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AU / Economics / ECON 2020 / In which type of product market does this firm sell?

In which type of product market does this firm sell?

In which type of product market does this firm sell?

Description

School: Auburn University
Department: Economics
Course: PRINCIPLES OF MICROECONOMICS
Professor: William finck
Term: Fall 2016
Tags: Microeconomics, micro, Econ, Test 5, Macy, and Fink
Cost: 50
Name: Micro Econ Test 5 practice Fink
Description: Practice tests a,b,c,d for Micro Econ test 5
Uploaded: 02/24/2016
28 Pages 69 Views 4 Unlocks
Reviews


VERSION 1


In which type of product market does this firm sell?



Name _________________

ECON 2020 Exam #5

DIRECTIONS: Read each question and EVERY possible answer VERY carefully. Select  the best answer from the alternatives. Good luck!

Use the following graph to answer question 1 - 2.

 W

 MFC

 $40

 S

 $28

 $21 D = MRPL 


What is the amount of the excise tax?



120 200 410 L

1. In a monopsony labor market, ____ workers would be hired for a wage of _____ . A. 120; $21

B. 120; $28

C. 200; $21

D. 200; $40

E. 410; $28  

2. In a competitive labor market, ____ workers would be hired for a wage  of ____ .

A. 120; $21

B. 120; $28

C. 200; $21

D. 200; $40

E. 410; $28  

Use the following information to answer question 3.

MRPL = 410 – L W = 10 + 2L

3. For the monopsonist facing this demand curve with these costs, the profit-maximizing  level of employment is ___ workers and wage is ____ .

A. 80, $170


Which of the following actions is taken by labor unions to reach their goals?



B. 84, $178

C. 133, $277

D. 80, $330 Don't forget about the age old question of What is opiates?
If you want to learn more check out What are the four models of financing health care?

E. 100, $310

1

VERSION 1

Use the following table to answer questions 4 - 7.

L

Q

MPL

MR

MRPL

W

TVC

MFC

1

9

9

8

72

12

12

12

2

A

8

64

13

3

24

8

15

45

19

4

5

8

B

23

5

33

8

32

20

100

Don't forget about the age old question of How would one know if a molecule has london dispersion forces?

4. The correct value for the blank labeled "A" is

A. 15

B. 18

C. 17 Don't forget about the age old question of What are the differences in trading activities between equities and corporate bonds?

D. 8

E. “I'm all jacked up on Mountain Dew!”

5. The correct value for the blank labeled "B" is

A. 17

B. 18

C. 19

D. 68

E. 40

6. The employer will hire ___ workers at a wage of ____.

A. 3, $15

B. 4, $17

C. 4, $23

D. 5, $32

E. 5, $20

7. In which type of product market does this firm sell?

A. perfect competition

B. monopoly

C. monopsony

D. “So when you say psychosomatic, you mean, like, he could start a fire with   his thoughts?”

8. When an unregulated positive externality exists, Don't forget about the age old question of Why do we still not believe science?

A. the marginal social benefit exceeds the marginal social cost  

B. the marginal social cost exceeds the marginal social benefit

C. the market equilibrium output is greater than the socially optimal level D. A and C only

E. B and C only

2

VERSION 1

Use the following graph to answer questions 9 – 10.  P

 S = MSC

 $38  $34  $31

Don't forget about the age old question of Has anyone changed their mind about being a liberal after going through this reasoning?

 MSB D  

 Q 75 85 95

9. Without regulation, the equilibrium price and quantity will be

A. $31; 75 units

B. $38; 75 units

C. $34; 95 units

D. $34; 85 units

10. The optimal _____ for this market is _____ .

A. subsidy, $4

B. tax, $4

C. tax, $7

D. subsidy, $7

E. “What does that do? Does that blow your mind? That just happened!!”

11. All firms find the profit-maximizing level of employment where

A. MRPL = W

B. MR = MC

C. W = MPL 

D. MRPL = MFC  

E. “If you ain't first, you're last!”

12. Lucius Washington has just discovered a new production process that will increase the  marginal productivity of all Dennit Racing team members. What will happen to Dennit  Racing’s demand for labor? (HINT: Remember that DL = MRPL )

A. DL will decrease  

B. DL will increase  

C. DL will stay the same

D. “This sticker is dangerous and inconvenient, but I do love Fig Newtons.”  

13. Which of the following will decrease the price elasticity of demand for labor? A. an increase in the price of substitute inputs

B. a decrease in the number of substitute inputs  

C. an increase in the price elasticity of demand for the output  

D. all of the above

E. B and C only

3

VERSION 1

14. Granny taught Walker and Texas Ranger to stop acting like a couple of gangbangers,  creating a positive externality. What type of government action could improve social  welfare?

A. a tax on training juvenile delinquents, causing less training to occur B. a tax on training juvenile delinquents, causing more training to occur C. a subsidy on training juvenile delinquents, causing less training to occur D. a subsidy on training juvenile delinquents, causing more training to occur E. “Shake and bake!”  

Use the following game to answer question 15.

 

Cal Naughton Jr.

 Collude Cheat

 Collude  

 Ricky Bobby  

 

Cheat  

 

 $30,000 profit  

$30,000 profit

$50,000 profit

-$10,000 profit

-$10,000 profit

$50,000 profit

$0 profit

$0 profit

15. With respect to the above “game,” which of the following statements is FALSE? A. The players maximize total producer welfare by cheating.

B. The players maximize their individual welfare by cheating.

C. Consumers are better off when the players cheat.

D. A and C only

E. B and C only

16. Which of the following is one of the characteristics of oligopoly? A. no barriers to entry

B. imperfect information

C. few mutually interdependent sellers  

D. all of the above

E. B and C only

17. Which of the following factors will NOT break down collusion? A. a large number of sellers  

B. standardized products  

C. antitrust policy

D. A and B only

E. A and C only

4

VERSION 1

18. Larry Dennit Jr. is considering hiring Jean Girard to race for his team. Which of the  following effects will Jean’s hiring have on Mr. Dennit’s firm?

A. profit will rise  

B. total revenue will rise

C. total cost will rise

D. all of the above

E. B and C only

19. Assume labor unions successfully lobby for an increase in the minimum wage.  Implementation of this proposal is likely to

A. increase employment among young (non-union) people

B. increase unemployment among young (non-union) people

C. increase the demand for union labor

D. A and C only

E. B and C only

Use the following information to answer question 20.

Due to the fact that packs of wild dogs have taken over some major cities, the Federal  government is assigning Special Forces teams to cities across the country. Each team will cost  taxpayers $10,200. There are two types of consumers: major city residents, and rural area  residents. The marginal benefit of each additional team is represented in the following table:

Q MB (m.c.) MB (r.a.)

1 20 4

2 16 3

3 12 2

4 8 1

5 4 0

20. If there are 600 major city residents and 200 rural area residents, what is the socially  optimal number of teams?

A. 1

B. 2

C. 3

D. 4

E. 5

21. A firm operates in a perfectly competitive labor market has a marginal revenue product of  labor curve of MRPL = 180 – 6L. If the market wage rate is $24, what level of  employment will maximize profits?

A. 6 workers

B. 10 workers

C. 26 workers

D. 7 workers

E. 34 workers

5

VERSION 1

22. When all other firms in a cartel obey the rules of the collusion agreement, A. an individual firm demand curve will be more elastic if it colludes than if it cheats  B. an individual firm demand curve will be more elastic if it cheats than if it colludes C. an individual firm can make more money by cheating than by colluding D. A and C only

E. B and C only

Use the following graph to answer questions 23 - 24.

 S+T

 P

 $33 S

 $28  

 $25

 D

 80 100 Q

23. The dotted area represents  

A. consumer burden

B. producer burden

C. tax revenue

D. deadweight loss

E. “That's a good call. Here, that's worth a nickel.”

24. What is the amount of the excise tax?

A. $13.00

B. $3.00

C. $5.00

D. $8.00

E. “Why, if it isn't our mangy, transient grandfather.”

25. Which of the following actions is taken by labor unions to reach their goals? A. lobbying for fewer immigration laws

B. lobbying for import restrictions  

C. lobbying for minimum wage decreases

D. A and B only

E. B and C only

6

VERSION 1

7

VERSION 1

Name _________________

ECON 2020 Exam #5

DIRECTIONS: Read each question and EVERY possible answer VERY carefully. Select  the best answer from the alternatives. Good luck!

Use the following graph to answer questions 1 – 2.

 P

 $22  $17  $13

 MSC  S  

D  

 Q 40 50 60

1. Without regulation, the equilibrium price and quantity will be A. $17; 60 units

B. $22; 50 units

C. $13; 50 units

D. $17; 40 units

E. “Hakuna matata…”

2. The optimal _____ for this market is _____ .

A. subsidy, $5  

B. tax, $5

C. subsidy, $9

D. tax, $9

E. “What does that do? Does that blow your mind? That just happened!!”

3. Which of the following is one of the characteristics of oligopoly? A. high barriers to entry

B. imperfect information

C. few, mutually interdependent sellers  

D. all of the above

E. B and C only

4. All firms find the profit-maximizing level of employment where A. W = MPL 

B. MRPL = MFC  

C. MRPL = W

D. MR = MC

E. “If you ain't first, you're last!”

1

VERSION 1

Use the following game to answer question 5.

 

Cal Naughton Jr.

 Collude Cheat

 Collude  

 Ricky Bobby  

 

Cheat  

 

 $30,000 profit  

$30,000 profit

$50,000 profit

-$10,000 profit

-$10,000 profit

$50,000 profit

$0 profit

$0 profit

5. With respect to the above “game,” which of the following statements is TRUE? A. Consumers are better off when the players collude.  

B. The players maximize total producer welfare by cheating.

C. The players maximize their individual welfare by cheating.

D. A and B only

E. A and C only

6. Larry Dennit Jr. is considering hiring Jean Girard to race for his team. Which of the  following effects will Jean’s hiring have on Mr. Dennit’s firm?

A. total revenue will rise  

B. total cost will fall

C. price will fall  

D. profit will rise

E. A and B only

7. Which of the following actions is taken by labor unions to reach their goals? A. lobbying for fewer immigration laws

B. lobbying for import restrictions  

C. lobbying for minimum wage decreases

D. all of the above

E. B and C only

8. A firm operates in a perfectly competitive labor market has a marginal revenue product of  labor curve of MRPL = 276 – 6L. If the market wage rate is $24, what level of  employment will maximize profits?

A. 42 workers

B. 11 workers

C. 9 workers

D. 50 workers

E. 34 workers

2

VERSION 1

Use the following information to answer question 9.

W = 20 + 2L MRPL = 200 – 2L

9. For the monopsonist facing this demand curve with these costs, the profit-maximizing  level of employment is ___ workers and wage is ____ .

A. 55, $130

B. 37, $94

C. 30, $140

D. 30, $80

E. 45, $110

Use the following graph to answer question 10.

 W

 MFC

 $40

 S

 $21

 $17 D = MRPL 

30 50 100 L

10. In a monopsony labor market, ____ workers would be hired for a wage of _____ . A. 50; $40

B. 100; $21

C. 30; $17

D. 50; $17

E. 30; $21  

11. If the cost of production falls in a product market, supply increases. How would an  increase in the supply of a product affect the labor market?

A. since quantity of products supplied is increasing, employment will increase B. since quantity of products supplied is increasing, employment will decrease C. since quantity of products supplied is decreasing, employment will increase D. since quantity of products supplied is decreasing, employment will decrease

12. Which of the following will decrease the price elasticity of demand for labor? A. a decrease in the price elasticity of demand for the output

B. an increase in the price of substitute inputs

C. a decrease in the number of substitute inputs

D. A and B only

E. A and C only

3

VERSION 1

Use the following graph to answer questions 13 - 14.

 S+T

 P

 $33 S

 $26  

 $18

 D

 90 100 Q

13. The dotted area represents  

A. deadweight loss  

B. producer burden

C. consumer burden  

D. tax revenue

E. “That's a good call. Here, that's worth a nickel.”

14. What is the amount of the excise tax?

A. $10.00

B. $8.00

C. $7.00

D. $15.00

E. “Why, if it isn't our mangy, transient grandfather.”

15. When an unregulated positive externality exists,

A. the marginal social cost exceeds the marginal social benefit

B. the marginal social benefit exceeds the marginal social cost  

C. the market equilibrium output is less than the socially optimal level

D. A and C only

E. B and C only

16. When all other firms in a cartel obey the rules of the collusion agreement, A. an individual firm demand curve will be more elastic if it colludes than if it cheats B. an individual firm demand curve will be more elastic if it cheats than if it colludes C. an individual firm can make more money by colluding than by cheating D. A and C only

E. B and C only

17. Which of the following factors will NOT break down collusion?

A. a large number of sellers  

B. antitrust policy

C. differences in costs

D. standardized products

E. all of the above WILL break down collusion

4

VERSION 1

Use the following information to answer question 18.

Due to the fact that packs of wild dogs have taken over some major cities, the Federal  government is assigning Special Forces teams to cities across the country. Each team will cost  taxpayers $8,000. There are two types of consumers: major city residents, and rural area  residents. The marginal benefit of each additional team is represented in the following table:

Q MB (m.c.) MB (r.a.)

1 18 4

2 16 3

3 14 2

4 12 1

5 10 0

18. If there are 800 major city residents and 400 rural area residents, what is the socially  optimal number of teams?

A. 1

B. 2

C. 3

D. 4

E. 5

19. A public good must possess which of the following characteristics? A. non-rival in consumption

B. non-rival in production

C. non-excludable

D. A and C only

E. B and C only  

20. Lucius Washington has just discovered a new production process that will increase the  marginal productivity of all Dennit Racing team members. What will happen to Dennit  Racing’s demand for labor? (HINT: Remember that DL = MRPL )

A. DL will stay the same

B. DL will decrease  

C. DL will increase

D. “This sticker is dangerous and inconvenient, but I do love Fig Newtons.”  

21. Jean Girard played jazz on the jukebox at the Pit Stop, which created a negative  externality. Which of the following government actions could improve social welfare? A. a tax on jazz, causing more jazz to be played

B. a tax on jazz, causing less jazz to be played

C. a subsidy on jazz, causing more jazz to be played

D. a subsidy on jazz, causing less jazz to be played

E. “Shake and bake!”

5

VERSION 1

Use the following table to answer questions 22 - 25.

L

Q

MPL

MR

MRPL

W

TVC

MFC

1

12

12

6

16

16

2

11

6

17

18

3

A

6

54

18

54

4

7

6

42

B

26

5

44

5

6

22

22. The correct value for the blank labeled "A" is

A. 33

B. 40

C. 32

D. 28

E. “I'm all jacked up on Mountain Dew!”

23. The correct value for the blank labeled "B" is

A. 7

B. 20

C. 28

D. 19

E. 21

24. The employer will hire ___ workers at a wage of ____.

A. 3, $18

B. 3, $54

C. 4, $20

D. 5, $30

E. 5, $22

25. In which type of product market does this firm sell?

A. perfect competition

B. monopoly

C. monopsony

D. “So when you say psychosomatic, you mean, like, he could start a fire with   his thoughts?”

6

VERSION 1

7

VERSION 1

Name _________________

ECON 2020 Exam #5

DIRECTIONS: Read each question and EVERY possible answer VERY carefully. Select  the best answer from the alternatives. Good luck!

Use the following information to answer question 1.

MRPL = 410 – 2L W = 10 + L

1. For the monopsonist facing this demand curve with these costs, the profit-maximizing  level of employment is ___ workers and wage is ____ .

A. 80, $90

B. 105, $115

C. 133, $143

D. 100, $210

E. 100, $110

Use the following graph to answer questions 2 - 3.

 S+T

 P

 $36 S

 $28  

 $22

 D

 80 100 Q

2. The dotted area represents  

A. producer burden

B. consumer burden  

C. deadweight loss

D. tax revenue

E. “That's a good call. Here, that's worth a nickel.”

3. What is the amount of the excise tax?

A. $14.00

B. $20.00

C. $6.00

D. $8.00

E. “Why, if it isn't our mangy, transient grandfather.”

1

VERSION 1

4. A firm operates in a perfectly competitive labor market has a marginal revenue product of  labor curve of MRPL = 228 – 6L. If the market wage rate is $24, what level of  employment will maximize profits?

A. 42 workers

B. 13 workers

C. 26 workers

D. 57 workers

E. 34 workers

Use the following information to answer question 5.

Due to the fact that packs of wild dogs have taken over some major cities, the Federal  government is assigning Special Forces teams to cities across the country. Each team will cost  taxpayers $6,800. There are two types of consumers: major city residents, and rural area  residents. The marginal benefit of each additional team is represented in the following table:

Q MB (m.c.) MB (r.a.)

1 20 4

2 16 3

3 12 2

4 8 1

5 4 0

5. If there are 800 major city residents and 400 rural area residents, what is the socially  optimal number of teams?

A. 1

B. 2

C. 3

D. 4

E. 5

6. When all other firms in a cartel obey the rules of the collusion agreement, A. an individual firm demand curve will be more inelastic if it colludes than if it cheats  B. an individual firm demand curve will be more inelastic if it cheats than if it colludes C. an individual firm can make more money by cheating than by colluding D. A and C only

E. B and C only

7 Which of the following will increase the demand for labor?

A. a decrease in the number of substitute inputs  

B. an increase in the price of substitute inputs

C. an increase in the demand for the output  

D. all of the above

E. B and C only

2

VERSION 1

Use the following table to answer questions 8 - 12.

L

Q

MPL

MR

MRPL

W

TVC

MFC

1

11

5

20

20

2

A

4

36

21

22

3

8

3

24

22

66

4

34

2

B

30

5

39

5

1

130

34

8. The correct value for the blank labeled "A" is

A. 15

B. 19

C. 9

D. 20

E. “I'm all jacked up on Mountain Dew!”

9. The correct value for the blank labeled "B" is

A. 17

B. 23

C. 24

D. 25

E. 96

10. The employer will hire ___ workers at a wage of ____.

A. 3, $22

B. 3, $24

C. 4, $23

D. 4, $24

E. 4, $25

11. In which type of product market does this firm sell?

A. perfect competition

B. monopoly

C. monopsony

D. “So when you say psychosomatic, you mean, like, he could start a fire with   his thoughts?”

12. In which type of labor market does this firm hire workers?

A. perfect competition

B. monopoly

C. monopsony

D. “Hakuna matata…”

3

VERSION 1

Use the following graph to answer question 13.

 W

 MFC

 $40

 S

 $21

 $17 D = MRPL 

200 300 600 L

13. In a monopsony labor market, ____ workers would be hired for a wage of _____ . A. 600; $21

B. 200; $17

C. 200; $21

D. 300; $40

E. 300; $17

14. Which of the following actions is taken by labor unions to reach their goals? A. advertising union-made

B. lobbying for import restrictions  

C. lobbying for minimum wage decreases

D. all of the above

E. A and B only

15. Which of the following is one of the characteristics of oligopoly? A. no barriers to entry

B. perfect information

C. few, mutually interdependent sellers  

D. all of the above

E. B and C only

16. Jean Girard played jazz on the jukebox at the Pit Stop, which created a negative  externality. Which of the following government actions could improve social welfare? A. a tax on jazz, causing more jazz to be played

B. a tax on jazz, causing less jazz to be played

C. a subsidy on jazz, causing more jazz to be played

D. a subsidy on jazz, causing less jazz to be played

E. “Shake and bake!”

4

VERSION 1

Use the following game to answer question 17.

 

Cal Naughton Jr.

 Collude Cheat

 Collude  

 Ricky Bobby  

 

Cheat  

 

 $30,000 profit  

$30,000 profit

$50,000 profit

-$10,000 profit

-$10,000 profit

$50,000 profit

$0 profit

$0 profit

17. With respect to the above “game,” which of the following statements is FALSE? A. The players maximize their individual welfare by colluding.

B. The players maximize total producer welfare by cheating.

C. Consumers are better off when the players cheat.

D. A and B only

E. B and C only

Use the following graph to answer questions 18 – 19.

 P

 $22  $20  $17

 MSC  S  

D  

 Q 75 85 95

18. Without regulation, the equilibrium price and quantity will be A. $22; 85 units

B. $17; 85 units

C. $20; 75 units

D. $20; 95 units

19. The optimal _____ for this market is _____ .

A. tax, $5

B. subsidy, $5  

C. tax, $2

D. subsidy, $2

E. “What does that do? Does that blow your mind? That just happened!!”

5

VERSION 1

20. Larry Dennit Jr. is considering hiring Jean Girard to race for his team. Which of the  following effects will Jean’s hiring have on Mr. Dennit’s firm?

A. profit will rise  

B. total cost will fall

C. total revenue will rise  

D. A and B only

E. A and C only

21. When an unregulated negative externality exists,

A. the marginal social cost exceeds the marginal social benefit

B. the marginal social benefit exceeds the marginal social cost  

C. the market equilibrium output is greater than the socially optimal level D. A and C only

E. B and C only

22. Lucius Washington has just discovered a new production process that will increase the  marginal productivity of all Dennit Racing team members. What will happen to Dennit  Racing’s demand for labor? (HINT: Remember that DL = MRPL )

A. DL will increase  

B. DL will decrease  

C. DL will stay the same

D. “This sticker is dangerous and inconvenient, but I do love Fig Newtons.”  

23. Which of the following factors will NOT break down collusion? A. a small number of sellers  

B. differentiated products

C. antitrust policy

D. A and B only

E. B and C only  

24. Assume labor unions successfully lobby for an increase in the minimum wage.  Implementation of this proposal is likely to

A. increase employment among young (non-union) people

B. increase unemployment among young (non-union) people

C. decrease the demand for union labor

D. A and C only

E. B and C only

25. All firms find the profit-maximizing level of employment where A. W = MPL 

B. MRPL = MFC  

C. MRPL = W

D. MR = MC

E. “If you ain't first, you're last!”

6

VERSION 1

7

VERSION 1

Name _________________

ECON 2020 Exam #5

DIRECTIONS: Read each question and EVERY possible answer VERY carefully. Select  the best answer from the alternatives. Good luck!

Use the following graph to answer question 1.

 W

 MFC

 $50

 S

 $30

 $17 D = MRPL 

 7 11 21 L

1. In a monopsony labor market, ____ workers would be hired for a wage of _____ . A. 11; $50

B. 11; $17

C. 7; $17

D. 7; $30

E. 21; $30  

2. A firm operates in a perfectly competitive labor market has a marginal revenue product of  labor curve of MRPL = 152 – 4L. If the market wage rate is $16, what level of  employment will maximize profits?

A. 34 workers

B. 42 workers

C. 38 workers

D. 9 workers

E. 8 workers

3. Larry Dennit Jr. is considering hiring Jean Girard to race for his team. Which of the  following effects will Jean’s hiring have on Mr. Dennit’s firm?

A. total cost will rise

B. total revenue will rise

C. price will rise

D. profit will rise

E. A and B only

1

VERSION 1

Use the following graph to answer questions 4 - 5.

 S+T

 P

 $20 S

 $16  

 $14

 D

 120 180 Q

4. The dotted area represents  

A. consumer burden  

B. tax revenue

C. deadweight loss  

D. producer burden

E. “Why, if it isn't our mangy, transient grandfather.”  

5. What is the amount of the excise tax?

A. $4.00

B. $60.00

C. $6.00

D. $2.00

Use the following game to answer question 6.

 

Cal Naughton Jr.

 Collude Cheat

 Collude  

 Ricky Bobby  

 

Cheat  

 

 $30,000 profit  

$30,000 profit

$50,000 profit

-$10,000 profit

-$10,000 profit

$50,000 profit

$0 profit

$0 profit

6. With respect to the above “game,” which of the following statements is TRUE? A. Consumers are better off when the players cheat.  

B. The players maximize their individual welfare by cheating.

C. The players maximize total producer welfare by cheating.

D. A and B only

E. A and C only

2

VERSION 1

7. Which of the following actions is NOT taken by labor unions to reach their goals? A. apprenticeship programs

B. lobbying for import restrictions  

C. lobbying for minimum wage decreases

D. A and B only  

E. all of the above actions ARE taken by unions

8. Jean Girard played jazz on the jukebox at the Pit Stop, creating a negative externality.  What type of government action could improve social welfare?

A. a tax on playing jazz, causing less jazz to be played

B. a tax on playing jazz, causing more jazz to be played

C. a subsidy on playing jazz, causing less jazz to be played

D. a subsidy on playing jazz, causing more jazz to be played

E. “What does that do? Does that blow your mind? That just happened!!”  Use the following information to answer question 9.

W = 20 + 2L MRPL = 230 – 3L

9. For the monopsonist facing this supply curve with this MRPL, the profit-maximizing  level of employment is ___ workers and wage is ____ .

A. 30, $140

B. 30, $80

C. 42, $104

D. 50, $120

E. 36, $92

10. Lucius Washington has just discovered a new production process that will increase the  marginal productivity of all Dennit Racing team members. What will happen to Dennit  Racing’s demand for labor? (HINT: Remember that DL = MRPL )

A. “Shake and bake!”  

B. DL will stay the same

C. DL will decrease  

D. DL will increase  

11. When all other firms in a cartel obey the rules of the collusion agreement, A. an individual firm can make more money by colluding than by cheating  B. an individual firm demand curve will be more elastic if it cheats than if it colludes C. an individual firm demand curve will be more elastic if it colludes than if it cheats D. A and B only

E. A and C only

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Use the following information to answer question 12.

Due to the fact that packs of wild dogs have taken over some major cities, the Federal  government is assigning Special Forces teams to cities across the country. Each team will cost  taxpayers $8,000. There are two types of consumers: major city residents, and rural area  residents. The marginal benefit of each additional team is represented in the following table:

Q MB (m.c.) MB (r.a.)

1 18 9

2 16 8

3 14 7

4 12 6

5 10 5

12. If there are 300 major city residents and 400 rural area residents, what is the socially  optimal number of teams?

A. 1

B. 2

C. 3

D. 4

E. 5

13. A public good must possess which of the following characteristics? A. non-rival in consumption

B. non-rival in production

C. non-excludable

D. A and C only

E. B and C only  

14. Which of the following is a characteristic of oligopoly?

A. close substitutes

B. perfect information

C. many, small buyers and sellers

D. standardized products  

E. high barriers to entry  

15. Which of the following factors will NOT break down collusion? A. differences in costs

B. antitrust policy

C. standardized products

D. a large number of sellers  

E. all of the above WILL break down collusion  

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Use the following table to answer questions 16 - 19.

L

Q

MPL

MR

MRPL

W

TVC

MFC

1

7

7

8

20

20

2

A

7

42

21

42

3

17

6

22

4

20

5

15

30

5

2

4

8

26

B

16. The correct value for the blank labeled "A" is

A. 10

B. 14

C. 6

D. 13

E. 3

17. The correct value for the blank labeled "B" is

A. 34

B. 130

C. 36

D. 32

E. “So when you say psychosomatic, you mean, like, he could start a fire with   his thoughts?”

18. The employer will hire ___ workers at a wage of ____.

A. 5, $26

B. 4, $30

C. 4, $24

D. 3, $24

E. 3, $22

19. In which type of product market does this firm sell?

A. monopoly

B. monopsony

C. perfect competition

D. “Hakuna matata…”

20. How would an increase in the supply of a product affect the labor market? A. since quantity of products demanded is decreasing, employment will increase B. since quantity of products demanded is decreasing, employment will decrease C. since quantity of products demanded is increasing, employment will increase D. since quantity of products demanded is increasing, employment will decrease E. “That's a good call. Here, that's worth a nickel.”  

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21. Which of the following will decrease the price elasticity of demand for labor? A. a decrease in the number of substitute inputs  

B. a decrease in the demand for the output

C. an increase in the price of substitute inputs

D. A and B only

E. B and C only

22. When an unregulated positive externality exists,

A. the marginal social cost exceeds the marginal social benefit

B. the marginal social benefit exceeds the marginal social cost  C. the market equilibrium output is less than the socially optimal level D. A and C only

E. B and C only

Use the following graph to answer questions 23 – 24.

 P

 $32  $29  $27

 MSC  S

D = MSB 

 Q 80 90 110

23. After regulation, the market price and quantity will be

A. $32; 80 units

B. $29; 90 units

C. $27; 110 units

D. $27; 80 units

E. “This sticker is dangerous and inconvenient, but I do love Fig Newtons.”

24. The optimal _____ for this market is _____ .

A. subsidy, $3

B. tax, $3

C. subsidy, $5

D. tax, $5

E. “If you ain't first, you're last!”  

25. All firms find the profit-maximizing level of employment where A. MRPL = W

B. MR = MC

C. MRPL = MFC  

D. W = MPL 

E. “I'm all jacked up on Mountain Dew!”

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