Review Test Submission_ Quiz 5_ 2016 – EMION.pdf

5/8/2016 Review Test Submission: Quiz 5: 2016 – EMIC2714 BFN ON

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Online tests Review Test Submission: Quiz 5: 2016H

Review Test Submission: Quiz 5: 2016

User Samkelo LUSASENICourse EMIC2714 BFN ONTest Quiz 5: 2016Started 5/7/16 3:49 AMSubmitted 5/7/16 4:01 AMDue Date 5/8/16 11:59 PMStatus CompletedAttempt Score 5 out of 20 points Time Elapsed 12 minutesResultsDisplayed

All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly AnsweredQuestions

Question 1

Which of the following is true of a natural monopoly?

SelectedAnswer: If regulated, the firm will have a lower level of output than an unregulated

firm, whether the regulation is based on average cost, marginal cost, ornormal profit.

Answers: If regulated, the firm will have a higher level of output than an unregulatedfirm, whether the regulation is based on average cost, marginal cost, ornormal profit.

If regulated, the firm will have a lower level of output than an unregulatedfirm, whether the regulation is based on average cost, marginal cost, ornormal profit.

If regulated, the firm that is only allowed a normal profit will be allowed tocharge a price in excess of its average cost.

If regulated, the firm that is only allowed a normal profit will be allowed toproduce more than a firm that must set a price equal to its marginal cost.

If regulated, the firm that is only allowed a normal profit will be allowed toproduce more than a firm that must set a price equal to its average cost.

Question 2

Suppose labour and capital are both used to produce output. In the long run, if the wagerate rises while the rental rate on capital remains unchanged,

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SelectedAnswer:

The process will become more labour intensive

Answers: The process will become more labour intensive

The process will become more capital intensive

Market forces will come into play to bring the prices back to their earlierrelationship

The marginal product of capital will rise and the marginal product oflabour will fall

Question 3

Refer to Exhibit 1.9. The equilibrium price in the market before the tax is imposed is

Selected Answer: $6.

Answers: $8.

$6.

$5.

$3.

Question 4

The substitution effect of a decrease in the wage rate causes the quantity of laboursupplied to

Selected Answer: increase only if the individual desires more leisure time

Answers: increase

increase only if the individual desires more leisure time

increase only if the substitution effect outweighs the income effect

decrease

decrease only if the individual lowers the value of leisure time

Question 5

The most significant difference between perfect competition and monopolisticcompetition is that

SelectedAnswer: in a perfectly competitive market there is a large number of sellers, while in

a monopolistically competitive market there is a small number of sellers.

Answers:

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in a perfectly competitive market products are differentiated, while in amonopolistically competitive market products are homogeneous.

in a perfectly competitive market products are homogeneous, while in amonopolistically competitive market products are differentiated.

in a perfectly competitive market there is a large number of sellers, while ina monopolistically competitive market there is a small number of sellers.

in a perfectly competitive market there is a small number of sellers, while ina monopolistically competitive market there is a large number of sellers.

Question 6

Under rate of return regulation

Selected Answer: Firms earn zero economic profits

Answers: Firms earn positive economic profits

Firms earn negative economic profits

Firms earn zero economic profits

Firms earn zero accounting profits

Question 7

Refer to Exhibit 1.9. The price that buyers pay after the tax is imposed is

Selected Answer: $5.

Answers: $8.

$6.

$5.

$3.

Question 8

An increase in the demand for automobiles will increase the demand for labour used toproduce the automobiles due to a(n)

Selected Answer: decrease in the marginal revenue product of automobiles

Answers: increase in the marginal revenue product of labour

decrease in the marginal revenue product of labour

increase in the marginal revenue product of automobiles

decrease in the marginal revenue product of automobiles

decrease in the price of automobiles

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Question 9

As a firm buys more capital and less labour, the marginal physical product of capital__________ and the marginal physical product of labour __________, assuming the lawof diminishing marginal returns has set in for each factor.

Selected Answer: decreases; increases

Answers: decreases; increases

increases; increases

decreases; decreases

increases; remains constant

remains constant; decreases

Question 10

If Hannah considers biscuits an inferior good, then when their price falls, she

SelectedAnswer:

may buy more biscuits

Answers: will definitely buy more biscuits

will definitely buy fewer biscuits

may buy more biscuits

will buy fewer biscuits if the substitution effect is larger than theincome effect

will buy more biscuits if the substitution effect is smaller than theincome effect

Question 11

If firms in a competitive market are not identical, then the longrun market supply curvewill be

Selected Answer: undetermined.

Answers: horizontal.

upward sloping.

downward sloping.

undetermined.

Question 12

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Which of the following would cause a consumer to purchase less of a good when theprice of the good rises?

Selected Answer: Both a and b

Answers: The income effect

The substitution effect

Both a and b

Neither a nor b

Question 13

Refer to Exhibit 4.9, what is the wage rate for the perfectly competitive market?

Selected Answer: W4

Answers: W1

W2

W3

W4

Question 14

A production function for which proportional changes in all inputs leads to a morethanproportional change in output is said to exhibit

Selected Answer: Increasing returns to scale

Answers: Diminishing marginal product (returns)

Decreasing returns to scale

Constant returns to scale

Increasing returns to scale

Question 15

The main difference between a monopsonist and a competitive buyer of labour is that

SelectedAnswer: the competitor is also a competitor in product markets while the

monopsonist is also a monopoly in product markets.

Answers: the competitor can hire as many workers as it wants at the going wage whilea monopsonist can force wages down when hiring additional workers.

the competitor can hire as many workers as it wants at the going wage whilea monopsonist must raise wages to hire additional workers.

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the competitor is a small firm while the monopsonist is a large firm.

the competitor is also a competitor in product markets while themonopsonist is also a monopoly in product markets.

Question 16

Refer to Exhibit 1.5. The market for good X is initially in equilibrium at $5. Thegovernment then places a perunit tax on good X, as shown by the shift of S1 to S2.Approximately what percentage of the tax do consumers end up paying?

Selected Answer: 25 percent

Answers: 63 percent

45 percent

70 percent

55 percent

25 percent

Question 17

An economist is told that concentration in the cement industry has increased. He cansafely conclude that

Selected Answer: All of the above are correct.

Answers: cement production must have fallen in the industry.

competition in the cement industry has decreased.

there are fewer cement producers than before.

All of the above are correct.

Question 18

Refer to Exhibit 4.20. To maximize its profit, a monopolist would choose which of thefollowing outcomes?

Selected Answer: Q = 30 and P = 60

Answers: Q = 30 and P = 30

Q = 30 and P = 60

Q = 45 and P = 45

Q = 60 and P = 30

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Sunday, May 8, 2016 7:21:55 AM CAT

Question 19

Bundles that lie above the indifference curve are preferred to bundles that lie below. Thisis an example of

Selected Answer: More is better

Answers: Transitivity

Completeness

More is better

Convexivity

Question 20

Refer to Exhibit 1.6. Let S1 be the supply curve of a producer. If S2 is the supply curveof the same producer after the government imposes a perunit tax, the tax revenuegenerated will be

SelectedAnswer:

greater if D1 is the demand curve facing the firm.

Answers: greater if D1 is the demand curve facing the firm.

greater if D2 is the demand curve facing the firm.

the same regardless of which demand curve the firm faces.

Any of the above, depending on the type of good the tax is imposedon.

← OK

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Review Test Submission_ Quiz 5_ 2016 – EMION.pdf