Exam 3

Question 1

Pick the panel that would best model the following scenario: Working conditions become less pleasant

Answer 1

C

Question 2

Pick the panel that would best model the following scenario: A significant number of immigrants enter the labor market

Answer 2

D

Question 3

The labor-supply curve depicts the quantity of _________ at alternative _________

Answer 3

labor supplied; wage rates

Question 4

The labor-supply curve relates the quantity of labor supplied to the

Answer 4

wage rate

Question 5

Ceteris paribus, if additional immigrants come to the United States with marketable skills, and they decide to enter the labor market

Answer 5

the labor supply curve shifts to the right

Question 6

An upward-sloping supply curve of labor reflects the

Answer 6

increasing opportunity cost of labor

Question 7

An upward-sloping supply curve of labor illustrates that the

Answer 7

supply of labor and the wage rate are inversely related

Question 8

Ceteris paribus, the willingness and ability to work specific amounts of time at alternative wage rates in a given period of time is

Answer 8

labor supply

Question 9

A firm’s demand for labor is referred to as a derived demand because it is derived from the

Answer 9

demand for the product that labor produces

Question 10

The quantities of labor employers are willing and able to hire at alternative wage rates is the

Answer 10

demand for labor

Question 11

A firm should continue to hire workers until the marginal revenue product is equal to

Answer 11

the market wage rate

Question 12

The decline in unionization can be explained by all of the following except

Answer 12

increased worldwide investment barriers

Question 13

The marginal physical product is the change in

Answer 13

total output associated with an additional unit of labor

Question 14

Which of the following is the correct formula for calculating the marginal revenue product of labor?

Answer 14

the change in total revenue divided by the change in the quantity of labor

Question 15

The opportunity cost of working is the

Answer 15

value of leisure time that must be given up

Question 16

Ceteris paribus, if the cost of daycare increases and some workers need to leave the labor market and stay home with their children

Answer 16

the labor-supply curve shifts to the left

Question 17

Generally, as the number of hours worked increases, the marginal utility of leisure time tends to

Answer 17

increase

Question 18

Which of the following does not affect labor demand?

Answer 18

the supply of labor

Question 19

If consumers want to increase the wages and the number of jobs for strawberry pickers, they should

Answer 19

buy more strawberries

Question 20

Assume a university pays the football coach significantly more than the university’s president. This is justified if the coach

Answer 20

brings more revenue to the university than the president

Question 21

A higher wage rate causes

Answer 21

the opportunity cost of leisure to increase

Question 22

The law of diminishing returns states that, ceteris paribus, the marginal physical product of labor declines as

Answer 22

more labor is employed

Question 23

Other things being equal, higher wage rates will

Answer 23

decrease the quantity demanded of labor

Question 24

If the demand for labor is a derived demand, then the demand for airplane pilots depends on the

Answer 24

desire for airline travel

Question 25

The determinants of the market supply of labor include all of the following except

Answer 25

the market wage rate

Question 26

Which of the following is not an example of market failure?

Answer 26

government intervention

Question 27

The distinction between public goods and private goods is based on

Answer 27

the link between payment and consumption

Question 28

The most desirable combination of output attainable with available resources, technology, and social values is known as the

Answer 28

optimal mix of output

Question 29

The term externalities refers to

Answer 29

all costs and benefits of a market activity borne by a third party

Question 30

Sources of microeconomic failure that may require government intervention include all of the following except

Answer 30

the need for private goods

Question 31

Which of the following is an economic justification for a policy of laissez-faire?

Answer 31

the efficiency of the market mechanism

Question 32

When public goods are marketed like private goods

Answer 32

too few goods are produced

Question 33

An unregulated natural monopoly can lead to all of the following except

Answer 33

low prices for consumers

Question 34

In a market economy, producers will produce the goods and services that

Answer 34

consumers demand

Question 35

A public good is

Answer 35

the source of the free-rider dilemma

Question 36

In order to reduce pollution, the government can use all of the following except

Answer 36

income transfers

Question 37

A market failure is defined by a(n)

Answer 37

suboptimal mix of output

Question 38

Noise generated by an airport best illustrates

Answer 38

an externality

Question 39

In economics, a public good

Answer 39

cannot be denied to consumers who do not pay

Question 40

Externalities are a type of market failure because

Answer 40

third parties bear the costs or benefits of a market activity

Question 41

Which of the following is not considered to be a source of market power for a firm?

Answer 41

externalities

Question 42

Subsidized vaccines for COVID-19 can be considered a

Answer 42

private good provided (subsidized) by the government

Question 43

Which of the following is most likely to have social demand greater than market demand?

Answer 43

healthcare services

Question 44

If market prices and sales are used to signal desired output, then the optimal mix of output would be determined by

Answer 44

the market mechanism

Question 45

If the economy relies entirely on markets to answer the what question, it tends to

Answer 45

overproduce private goods and under produce public goods

Question 46

The communal nature of a highway means that no one individual is motivated to pay for it because even those who do not pay will still benefit from using it. This is an example of

Answer 46

the free-rider dilemma

Question 47

Social costs are

Answer 47

the full resource costs of an economic activity

Question 48

The News Wire article in the text titled "Secondhand Smoke Kills More Than 600,000 a Year: A Study" addresses the true costs of tobacco use. Secondhand smoke is an example of

Answer 48

an externality

Question 49

Externalities are the

Answer 49

generate a gap between social costs or benefits and private costs or benefits

Question 50

Which of the following is a market incentive to discourage pollution?

Answer 50

emission charges

Question 51

Which of the following is not a basic measure of macroeconomic performance?

Answer 51

public goods production rates

Question 52

Which of the following is true during the expansionary phase of the business cycle?

Answer 52

Real GDP increases

Question 53

People are unemployed if they are over 16 and not working due to

Answer 53

the inability to find a job even though they are looking

Question 54

Joseph is unemployed. He was working at a thrift shop in Indiana but decided to go back to school full time to become an engineer. He would be classified as

Answer 54

not in the labor force

Question 55

Alternating periods of growth and contraction in real GDP define

Answer 55

the business cycle

Question 56

Deflation occurs when the

Answer 56

price decreases for some goods and services outweigh price increases on all other goods and services

Question 57

Inflation is defined as

Answer 57

an increase in the average level of prices

Question 58

When the economy is operating at full employment

Answer 58

the economy is operating at the lowest rate of unemployment consistent with price stability

Question 59

Which of the following is characteristic of a downturn in the business cycle?

Answer 59

higher unemployment rates

Question 60

The study of aggregate economic behavior is referred to as

Answer 60

higher unemployment rates

Question 61

The study of aggregate economic behavior is referred to as

Answer 61

macroeconomics

Question 62

Real income

Answer 62

reflects the purchasing power of money

Question 63

When calculating nominal GDP, the volume of output is measured using

Answer 63

the current market value

Question 64

A recession is technically _________ quarters or more of declining output or real GDP

Answer 64

2

Question 65

To be officially counted as unemployed, one must be

Answer 65

actively seeking employment and currently not working

Question 66

Which of the following is likely if an economy is headed for a recession?

Answer 66

an increase in unemployment

Question 67

Real GDP measures changes in

Answer 67

output, but not prices

Question 68

Nominal GDP is defined as the

Answer 68

value of output in current dollars

Question 69

For a particular economy, the production-possibilities curve shows the

Answer 69

maximum potential output

Question 70

Which of the following lists best represents the three basic measures of macroeconomic performance?

Answer 70

GDP growth, unemployment, and inflation

Question 71

A decrease in the average level of prices of goods and services is known as

Answer 71

deflation

Question 72

GDP is defined as

Answer 72

the market value of all final goods and services produced in a country in a year

Question 73

If the number of dollars you receive every year is the same, but prices are rising, then your nominal income

Answer 73

stays the same, but your real income falls

Question 74

The alternative combinations of goods and services that can be produced in a given time period with available resources and technology is referred to as

Answer 74

the production possibilities

Question 75

Business cycles demonstrate that GDP, over time, follows

Answer 75

erratic growth and recessions of varying durations

Question 76

The total value of goods and services produced within a nation's borders, measured in constant prices refers to

Answer 76

real GDP