Income redistribution in the United States results in the income share of the ________ rising and the income share of the ________ falling. A. lowest quintile; other four quintiles B. two lowest quintiles; other three quintiles C. three lowest quintiles; other two quintiles D. four lowest quintiles; highest quintile

To maximize profit, a firm ________.

A. uses the quantity of land at which the rental rate equals the value of marginal product of land

B. balances the rental rate of capital against the wage rate of labor

C. uses the quantity of capital at which the marginal revenue equals the value of marginal product of capital

D. uses the quantity of capital at which the suppliers’ expected profit equals the value of marginal product of capital

A union will ________ if it can ________.

A. raise the wage rate of its members; decrease the marginal product of its union members

B. raise the wage rate of its members; introduce minimum qualifications, which will restrict membership of the union

C. increase the number of union jobs; restrict membership of the union

D. increase the number of union jobs; increase the union wage rate

Which of the following statements is incorrect. In oligopoly ________. A. barriers to entry prevent new firms entering B. each firm’s profit is influenced by each other firms’ advertising C. each firm’s action is influenced by the actions and reactions of each other firm D. each firm is a price taker and the price is the monopoly profit-maximizing price

If one firm advertises and other firms in the market don’t, then ________.

A. the demand for the advertised good becomes more elastic

B. the profit­maximizing quantity of the advertised good decreases because total fixed costs increase

C. the average cost of producing a small quantity of the advertised good rises but the average total cost of producing a large quantity might fall

D. the economic profit made from the advertised good increases

Perfect competition is efficient because all the following conditions hold except ________. A. total product is maximized B. firms maximize profit and produce on their supply curves C. consumers get a real bargain and pay a price below the value of the good D. firms minimize their average total cost of producing the good

The four largest firms in a market have the following market shares of total revenue: 20 percent, 15 percent, 10 percent, and 5 percent. The ________ in this industry is ________. A. four-firm concentration ratio; 50 percent B. four-firm concentration ratio; 750 percent C. Herfindahl-Hirschman Index; 50 D. Herfindahl-Hirschman Index; 2,500

In an advertising prisoners’ dilemma game, ________.

A. both firms will advertise and end up with lower profits than if neither advertises

B. only one firm will advertise because the other firm sees the advertising expenditure as a waste

C. the two firms agree on the total advertising budget and split it equally

D. neither firm will advertise because both realize that it lowers profit

Governments regulate natural monopoly by capping the price at ________.

A. marginal revenue and allowing the monopoly to maximize profit

B. marginal cost so that the monopoly is efficient and makes zero economic profit

C. average total cost, which allows the monopoly to be inefficient but make zero economic profit

D. the buyers’ willingness to pay, which makes the monopoly operate efficiently

Perfect competition is efficient because all the following conditions hold except ________.

A. total product is maximized

B. firms maximize profit and produce on their supply curves

C. consumers get a real bargain and pay a price below the value of the good

D. firms minimize their average total cost of producing the good

A monopoly that price discriminates ________.

A. benefits buyers because it offers the good at a variety of prices

B. gains because it converts consumer surplus to economic profit

C. uses resources more efficiently than would a competitive market

D. enables buyers to maximize their consumer surplus

In a competitive labor market for bakers, the equilibrium wage rate ________. A. rises if bakers become more productive B. falls if the supply of bakers decreases C. rises if the market price of bakery items falls D. rises if new technology makes it easier for anyone to be a baker

The value of marginal product of labor increases if ________.

A. more labor is hired

B. more of the good is produced

C. the market price of the good produced rises

D. using a new technology reduces the demand for labor

In the prisoners’ dilemma game, each player ________. A. consults the other player to determine his best action B. chooses the best outcome for the other player C. chooses the best outcome for himself D. chooses the best outcome for both players together