Country A has a more equal distribution of income than country B if
A) country A's Lorenz curve is closer to the line of equality than is country B's Lorenz curve.
B) country B's Lorenz curve is closer to the line of equality than is country A's Lorenz curve.
C) country A's Lorenz curve is just as close to the line of equality as is country B's Lorenz curve.
D) None of the above because it is impossible to compare income inequalities across countries.
Ques. 2If the marginal external cost of building a children's playground equals zero, then the
A) marginal private cost equals the marginal social cost.
B) marginal social cost equals zero.
C) marginal private cost equals zero.
D) None of the above answers is correct.
Ques. 3In the long run, a single-price monopolist will
A) make zero economic profit.
B) be able to continue to make an economic profit as long as there is a barrier to entry.
C) end up being regulated by the government because it is making short-run economic profits.
D) Both answers A and C are correct.
Ques. 4A 10 percent increase in income has caused a 5 percent decrease in the quantity demanded. The income elasticity is
A) 0.5.
B) -0.5.
C) 2.0.
D) -2.0.
Ques. 5To two hunters, a deer running in a forest is
A) nonrival and nonexcludable.
B) nonrival and excludable.
C) rival and nonexcludable.
D) rival and excludable.
Ques. 6Consider the perfectly competitive firm in the above figure. The shutdown point occurs at a price of
A) 11.00.
B) 12.00.
C) 16.00.
D) 22.00.
Ques. 7Given the data in the above table, if income is 16, and the price is 1 for a bottle of water and 2 for a hamburger, what is the quantity of water and the quantity of hamburgers that will maximize the consumer's total utility?
A) 5 bottles of water and 5 hamburgers
B) 4 bottles of water and 6 hamburgers
C) 6 bottles of water and 5 hamburgers
D) 6 bottles of water and 6 hamburgers
Ques. 8The table below shows data for India's economy. Real GDP is measured in millions of rupees. Suppose that full employment occurs when real GDP is 27,000 million rupees.
Price level Real GDP
supplied in the short run Real GDP demanded
a 114 23,501 35,898
b 120 25,355 32,341
c 125 27,670 27,670
d 131 30,366 18,569
e 138 33,164 15,898
The economy is experiencing ________ gap and firms will ________.
A) an inflationary gap; increase production
B) an inflationary gap; increase money wages paid to workers
C) a recessionary gap; increase production
D) a recessionary gap; decrease money wages paid to workers
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