The Gini co-efficient is the:
a. area between the Lorenz curve and the vertical axis divided by the area under the Lorenz curve.
b. area between the Lorenz curve and the horizontal axis divided by the area above the Lorenz curve.
c. area between the Lorenz curve and the line of perfect equality divided by the total area under the line of income equality.
d. area between the Lorenz curve and the line of perfect equality divided by the total area above the line of perfect equality.
e. area between the line of perfect equality and the horizontal axis divided by the area between the Lorenz curve and the horizontal axis.
QUESTION 2With cheaper communication technology and easy flow of information between countries,
a. industrial production becomes more labor intensive.
b. the pattern of employment and production can change.
c. the digital divide widens.
d. transaction costs increase.
QUESTION 3When more and more doses of fertilizers are added to a fixed plot of agricultural land, the crop yield initially declines but eventually rises.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4When the marginal cost of a price-taking firm is less than the market price of its product, the firm should:
a. expand output (provided that price is not less than average variable cost).
b. reduce output (provided that price is not less than average variable cost).
c. maintain output (provided that price is not less than average variable cost).
d. charge more than the market price.
QUESTION 5Income inequality is indicated by a Lorenz curve that:
a. bows up, away from the line of income equality.
b. bows down, away from the line of income equality.
c. lies parallel to the line of income equality.
d. coincides with the line of income equality.
e. approaches the vertical axis.
QUESTION 6When the slope of a country's production set declines, it implies:
a. the production set has shrunk.
b. the marginal cost of producing the good measured on the Y-axis has fallen.
c. the marginal cost of producing the good measured on the Y-axis has increased.
d. the marginal cost of producing the good measured on the X-axis has fallen.
QUESTION 7As long as there are fixed resources, diminishing marginal returns will never exist.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 8A price-taking firm will tend to expand its output as long as price exceeds average variable cost and:
a. its marginal revenue is positive.
b. its marginal revenue is greater than the market price.
c. its marginal revenue is less than the market price.
d. its marginal cost is less than the market price.
QUESTION 9If 50 percent of the population receives 20 percent of the total income, it can be represented on the Lorenz curve by:
a. a point below the line of income equality.
b. a line below the line of income equality.
c. a point on the line of income equality.
d. a line intersecting the line of income equality from below.
e. a point above the line of income equality.
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