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ECO/561 1) In a market economy the distribution of output will be determined primarily by: a social consensus as to what distribution of income is...

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ECO/561 1) In a market economy the distribution of output will be determined primarily by: A. a social consensus as to what distribution of income is most equitable. B. consumer needs and preferences. C. the quantities and prices of the resources that households supply. D. government regulations that provide a minimum income for all. 2) In a competitive market economy firms will select the least-cost production technique because: A. "dollar voting" by consumers mandates such a choice. B. such choices will result in the full employment of available resources. C. to do so will maximize the firms' profits. D. this will prevent new firms from entering the industry. 3) A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the: A. more inelastic the demand for the product. B. more elastic the supply curve. C. larger the elasticity of demand coefficient. D. more elastic the demand for the product. 4) Which of the following statements is true about productive and allocative efficiency? A. Realizing allocative efficiency implies that productive efficiency has been realized. B. Productive efficiency can only occur if there is also allocative efficiency. C. Productive efficiency and allocative efficiency can only occur together; neither can occur without the other. D. Society can achieve either productive efficiency or allocative efficiency, but not both simultaneously. 5) Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement: A. suggests that the supply of DVD players has increased. B. suggests that the demand for DVD players has increased. C. constitutes an exception to the law of supply in that they suggest a downward sloping supply curve. D. constitutes an exception to the law of demand in that they suggest an upward sloping demand curve. 6) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to: A. raise their price and reduce their quantity supplied. B. raise their price and increase their quantity supplied. C. lower their price and increase their quantity supplied. D. lower their price and reduce their quantity supplied. 7) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A. may be either greater or less than $5. B. will also be $5. C. will be greater than $5. D. will be less than $5. 8) If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use: A. more labor as a consequence of the substitution effect. B. more labor as a consequence of the output effect. C. less labor as a consequence of the output effect. D. less labor as a consequence of the substitution effect.
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9) If a firm is selling in an imperfectly competitive product market, then: A. A. average product will be less than marginal product for any number of workers hired. B. the marginal products of successive workers must be sold at lower prices. C. the marginal products of successive workers can be sold at a constant price. D. the marginal products of successive workers can be sold at higher prices. 10) In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs: A. are $2.50. B. are $1,250. C. are $1,100. D. are $750. 11) What do wages paid to blue-collar workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common? A. None are either implicit or explicit costs. B. All are opportunity costs. C. All are implicit costs. D. All are explicit costs. 12) Which of the following represents a long-run adjustment? A. a steel manufacturer cuts back on its purchases of coke and iron ore B. a farmer uses an extra dose of fertilizer on his corn crop C. unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants D. a supermarket hires four additional clerks 13) If the wage rate increases: A. a purely competitive and an imperfectly competitive producer will both hire less labor. B. a purely competitive producer will hire less labor, but an imperfectly competitive producer will not. C. an imperfectly competitive producer will hire less labor, but a purely competitive producer will not. D. an imperfectly competitive producer may find it profitable to hire either more or less labor. 14) Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason they do this is to: A. increase the demand for construction workers. B. restrict the supply of construction workers. C. increase the elasticity of demand for construction workers. D. increase the price of substitute inputs. 15) A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is: A. $15. B. $9. C. $10. D. $21. 16) Oligopoly is difficult to analyze primarily because: A. output may be either homogenous or differentiated. B. the number of firms is too large to make collusion understandable. C. the price and output decisions of any one firm depend on the reactions of its rivals. D. neither allocative nor productive efficiency is achieved. 17) A competitive firm will maximize profits at that output at which: A. total revenue exceeds total cost by the greatest amount. B. total revenue and total cost are equal.
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ECO/561
1) In a market economy the distribution of output will be determined primarily by:
A. a social consensus as to what distribution of income is most equitable.
B. consumer needs and...

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