Rent seeking ________.
A) increases consumer surplus
B) occurs only when the firm practices perfect price discrimination
C) increases deadweight loss
D) results in a larger output than a competitive industry would produce
Ques. 2When the consumer is at his or her best affordable consumption point, it is the case that the marginal rate of substitution is
A) greater than the price ratio.
B) equal to the price ratio.
C) less than the price ratio.
D) maximized.
Ques. 3When a firm faces a labor supply curve that is upward sloping, the firm must
A) offer a higher wage if it wishes to hire more workers.
B) pay a wage that exceeds the value of marginal product.
C) pay a wage that does not exceed the minimum wage.
D) maximize the amount of labor that it hires.
Ques. 4In the above figure of a monopolistically competitive firm, in the long run after all industry adjustments have taken place, assuming that this firm's costs have not changed the firm will
A) produce more output at a higher price.
B) produce less output at a lower price.
C) produce the same quantity at the same price.
D) Any of the above are possible.
Ques. 5Command system allocates resources by the order of someone in authority.
Indicate whether the statement is true or false
Ques. 6The figure above illustrates the problem of overcrowding and external costs experienced during the summer months in the state park. The competitive equilibrium is at
A) point G.
B) point H.
C) point I.
D) point J.
Ques. 7Moral hazard is
A) the tendency for people to enter into agreements in which they can use their private information to their own advantage and to the disadvantage of the less informed party.
B) when one of the parties to an agreement has an incentive after the agreement is made to act in a manner that brings additional benefits to himself or herself at the expense of the other party.
C) a situation in which only bad quality items are bought and sold.
D) an action taken outside a market that conveys information that can be used by that market.
Ques. 8Assuming velocity is constant, a 10 percent increase in the quantity of money leads to a 10 percent increase in nominal GDP in both the short run and the long run.
Indicate whether the statement is true or false
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