Microeconomics Final Study Guide

Question 1

If two nations have straight line production possibilities curve

Answer 1

There will be a basis for mutually advantageous trade provided the slopes differ

Question 2

One of the peculiarities of the U.S. market for health care is

Answer 2

Third-party payments by insurance companies

Question 3

Pay plans that are designed to elicit a desired level of performance from workers are generally called

Answer 3

Pay for performance plans

Question 4

If the government tightens up on drug dealers and raises the costs of dealing drugs, then the drug addicts’ dollar expenditures to feed their addiction will tend to

Answer 4

Increase because their demand is price-inelastic

Question 5

The long run is characterized by

Answer 5

The ability of the firm to change its plant size

Question 6

Consider the supply and demand curves depicted in the diagram above. If the government imposed a price ceiling of $15,then sellers will be willing to sell ___, and a black market could develop where the price would be ____.

Answer 6

24 units, above $15

Question 7

which of the following occupations is among the 10 projected most rapidly declining U.S. occupations in terms of percentage decreases from 2016 to 2026

Answer 7

Computer operators

Question 8

Which of the following is a supply factor in the health care market?

Answer 8

Slow productivity growth in the health care industry

Question 9

Which of the following is a public assistance or welfare program as opposed to a social insurance program

Answer 9

Supplemental Security Income (SSI)

Question 10

Pure monopolists may contain profits in the long run because

Answer 10

Of barriers to entry

Question 11

Monopolistic competition means

Answer 11

Many firms producing differentiated products

Question 12

Which of the following statements applies to the Social Security program?

Answer 12

It is finished by payroll taxes on employees and employers

Question 13

Social insurance programs partially replace income that has been lost due to the following, except

Answer 13

Resignation from a job

Question 14

According to the U.S. Bureau of Labor Statistics data on wage , which of the following professions paid the highest average annual wage in 2017?

Answer 14

Anesthesiologists

Question 15

If all workers were tity homogeneous, all jobs were equally attractive to workers, and labor markets were perfectly competitive,

Answer 15

All workers would receive the same wage rate

Question 16

Suppose the price of the product that labor is producing increases and simultaneously the price of capital, which is substitutable for labor, decreases. Assuming that the substitution effect is greater than the output effect, the demand for labor

Answer 16

Will decrease

Question 17

A decrease in supply holding demand constant, will cause

Answer 17

Higher prices and a smaller quantity sold

Question 18

If an ceiling price is placed on hamburgers, then

Answer 18

The quantity demand will exceed the quantity supplied, a black market for hamburgers may evolve, the price charged will be below the market clearing price, (All these choices are correct)

Question 19

The principle of comparative advantage indicates that mutually beneficial international trade can take place only when

Answer 19

Relative costs of production differ between nations

Question 20

The demand for health care in industrially economies is

Answer 20

About unit elasticity with respect to income and relatively inelastic with respect to price

Question 21

Incentive pay plans that seek to the worker compensation more closely to worker performance include the following. except

Answer 21

A seniority-based pay scale

Question 22

In Germany, one worker can produce either one cuckoo clock or one beer mug. In Taiwan, one worker can produce either two cuckoo clocks or three beer mugs. Who has the competitive advantage in each good?

Answer 22

Germany in clocks, Taiwan in mugs

Question 23

Use the graph to answer the question about the labor resource market faced by producers of good X. What will shift D2 to D1?

Answer 23

An increase in the price of a substitute input (If the output effect > substitution effect)

Question 24

The tables give production data for two countries, Alpha and Beta, which have populations of equal size. Beta

Answer 24

Should specialize in catching fish and trade with Alpha for chips

Question 25

Which of the following is a feature of a purely competitive market?

Answer 25

Products are standardized or homogeneous

Question 26

Which of the following is true under conditions of pure competition ?

Answer 26

No single firm cam influence the market price by changing its production level

Question 27

Suppose capital is readily substitutable for labor and that the price of capital falls. We can conclude that the

Answer 27

Substitution effect will tend to reduce the demand for labor

Question 28

In industrially advanced countries, the price elasticity of demand for health care is about

Answer 28

0.2

Question 29

Refer to the table. Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were actually set at $6

Answer 29

A shortage of 40 units would occur

Question 30

The elasticity of supply of product X is unitary if the price of X rises by

Answer 30

8 percent and quantity supplied rises by 8 percent

Question 31

Which of the following statements is most accurate about the occupations projected to be the fastest growing in the U.S. is terms of percentage increases from 2016 to 2026 ?

Answer 31

Half are in health care related professions

Question 32

Medicare and Medicaid sell their payment rates for medical services above marginal cost, but below average total cost. One major consequence of doing this that hospitals and other providers are then

Answer 32

Passing the uncovered costs on to patients with private health insurance

Question 33

Refer to the graph of a hypothetical market for health care. Assume that health insurance pays four-fifths of the costs of health care. The consumer will end up consuming how many units of health care and pay (out-of-pocket) how much for it per unit?

Answer 33

600 units, for $20 per unit

Question 34

An inflow of investment funds into the United States from overseas is likely to result from a(n)

Answer 34

Rise in U.S. interest rates relative to the world interest rates

Question 35

An industry having a four-firm concentration ratio of 30 percent

Answer 35

Is monopolistically competitive

Question 36

Refer to the given diagram, in which line AB is the U.S. production possibilities curve and AC is its trading possibilities curve. The international exchange ratio between beef and cheese (terms of trade)

Answer 36

Is the absolute value of the slope of line AC

Question 37

A college graduate who works at a firm is also working part-time on a master's degree in business and expects to be paid a higher wage after earning the degree. The basic reason for this wage difference is

Answer 37

Investment in human capital

Question 38

The impact of increasing, as opposed to constant, costs is to

Answer 38

Cause the bases for further specialization to disappear as anions specialize according to comparative advantage

Question 39

The supply curve of a one-of-a-kind original painting is

Answer 39

Perfectly inelastic

Question 40

The following are supply factors in the health care market, except

Answer 40

Health care insurance

Question 41

The medically uninsured may wait until their illness reaches a critical stage before going to the hospital for admittance or emergency care. Hospitals in the U.S. provide how much of the uncompensated, or "free" health care services per year?

Answer 41

About $40 billion

Question 42

The World Trade Organization

Answer 42

Was established to oversee trade agreements between its members nations

Question 43

If labor productivity in the health care industry rises very slowly relative to wages and salaries in the industry, this would tend to

Answer 43

Increase the cost of health care

Question 44

What is the most likely effect of the development of rental movies and online streaming on the movie theater (or cinema) industry?

Answer 44

Increased price elasticity of demand for movie theater tickets

Question 45

The concept of investment in human capital indicates that

Answer 45

Expenditures on education can be explained in essentially the same way as expenditures on machinery and equipment

Question 46

An increase in the price of tickets to a popular sporting event will increase total revenue if

Answer 46

The buyers of the tickets are fanatic about the event

Question 47

The hypothetical nations Wat and Xat have the production possibilities for rice and corn given in the accompanying tables. Assume that Wat originally produced combination B. If the nations now fully specialize based on comparative advantage, the total gains from specialization and trade are

Answer 47

50 units of rice and 50 units of corn

Question 48

Economists who criticize trade adjustment assistance argue that

Answer 48

It only benefits a small fraction of all unemployment workers

Question 49

The accompanying table shows the output (either machines or wine) that each unit of input in France and Germany can produce. We see that

Answer 49

Germany has a comparative advantage in producing wine

Question 50

One difference between monopolistic competition is that

Answer 50

There is some control over price in monopolistic competition