ECON #4
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ECON #4

Course: ECON 2100, Spring 2012

School: Kennesaw

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TEST BANK 4 EC 2100 FALL 2010 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The typical firm in the U. S. economy a. has some degree of market power. b. sells its product for a price that is equal to the marginal cost of producing the last unit. c. is perfectly competitive. d. is a monopoly. ____ 2. The two types of imperfectly competitive markets are a....

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BANK TEST 4 EC 2100 FALL 2010 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The typical firm in the U. S. economy a. has some degree of market power. b. sells its product for a price that is equal to the marginal cost of producing the last unit. c. is perfectly competitive. d. is a monopoly. ____ 2. The two types of imperfectly competitive markets are a. markets with differentiated products and monopoly. b. markets with differentiated products and oligopoly. c. oligopoly and monopoly. d. monopolistic competition and oligopoly. ____ 3. Firms in industries that have competitors but do not face so much competition that they are price takers are oper ating in either a(n) a. oligopoly or perfectly competitive market. b. oligopoly or monopoly market. c. oligopoly or monopolistically competitive market. d. monopoly or monopolistically competitive market. ____ 4. Imperfectly competitive firms are characterized by a. horizontal demand curves. b. standardized products. c. a large number of small firms. d. price making ability. ____ 5. Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an ex ample of a(n) (i) imperfectly competitive market. (ii) monopoly market. (iii) oligopoly market. a. (i) and (ii) only b. (ii) and (iii) only c. (i) and (iii) only d. (iii) only ____ 6. A concentration ratio a. measures the percentage of total sales of the top firm in the industry. b. reflects the level of competition in an industry. c. is inversely related to the price charged by the top firm in the industry. d. All of the above are correct. ____ 7. The higher the concentration ratio, the a. more control an individual firm has to set prices. b. more competitive the industry. c. less competitive the industry. d. Both a and c are correct. Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. Firm Industry B Industry C 1 0.24 0.46 0.10 0.32 2 0.13 0.24 0.08 0.16 3 0.10 0.10 0.06 0.08 4 0.08 0.05 0.05 0.04 5 0.05 0.04 0.04 0.02 6 0.03 0.03 0.03 0.01 7 0.02 0.02 0.02 0.01 8 ____ Industry A 0.01 0.01 0.01 0.01 8. Refer to Table 16-1. Which industry has the highest concentration ratio? a. Industry A b. Industry B c. Industry C d. Industry D Industry D ____ 9. Each firm in a monopolistically competitive firm faces a downward-sloping demand curve because a. there are many other sellers in the market. b. there are very few other sellers in the market. c. the firm's product is different from those offered by other firms in the market. d. that firm faces the threat of entry into the market by new firms. ____ 10. Each firm in a monopolistically competitive market a. earns both short-run and long-run profits. b. faces a downward-sloping demand curve. c. cannot earn economic profit in the short run. d. sets price equal to marginal cost. ____ 11. A monopolistically competitive firm chooses its a. price and quantity just as a monopoly does. b. quantity but faces a horizontal demand curve just as a competitive firm does. c. price but can sell any quantity at the market price just as an oligopoly does. d. price and quantity based on the decisions of the other firms in the industry just as an oligo poly does. ____ 12. A monopolistically competitive firm faces the following demand schedule for its product: Price ($) 10 9 8 7 6 5 4 3 2 1 Quantity 2 4 6 9 11 13 15 17 19 21 The firm has total fixed costs of $20 and a constant marginal cost of $2 per unit. The firm will maximize profit with a. 6 units of output. b. 9 units of output. c. 11 units of output. d. 13 units of output. Figure 16-2 This figure depicts a situation in a monopolistically competitive market. ____ 13. Refer to Figure 16-2. What price will the monopolistically competitive firm charge in this market? a. $60 b. $70 c. $75 d. $80 Figure 16-5 ____ 14. Refer to Figure 16-5. Which of the graphs shown would be consistent with a firm in a monopolistically competit ive market that is doing its best but still losing money? a. panel a b. panel b c. panel c d. panel d Figure 16-6 ____ 15. Refer to Figure 16-6. The firm depicted in panel b faces a horizontal demand curve. If panel b depicts a profitmaximizing firm, a. it could be operating in either a perfectly competitive market or in a monopolistically com petitive market. b. it would not have excess capacity in its production as long as it is earning zero economic profit. c. it is able to choose the price at which it sells its product. d. the firm can always raise its profit by increasing production since consumers will buy as much as the firm can produce. ____ 16. In which of the following markets is economic profit driven to zero in the long run? a. oligopoly b. monopoly c. monopolistic competition d. cartels ____ 17. When a firm's demand curve is tangent to its average total cost curve, the a. firm's economic profit is zero. b. firm must be earning economic profits. c. firm must be incurring economic losses. d. firm must be operating at its efficient scale. ____ 18. "In a long-run equilibrium, price is equal to average total cost." This statement applies to a. competitive markets, but not to monopolistically competitive markets or monopolies. b. competitive and monopolistically competitive markets, but not to monopolies. c. competitive markets, monopolistically competitive markets, and monopolies. d. None of the above is correct. ____ 19. Suppose the point of tangency that characterizes long-run equilibrium for a monopolistically competitive firm oc curs at Q1 units of output. This level of output, Q1, a. exceeds the level of output at which marginal revenue equals marginal cost. b. exceeds the level of output at which marginal cost equals average total cost. c. falls short of the level of output at which price equals marginal cost. d. exceeds the firms efficient scale of output. Figure 16-7 The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms. ____ 20. Refer to Figure 16-7. Which of the diagrams illustrates the impact of some existing firms leaving the market? a. panel a b. panel b c. panel c d. panel d Table 16-3 This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. Quantity Price Marginal Cost Average Total Cost 0 $10 -- -- 1 $9 $3 $14 2 $8 $6 $10 3 $7 $9 $9 4 $6 $12 $10 5 $5 $15 $12 6 $4 $18 $14 7 $3 $21 $17 8 $2 $24 $21 9 $1 $27 $25 10 $0 $30 $29 ____ 21. Refer to Table 16-3. What price will this firm charge to maximize profit? a. $6 b. $7 c. $8 d. $9 Table 16-5 Tracis Hairstyling is one salon among many in the market for hairstyling. The following table presents cost and revenue data for hair cuts at Tracis Hairstyling. COSTS REVENUES Quantity Produced Total Cost Marginal Cost Quantity Demanded Price 0 $10 -- 0 $50 1 $15 1 $45 2 $21 2 $40 3 $28 3 $35 Total Revenue Marginal Revenue -- 4 $36 4 $30 5 $45 5 $25 6 $55 6 $20 7 $66 7 $15 8 $78 8 $10 ____ 22. Refer to Table 16-5. At the profit-maximizing quantity, what is Tracis total profit? a. $30 b. $59 c. $77 d. $84 ____ 23. The administrative burden of regulating price in a monopolistically competitive market is a. small due to economies of scale. b. large because price is usually below marginal cost. c. large because of the large number of firms that produce differentiated products. d. small because firms produce with excess capacity. ____ 24. When existing firms lose customers and profits due to entry of a new competitor, a a. predatory-pricing externality occurs. b. consumption externality occurs. c. business-stealing externality occurs. d. product-variety externality occurs. ____ 25. Which of the following is not an argument made by critics of advertising? a. Advertising manipulates peoples tastes. b. Advertising impedes competition. c. Advertising promotes economies of scale. d. Advertising increases the perception of product differentiation. ____ 26. The primary claim of defenders of advertising is that it a. conveys information about firm profitability. b. is psychological rather than informational. c. enhances the information available to consumers. d. reduces the elasticity of demand for a firms product. ____ 27. Most businesses advertise their products and services. Some business use SPAM emails to advertise because the cost of a mass e-mail is close to zero. Other business spend millions of dollars to advertise in a 30-second spot during the Super Bowl. Having observed this real world data, economists argue that the amount of money that a business spends on advertising is a proxy for a good or service's a. size. b. quality. c. newness. d. cost of production. ____ 28. In some countries, brand name fast-food restaurants are not allowed to operate. Such restrictions are likely to a. enhance the social welfare of society. b. increase the number of fast-food restaurants. c. reduce barriers to entry in imperfect markets. d. reduce the competitive nature of local fast-food markets. Scenario 16-3 Consider the problem facing two firms, Firm A and Firm B, in the fast-food restaurant market. Each firm has just come up with an idea for a new fast-food menu item which it would sell for $4. Assume that the marginal cost for each new menu item is a constant $2, and the only fixed cost is for advertising. Each company knows that if it spends $12 million on advertising it will get 2 million consumers to try its new product. Firm A has done market research which suggests that its product does not have any "staying" power in the market. Even though it could get 2 million consumers to buy the product once, it is unlikely that they will continue to buy the product in the fu ture. Firm B's market research suggests that its product is very good, and consumers who try the product will con tinue to be consumers over the ensuing year. On the basis of its market research, Firm B estimates that its initial 2 million customers will buy one unit of the product each month in the coming year, for a total of 24 million units. ____ 29. Refer to Scenario 16-3. If Firm A decides to advertise its product it can expect to a. incur a loss of $8 million. b. incur a loss of $4 million. c. earn a profit of $4 million. d. earn a profit of $8 million. ____ 30. As the number of firms in an oligopoly increases, the a. price approaches marginal cost, and the quantity approaches the socially efficient level. b. price and quantity approach the monopoly levels. c. price effect exceeds the output effect. d. individual firms profits increase. Table 17-1 Imagine a small town in which only two residents, Lisa and Mark, own wells that produce safe drinking water. Each week Lisa and Mark work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Lisa and Mark can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: Quantity (in gallons) Price Total Revenue (and Total Profit) 0 $120 $0 100 110 11,000 200 100 20,000 300 90 27,000 400 80 32,000 500 70 35,000 600 60 36,000 700 50 35,000 800 40 32,000 900 30 27,000 1,000 20 20,000 1,100 10 11,000 1,200 0 0 ____ 31. Refer to Table 17-1. If Lisa and Mark operate as a profit-maximizing monopoly in the market for water, how many gallons of water will be produced and sold? a. 0 b. 500 c. 600 d. 1,200 ____ 32. Refer to Table 17-1. If the market for water were perfectly competitive instead of monopolistic, how many gal lons of water would be produced and sold? a. 0 b. 600 c. 900 d. 1,200 Table 17-3. The information in the table below shows the total demand for premium-channel digital cable TV subscriptions in a small urban market. Assume that each digital cable TV operator pays a fixed cost of $200,000 (per year) to provide premium digital channels in the market area and that the marginal cost of providing the premium channel service to a household is zero. Quantity Price (per year) 0 $180 3,000 $150 6,000 $120 9,000 $ 90 12,000 $ 60 15,000 $ 30 18,000 $0 ____ 33. Refer to Table 17-3. Assume there are two digital cable TV companies operating in this market. If they are able to collude on the quantity of subscriptions that will be sold and on the price that will be charged for subscriptions, then their agreement will stipulate that a. each firm will charge a price of $90 and each firm will sell 4,500 subscriptions. b. each firm will charge a price of $90 and each firm will sell 9,000 subscriptions. c. each firm will charge a price of $120 and each firm will sell 3,000 subscriptions. d. each firm will charge a price of $150 and each firm will sell 1,500 subscriptions. Table 17-4. The information in the table below shows the total demand for high-speed Internet subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $200,000 (per year) and that the marginal cost of providing an additional subscription is always $80. Quantity Price (per year) 0 $320 2,000 $280 4,000 $240 6,000 $200 8,000 $160 10,000 $120 12,000 $ 80 14,000 $ 40 16,000 $0 ____ 34. Refer to Table 17-4. Assume there are two high-speed Internet service providers operating in this market. Further assume that they are not able to collude on the price and quantity of subscriptions to sell. What price will they charge for a subscription when this market reaches a Nash equilibrium? a. $120 b. $160 c. $200 d. $240 ____ 35. Which of these situations produces the largest profits for oligopolists? a. The firms reach a Nash equilibrium. b. The firms reach the monopoly outcome. c. The firms reach the competitive outcome. d. The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome. ____ 36. As the number of firms in an oligopoly market a. decreases, the price charged by firms likely decreases. b. decreases, the market approaches the competitive market outcome. c. increases, the market approaches the competitive market outcome. d. increases, the market approaches the monopoly outcome. ____ 37. Assume oligopoly firms are profit maximizers, they do not form a cartel, and they take other firms' production levels as given. Then in equilibrium the output effect a. must dominate the price effect. b. must be smaller than the price effect. c. must balance with the price effect. d. can be larger or smaller than the price effect. ____ 38. Cartels are difficult to maintain because a. antitrust laws are difficult to enforce. b. cartel agreements are conducive to monopoly outcomes. c. there is always tension between cooperation and self-interest in a cartel. d. firms pay little attention to the decisions made by other firms. ____ 39. If duopolists individually pursue their own self-interest when deciding how much to produce, the amount they will produce collectively will a. be less than the monopoly quantity. b. be equal to the monopoly quantity. c. be greater than the monopoly quantity. d. Any of the above are possible. ____ 40. When price is above marginal cost, selling one more unit at the current price will increase profit. This concept is known as the a. income effect. b. price effect. c. output effect. d. cartel effect. ____ 41. When an oligopoly grows very large, the a. output effect disappears. b. price effect disappears. c. output effect equals the price effect. d. price of the product greatly exceeds marginal cost. Table 17-8. For a certain small town, the table shows the demand schedule for water. Assume the marginal cost of supplying water is constant at $4 per bottle. Price $9 Quantity (bottles) 100 $8 200 $7 300 $6 400 $5 500 $4 600 $3 700 $2 800 ____ 42. Refer to Table 17-8. If there are two suppliers of water, Mort and Callie, then what will be their combined level of output when a Nash equilibrium is reached? a. 200 b. 400 c. 600 d. 800 ____ 43. When strategic interactions are important to pricing and production decisions, a typical firm will a. set the price of its product equal to marginal cost. b. consider how competing firms might respond to its actions. c. generally operate as if it is a monopolist. d. consider exiting the market. Table 17-9 Two cigarette manufacturers (Firm A and Firm B) are faced with lawsuits from states to recover the healthcare re lated expenses associated with cigarette smoking. Both cigarette firms have evidence that indicates that cigarette smoke causes lung cancer (and other related illnesses). State prosecutors do not have access to the same data used by cigarette manufacturers and thus will have difficulty recovering full costs without the help of at least one cigar ette firm study. Each firm has been presented with an opportunity to lower its liability in the suit if it cooperates with attorneys representing the states. Firm B Concede that cigarette smoke causes lung cancer Firm A Concede that cigarette smoke causes lung cancer Argue that there is no evidence that smoke causes cancer Argue that there is no evidence that smoke causes cancer Firm A profit = $20 Firm B profit = $15 Firm A profit = $50 Firm B profit = $5 Firm A profit = $5 Firm B profit = $50 Firm A profit = $10 Firm B profit = $10 ____ 44. Refer to Table 17-9. If both firms follow a dominant strategy, Firm A's profits (losses) will be a. $-50 b. $-20 c. $-10 d. $-5 ____ 45. Much of the research on game theory in recent decades was driven by attempts to analyze actions of players dur ing a. the Great Depression of the 1930s. b. World War II. c. the Cold War between the United States and the Soviet Union. d. the ascendancy of the conservative movement in the United States in the 1970s and 1980s. ____ 46. Individual profit earned by Dave, the oligopolist, depends on which of the following? (i) The quantity of output that Dave produces (ii) The quantities of output that the other firms in the market produce (iii) The extent of collusion between Dave and the other firms in the market a. (i) and (ii) b. (ii) and (iii) c. (iii) only d. (i), (ii), and (iii) Table 17-13. This table shows a game played between two players, A and B. The payoffs in the table are shown as (Payoff to A, Payoff to B). B Left Right Up (1, 4) (6, 2) (3, 1) Middle (2, 2) (4, 6) (5, 7) Down A Center (3, 2) (5, 5) (4, 3) ____ 47. Refer to Table 17-13. Which of the following statements regarding this game is true? a. Both players have a dominant strategy. b. Player A has a dominant strategy, but player B does not have a dominant strategy. c. Player A does not have a dominant strategy, but player B does have a dominant strategy. d. Neither player has a dominant strategy. Table 17-16. This table shows a game played between two firms, Firm A and Firm B. In this game each firm must decide how much output (Q) to produce: 5 units or 6 units. The profit for each firm is given in the table as (Profit for Firm A, Profit for Firm B). Firm B Q=5 Q=6 Q=5 (24, 24) (10, 30) Q=6 Firm A (30, 10) (19, 19) ____ 48. Refer to Table 17-16. The dominant strategy For Firm A is to produce a. 5 units and the dominant strategy for Firm B is to produce 5 units. b. 5 units and the dominant strategy for Firm B is to produce 6 units. c. 6 units and the dominant strategy for Firm B is to produce 5 units. d. 6 units and the dominant strategy for Firm B is to produce 6 units. ____ 49. Refer to Table 17-16. The Nash equilibrium for this game is a. 5 units of output for Firm A and 5 units of output for Firm B. b. 5 units of output for Firm A and 6 units of output for Firm B. c. 6 units of output for Firm A and 5 units of output for Firm B. d. 6 units of output for Firm A and 6 units of output for Firm B. Table 17-17. Consider a small town that has two grocery stores from which residents can choose to buy a gallon of milk. The store owners each must make a decision to set a high milk price or a low milk price. The payoff table, showing profit per week, is provided below. The profit in each cell is shown as (Store 1, Store 2). Store 2 Low Price Low Price (500, 500) (800, 100) High Price Store 1 High Price (100, 800) (650, 650) ____ 50. Refer to Table 17-17. If grocery store 1 sets a high price, what price should grocery store 2 set? And what will grocery store 2's payoff equal? a. Low price, $800 b. High price, $100 c. Low price, $500 d. High price, $650 Table 17-18. Amy and Heather are two college roommates who both prefer a clean common space in their dorm room, but neither enjoys cleaning. The roommates must each make a decision to either clean or not clean the dorm room's common space. The payoff table for this situation is provided below, where the higher a players payoff number, the better off that player is. The payoffs in each cell are shown as (payoff for Amy, payoff for Heather). Heather Clean Dont Clean Clean (75, 75) (15, 100) Dont Clean (100, 15) (20, 20) Amy ____ 51. Refer to Table 17-18. If Amy chooses to not clean, then Heather will a. clean, and Heathers payoff will be 20. b. not clean, and Heathers payoff will be 100. c. clean, and Heathers payoff will be 75. d. not clean, and Heathers payoff will be 20. Figure 17-2. John and Michael are roommates. On a particular day, their apartment needs to be cleaned. Each person has to decide whether to take part in cleaning. At the end of the day, either the apartment will be com pletely clean (if one or both roommates take part in cleaning), or it will remain dirty (if neither roommate cleans). With happiness measured on a scale of 1 (very unhappy) to 10 (very happy), the possible outcomes are as follows: John's Decision Clean Don't clean John's happiness = 7 John's happiness = 10 Clean Michael's Decision M ichael's happiness = 8 M ichael's happiness = 3 John's happiness = 3 John's happiness = 6 Don't clean M ichael's happiness = 10 M ichael's happiness = 4 ____ 52. Refer to Figure 17-2. If this game is played only once, then the most likely outcome is that a. John and Michael both clean. b. John cleans and Michael does not clean. c. Michael cleans and John does not clean. d. neither John nor Michael cleans. Table 17-19. The Chicken Game is named for a contest in which drivers test their courage by driving straight at each other. John and Paul have a common interest to avoid crashing into each other, but they also have a personal, competing interest to not turn first to demonstrate their courage to those observing the contest. The payoff table for this situation is provided below. The payoffs are shown as (John, Paul). Paul Turn Turn (10, 10) (5, 20) Drive Straight John Drive Straight (20, 5) (0, 0) ____ 53. Refer to Table 17-19. If John chooses Turn, what will Paul choose to do and what will Paul's payoff equal? a. Turn, 10 b. Drive Straight, 20 c. Turn, 5 d. Drive Straight, 0 ____ 54. Refer to Table 17-19. What is John's dominant strategy? a. John has no dominant strategy. b. John should always choose Turn. c. John should always choose Drive Straight. d. John has two dominant strategies. ____ 55. Refer to Table 17-19. What is (are) the Nash equilibrium (equilibria) in this Chicken game? a. John: Turn Paul: Turn b. John: Turn Paul: Drive Straight c. John: Drive Straight Paul: Turn d. Both b and c are Nash equilibria ____ 56. An equilibrium occurs in a game when a. price equals marginal cost. b. quantity supplied equals quantity demanded. c. all independent strategies counterbalance all dominant strategies. d. all players follow a strategy that they have no incentive to change. ____ 57. The Sherman Act made cooperative agreements a. unenforceable outside of established judicial review processes. b. enforceable with proper judicial review. c. a criminal conspiracy. d. a crime, but did not give direction on possible penalties. ____ 58. The practice of tying is used to a. enhance the enforcement of antitrust laws. b. encourage the enforcement of collusive agreements. c. control the retail price of a collection of related products. d. package products to sell at a combined price closer to a buyer's total willingness to pay. ____ 59. When individuals are damaged by an illegal arrangement to restrain trade, which law allows them to pursue civil action and recover up to three times the damages sustained? a. Trade Damage Act b. Clayton Act c. Sherman Act d. No law allows individuals to pursue civil action and recover up to three times the damages sustained. ____ 60. Predatory pricing involves a firm a. colluding with another firm to restrict output and raise prices. b. selling two individual products together for a single price rather than selling each product individually at separate prices. c. temporarily cutting the price of its product to drive a competitor out of the market. d. requiring that the firm reselling its product do so at a specified price. ____ 61. Tying involves a firm a. colluding with another firm to restrict output and raise prices. b. selling two individual products together for a single price rather than selling each product individually at separate prices. c. temporarily cutting the price of its product to drive a competitor out of the market. d. requiring that the firm reselling its product do so at a specified price. Scenario 18-1 Harry owns a snow-removal business. He hires workers to shovel driveways for him during the winter. The first worker he hires can shovel twelve driveways in one day. When Harry hires two workers, they can shovel a total of 22 driveways in one day. When Harry hires a third worker, he shovels an additional eight driveways in one day. ____ 62. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the second worker? a. $200 b. $240 c. $800 d. $960 ____ 63. Refer to Scenario 18-1. Suppose that Harry pays each worker $80 per day and that he charges each customer $20 to have his driveway shoveled. What is the value of the marginal product of labor for the third worker? a. $160 b. $640 c. $1,600 d. $2,400 Figure 18-1. On the graph, L represents the quantity of labor and Q represents the quantity of output per week. Q 420 390 345 285 210 120 1 2 3 4 5 6 L ____ 64. Refer to Figure 18-1. Suppose the firm hires each unit of labor for $600 per week, and each unit of output sells for $9. What is the value of the marginal product of the third worker? a. $540 b. $600 c. $675 d. $810 ____ 65. Factor markets are different from product markets in an important way because a. equilibrium is the exception, and not the rule, in factor markets. b. the demand for a factor of production is a derived demand. c. the demand for a factor of production is likely to be upward sloping, in violation of the law of demand. d. All of the above are correct. ____ 66. If the demand curve for computer games shifts to the left, then the value of the marginal product of labor for com puter game authors will a. rise. b. fall. c. remain unchanged. d. rise or fall; either is possible. ____ 67. A sandwich shop hires workers to make sandwiches and sell them to customers. If the firm is competitive in both the market for sandwiches and in the market for sandwich-makers, then it has a. some control over both the price of sandwiches and the wage it pays to its workers. b. no control over the price of sandwiches but some control over the wage it pays to its work ers. c. some control over the price of sandwiches but no control over the wage it pays to its work ers. d. no control over either the price of sandwiches or the wage it pays to its workers. ____ 68. If a firm experiences diminishing marginal productivity of labor, the marginal product a. increases as total product increases. b. decreases as total product increases. c. increases as total product decreases. d. decreases as total product decreases. ____ 69. When deciding whether to hire an additional worker, firms look at how the additional worker would affect a. costs only. b. revenue only. c. output only. d. profit. ____ 70. Which of the following events would shift the labor supply curve? a. Changes in the number of women willing to work b. Immigration of workers c. Changing attitudes towards work d. All of the above are correct. ____ 71. If workers respond to an increase in the opportunity cost of leisure by taking more leisure, then their labor supply curve is a. upward sloping. b. backward sloping. c. horizontal. d. vertical. ____ 72. Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all computer programmers increased dramatically. Holding all else equal, what effect did this process have on the equilibrium wage in the labor market for computer programmers? a. The equilibrium wage increased. b. The equilibrium wage decreased. c. The equilibrium wage did not change. d. It is not possible to determine the equilibrium wage. ____ 73. Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when these computer programming students graduated the dot.com bust took place. The dot.com bust decreased the value of the marginal product of computer programmers. Holding all else equal what effect did these two circumstances have on the equilibrium quantity in the labor market for computer programmers? a. The equilibrium quantity of labor increased. b. The equilibrium quantity of labor decreased. c. The equilibrium quantity of labor did not change. d. It is not possible to determine what happens to the equilibrium quantity of labor. ____ 74. Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, what effect does this have on the equilibrium wage of health care employees? a. The equilibrium wage increases. b. The equilibrium wage decreases. c. The equilibrium wage does not change. d. It is not possible to determine what happens to the equilibrium wage. ____ 75. Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, what effect does this have on the equilibrium quantity of health care employees? a. The equilibrium quantity increases. b. The equilibrium quantity decreases. c. The equilibrium quantity does not change. d. It is not possible to determine what happens to the equilibrium quantity. ____ 76. Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics decreases for many individuals. Since it generally takes about five years to get a Ph.D. in economics, holding all else constant, what will happen to the equilibrium wage for university econom ics professors in five years? a. The equilibrium wage will increase. b. The equilibrium wage will decrease. c. The equilibrium wage will not change. d. It is not possible to determine what will happen to the equilibrium wage. Figure 18-5 ____ 77. Refer to Figure 18-5. If the price of apples decreases, the a. demand for apple pickers will shift to the left. b. demand for apple pickers will shift to the right. c. supply of apple pickers will shift to the left. d. supply of apple pickers will shift to the right. Figure 18-6 ____ 78. Refer to Figure 18-6. Assume W1 = $20 and W2 = $22 and the market is always in equilibrium. Then the shift of the labor demand curve from D1 to D2 a. increases the value of the marginal product of labor by $2. b. increases the value of the marginal product of labor by less than $2. c. decreases the value of the marginal product of labor by more than $2. d. does not change the value of the marginal product of labor. ____ 79. An increase in the value of the marginal product of labor has the effect of increasing the a. demand for labor. b. wage. c. quantity of labor employed. d. All of the above are correct. Figure 18-7 ____ 80. Refer to Figure 18-7. If the relevant labor supply curve is S2 and the current wage is W1, a. there is a surplus of labor. b. the quantity of labor demanded exceeds the quantity of labor supplied. c. an increase in the minimum wage could be employed to equilibrium restore in the market. d. firms will need to raise the wage to restore equilibrium. ____ 81. Suppose that a large tornado destroys the fleet of fire trucks for the city of Omaha, Nebraska. What happens to the earnings of firefighters in Omaha? a. The reduction in the supply of fire trucks reduces the marginal productivities of Omaha firefighters, which causes the equilibrium wage to fall. b. The reduction in the supply of fire trucks increases the marginal productivities of Omaha firefighters, which causes the equilibrium wage to fall. c. The reduction in the supply of fire trucks reduces the marginal productivities of Omaha firefighters, which causes the equilibrium wage to rise. d. The reduction in the supply of fire trucks increases the marginal productivities of Omaha firefighters, which causes the equilibrium wage to rise. ____ 82. The marginal product of any factor of production depends on a. the quantity of the factor used. b. the price of the final good. c. the demand for the final good. d. All of the above are correct. ____ 83. In economics, the term capital is used to refer to a. money. b. stocks and bonds. c. equipment and structures used in production. d. All of the above are correct. ____ 84. Capital is paid according to the value of its marginal product a. only if earnings from capital are paid to households in the form of dividends. b. only if earnings from capital are kept within firms as retained earnings. c. regardless of whether earnings from capital are paid to households in the form of di vidends or whether those earnings are kept within firms as retained earnings. d. None of the above are correct; capital is a factor of production for which earnings are un related to the value of marginal product. ____ 85. Consider the market for capital equipment. Suppose the value of the marginal product of capital equipment in creases. Holding all else constant, what will happen to the equilibrium quantity of capital equipment? a. The equilibrium quantity of capital equipment increases. b. The equilibrium quantity of capital equipment decreases. c. The equilibrium quantity of capital equipment does not change. d. It is not possible to determine what will happen to the equilibrium quantity of capital equipment. ____ 86. As a result of severe flooding, a farmer loses half of his productive farmland. He should expect to see the margin al productivity of his remaining land a. increase. b. remain unchanged. c. decrease, but remain positive. d. decrease and become negative. ____ 87. As a result of severe flooding, a farmer loses half of his productive farmland. If the property of diminishing re turns applies to all factors of production, he should expect to see a. an increase in the marginal productivity of his remaining land and an increase in the mar ginal productivity of his labor. b. an increase in the marginal productivity of his remaining land and a decrease in the mar ginal productivity of his labor. c. a decrease in the marginal productivity of his remaining land and an increase in the mar ginal productivity of his labor. d. a decrease in the marginal productivity of his remaining land and a decrease in the margin al productivity of his labor. ____ 88. Suppose that due to flooding in Louisiana, 100,000 farmers relocate from Louisiana to Texas. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and the rents earned by landowners in Texas? a. Both wages and rents would increase. b. Both wages and rents would decrease. c. Wages would increase, and rents would decrease. d. Wages would decrease, and rents would increase. ____ 89. Suppose that a large lake in the middle of Minnesota evaporates, leaving more fertile farm land for growing corn available. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and rents earned by landowners? a. Both wages and rents would increase. b. Both wages and rents would decrease. c. Wages would increase, and rents would decrease. d. Wages would decrease, and rents would increase. ____ 90. Which of the following statements is not correct? a. Some firms pay wages that are above the equilibrium wage. b. Workers sometimes form labor unions to push their wages up. c. Wages never deviate from the balance of supply and demand in the market for labor. d. The federal government mandates that employers pay their workers at least as much as the minimum wage. ____ 91. Suppose that a company hires recent college graduates for two types of jobs, sales people and credit analysts. The hours worked and skill levels are the same for both positions. The sales people get to travel to several desirable locations, whereas the credit analysts do not leave the home office. When comparing the salaries of the two posi tions, it is likely that the company pays the a. sales people less as a compensating differential. b. credit analysts less as a compensating differential. c. same salary for both positions because they require the same skill level. d. same salary for both positions because it would be illegal to do otherwise. ____ 92. Which of the following is the most important contributor to human capital? a. education b. effort c. chance d. physical strength ____ 93. Based on the widening income gap between personal-service workers and symbolic analysts, a. America is likely to lose even more manufacturing jobs to China and India. b. labor productivity has fallen, which has caused employment to fall as well. c. workers who have more education and better problem-solving skills are likely to work in higher-paying jobs. d. the pay for personal-service workers is likely to rise. ____ 94. Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers offer two main hypotheses: a. One hypothesis emphasizes education, and the other emphasizes random influences. b. One hypothesis emphasizes education, and the other emphasizes supply and demand. c. One hypothesis emphasizes international trade, and the other emphasizes technology. d. One hypothesis emphasizes signaling, and the other emphasizes education. ____ 95. Why is a plumber never likely to be as rich as a movie star? a. Compensating differential creates a higher wage in the movie business. b. There haven't been any significant technological advances in the plumbing industry. c. Productivity levels are low in the plumbing industry due to low worker morale. d. A plumber can provide his services to only a limited number of customers. ____ 96. For a "superstar" to emerge, it must be the case that a. it is possible to supply the good or service that the superstar produces at low cost to every customer. b. some customers are willing and able to pay large sums of money to enjoy the good or ser vice provided by the superstar. c. the superstar has a natural monopoly on his or her good or service. d. the superstar is willing to settle for a level of pay that is less than the value of his marginal product. ____ 97. A worker association that bargains with employers over wages and working conditions is called a. a strike. b. an oligopoly. c. a firm. d. a union. ____ 98. In the early 20th century, streetcars in many southern cities required that white passengers sit in the front of car, while black passengers sat in the back. The firms that ran the streetcars were a. in favor of the segregation laws because they lowered costs and increased profits. b. against the segregation laws because they increased costs and lowered profits. c. lobbied local governments to enact such laws because their customers were willing to pay more for service in order to maintain the segregation. d. concerned about the effects of smoking. Since blacks smoked more than whites, they were supportive of the segregation laws. ____ 99. Evidence of discrimination in labor markets a. applies only to race and gender. b. is conclusively identified in large differences in average wages rates between men and wo men. c. is difficult to verify by reference to differences in average wage rates. d. is more easily identified on the basis of race than gender. ____ 100. Economists generally agree that a. human capital theory provides the best explanation of discriminatory practices. b. differences in average wages do not by themselves provide conclusive evidence about the magnitude of discrimination effects in labor markets. c. discrimination is exclusively an economic, rather than political, phenomenon. d. most of the wage differentials observed in the U.S. economy are due to discrimination. ____ 101. Attributing the gender wage gap to ongoing discrimination by employers will likely be incorrect because a. some of the wage gap is explained by efficiency wages. b. differences in years of work experience likely lead to productivity differences between men and women. c. compensating differentials usually lead to higher wages for women. d. All of the above are correct. ____ 102. In what way do competitive markets have a "natural remedy" for discriminatory hiring practices? a. Governments regulate to resolve problems of discrimination. b. Profit-maximizing firms that do not discriminate tend to replace firms that discriminate. c. Wages paid to groups that are victimized by discrimination are eventually bid up to aboveequilibrium levels. d. Discrimination is usually the outcome of rational decision-making processes, and compet itive markets produce rational outcomes. ____ 103. A study conducted by economists Marianne Bertrand and Sendhil Mullainathan found evidence of labor-market discrimination based on which of the following findings? a. Restaurant customers preferred to be waited on by white waitresses than by black wait resses. b. Black basketball players earned more than white basketball players. c. Employers were more likely to request interviews with job applicants with white names such as Greg than from applicants with black names such as Jamal. d. Employers were more likely to request interviews with job applicants with masculine names such as Mark than from applicants with feminine names such as Lisa. ____ 104. Assume men, on balance, have lower amounts of human capital than women have. Then we would expect a. the demand for female labor to be lower than the demand for male labor. b. the demand for female labor to be higher than the demand for male labor. c. the supply of female labor to be lower than the demand for male labor. d. the supply of female labor to be higher than the supply of male labor. ____ 105. Some economists are skeptical of the argument that employers are responsible for discriminatory wage differ ences. They argue that market economies provide a natural remedy to employer discrimination, and that remedy is a. social responsibility. b. the profit motive. c. fear of reprisal from groups that suffer from those wage differences. d. fear of reprisal from government in the form of prosecution. ____ 106. Which of the Ten Principles of Economics come into conflict with each other in this chapter? a. A countrys standard of living depends on its ability to produce goods & People face tradeoffs. b. Prices rise when the government prints too much money & Governments can sometimes improve market outcomes. c. Governments can sometimes improve market outcomes & People face tradeoffs. d. People face tradeoffs & Prices rise when the government prints too much money . ____ 107. Based on U.S. income data from 2005, the bottom fifth of all families received approximately what percent of all income? a. 48 percent b. 21 percent c. 10 percent d. 4 percent Table 20-3 The Distribution of Income in Hapland Group Annual Family Income Top Fifth $120,000 and over Fourth Fifth $90,000 - 119,999 Middle Fifth $60,000 - 89,999 Second Fifth $45,000 - 59,999 Bottom Fifth Under $45,000 ____ 108. Refer to Table 20-3. According to the table, what percent of families in Hapland have income levels below $90,000? a. 20 percent. b. 40 percent. c. 60 percent. d. 80 percent. ____ 109. Refer to Table 20-3. According to the table, what percent of families in Hapland have income levels above $60,000? a. 80 percent b. 60 percent c. 50 percent d. 40 percent ____ 110. The poverty rate is a measure of the percentage of people whose incomes fall below a. a relative level of income. b. an absolute level of income. c. the median income for a family of three. d. the bottom 20 percent of the income distribution. ____ 111. Which of the following groups has the highest poverty rate? a. Blacks. b. Asians. c. Children (under age 18). d. Female-headed households. Figure 20-1 Number of Poor ____ 112. Refer to Figure 20-1. Between 1965 and 2001, during recessions (the shaded bars) the number of individuals in poverty has a. increased. b. decrease. c. not changed. d. decreased and then increased. Figure 20-2 Poverty Rates by Age ____ 113. Refer to Figure 20-2. In 2001, the percent of children under age 18 in poverty is a. higher than both the percentage of adults aged 18 to 64 and the percentage of elderly aged 65 years and over in poverty. b. higher than the percentage of adults aged 18 to 64 but is lower than the percentage of eld erly aged 65 years and over in poverty. c. lower than both the percentage of adults aged18 to 64 and the percentage of elderly aged 65 years and over in poverty. d. lower than the percentage of adults aged 18 to 64 but is higher than the percentage of eld erly aged 65 years and over in poverty. ____ 114. Refer to Figure 20-2. In 2001, the percent of adults between aged 18 and 64 in poverty is a. higher than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. b. higher than the percentage of children under age 18 but is lower than the percentage of elderly aged 65 and over in poverty. c. is lower than both the percentage of children under age 18 and the percentage of elderly aged 65 and over in poverty. d. is lower than the percentage of children under age 18 and is equal to the percentage of eld erly aged 65 and over in poverty. ____ 115. Refer to Figure 20-2. In 1968, the percent of elderly aged 65 and over in poverty is a. higher than both the percentage of adults aged 18 to 64 and the percentage of children un - der age 18 in poverty. b. higher than the percentage of adults aged 18 to 64 but is lower than the percentage of chil dren under age 18 in poverty. c. lower than both the percentage of adults aged 18 to 64 and the percentage of children un der age 18 in poverty. d. is lower than the percentage of adults aged 18 to 64 but is higher than the percentage of children under age 18 in poverty. ____ 116. In-kind transfers are transfers to the poor a. in the form of goods and services rather than cash. b. in the form of goods, services, and cash. c. from private charitable organizations only. d. from the federal government only. ____ 117. In the United States, a typical worker's income peaks around age a. 70. b. 60. c. 50. d. 40. ____ 118. The life cycle effect characterizes a lifetime income profile in which income a. tends to follow a seasonal pattern. b. rises as a worker gains maturity and experience. c. rises and falls in conjunction with the business cycle. d. falls during the early years of market activity and peaks at retirement. ____ 119. An example of a transitory change in income is the a. annual cost of living adjustment to your salary. b. increase in income that results from a job promotion linked to your education. c. increase in income of California orange growers that results from an orange-killing frost in Florida. d. All of the above are correct. Scenario 20-1 Suppose that a society is made up of five families whose incomes are as follows: $120,000; $90,000; $30,000; $30,000; and $18,000. The federal government is considering two potential income tax plans: Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000. Plan B is a two-tiered plan where the poverty line is $35,000; families earning over $35,000 pay 10% of their in come in taxes, and families earning less than $35,000 pay no income tax. ____ 120. Refer to Scenario 20-1. Assuming that utility is directly proportional to the cash value of after-tax income, which government policy would an advocate of libertarianism prefer? a. Plan A b. Plan B c. either Plan A or Plan B d. neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy ____ 121. The founders of utilitarianism include a. A. C. Pigou and John Maynard Keynes. b. Jeremy Bentham and John Stuart Mill. c. Augustin Cournot and Jean B. Say. d. A. Kondratieff and Thomas Malthus. ____ 122. The utilitarian case for redistributing income is based on the assumption of a. collective consensus. b. a notion of fairness engendered by equality. c. diminishing marginal utility. d. rising marginal utility. ____ 123. The concept of diminishing marginal utility is embedded in the utilitarian rationale for a. trickle-down effects. b. enhancing market efficiency. c. redistributing income. d. maintaining the status quo income distribution. ____ 124. Diminishing marginal utility suggests that a. more is always preferred to less. b. the well-being of society is maximized when the distribution of income is equal. c. the poor are less efficient at spending money than the rich. d. the poor receive more satisfaction from the last dollar spent than the rich. ____ 125. Which political philosophy focuses on the process of determining the distribution of income rather than on the outcome? a. Utilitarianism. b. Liberalism. c. Libertarianism. d. Welfarism. ____ 126. A negative income tax system would a. make taxes more regressive. b. sever the link between tax policy and income distribution. c. collect from high-income households and give transfers to low-income households. d. eliminate progressive tax rates. ____ 127. Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 Income) - 10,000. A family that earns an income of $30,000 will a. neither pay taxes nor receive an income subsidy. b. receive an income subsidy of $500. c. pay $1,000 in taxes. d. pay $600 in taxes. ____ 128. Which of the following offers an explanation as to why the principal-agent problem exists for a firm? a. The firm cares less about profit and more about cost when there are many competitors in the market. b. The firm offers an employee-incentive program in which employees share in the firms profits. c. The firm operates in a market with many competitors forcing the firm to pay its employees more to keep them from switching to another firm. d. The firm operates to maximize profit while the employees attempt to work as little as pos sible to earn their paychecks. ____ 129. Ed was recently hired as a salesman for a national consulting firm. His job involves spending a significant por tion of his time out of the office visiting prospects and attending conferences. His firm is paying him a wage that is higher than the equilibrium wage, but he receives much of his income in quarterly bonuses based on how much he sells. a. The consulting firm is trying to prevent adverse selection with its compensation strategy. b. Ed has an incentive to go golfing with his buddies rather than conducting sales meetings. c. The consulting firm is responding to the moral hazard problem with its compensation strategy. d. Ed should quit this job and take a job where he gets paid an equilibrium wage more fre quently. ____ 130. Carlos, who knows nothing about construction, paid Joe to remodel a room in his house. Two years later, one wall in the remodeled room crumbled because Joe used poor-quality materials. This illustrates which economic prob lem? a. Adverse selection b. Screening c. Moral hazard d. Signaling ____ 131. Insurance companies charge annual premiums to collect revenue, which they then use to pay customers who file claims for damages they incur. As a result of the moral hazard problem (1) what is the percentage of policy hold ers making claims, and (2) what is the average premium charged when compared to a world with no moral hazard problem? a. The percentage of policy holders making claims is higher; average annual premiums are lower. b. The percentage of policy holders making claims is lower; average annual premiums are lower. c. The percentage of policy holders making claims is higher; average annual premiums are higher. d. The percentage of policy holders making claims is lower; average annual premiums are higher. ____ 132. Effective signals a. convey useful information from informed parties to uninformed parties. b. impose little or no cost on the signaler. c. cannot be conveyed accurately when there is an information asymmetry. d. can be used by employers to alleviate the moral hazard problem in the workplace. Table 22-1 Three friends -- Tricia, Sarah, and Katie -- are deciding where to go together for vacation. They all agree that they should go to one of three places: Ireland, Italy, or Greece. They also agree that they will have two pairwise votes to determine where to go on vacation, with the majority determining the outcome on each vote. The first, second, and third choices for each person are as indicated in the table below. Tricia First choice Second choice Sarah Katie Ireland Italy Greece Italy Greece Ireland Third choice Greece Ireland Italy ____ 133. Refer to Table 22-1. If the first vote pits Ireland against Greece and the second vote pits Italy against the winner of the first vote, then the outcome is as follows: a. Ireland wins the first vote and Italy wins the second vote, so they go to Italy. b. Ireland wins the first vote and Ireland wins the second vote, so they go to Ireland. c. Greece wins the first vote and Greece wins the second vote, so they go to Greece. d. Greece wins the first vote and Italy wins the second vote, so they go to Italy. ____ 134. Refer to Table 22-1. If the first vote pits Italy against Greece and the second vote pits Ireland against the winner of the first vote, then the outcome is as follows: a. Italy wins the first vote and Ireland wins the second vote, so they go to Ireland. b. Italy wins the first vote and Italy wins the second vote, so they go to Italy. c. Greece wins the first vote and Greece wins the second vote, so they go to Greece. d. Greece wins the first vote and Ireland wins the second vote, so they go to Ireland. ____ 135. Recent developments in political economy a. render much of the traditional field of political science obsolete. b. render much of the traditional field of economics obsolete. c. illustrate the resolute nature of democracy. d. point to the fact that government is a less-than-perfect institution. ____ 136. The Condorcet paradox shows that a. allocations of resources based on majority rule are always inefficient. b. problems in counting votes can negate legitimate democratic outcomes. c. the order on which things are voted can affect the result. d. transitive preferences are inconsistent with rationality. Table 22-3 The citizens of Paradoxopolis will decide whether to build a new school, build a new park, or build a new road. Exactly one of the three choices will prevail, and the choice will be made by way of pairwise voting, with the ma jority determining the outcome on each vote. The preferences of the voters are summarized in the table below. Voter Type Type 1 Percent of Electorate Type 2 25 35 Type 3 40 First choice School Park Road Second choice Park Road School Third choice Road School Park ____ 137. Refer to Table 22-3. If (1) the first vote pits "school" against "park," and (2) the second vote pits "road" against the winner of the first vote, then the outcome is as follows: a. "School" wins the first vote and "school" wins the second vote, so they build a school. b. "School" wins the first vote and "road" wins the second vote, so they build a road. c. "Park" wins the first vote and "park" wins the second vote, so they build a park. d. "Park" wins the first vote and "road" wins the second vote, so they build a road. ____ 138. Economist Kenneth Arrow wrote a famous book in 1951 in which he took up the question, a. Is there a perfect voting system? b. Are preferences transitive? c. Is a dictatorship a good form of government? d. Should the president of the United States be elected to a single, six-year term? ____ 139. The assertion that the median voter is "king" refers directly to the result established by the a. Arrow impossibility theorem. b. Condorcet paradox. c. median voter theorem. d. Borda mechanism. Table 22-4 Five voters must choose from among four options: A, B, C, or D. Each voters preferences are summarized in the table below. Options higher in the table are more preferred by the voter. Preferences Voter 1 Voter 2 Voter 3 Voter 4 Voter 5 1st Choice D C B C A 2nd Choice A B A D D 3rd Choice B A D B C 4th Choice C D C A B ____ 140. Refer to Table 22-4. If the vote were conducted according to a modified Borda count system where each person's first choice receives 10 points, second choice 5 points, third choice 3 points and fourth choice 1 point, the result would be a. that A would win. b. that B would win. c. that C would win. d. that D would win. Table 22-7 Number of People Preferred Budget 4 $20 7 $30 10 $0 13 $40 15 $10 26 $50 ____ 141. Refer to Table 22-7. The table shows the most preferred budget of 75 voters. In an election, each voter will select the budget closest to his or her most preferred budget. Using this information, what is the most preferred budget of the median voter? a. $10 b. $20 c. $30 d. $40 Table 22-8 Voter Type Type 1 Type 2 Type 3 Type 4 Percent of electorate 32 20 15 First choice W X Z Y Second choice X Z W W Third choice Y W Y 33 Z Fourth choice Z Y X X ____ 142. Refer to Table 22-8. The table shows the preferences of four types of voters over four possible outcomes: W, X, Y, and Z. In addition, the table shows the percentage of voters of each type. Suppose that, for some reason, W is eliminated as a possible option. Using a Borda count election, with 3 points for the best choice, 2 points for the second best choice, and 1 point for the last choice, which outcome would win this election? a. X b. Y c. Z d. There would be a three-way tie. Table 22-9 Voter Type Type 1 Type 2 Type 3 # Voters 40 15 45 First choice C B A Second choice B A C Third choice A C B ____ 143. Refer to Table 22-9. The table shows the preferences of 100 voters over three possible outcomes: A, B, and C. If a Borda count election were held among these voters, giving three points to each voter's first choice, two points to the second choice, and one point to the last choice, which outcome would win the election? a. Outcome A b. Outcome B c. Outcome C d. Either outcome A or outcome C since these have the same total score. Scenario 22-3 Three candidates, Frank, Brian, and Wanda, are running for office. There are three voters in the upcoming elec tion: Henry, Diane, and Linda. Henry prefers Brian over Frank and Frank over Wanda. Diane prefers Wanda over Brian and Brian over Frank. Linda prefers Frank over Brian and Brian over Wanda. ____ 144. Refer to Scenario 22-3. If the voters were given a choice of Frank versus Wanda first, then the winner was in a second election versus Brian, who would win? a. Frank b. Brian c. Wanda d. There is not enough information to answer this question. Scenario 22-4 Suppose that residents of a town are asked to vote on the best way to improve the safety of an intersection. The three choices are: a stoplight, a 4-way stop, and a 2-way stop. The voters are divided into three groups based on their preferences. Voter Type Type 1 Type 2 Type 3 Percent of Electorate 40 40 20 1st Choice 4-way stop stoplight 2-way stop 2nd Choice 2-way stop 4-way stop 4-way stop 3rd Choice stoplight 2-way stop stoplight ____ 145. Refer to Scenario 22-4. If the first vote pits a 2-way stop against a stoplight and the second vote pits a 4-way stop against the winner of the first vote, then the outcome is as follows: a. 2-way stop wins the first vote and 2-way stop wins the second vote, so the town installs a 2-way stop. b. 2-way stop wins the first vote and 4-way stop wins the second vote, so the town installs a 4-way stop. c. Stoplight wins the first vote and stoplight wins the second vote, so the town installs a stoplight. d. Stoplight wins the first vote and 4-way stop wins the second vote, so the town installs a 4way stop. ____ 146. Economic policy that appears to be ideal in an economics textbook may not be the final policy that is approved by elected politicians because a. sometimes a politicians self interest may conflict with the national interest. b. economics professors have a notoriously low voting rate. c. only policies advocated by the Presidents Council of Economic Advisors receive enough national attention to interest politicians. d. Economists cannot explain why politicians do not implement the ideas from their text books. ____ 147. When economists assume that people are rational, they assume that a. consumers maximize profits. b. firms maximize revenues. c. consumers maximize utility. d. firms maximize output. ____ 148. People interpret evidence to confirm beliefs they already hold. This statement is an example of which of the fol lowing systematic mistakes that people make? a. people are overconfident b. people give too much weight to a small number of vivid observations c. people are reluctant to change their minds d. All of the above ____ 149. Bob is a contestant on a trivia quiz show. For every state capital he can correctly identify, he will win $1,000. However, before identifying any capitals, he must decide how many he thinks he can correctly identify. If he can not identify as many as he has wagered, Bob will not win any money. Suppose Bob says that he can correctly identify 42 state capitals for a potential payoff of $42,000. According to studies of human decision-making, what is most likely to happen? a. Bob will be able to identify 42 state capitals and he will win $42,000. b. Bob will be able to identify fewer than 42 state capitals and will not win any money. c. Bob will not be able to identify any state capitals and will not win any money. d. Bob will choose to save all of the money he wins on the quiz show for his retirement. ____ 150. According to one survey 76 percent of Americans said they were not saving enough for retirement. This example of inconsistency over time a. is rational behavior. b. likely occurs because saving requires a sacrifice in the present for a reward in the distant future. c. likely occurs because Americans dont care about retirement. d. definitely would not happen if Americans earned a greater return on their investments. TEST BANK 4 EC 2100 FALL 2010 Answer Section MULTIPLE CHOICE 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: Register to View AnswerD C D C B D B C B 11. Register to View Answer12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: Register to View AnswerD B B C A B C C C D C C C C B D A A C D A B B C C C C 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: Register to View AnswerB B B C C D D D D A D D B A D D C D B C B A A C B B D B D D B A D A A B A A D A A A C C A 86. 87. 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: Register to View AnswerB D C C A A C C D A D B C B B B C B B C D C B B D A A D A A C B C D B C C D C C A D C C C A 133. 134. 135. 136. 137. 138. 139. 140. 141. 142. 143. 144. 145. 146. 147. 148. 149. 150. ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: ANS: Register to View AnswerA D C B A C C D B C B B A C C B B

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Kennesaw - ECON - 2100
ECON 2100 Section 10 TR 8 pmExam 1 Fall 2010Multiple ChoiceIdentify the choice that best completes the statement or answers the question._1. The opportunity cost of an item isa. the number of hours needed to earn money to buy the item.b. what you g
Kennesaw - ECON - 2100
Study guide for Exam 3[Covering chapters 9,12,13,14, and 15]Econ 2100 microeconomicsFall 2010Multiple ChoiceIdentify the choice that best completes the statement or answers the question._____1. With which of the Ten Principles of Economics is t
Kennesaw - ECON - 2100
Study Guide for Exam 2 ECON 2100 SECTION 04 FALL 2010Multiple Choice_ 1.Welfare economics is the study ofa. the well-being of less fortunate people.b. welfare programs in the United States.c. how the allocation of resources affects economic well-bei
Kennesaw - ECON - 2200
Study Guide 2 EC2200/8 SAT 11 AMMultiple ChoiceIdentify the choice that best completes the statement or answers the question._______1. The term inflation is used to describe a situation in whicha. the overall level of prices in the economy is i
Kennesaw - ECON - 2200
Exam 1 EC2200 Principles of Macroeconomics-Section 6TR 3.30 PMSpring 2011Multiple ChoiceIdentify the choice that best completes the statement or answers the question.____1. The marginal benefit John gets from eating a fourth cheeseburger at a pic
Kennesaw - ECON - 2200
Exam 2 ECON 2200-06 TR 330pmSpring 2011Multiple ChoiceIdentify the choice that best completes the statement or answers the question._______1. Which of the following is a correct way to measure productivity?a. Divide the number of hours worked
Kennesaw - ECON - 2200
exam 3 Econ 2200-6 TR 3.30 pmMultiple ChoiceIdentify the choice that best completes the statement or answers the question._1. Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania. Supposing this is theonly trade that these
Kennesaw - ECON - 2200
If GDP is $5 trillion, this implies that d. B and C are correct.Which of the following would not be included in the calculation of GDP? c. Sandy, who is onwelfare, receives $100 in food stamps.If in 2000 the CPI was 103 and your salary was $30,000 and
Kennesaw - ECON - 2200
A bond is a b. certificate of indebtedness.A cable television broadcast of a movie is b. excludable and not rival in consumption.A country has a comparative advantage in a product if the world price is b. higher than that countrys domestic price without
Kennesaw - ECON - 2200
Study guide 4 ECON 2200-6 ch 32.24.35.10.11.9.12.20Multiple ChoiceIdentify the choice that best completes the statement or answers the question.________1. Other things the same, an increase in the U.S. interest rate causes the quantity of loana
Kennesaw - ECON - 2200
STUDY GUIDE 2 EC 2200-6 TR 3.30pm [Covering chapters 31, 32, 33, and 34]Multiple ChoiceIdentify the choice that best completes the statement or answers the question._1. International tradea. raises the standard of living in all trading countries.b.
Kennesaw - ECON - 2200
A bond is a b. certificate of indebtedness.A closed economy does not a. trade with other economies.A country with a relatively low level of real GDP per person is considering adopting d. neither the first nor the secondA decrease in the price of domest
UNC - DRAM - 115
AbsurdAnti-NaturalismAristotle / AristotelianDramaBox SetCamus1. Camus wrote essay called The Myth of Sisyphus, calling Sisyphusan absurd hero2. Traditional vs. Absurdism3. The word absurd in this context does not mean "logicallyimpossible," but
UNC - DRAM - 115
Drama 115/003Spring 2011Exam OneReview plays and notes for an overview of the following:Plays: Basics of plot, character and themes, especially scenes and speeches discussed in class-BacchaeLysistrataHamletTartuffeTopicsQualities of Drama and The
UNC - DRAM - 115
Notes (Amy you owe me! Luh yuh gurl!)What makes theatre?Theatre is the study of human expression and cultural outlets that give insight to societal viewsand culture. (That was my definition, Yes, yes, Amy I know Im a genius)You MUST have actors and an
UNC - ECON - 101
Pure Monopoly1 SellerNo close substitutesMany buyersBarriers to entryNatural MonopolyCost characteristics:1. Large fixed costs2. Relatively small marginal costsPrice Makers/SettersMonopolyMCATCMCD Dead weight lossDMR- Profit maximizing p
UNC - WMST - 101
WMST 101Midterm ReviewWhat is Womens Studies?Intro to KMSBefore the late 1960s there was soWMST, now over 1,000 programsMen, Latino, Black, JewishWhat is Feminism 1st and 2nd wavesThe Politics of Black Womens Studies,BlackAkasha Hull and Barbara
UNC - ASTR - 101
Summer solstice: sun at northernmost pt above celestial equator, June 21, longest day in N; Winter Solstice:sun at southernmost pt below celestial eq., Dec 21, shortest day in N; Autumnal Equinox: Sept 21, 12 hr day,axis not towards or away from sun; Ve
UNC - ASTR - 101
MOON: orbit: about 384000 km from earth, laser-ranging tech allows us to measure orbit within cm-necessary for unmannedspacecraft landings; angular diameter=0.5, radius= 1738km, mass=7.3x1022, density=3300kg/m3, gravity is 1/6 of earth, escapespeed= 2.4
UNC - ASTR - 101
LESSON 7 EQUATIONS-Shield volcanoheight depends on how much weight it cansupport, which depends on how strength ofplanet's surface gravity. On Earth and Venuswhere the surface gravities are similar, shieldvolcanoes can grow to about 10 km. On Marswh
UNC - ASTR - 101
NOTES REFERRENCED WITH CORRESPONDING HOMEWORKS Objects around earthNOTES REFERRENCED WITH CORRESPONDING HOMEWORKSNOTES REFERRENCED WITH CORRESPONDING HOMEWORKSCircumpolar stars stars that never set PolarisNOTES REFERRENCED WITH CORRESPONDING HOMEWORK
UNC - ENGL - 131
Russian Ark ScriptRussian Ghost. I open my eyes and I see nothing. I only remember there was some accident.Everyone ran for safety as best they could. I just cant remember what happened to me. Howstrange. Where am I?[Soldiers and ladies entering the W
University of Florida - MAP - 3302
11Equations for Linear System 1Equations for Linear System 2241.821.61.40x2x21.2120.840.60.460.2021.81.61.4461.21x10.80.60.40.28503214Residuals for Linear System 1x 10480x112345Residuals for Linear Syst
University of Florida - MAP - 3302
12Chapter 2. Solutions: Sensitivity Analysis: When a Little Means a Lot137.9LP Example 1: perturbed solutionsx 10LP Example 1: perturbed function values10.87.850.60.40.27.750.2x27.800.47.70.60.87.650.9990.99920.99940.99960.9998
University of Florida - MAP - 3302
13Solutions to the differential equation1.71.61.5y1.41.31.21.110510152025t3035404550Figure 2.3. Results of Challenge 2.4. The black curves result from settinga = 0.006 and a = 0.009. The blue curves have random rates chosen for eac
University of Florida - MAP - 3302
14Chapter 2. Solutions: Sensitivity Analysis: When a Little Means a Lot
University of Florida - MAP - 3302
Chapter 3Solutions: ComputerMemory and Arithmetic:A Look Under the HoodCHALLENGE 3.1. See problem1.m on the website.CHALLENGE 3.2. The counts of the number of blocks moved are summarizedin the following table:columnorientedstorageroworientedst
University of Florida - MAP - 3302
16Chapter 3. Solutions: Computer Memory and ArithmeticCHALLENGE 3.5. The data cannot be fully explained by our simple model,since, for example, this machine uses prefetching, two levels of cache, and a morecomplicated block replacement strategy than t
University of Florida - MAP - 3302
Chapter 4Solutions: Design ofComputer Programs:Writing Your LegacyCHALLENGE 4.1. See posteddoc.m on the website.CHALLENGE 4.2. Data that a function needs should be specied in variables, not constants.This is ne; C is a variable. Code should be mod
University of Florida - MAP - 3302
18Chapter 4. Solutions: Design of Computer ProgramsTimes for matrices with 200 rows310Original algorithmModified algorithm2101time (sec)1001011021050100150200number of columnsFigure 4.1. Time taken by the two algorithms for matrices
University of Florida - MAP - 3302
Unit IISOLUTIONS: Dense MatrixComputations19
University of Florida - MAP - 3302
University of Florida - MAP - 3302
Chapter 5Solutions: MatrixFactorizationsCHALLENGE 5.1.s = zeros(m,1);for j=1:n,s = s + abs(A(:,j);endCompare with:for i=1:m,s(i) = norm(A(i,:),1);endCHALLENGE 5.2.3x2 = 6 x2 = 2,12x1 + 5x2 = 8 x1 = (8 10) = 1.2The determinant is 2 3 = 6.
University of Florida - MAP - 3302
22Chapter 5. Solutions: Matrix Factorizationsx = b;detA = 1;for i=1:n,x(i) = x(i) / A(i,i);x(i+1:n) = x(i+1:n) - A(i+1:n,i)*x(i);detA = detA * A(i,i);endCHALLENGE 5.4.(a)a11 a21a31a12a22a32a13a23 = a3311210110 0033022313221
University of Florida - MAP - 3302
23CHALLENGE 5.6.for i=1:3,W = planerot(A(i:i+1,i);% Note that the next instruction just operates on the part% of A that changes. It is wasteful to do multiplications% on the rest.A(i:i+1,i:n) = W * A(i:i+1,i:n);endCHALLENGE 5.7. For G to be unita
University of Florida - MAP - 3302
24Chapter 5. Solutions: Matrix FactorizationsAlternatively, using Gram-Schmidt orthogonalization,r11 = 32 + 32 = 3 2,1q1 = 32Then31r12 = qT1q2 =3133.= 4/ 2, 4/ 2q1 ,and r22 = the norm of this vector = 2, so q2 = q2 / 2. If we complete
University of Florida - MAP - 3302
25andv2= (z eT )(z e1 )1= z z z1 z1 + = z z ei z ei ei z ei + z= 2z z 2 z .2ThenQz = (I 2uu )z2vv )z= (I v22v z=zvv2=zv= e1 .(b) Let the second column of A1 be [a, v1 , . . . , vn1 ]T . Use the vector v to form theHouseholder transf
University of Florida - MAP - 3302
26Chapter 5. Solutions: Matrix FactorizationsWe need to sum this from j = 1 to n, but we can neglect all but the highest orderterms (mn3 and n3 ), so only the cost of steps (5) and (6) are signicant. For (5)we getn12(m j + 1)(n j + 1) mn2 n3 ,3j
University of Florida - MAP - 3302
27CHALLENGE 5.12. Denec = Q b =c1c2R10,R =,where c1 is n 1, c2 is (m n) 1, R1 is n n, and 0 is (m n) n. Thenb Ax2= Q (b Ax)= c Rx 2= c1 R 1 x= c1 R 1 x222+ c2 0x22+ c2 .To minimize this quantity, we make the rst term zero by taking
University of Florida - MAP - 3302
28Chapter 5. Solutions: Matrix Factorizationswhere D is a diagonal matrix containing the1 1 21 1 2 22W= . .... ...12rrvalues 1 , . . . , r , andr. . . 11r. . . 21 . ....r. . . r1Now W is a Vandermonde matrix and has full rank r
University of Florida - MAP - 3302
29CHALLENGE 5.16.Form y = U bForm z = 1 yForm x = VzTotal:n2 multiplicationsn multiplications (zi = yi /i )n2 multiplications2n2 + n multiplicationsCHALLENGE 5.17.(a) The columns of U corresponding to nonzero singular values form such a basis,
University of Florida - MAP - 3302
30Chapter 5. Solutions: Matrix Factorizations(b) Substituting the SVD our equation becomesA x = V10U x = b,where 1 is n n with the singular values on the main diagonal. Letting y = U x,we see that a particular solution isygood =soxgood = U1 1
University of Florida - MAP - 3302
31CHALLENGE 5.20.(a) Since UV x = b, we havex = V1 U b.If we let c = U b, then 1 = c1 /1 , and 2 = c2 /2 .(b) Here is one way to look at it. This system is very ill-conditioned. The conditionnumber is the ratio of the largest singular value to the s
University of Florida - MAP - 3302
32Chapter 5. Solutions: Matrix FactorizationsCHALLENGE 5.22. (Partial Solution)(a) Find the null space of a matrix: QR (fast; relatively stable) or SVD (slower butmore reliable)(b) Solve a least squares problem: QR when the matrix is well conditioned
University of Florida - MAP - 3302
Chapter 6Solutions: Case Study:Image Deblurring: I CanSee Clearly Now(coauthored by James G. Nagy)Observe that if y is a p 1 vector and z is a q 1 vectorCHALLENGE 6.1.then2yzpq2yi +=2i=12zi = y22+ z 2.2i=1Therefore,g0KI2f2
University of Florida - MAP - 3302
34Chapter 6. Solutions: Case Study: Image Deblurring: I Can See Clearly Now2UT g VT fVT f==g ff=g022I22f.2CHALLENGE 6.3. Lets write the answer for a slightly more general case: Kof dimension m n with m n.g0I2f2= g f22+ 2 fn
University of Florida - MAP - 3302
35 One common bug in the TSVD section: zeroing out pieces of SA and SB . Thisdoes not zero the smallest singular values, and although it is very ecient intime, it gives worse results than doing it correctly. The data was generated by taking an origina
University of Florida - MAP - 3302
36Chapter 6. Solutions: Case Study: Image Deblurring: I Can See Clearly NowOriginal ImageBlurred Image50501001001501502002002502505010015020025050Tikhonov with = 0.0015100150200250TSVD with p = 250050501001001501502002002
University of Florida - MAP - 3302
Chapter 7Solutions: Case Study:Updating and DowndatingMatrix Factorizations: AChange in PlansCHALLENGE 7.1.(a) Set the columns of Z to be the dierences between the old columns and the newcolumns, and set the columns of V to be the 6th and 7th colum
University of Florida - MAP - 3302
38Chapter 7. Solutions: Case Study: Updating and DowndatingMaking ShermanMorrisonWoodbury time comparable to Backslash300250Rank of update2001501005000100200300400500600Size of matrix7008009001000Figure 7.1. Results of Challenge 4.
University of Florida - MAP - 3302
39(a) (Review)cz1 + sz2sz1 cz2Gz == xe1Multiplying the rst equation by c, the second by s, and adding yields(c2 + s2 )z1 = cx ,soc = z1 /x .Similarly, we can determine thats = z2 /x .Since c2 + s2 = 1, we conclude that22z1 + z2 = x2 ,so we
University of Florida - MAP - 3302
40Chapter 7. Solutions: Case Study: Updating and Downdating=A001So we can take00...Z = 0100...a1,n+1a2,n+1...+0an,n+11 (an+1,n+1 1)a1,n+1a2,n+1...an,n+1(an+1,n+1 1)an+1,10..an+1,n001T;V =an+1,10..an+1,n00
University of Florida - MAP - 3302
Chapter 8Solutions: Case Study:The Direction-of-ArrivalProblem: Coming at YouCHALLENGE 8.1. Let wk = SCzk , and multiply the equation BASCzk =k BASCzk by (BA)1 to obtainwk = k wk ,k = 1, . . . , d.Then, by the denition of eigenvalue, we see that k
University of Florida - MAP - 3302
42Chapter 8. Solutions: Case Study: The Direction-of-Arrival ProblemResults using rectangular windowing3025201510500100200300400500600700Figure 8.1. Results of Challenge 3: the true DOA (blue) and the DOAestimated by rectangular windowi
University of Florida - MAP - 3302
43Results using exponential windowing3025201510500100200300400500600700Figure 8.2. Results of Problem 5: the true DOA (blue) and the DOAestimated by exponential windowing (red) as a function of time.CHALLENGE 8.6.(a) The sum of the squ
University of Florida - MAP - 3302
44Chapter 8. Solutions: Case Study: The Direction-of-Arrival ProblemWe have seen that matrix-based algorithms are powerful tools for signal processing, but they must be used in the light of statistical theory and the problemsgeometry.CHALLENGE 8.8. No
University of Florida - MAP - 3302
Unit IIISOLUTIONS: Optimizationand Data Fitting45
University of Florida - MAP - 3302
University of Florida - MAP - 3302
Chapter 9Solutions: NumericalMethods forUnconstrainedOptimizationCHALLENGE 9.1.f (x) = x4 + x2 (x2 1),14x312x2 1g(x) =12x210, H(x) =02.Step 1:p=12x210024x312x2 11sox480=0232312/3+3/2=4/31/2ex1 +x2 (1 + x1 )ex1
University of Florida - MAP - 3302
48Chapter 9. Solutions: Numerical Methods for Unconstrained OptimizationCHALLENGE 9.3.x = [1;2];for i=1:5,g = [4*(x(1) - 5)^3 - x(2);4*(x(2) + 1)^3 - x(1)];H = [12*(x(1) - 5)^2, -1;-1, 12*(x(2) + 1)^2];p = -H \ g;x = x + p;endCHALLENGE 9.4. Th
University of Florida - MAP - 3302
49To verify the secant condition, computeB(k+1) s(k) = B(k) s(k) (B(k) s(k) y(k) )s(k) T s(k)s(k) T s(k)= B(k) s(k) (B(k) s(k) y(k) )= y(k) ,as desired. If vT s(k) = 0, thenB(k+1) v = B(k) v (B(k) s(k) y(k) )s(k) T vs(k) T s(k)= B(k) v,as desi