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4 questions
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Other
Subject:
Mathematics & Economics
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Multiple Choice Questions
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English (U.S.)
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Topic:

Economics (Multiple Choice Questions Sample)

Instructions:

your just answering these questions. Answer them in complete sentences. Also see attachment for questionsю

Question and problems

  1.  The perfectly competitive firm exhibits resource allocative efficiency (p=MC), but the single-price monopolist does not.  What is the reason for this difference?

3.    When a single-price monopolist maximizes profits, price is greater than marginal cost.  This means that buyers would be willing to pay more for additional units of output than the units cost to produce.  Given this, why doesn’t the monopolist produce more?

5.    IT has been noted that rent seeking is individually rational but socially wasteful.  Explain.

9.    Make a list of market monopolies and a list of government monopolies.  Which list is longer?  Why do you think this is so?

(pg 506)

      1.     What, if anything, do all firms in all four market structures have in common?

      6.     Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition?

     10.    Give an Example of a prisoner’s dilemma situation other than the ones mentioned in the chapter.

    11.     How are oligopoly and monopolistic competition alike?  How are they different?

        (pg528)

    2.       Explain why defining a market narrowly or broadly can make a difference in how antitrust policy is implemented.

    4.       How does a vertical merger differ from a horizontal merger?  Why would the government look more carefully at one than at the other?

    6.       Explain price regulation, profit regulation, and output regulation.

    8.       What is the major difference between the capture theory  of regulation and the public interest theory of regulation?

 

      (pg 552)

  1. What forces and factors determine the wage rate for a particular type of labor?

10.  Explain the relationship between each of the following pairs of concepts: (a)  the elasticity of demand for a product and the elasticity  of demand for the labor that produces the product; (b) the labor cost-total cost ratio and elasticity of demand for labor; (c) the number of substitutes for labor and the elasticity of demand for labor.

(pg 570)

1.           What is the difference between a craft (trade) union and an industrial union?

2.           What view is a labor union likely to hold on each of the following issues? (a) easing of the immigration laws; (b) a quota on imported products; (c) free trade; (d) a decrease in the minimum wage.

6.           What is the effect of labor unions on nonunion wage rates?

 

        (pg591)

1.           The Gini coefficient for country A is 0.35, and for country B, it is 0.22.  From this, it follows that the bottom 10 percent of income recipients in country B have a greater percentage of the total income than the bottom 10 percent of the income recipients in country A.  Do you agree or disagree? Why?

2.           Would you expect greater income inequality in country A, where there is great disparity in age, or in country B, where there is little disparity in age?  Explain your answer.

3.           Has U.S. income inequality increased or decreased (if we compare the income distribution in 1967 with the income distribution in 2004)?  What percentage of total money income did the top fifth of U.S. households receive in 2004?

      (pg608)

4.           What is the overall economic function of profits?

7.           Make an attempt to calculate the present value of your  future income. 

source..
Content:
Question and problems
The perfectly competitive firm exhibits resource allocative efficiency (p=MC), but the single-price monopolist does not. What is the reason for this difference?
For the perfectly competitive firm, MR=AR=p as all firms are price takers. Whereas allocative efficiency occurs at MR=MC where incremental revenue is equal to incremental cost. Therefore MR=MC=p . For a single price monopolist MR=MC does not equal AR and hence p≠MC.
When a single-price monopolist maximizes profits, price is greater than marginal cost. This means that buyers would be willing to pay more for additional units of output than the units cost to produce. Given this, why doesn’t the monopolist produce more?
For the single-price monopolist the AR and MR curves are separate. So where MR=MC, AR is higher. When the monopolist produces at MR=MC its output is optimum which means that if it were to go beyond that output, the AR would be at a lower level as compared to at the optimal level. Thus even if costs were lower, total profits would fall at a point above that of the allocatively efficient output.
5. IT has been noted that rent seeking is individually rational but socially wasteful. Explain.
This is because rent-seeking behavior implies that the costs are increased while productivity is not. When this happens individual gain is maximized, but costs in total to the society rise.
9. Make a list of market monopolies and a list of government monopolies. Which list is longer? Why do you think this is so?
There are more government monopolies, because the state-backed monopolies can exist for a long time as there are regulations imposed on other firms which become barriers to entry. And unless the state wants it, the power of the state monopoly remains. In a free market, monopolies can exist only till the time other firms don’t enter, which is for a very short while as there are no barriers to entry in a market economy.
What, if anything, do all firms in all four market structures have in common?
All the firms face similar cost curves where MC=AC at the lowest point on the AC curve.
6. Why does interdependence of firms play a major role in oligopoly but not in perfect competition or monopolistic competition?
In an oligopoly only a few firms dominate the industry and therefore it is possible for them to collude and increase their bargaining power and restrict output to increase profits. In a perfect competition each firm is a very small portion of the market and no firm can be a price setter, all are price takers and hence interdependence does not matter. For firms in monopolistic competition, the products are all slightly differentiated and thus it is not possible for the firms to collude and thus interdependence does not matter.
10. Give an Example of a prisoner’s dilemma situation other than the ones mentioned in the chapter.
One example is where two firms A and B are the only big telecom co...
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