As compared to a firm that competes for labor, a monopsony will:
a. hire fewer workers and pay lower wages.
b. hire fewer workers by pay higher wages.
c. pay lower wages but hire more workers.
d. pay higher wages and hire more workers.
QUESTION 2Because the income tax structure is progressive, the amount of taxes paid is a _____.
a. constant fraction of income throughout the business cycle
b. larger fraction of income in expansions than in contractions
c. smaller fraction of income in expansions than in contractions
d. decreasing function of income in both expansions and contractions
e. constant amount at all levels of output and income
QUESTION 3Marianne and Laura are both homemakers with children. When Laura starts to work as an unpaid volunteer at a hospital, she hires Marianne to care for her young child. In this context, the gross domestic product (GDP) will _____.
a. increase
b. decrease
c. remain unaffected
d. increase if Marianne cares for the child better than Laura
e. increase if Laura treats patients with more sincerity than the other volunteers
QUESTION 4BigBiz, a local monopsonist, currently hires 50 workers and pays them 6 per hour. To attract an additional worker to its labor force, BigBiz would have to raise the wage rate to 6.25 per hour. What is BigBiz's marginal factor cost?
a. 6.25 per hour.
b. 12.50 per hour.
c. 18.75 per hour.
d. 20 per hour.
QUESTION 5The U.S. federal income tax is progressive, which means that _____.
a. tax receipts grow at the same rate that income does
b. tax receipts grow at the same rate that government spending does
c. middle-income individuals pay more in taxes than either high-income or low-income individuals
d. the tax rate decreases with increases in income.
e. high-income individuals are taxed at a higher rate than low-income individuals
QUESTION 6Which of the following is a problem associated with gross domestic product (GDP) as a measure of social welfare?
a. It includes many nonmarket activities.
b. It takes into account the value of only those goods which are widely used.
c. It takes into account the cost of environmental damage caused by pollution.
d. It includes intermediate goods as a separate entry.
e. It excludes the value of leisure time.
QUESTION 7Compared to a competitive input market, a monopsonist will hire:
a. more and pay a higher input price.
b. less but pay a higher input price.
c. more but pay a lower input price.
d. less and pay a lower input price.
QUESTION 8Which of the following is an example of an automatic stabilizer?
a. Decrease in tax rates by Congress in times of unemployment
b. Decrease in tax rates by Congress in times of inflation
c. Increase in government defense spending during war
d. Increase in unemployment compensation during recession
e. Decrease in welfare programs during inflation
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