Managerial Economics Question
Bank
Course Introduction
Managerial Economics is a course designed to bridge economic theory and practical business decision-making. It focuses on applying microeconomic principles to solve real-world managerial problems, such as pricing strategies, production choices, and resource allocation. Through case studies and analytical tools, students learn how demand analysis, cost estimation, market structure assessment, and forecasting techniques inform decisions in various organizational contexts. The course equips future managers with the ability to assess risks, understand market dynamics, and make informed decisions that enhance the efficiency and profitability of their organizations.
Recommended Textbook
Microeconomics Private and Public Choice 14th Edition by
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Page 2
James D. Gwartney
Chapter 1: The Economic Approach
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Q1) Positive economics
A)postulates relationships among economic variables that are potentially refutable by real-world events.
B)is strictly quantitative and is, therefore, of little value to policy makers.
C)will usually indicate which economic policy is best.
D)is the same as normative economics.
Answer: A
Q2) The unintended consequences of an economic change that are not immediately identifiable but are felt only with time are known in economics as
A)opportunity costs.
B)marginal effects.
C)secondary effects.
D)scarcity constraints.
Answer: C
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Chapter 2: A: Some Tools of the Economist
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Q1) Steve values his Honda Accord at $10,000, and Jennifer values it at $14,000. If Jennifer buys it from Steve for $11,000, which of the following is true?
A)Steve gains $1,000 of value, and Jennifer gains $3,000 of value.
B)Steve gains $11,000 of value, and Jennifer loses $11,000 of value.
C)Steve gains $10,000 of value, and Jennifer loses $14,000 of value.
D)Steve and Jennifer both gain $11,000 of value.
Answer: A
Q2) "Henry Ford made millions of dollars producing and marketing automobiles. Many workers and consumers must have suffered in order for Ford to amass such enormous wealth." The person who made this observation
A)has failed to understand the principle of opportunity cost.
B)has failed to comprehend the fallacy of composition.
C)has failed to understand that specialization and exchange generally result in mutual economic gain.
D)has utilized the economic way of thinking by thinking the gains of producers are made primarily at the expense of consumers and workers.
Answer: C
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Chapter 2: B: Some Tools of the Economist
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Q1) Refer to Table 2-4. Which of the following is correct?
A)In Lebos, the opportunity cost of producing one unit of food is equal to one unit of clothing.
B)In Slavia, the opportunity cost of producing one unit of food is equal to two units of clothing.
C)The opportunity cost of producing food in Lebos is less than the opportunity cost of producing food in Slavia.
D)All of the above are correct.
Answer: D
Q2) Which of the following is NOT true of opportunity cost?
A)Opportunity costs are subjective because they depend upon how the decision-maker values his or her options.
B)Opportunity costs are only the monetary costs of lost options.
C)Opportunity costs are the highest-valued alternative sacrificed in order to choose an option.
D)Only the decision-maker can determine his or her opportunity costs for any particular action.
Answer: B
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Chapter 3: A: Supply, Demand, and the Market Process
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Q1) Assuming Chinese food and Thai food are substitutes, if Lucy Ho's Chinese restaurant reduces its prices,
A)the demand for food at Lucy Ho's will increase.
B)the quantity demanded for food at Lucy Ho's will increase.
C)the demand facing the nearby Bahn Thai restaurant will decrease.
D)both b and c will happen.
Q2) Which of the following does the law of demand specifically imply?
A)If the product price increases, quantity demanded will decrease.
B)If consumer income increases, quantity demanded will increase.
C)If the product price increases, quantity demanded will increase.
D)If consumer income increases, quantity demanded will decrease.
E)If supply increases, demand will increase.
Q3) An increase in the price of plastic raises the cost of manufacturing VCRs. As a result, the market changes to a new equilibrium because of A)a surplus of VCRs.
B)an increase in the demand for VCRs.
C)a leftward shift in the demand curve for VCRs.
D)a leftward shift in the supply curve for VCRs.
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Chapter 3: B: Supply, Demand, and the Market Process
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Q1) A recent editorial in a local newspaper argues, "Consumers need to know more about products than just their price. They need to know how these prices are determined, who owns the businesses, and the wages of the workers." Is the editorial writer correct? Why or why not?
Q2) "Falling consumer income from the recent recession has hurt automakers in more ways than one. Not only have sales of new cars fallen, but car prices have fallen as well. As a result, the major automakers have announced cutbacks in production and layoffs of workers." Which of the following places these statements in the proper economic terminology within the context of the supply and demand model? [Note: It may help to graph this first.]
A)a decrease in demand and a decrease in supply
B)a decrease in demand and a decrease in quantity supplied
C)a decrease in quantity demanded and a decrease in quantity supplied
D)a decrease in quantity demanded and a decrease in supply
Q3) If there is a decrease in demand for lettuce, we would expect
A)both the price and quantity sold to increase.
B)both the price and quantity sold to decrease.
C)the price to decrease and the quantity sold to increase.
D)the price to increase and the quantity sold to decrease.
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Chapter 4: A: Supply and Demand: Applications and Extensions
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Q1) In the supply and demand model, a subsidy granted to sellers is illustrated by
A)a downward shift in the demand curve, by the per unit amount of the subsidy.
B)an upward shift in the demand curve, by the per unit amount of the subsidy.
C)a downward shift in the supply curve, by the per unit amount of the subsidy.
D)an upward shift in the supply curve, by the per unit amount of the subsidy.
Q2) Refer to Figure 4-8. Which of the following is true?
A)The tax increases the price of soft coal by $40 per ton.
B)Since the demand for soft coal is more inelastic than the supply, consumers bear most of the burden of the tax.
C)Since the demand for soft coal is more elastic than the supply, suppliers of soft coal bear most of the burden of the tax.
D)Since the supply of soft coal is highly inelastic, the primary burden of the tax is imposed on the consumers of soft coal.
Q3) Which of the following would tend to increase the wage of coal miners?
A)new environmental laws that make it more costly for firms to use coal in their production process
B)an increase in the price of oil, a substitute for coal
C)a decrease in the demand for coal
D)an increase in the supply of coal miners
Page 8
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Chapter 4: B: Supply and Demand: Applications and Extensions
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Q1) Refer to Figure 4-25. The benefit to the government is
A)measured by tax revenue and is represented by area A + B.
B)measured by tax revenue and is represented by area B + D.
C)measured by the net gain in total surplus and is represented by area B + D.
D)measured by the net gain in total surplus and is represented by area D + E.
Q2) An income tax is regressive if
A)the tax liability of high-income recipients exceeds the tax liability of those with low incomes.
B)the tax liability of high-income recipients is less than the tax liability of those with low incomes.
C)high-income recipients pay a higher percentage of their incomes in taxes than those with low incomes.
D)high-income recipients pay a lower percentage of their incomes in taxes than those whose incomes are low.
Q3) Because illegal drug markets operate outside the legal system,
A)the quality of these drugs has increased.
B)the sellers of illegal drugs earn less money.
C)there is less violence in these markets than if they were legal.
D)none of the above.
Page 9
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Chapter 5: Difficult Cases for the Market and the Role of Government
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Q1) Which of the following is most likely to lead to the underpricing and overuse of an economic resource?
A)Human greed and selfishness.
B)Capital markets.
C)The absence of an enforceable property right.
D)The lack of understanding of pollution and its effects.
Q2) Which of the following would be a protective function of government?
A)providing national defense
B)undertaking income redistribution
C)providing national parks
D)monopolizing mail delivery
Q3) When production of a good generates external costs, the
A)demand curve for the good will overstate the true social benefits from consumption of the good.
B)demand curve for the good will understate the true social benefits from consumption of the good.
C)supply curve for the good will overstate the true social cost of producing the good.
D)supply curve for the good will understate the true social cost of producing the good.
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Chapter 6: The Economics of Collective Decision-Making
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Q1) Public choice theory suggests that politicians will be most likely to favor redistribution of income from
A)the rich to the poor.
B)unorganized taxpayers to well-organized interest groups.
C)well-organized business groups to consumers.
D)none of the above.
Q2) Suppose we coupled the pay of Congress with the federal budget, so that for every billion dollars of deficit spending, a lawmaker's pay would be reduced $1,000. How would this affect fiscal policy?
Q3) Which of the following is a predictable side effect of increased government activity (e.g., taxes and subsidies) designed to redistribute income among citizens?
A)improvement in the operational efficiency of government agencies
B)budget surpluses
C)reduction in the poverty rate
D)an increase in rent-seeking activity
Q4) With a strong and active federal government, why do we need state and local governments?
Q5) Is calling a voter rationally ignorant the same as calling her irrational? Explain.
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Chapter 7: Consumer Choice and Elasticity
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Q1) Which of the following most directly reflects the law of diminishing marginal utility?
A)After watching two football games, Terry decides to watch a third game.
B)A sports fan enjoys watching Monday night football rather than going to the theater.
C)After listening to three compact discs, Kim decides to go bowling rather than listen to a fourth disc.
D)A musician receives the biggest ovation of the evening after playing the final number of a recital.
Q2) If the quantity demanded of a product fell from 11,000 to 10,000 when price rose from $9 to $10, the price elasticity of demand over this range is equal to approximately A)-0.1.
B)-0.05.
C)-0.9.
D)-1.1.
Q3) A question on an economics exam asks: What happens in the market for margarine when income rises? Allison, an excellent student, shows the demand for margarine decreasing. Is she necessarily wrong? Why or why not?
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Chapter 8: A: Costs and the Supply of Goods
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Q1) According to Figure 8-1, what is the firm's approximate total cost when it produces three units?
A)10
B)16
C)48
D)60
Q2) Ben quit his job as an economics professor to become a golf professional. He gave up his $30,000 salary and invested his retirement fund of $50,000 (which was earning 10 percent interest) in this venture. After all expenses, his net winnings were $35,000. Ben's economic profits were
A)$35,000.
B)$5,000.
C)$2,000. D)zero.
Q3) Refer to Figure 8-14. If the firm produces 10 units of output, its total fixed cost is A)6.
B)60.
C)70. D)130.
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Chapter 8: B: Costs and the Supply of Goods
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Q1) The AB Manufacturing Company has hired an economist to evaluate its financial situation. She explains to the board of directors that the company is making zero economic profit. Should the company go out of business?
Q2) Kim used to work at "The Big One" accounting firm, and she earned $50,000 a year. She saved her money and has now invested $100,000 in her own firm. Profit is $20,000 a year, which Kim receives as her only compensation. She concludes that this is great because a 20 percent return is much better than the 8 percent she could get in another investment (the opportunity cost of the funds). What is wrong with this line of thinking?
Q3) James opened a baseball manufacturing operation, and initially the more balls he made, the lower the per-unit cost. Now, as output expands, his per-unit costs are rising. He concludes that diseconomies of scale have set in. Is he correct? Why?
Q4) The boss observes that her 10 workers produce 1,000 widgets a day. She concludes that she can employ 20 workers and make 2,000 widgets, 30 to make 3,000, or 40 to make 4,000. Explain why this observation is either correct or incorrect.
Q5) If the ABC Company decides to take over the XYZ Corporation by purchasing all of the stock of XYZ, what does this tell us about the view ABC holds of XYZ?
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Chapter 9: A: Price Takers and the Competitive Process
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Q1) Refer to Scenario 9-1. At Q = 999, the firm's total cost amounts to
A)$10,985.
B)$10,990.
C)$10,995.
D)$10,999.
Q2) Suppose that sharply lower coffee prices lead to a decrease in the demand for tea. Tea price decreases, and the tea producers experience short-run economic losses. If the tea industry is a price-taker market, after sufficient time is allowed for the market to adjust fully to the decrease in the demand for tea, one would expect the tea industry's output to
A)increase and economic losses to persist.
B)decline and economic losses to persist.
C)decline and economic losses to disappear.
D)increase and economic losses to disappear
Q3) In price-taker markets, individual firms have no control over price. Therefore, the firm's marginal revenue curve is
A)a downward-sloping curve.
B)indeterminate.
C)constant at the market price of the product.
D)precisely the same as the firm's total revenue curve.
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Chapter 9: B: Price Takers and the Competitive Process
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Q1) When a competitive price-taker market is in long-run equilibrium
A)the firms in the market will earn zero economic profit.
B)the average total cost of the firms in the market will be minimized.
C)every unit of the relevant good that is valued more than its opportunity costs will be produced and sold.
D)all of the above are correct.
Q2) When the demand for a product falls, why do costs of production go down in an increasing cost industry?
Q3) In some industries, like insurance, both small and very large firms coexist and compete quite effectively in the market. This indicates that the long-run average total cost curve in these industries
A)is "U" shaped.
B)is downward sloping over all levels of output.
C)exhibits constant returns to scale over a wide range of output.
D)exhibits diseconomies of scale beginning at a low rate of output.
Q4) Why is it considered "ideal" for price to just equal marginal cost?
Q5) If the demand for pizza falls, pizza suppliers will suffer economic losses, and some firms will leave the industry. Why is this considered good? Shouldn't we feel sorry for these business owners?
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Chapter 10: Price-Searcher Markets With Low Entry Barriers
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Q1) In the short run, Fed Ex, a price searcher wishing to maximize profits or minimize losses, should produce the output that
A)equates marginal cost with marginal revenue.
B)equates marginal cost with price.
C)corresponds to the lowest point on the average variable cost curve.
D)corresponds to the lowest point on the average total cost curve.
Q2) Which of the following most closely approximates the conditions of a competitive price-searcher market?
A)the market for Grade A eggs, which is characterized by a large number of firms producing a homogeneous product
B)the restaurant industry, which is characterized by firms producing a differentiated product in a market with low entry barriers
C)local cable television service, where a licensed supplier competes with firms offering satellite service
D)the market for jumbo aircraft, where one major domestic firm competes with one major foreign firm
Q3) What type of industry is the market for grocery products? Is over-capacity present?
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Chapter 11: A: Price-Searcher Markets With High Entry
Barriers
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Q1) Monopolists may be able to earn profit, even in the long run, as the result of A)consumer ignorance.
B)an inelastic demand for its product.
C)product differentiation.
D)high barriers to entry.
Q2) An organization of sellers designed to coordinate their supply decisions to maximize joint profits is called a
A)consumer cooperative.
B)marketing association.
C)regulatory agency.
D)cartel.
Q3) Refer to Table 11-1. The marginal cost of the fourth unit is
A)$7.
B)$12.
C)$25.
D)$60.
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Chapter 11: B: Price-Searcher Markets With High Entry
Barriers
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Q1) Which of the following is true for a firm that is a monopolist?
A)the firm will make an economic profit in the short run.
B)the firm will produce a smaller quantity of output than what would be best from the viewpoint of ideal economic efficiency.
C)the additional revenue that can be generated from an increase in output will exceed the firm's price.
D)the firm can charge whatever it wants for its product since consumers have no alternatives.
Q2) An oligopolistic firm that is deciding the price to charge, the output to produce, or the quality of product to offer, must consider
A)the regulatory price limits that are always present with oligopoly.
B)the potential reactions of rivals in the market.
C)the fact that per-unit costs will usually increase as the scale of production increases.
D)that entry barriers into oligopolistic markets are low.
Q3) Why does the U.S. government maintain a monopoly in the delivery of first-class mail? Does the Postal Service nevertheless face other forms of competition?
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Page 19
Chapter 12: The Supply of and Demand for Productive Resources
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Q1) Other things constant, if the demand for a product is inelastic, the demand for a resource used as an input will tend to be
A)inelastic as well.
B)basically elastic.
C)of unitary elasticity.
D)the inverse of the elasticity coefficient of the product.
Q2) Refer to Table 12-3. Suppose that the firm pays its workers $55 per day. Each unit of output sells for $12. How many days of labor should the firm hire?
A)3
B)4
C)5
D)6
Q3) The Hardboard Construction Company hired Bob at $10 an hour, but its output of doll houses only increased by three units a day. Two weeks later, the company purchased an $8 hammer for Bob and output increased by twelve units. Since the hammer increased the marginal product more than Bob did, and at less cost, Hardboard fired Bob. Is this consistent with the theory of marginal productivity? Why or why not?
Q4) There is an Italian soccer player who makes more than $10 million a year. Why?
Page 20
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Chapter 13: Earnings, Productivity, and the Job Market
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Q1) Automated production methods are only attractive when they
A)are undertaken in heavily unionized sectors of the economy.
B)reduce per-unit costs.
C)replace workers.
D)decrease labor productivity.
Q2) When employment discrimination results from the personal prejudices of employers, economic theory suggests that
A)competitive forces will tend to reduce discrimination.
B)the wages of employees who are discriminated against will rise.
C)an employer who discriminates will have the same costs as those who do not discriminate.
D)discrimination by an employer will reduce production costs since the employer can pay lower wages.
Q3) Which of the following could be an institutional barrier to employment?
A)licensing requirements
B)labor unions
C)minimum wages
D)all of the above
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Chapter 14: Investment, the Capital Market, and the Wealth of Nations
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Q1) The net present value of $1,000 received at a time in the future would
A)decline if the $1,000 were received sooner.
B)increase if the delivery date for the $1,000 were set farther into the future.
C)increase if the interest rate rose.
D)increase if the interest rate fell.
Q2) Higher real interest rates indicate that people who are saving now will be able to purchase more in the future. This statement is
A)true.
B)always false.
C)never true.
D)either true or false, depending on the rate of inflation.
Q3) Discounting is a procedure used to
A)determine the present value of income or costs expected in the future.
B)adjust future income for the effects of inflation.
C)adjust the money interest rates for the effects of inflation.
D)compare the value of income after taxes with its value prior to taxes.
Q4) Erin just won Lotto America, which will pay her $40 million over the next 20 years at a rate of $2 million a year. Is Erin $40 million richer today?
Q5) In a barter economy that had no form of currency, how could interest exist?
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Chapter 15: Income Inequality and Poverty
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Q1) Which of the following is true?
A)The best distribution of income can be determined objectively.
B)The transfer of income from one group to another is costly; it will generally reduce total output.
C)Positive economics can determine the variation in incomes that would be best for an economy.
D)The fairness of an income distribution is determined by its pattern (the measured degree of income inequality).
E)All of the above are true.
Q2) (I) Positive economics cannot determine how much income inequality should be present in a country. (II) Critics of government action to reduce income inequality argue that modifying the market process of income determination may create perverse incentives and hurt wealth creation.
A)Both I and II are true.
B)Both I and II are false.
C)I is true; II is false.
D)I is false; II is true.
Q3) Some people inherit money and wealth that they did nothing to earn. Why don't we tax inheritance at 100 percent?
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Page 23
Chapter 16: Appendix: Government Spending and Taxation
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Q1) As government becomes larger and larger as a share of the economy, economic growth is likely to decline because
A)taxes are reduced to levels that are inconsistent with economic efficiency.
B)governments are involved in many activities for which they are ill-suited.
C)tax-transfer activities are reduced and sometimes virtually eliminated.
D)governments do not spend enough on the provision of key public goods like education.
Q2) Based on estimates from the U.S. Treasury Department, the federal tax structure is A)highly regressive.
B)roughly proportional.
C)highly progressive.
D)regressive at lower incomes and progressive at higher incomes.
Q3) Because of which provision in the tax code did more than one-third of all taxpayers either have a zero tax liability or actually receive money from the IRS in 2006?
A)Earned Income Tax Credit
B)Standard Deduction
C)Marginal Tax Rate
D)Families with Low Income Credit
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Chapter 17: Appendix: the Economics of Social Security
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Q1) The current surplus of the Social Security system is expected to become a deficit sometime around 2018 because the
A)payroll tax rate is scheduled to decline at that time.
B)number of workers relative to the number of Social Security recipients will decline as the baby boom generation moves into the retirement phase of life.
C)stock market is not expected to perform nearly as well during the next two decades as was the case during the 1980s and 1990s.
D)growth rate of the U.S. economy is expected to slow during the next two decades.
Q2) When the current Social Security surpluses end and the bonds in the trust funds are reduced in order to make payments to retirees, the financing for the redemption of the trust fund bonds will come from
A)higher taxes or more government borrowing.
B)the surplus funds deposited in government banking accounts.
C)equity capital being liquidated.
D)the sale of private equities and securities that the government has been purchasing with the funds.
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Q1) During the last sixty years, the broad stock market (Standard and Poor's 500 Index) yielded an average annual nominal rate of return of approximately ____ and real rate of return of approximately ____.
A)5 percent; 2 percent
B)10 percent; 7 percent
C)17 percent; 9 percent
D)9 percent; 17 percent
Q2) Which of the following is true?
A)The P/E ratio provides information on the price of a stock relative to its current earnings.
B)The P/E ratio provides information on the price of a stock relative to its future earnings. C)The P/E ratio provides information on the price of a stock relative to its past earnings. D)The P/E ratio average from 1950-2008 was 26.
Q3) Jane is a 22-year-old college graduate. She has just started working at a job that pays her $75,000 per year. Since you have had an economics course, Jane asks you for advice on where to invest the money she is saving for her retirement. What do you recommend?
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Chapter 19: Appendix: Great Debates in Economics: Keynes Versus
Hayek
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Q1) In the main chorus of the Keynes-Hayek rap lyrics, Keynes states "I want to steer markets" and Hayek replies, "I want them set free." These statements are referring to A)the tendency of Keynesians to favor government intervention and central planning and the tendency of Hayekians to favor free markets.
B)the tendency of Keynesians to favor restrictive fiscal policy and the tendency of Hayekians to favor expansionary fiscal policy.
C)the tendency of Keynesians to favor budget deficits and the tendency of Hayekians to insist on budget surpluses.
D)the tendency of Keynesians to favor fiscal policy and of Heyekians to favor monetary policy.
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Chapter 20: Appendix: the Crisis of 2008: Causes and Lessons for the Future
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Q1) Between 2001 and 2005, sub-prime (including Atl-A) mortgages ____________ as a share of the total.
A)fell from 30 percent to less than 10 percent
B)rose from 5 percent to 10 percent
C)rose from 10 percent to more than 30 percent
D)fell from more than 20 percent to less than 10 percent
Q2) The increase in the share of loans extended to borrowers with little or no down payment contributed to the financial crisis of 2008 because these loans
A)initially depressed housing prices.
B)were extended only to borrowers with prime credit status.
C)had much higher default rates than loans to borrowers making larger down payments.
D)were unavailable to low-income borrowers, who would have profited the most from such loans.
Q3) The primary objective of the monetary policy of the Fed should be
A)low rates of unemployment.
B)the growth rate of real GDP.
C)the achievement of price stability.
D)the regulation of financial institutions.
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Chapter 21: Appendix: Lessons From the Great Depression
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Q1) During 1929-1933, monetary policy was
A)highly expansionary and this led to an increase in the general level of prices.
B)characterized by steady monetary growth, which resulted in price stability.
C)characterized by a sharp reduction in the supply of money, which led to downward pressure on prices and a decline in output.
D)highly expansionary and this led to a reduction in the general level of prices.
Q2) The rapid growth in stock prices during the 1920s was due in large part to
A)the expansionary monetary policy of the Federal Reserve.
B)the wartime demand for military equipment and supplies.
C)the artificially high value of the dollar, which eventually led to the stock market crash of 1929.
D)the technological innovations of the decade, which spurred economic growth.
Q3) The Great Depression was an era marked by
A)steady growth in GDP and a decline in the rate of unemployment.
B)a prolonged period of high unemployment and output substantially below its potential.
C)a large decline in the stock market followed by a steady recovery.
D)a failure of expansionary monetary policy to stimulate output and employment.
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Chapter 22: Appendix: the Economics of Healthcare
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Q1) Economic analysis indicates that the increasing government expenditures and growth of third-party payments accompanying the Medicare and Medicaid programs
A)reduced the demand for healthcare services.
B)reduced the incentive of consumers to economize on their use of healthcare.
C)increased the incentive of consumers to economize on their use of healthcare.
D)placed downward pressure on the prices of healthcare services.
Q2) If a third party pays for an individual to consume a good, how is the decision making of consumers affected? How does this affect the actions of suppliers?
Q3) During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)
A)has remained relatively constant.
B)fell from approximately 60 percent in 1960 to 30 percent in 2007.
C)increased from approximately 45 percent in 1960 to over 85 percent in 2007.
D)declined during the 15 years following the passage of Medicare but has been increasing since 1980.
Q4) How has public policy influenced the incentives of consumers to economize and suppliers to provide their services economically in the health-care industry?
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Chapter 23: Appendix:education: Problems and Performance
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Q1) Spending per student in American public elementary schools is ____ than that of most developed countries.
A)substantially less
B)slightly less
C)slightly more
D)substantially more
Q2) Public elementary and secondary school administrators have a strong incentive to
A)attempt to increase their funding levels.
B)be efficient since their budgets are determined by politicians.
C)cater to the preferences of students and parents.
D)do all of the above.
Q3) In 2005, average spending per pupil in public elementary and secondary schools in the United States was approximately
A)$4,585.
B)$6,585.
C)$8,585.
D)$10,585.
Q4) "Increasing competition between schools will tend to lower both the cost and quality of education." Is this statement true or false?
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Chapter 24: Appendix: Earnings Differences Between Men and Women
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Q1) Which of the following is true?
A)Employers who discriminate against women will have lower costs than rival firms that hire employees strictly on the basis of merit (productivity).
B)On average, the number of hours worked per year by women in the labor force is greater than the hours worked by men in the labor force.
C)The female/male earnings ratio is substantially higher for never married persons than for those married with a spouse present.
D)As the proportion of women preparing for careers as professionals has increased in recent decades, the earnings of women have declined relative to those for men.
Q2) When female/male earnings differentials are adjusted for age, education, language, and locational characteristics, the
A)differential between the earnings of males and those of females increases substantially.
B)differential between the earnings of males and those of females does not change much.
C)corrected earnings of males are equal to those of similar females.
D)corrected earnings of females are greater than those of similar males.
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Page 32
Chapter 26: Appendix: the Question of Resource Exhaustion
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Q1) Economic theory indicates that the economy is better off not to produce proved reserves of a mineral "too quickly." By this, we mean that we
A)prefer some bad luck in exploration efforts, rather than too much good luck in finding the resources.
B)do not want the resource to be too abundantly available since this would reduce its price and GDP.
C)want to use other nations' resources first, even if doing so is more costly.
D)do not want to use additional resources for exploration if the present discounted value of the benefits is smaller than the cost.
Q2) In the Central Utah Project, the water delivered from dams to users
A)is very well utilized, because planners allocated water to its highest valued uses and users.
B)cannot generally be traded, so is often wastefully used in low-valued uses.
C)is often sold to water-short cities by farmers who can then enjoy a profit from the sale. D)is very expensive to the users who get it.
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33
Chapter 25: Appendix: Do Labor Unions Increase the Wages of Workers
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Q1) Which of the following states had the highest incidence of union membership as a percent of all wage and salary workers in 2010?
A)New York
B)Arkansas
C)North Carolina
D)California
Q2) In a strike, what does the union have to lose? What does management lose?
Q3) Data on the relationship between the percentage of the workforce unionized and the share of national income allocated to labor suggest that unionization has
A)greatly altered the labor-capital distribution of national income.
B)increased the share of national income allocated to labor.
C)had a positive effect on the wages of nonunion workers.
D)had no significant impact on the share of income going to labor.
Q4) Most studies indicate that during the last two decades, the wages of union members have been approximately
A)5 percent higher than the wages of similar nonunion workers.
B)14 to 19 percent higher than the wages of similar nonunion workers.
C)34 to 39 percent higher than the wages of similar nonunion workers.
D)64 to 69 percent higher than the wages of similar nonunion workers.
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Chapter 27: Appendix: Difficult Environmental Cases and the
Role of Government
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Q1) When a park is funded by visitors but not by taxpayers in general,
A)there will be too few parks because most people will not pay to use a park.
B)visitors will be better served because poor service would lead to reductions in revenues.
C)park budgets will decline.
D)park quality will decline.
Q2) The Endangered Species Act
A)weakened the property rights of landowners.
B)encourages landowners to find new ways to provide habitat for listed species.
C)provides compensation to landowners affected by the law.
D)has not benefited any of the species protected under the act.
Q3) Pollution from a privately owned factory that seriously harms a privately owned forest will, if property rights are strongly protected,
A)not result in penalties to the polluter, who has a right to use his property as he wishes.
B)make the polluter liable for any damages done to the forest.
C)be ignored under the law, in favor of the polluting factory owner.
D)never occur.
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