of taxation

b) when something is made by the government, it is made for free, so there is no problem fo who pays

c)the government has the power to exclude people from using public goods even when private companies can't

d) people will voluntarily contribute to the government when they would not voluntarily pay a private business

Question 13

what happens to the marginal revenue product as more workers are hired when the company is in the region of diminishing marginal returns

• it could either rise, fall, or stay the same
• it rises
• it stays the same
• it falls

Question 14

A worker is making $20,000. The government announces it will pay everyone whatever is necessary to reach the poverty line of $15.000. What can we say about this worker?

a) Since he is earning more than the poverty line, he would certainly choose to continue working.

b) It is very possible that he would stop working

Question 15

What does a cold day do to the utility of a jacket compared to a hot day?

a) lowers it

b) raises it

c) The utility of an item can not be changed by circumstance, so it stays the same

Question 16

To end poverty, a welfare program would have to have what?

a) A guaranteed income level of $0

b) A benefit reduction rate of 0%.

c) A guaranteed income level above the poverty line

d) A benefit reduction rate of 100%

Question 17

The general name for externalities. public goods. and the tragedy of the commons is what?

a) Market failure.

b) Market expubtrag.

c) Market economy.

d) Market perfection.

Question 18

Does money have a diminishing marginal utility?

a) Yes. because of limited storage space.

b) No. because while people may get tired of eating donuts. they never get tired of

c) No. because nothing has diminishing marginal utility.

d) Yes. because the goods It buys have diminishing marginal utility.

Question 19

Which of these was the liberal solution to the problem of poverty?

a) Don't have children till you are married.

b) Get a job.

c) Finish school.

d) More generous welfare programs.

Question 20

Why does the signaling theory of education believe that a college degree increases a worker's value to an employer?

a) College has taught the potential worker many valuable labor skills.

b) Actually the signalling theory predicts a college degree lowers the value of a worker to a business.

c)It signals this worker is willing and able to learn.

d)The student has made valuable labor contacts with his fellow students.