When describing goods and services, what is meant by the terms rival and nonrival? Are private goods rival or nonrival? Are public goods rival or nonrival? Are common resources rival or nonrival?
What will be an ideal response?
Ques. 2The above figure shows the utility of wealth curve for a homeowner whose only possession is a 50,000 house. If there is a 20 percent chance that the home could be entirely destroyed, the highest price for insurance this person would pay is
A) 0.
B) 5,000.
C) 10,000.
D) 20,000.
Ques. 3The local pizza delivery industry currently has a Herfindahl-Hirschman index (HHI) value of 999 and two of the competing pizza shops have considered merging.
Because the merger would raise the HHI by 55 points, the Federal Trade Commission would likely A) not challenge the merger.
B) challenge the merger.
C) allow the merger under the condition that HHI does not rise by more than 55 points as promised.
D) allow the merger under the condition that the HHI remain at the premerger level of 999.
Ques. 4In the above figure, if a single-price monopolist charges the profit-maximizing price, the triangle dce represents
A) consumer surplus.
B) producer surplus.
C) deadweight loss.
D) marginal revenue.
Ques. 5The above figure shows the cost curves for a perfectly competitive firm. If all firms in the market have the same cost curves and the price equals 16 per unit
A) the market is in its long-run equilibrium.
B) over time, firms will leave this market.
C) the firm is making zero economic profit.
D) over time, the price will fall as new firms enter the market.
Ques. 6The paradox of value refers to the fact that
A) different consumers value the same items differently.
B) the value of a good depends on its total utility.
C) water costs little, while diamonds cost a lot.
D) water brings little consumer surplus.
Ques. 7Over the past decade, the incomes of the top 1 percent have increased disproportionately higher than that of the middle class. These changes mean that the Lorenz curve moved ________ the 45 degree line and the Gini ratio has ________.
A) closer to; decreased
B) closer to; increased
C) further away from; decreased
D) further away from; increased
Ques. 8If a union successfully restricts the supply of labor to the firm but the union has no effect on the demand for labor, then the
A) wage increases and there is no change in employment.
B) wage increases and employment increases.
C) wage increases and employment decreases.
D) wage increases and there is an unambiguous effect on employment.
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