Questions:
1. When a second firm enters a monopolist's market, the monopolist's marginal revenue curve will __________ .
A. shift to the left as its initial demand curve shifts to the left
B. shift to the right as its initial demand curve shifts to the right
C. remain the same
D. none of the above
2. In which of the following market structures do you find many sellers?
A. monopoly
B. perfect competition
C. monopolistic competition
D. monopolistic competition and perfect competition
3. When a second firm enters a monopolist's market __________ .
A. market price will rise
B. the quantity produced by the first firm will increase
C. the first firm's profits will decrease
D. All of the above will occur.
4. When a second firm enters a monopolist's market, the initial demand curve facing the monopolist will __________ .
A. shift to the left
B. shift to the right
C. remain the same
D. none of the above
5. In which of the following market structures do you find many sellers?
A. monopoly
B. perfect competition
C. monopolistic competition
D. monopolistic competition and perfect competition
6. Which of the following is NOT a characteristic of a perfectly competitive market?
A. a large number of firms in a market
B. selling a standardized product
C. substantial barriers to entry
D. an individual firm having no control over price
7. Which of the following is a characteristic of a perfectly competitive market?
A. a large number of firms in a market
B. selling a standardized product
C. no barriers to entry
D. all of the above
8. Long-run equilibrium for a perfectly competitive industry occurs when __________ .
A. P = MC = ATC
B. P = MC = AVC
C. P = MC = AFC
D. P > MC = ATC
9. In order to practice price discrimination, a firm must be in a market such that the consumers in its market __________.
A. have identical tastes
B. have identical elasticity of demand
C. have different elasticity of demand
D. have the same demand for its product
10. The marginal revenue product of labor is the __________ .
A. change in labor necessary to produce an additional unit of output
B. cost of additional labor necessary to produce an additional unit of output
C. change in output resulting from adding an additional unit of labor
D. change in revenue resulting from adding an additional unit of labor
11. The price of an hour of leisure time is __________ .
A. the income that could have been earned in that hour
B. zero
C. the minimum wage rate
D. determined by the value of the activity the person engages in during that hour of leisure
12. Without the government's redistribution programs, the income share of the lowest quintile would __________ and the income share of the highest quintile would __________ .
A. decrease; remain the same
B. decrease; increase
C. remain the same; increase
D. increase; decrease
13. Suppose that differences in skills explain part of the difference in wages by race. Wage differences arising from skill differences __________ .
A. may result from past discrimination in access to education
B. are not attributable to present or past discrimination
C. will disappear when labor markets are in equilibrium
D. are always classified as racial discrimination
14. A minimum wage that is less than the prevailing market wage will __________ .
A. have no effect on the market
B. increase unemployment
C. increase wages
D. reduce wages
15. Which of the following explains the impact of the expansion of international trade on the demand for less skilled workers in the United States?
A. An increase in international trade has increased the demand for less skilled workers.
B. An increase in international trade has decreased the demand for less skilled workers.
C. An increase in international trade has had little impact on the demand for less skilled workers.
D. The impact of the expansion of international trade on the demand for less skilled workers in the United States varies from year to year.
16. One reason that college graduates earn higher wages than non-graduates is because college graduates __________ .
A. acquire additional skills to allow them to work in more industries than non-graduates
B. always work in more dangerous jobs than non-graduates
C. are always more intelligent than non-graduates
D. are less equipped to deal with technological change, as their skills are technology-specific
17. When a firm hires a worker for one hour, the marginal benefit to that firm equals the __________ .
A. dollar value of the goods produced by that worker in one hour
B. hourly wage of that worker
C. number of items the worker produces in that hour
D. price of each item that the worker produces in that hour
18. People who complete college provide a signal to employers about their skills and thus face better employment opportunities than equally skilled high school graduates. This is called __________ .
A. the learning effect of a college education
B. the signaling effect of a college education
C. the discriminatory effect of a college education
D. none of the above
19. One reason that professional baseball players earn higher incomes than college professors is that __________ .
A. the training costs to enter the baseball profession are low
B. there no barriers to entry in the baseball profession
C. few people have the skill to play professional baseball
D. being a college professor requires less education
20. The change in the quantity of labor demanded resulting from a change in the quantity produced of the product is known as the __________ effect.
A. input-substitution
B. price elasticity
C. output
D. derived demand
21. Which of the following is the most important reason for growing inequality in the income distribution in the United States?
A. an increase in demand for highly educated workers
B. inheritances
C. discrimination
D. a steady increase in tuition and fees for a college education
22. Which of the following explains the impact of technological advances on the wage gap between less skilled workers and highly skilled workers?
A. Advances in technology have increased the demand for higher education degrees and widened the wage gap between the two groups.
B. Advances in technology have increased the productivity of less skilled workers and thus narrowed the wage gap between the two groups.
C. Advances in technology have increased the demand for less skilled workers and highly skilled workers alike, and thus the wage gap between the two groups remains unchanged.
D. none of the above
23. Given their skills and education, steelworkers earn higher incomes than they would in other occupations. This is partly because __________ .
A. steel workers face the higher risk of getting injured or killed
B. it is costly to acquire skills necessary for jobs at steel mills
C. few people have skills and knowledge required for jobs at steel mills
D. all of the above
24. Other things being equal, as diminishing marginal returns begin to occur, the marginal revenue product of labor __________ .
A. decreases as more workers are used
B. increases as more workers are used
C. remains unchanged as more workers are used
D. none of the above
25. Which of the following is a main factor that explains the differences in the incomes of U.S. households?
A. inheritances
B. luck and misfortune
C. discrimination
D. all of the above
26. The poverty rate in the United States is highest for __________ .
A. married couples
B. childless households
C. female headed households
D. single people
27. Suppose that a minimum wage is set that is higher than wages for retail workers. This is __________ news for shoppers and __________ retail workers.
A. bad; good news for some, but not all
B. bad; good news for all
C. good; good news for some but not all
D. good; good news for all
28. Compared to the typical high-school graduate, the typical college graduate has greater human capital and thus more options for both low-skill and high-skill jobs. This is called __________ .
A. the signaling effect of a college education
B. the learning effect of a college education
C. the discriminatory effect of a college education
D. all of the above