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The Master's College, Microeconomics, Dr. Hill, Spring 2012, includes questions from quizzes 5-8 and the extra questions from Midterm Exam #2, and quiz questions from quizzes 9-10

T/F: Monopolies charge the highest price possible.

False

T/F: A pure monopoly has an unlimited number of close substitutes.

False

T/F: Price differences due to price discrimination are not due to cost differences.

True

T/F: One of the criticisms of the kinked demand curve is that it never explains how the original price was determined.

True

T/F: In a monopoly, barriers to entry might include patents and licenses.

True

T/F: In monopolistic competition, demand is highly elastic.

True

T/F: In monopolistic competition, the products are all the same.

False

T/F: The prisoner's dilemma shows that behavior can be predicted using game theory.

True

T/F: An example of price discrimination is business travel.

True

T/F: A monopolist is a price taker.

False

T/F: Change in the price of a complementary resource is not a determinate of resource demand.

False

T/F: Wages paid for labor include direct money payments and benefits.

True

T/F: The population that would be most impacted by a change in minimum wage would be the agricultural field workers

False

T/F: The elimination of the minimum wage would decrease unemployment

True

T/F: Changes in demand for complimentary resources are inversely related.

False

T/F: According to the least cost rule, the last dollar spent on each resource yields the same marginal product.

True

T/F: Monopsony's can minimize profit by hiring smaller numbers of workers.

False

T/F: Wage requirements by unions decrease unemployment.

False

T/F: An optimal combination of resources will maximize profit.

True

T/F: Change in product demand is a determinate of resource demand.

True

T/F: Resource consumption per capita has leveled off or is decreasing.

True

T/F: Nearly half of all US energy comes from renewable resources

False

T/F: Pure profit is what remains after implicit and explicit costs.

True

T/F: Economists believe we are in danger of running out of energy

False

T/F: Economic rent is influenced by the perfectly elastic supply of land.

False

T/F: Poorer countries are willing to sacrifice the environment in order to put their resources into getting out of poverty.

True

T/F: Money is more valuable the sooner it is obtained.

True

T/F: Per capita energy use has nearly doubled since the early 70s.

False

T/F: Commodity supply is rising faster than commodity demand.

True

T/F: We are using more water per person now than we have any time in our history.

False

T/F: The government currently spends about 50% of its yearly budget on defense.

False

The U.S. Steel Antitrust case was important because it was determined that just because there was only one firm in an industry, it was not necessarily illegal.

True

T/F: The adverse selection problem is the tendency for workers to shirk when they are not being monitored.

False

T/F: We have the highest marginal personal income tax rate in our history right now.

False

T/F: The "Laffer Curve" predicts that tax revenue will decrease if taxes get too high.

True

T/F: Voters have the tendency to vote for their own self interests, which works to the benefit of the economy due to the invisible hand theory.

False

T/F: According to the text a moral hazard occurs when a newly insured party behaves differently (more recklessly) after an insurance policy is issued.

True

T/F: When an inelastic product is taxed, the consumer bears the burden.

True

T/F: The Sherman Act was the first attempt at antitrust legislation in this country.

True

T/F: Regressive taxes hurt the poor more than the rich

True

T/F: Large variation in forest growth rates is due to differences in property rights

True

MC: Which of the following is NOT a basic characteristic of monopolistic competition?

recognized interdependence

T/F: Compared to most other countries, the U.S. has relatively high taxes on general consumption

False

T/F: The fertility rate in the US indicates that people are not replacing themselves.

True

T/F: About 45% of Federal tax revenue comes from corporate income tax.

False

T/F: Since the world's population increased from 1 to 6.8 Billion, the standard of living has steadily decreased.

False

T/F: Governments have proven to be just as efficient as private business.

False

T/F: The U.S. has a progressive income tax system

True

T/F: Real interest rates do not include an adjustment for inflation.

False

T/F: The interest rate is the price paid for the use of money.

True

T/F: Most developed countries have fertility rates less than 2.1

True

T/F: The government gets nothing in return for nonexhaustive transfer payments.

True

T/F: Although state and local taxes are highly progressive, Federal taxation is predominantly regressive.

False

MC: In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible in the future. This illustrates:

the moral hazard problem

T/F: Adverse Selection occurs when one party makes a decision that ends up being poor to unfoerseen natural disasters (hurricane, flood, etc...)

False

MC: The main purpose of the antitrust laws is:

to prevent the monopolization of industries

T/F: The Reagan tax cut proved the "Laffer Curve" predictions true.

True

T/F: Even if a majority of the population wants a law and the law is passed, the outcome may still be economically inefficient

True

T/F: Modernizing economies that have declining birthrates may still experience population growth because of rapidly declining death rates.

True

T/F: About one-half of U.S. electricity is generated using coal.

True

MC: A natural monopoly occurs when:

long-run average costs decline continuously through the range of demand.

T/F: A player is said to have a dominant strategy when one of the options is superior, regardless of what strategy the other player chooses.

True

T/F: The major expenditure of local governments is for education.

True

MC: Deregulation began in the:

70s

T/F: Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase.

False

MC: Under monopolistic competition entry to the industry is:

more difficult than under pure competition but not nearly as difficult as under pure monopoly.

T/F: The median voter has tremendous power in shaping government.

True

T/F: In a zero-sum game, the gains by one player will be exactly offset by the losses of the other.

True

T/F: Wages are 5% higher on average for union workers.

False

T/F: Sales taxes on consumer goods are regressive because poor people consume a larger proportion of their incomes than do rich people.

True

Short Answer: The supply of land and other natural resources is perfectly _____.

inelastic

T/F: Profit is compensation for bearing uninsurable risks.

True

Short Answer: Monopolist is a price _____ .

maker

T/F: Corruption does not have the same impact on private business as it does on the government.

True

T/F: Commodity prices are relatively stable from year to year.

False

T/F: Professor Hill agreed to cancel the final examination if students promised to study for it anyway. The concept of moral hazard would predict that it is unlikely that students will study for the exam.

True

T/F: One of the reasons franchises are successful is that they offer a known product.

True

T/F: Economists blame over regulation for the collapse of the Atlantic tuna and Red hake fish populations.

False

MC: Nonprice competition refers to:

advertising, product promotion, and changes in the real or perceived characteristics of a product.

T/F: Government "pork" refers to the influence of the government over pork belly futures.

False

T/F: The agriculture industry is in decline because the supply has increased rapidly while the demand has increased slowly.

True

T/F: Approximately 2% of the US labor force works in agriculture

True

T/F: The government redistributes money through a tax and transfer approach.

True

T/F: The average US household income in 2008 was among the highest in the world at just above $68,000.

True

MC: All of the following are causes of income inequality exceptL

increase in union populatioin

T/F: As of 2008, the poverty rate in the US is about 3%.

False

T/F: U.S. farmers have been receiving subsides since the end of the Civil War.

False

T/F: One of the causes of income inequality is difference in the levels education and training among employees.

True

MC: Price supports in agriculture do all of the following except:

create a price ceiling

T/F: The income inequality gap has been increasing since 1970.

True

T/F: Most immigrants gain citizenship by being family sponsored.

True

T/F: Obamacare is another name for the affordable care act.

True

T/F: The U.S. funds about half of all medical research worldwide.

True

T/F: Health care costs as a percentage of GDP have stayed about the same since 1960

False

T/F: In the U.S., immigration causes the wage and unemployment rates to fall.

True

T/F: The U.S. averages about 4 times as many illegal immigrants as there are legal immigrants.

False

T/F: The U.S. is averaging about 1 million legal immigrants per year.

True

T/F: Rising health care cost leads to slower wage growth.

True

T/F: The practice of employers offering health insurance began in the 1920s.

False

T/F: immigration causes worldwide output to fall.

False

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