Question 1

Price competition among firms has proved to be more important than the introduction of new products.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is not a reason unions became much less effective in the 1990s?

Accepted Answer

A) Greater competition in domestic markets 
B) Increased foreign competition 
C) Downsizing by American firms 
D) Increased regulatory scrutiny 
A) Greater competition in domestic markets 
B) Increased foreign competition 
C) Downsizing by American firms 
D) Increased regulatory scrutiny D

Question 3

Most innovation comes from universities and governments, which are inherently market driven.

Accepted Answer

A) True 
 B)False  False

Question 4

What are the three noteworthy labor market trends that Americans have experienced for about two decades?

Accepted Answer

For about two decades, Americans have ex

Question 5

Which of the following makes invention and entrepreneurship more likely in today's economy?

Accepted Answer

A) Increasing morality of inventors 
B) Government rules within society 
C) Positive marginal costs 
D) Positive marginal revenues 
A) Increasing morality of inventors 
B) Government rules within society 
C) Positive marginal costs 
D) Positive marginal revenues

Question 6

A labor union can increase wages by exercising market power on behalf of workers.

Accepted Answer

A) True 
 B)False

Question 7

When a patent is awarded, no one but the patent owner may produce the invention without the owner's permission.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not true of minimum wages?

Accepted Answer

A) They have little effect on highly skilled workers. 
B) They raise incomes of unskilled laborers who have jobs. 
C) They prevent some willing workers from getting jobs. 
D) They decrease wages for unskilled workers. 
A) They have little effect on highly skilled workers. 
B) They raise incomes of unskilled laborers who have jobs. 
C) They prevent some willing workers from getting jobs. 
D) They decrease wages for unskilled workers.

Question 9

Briefly explain Schumpeter's model of innovation. Why does an innovator's economic profit eventually reduce to zero?

Accepted Answer

Professor Schumpeter argued that the suc

Question 10

Those who view education as a sorting mechanism emphasize that employers value the

Accepted Answer

A) skills that people who attend college have already acquired before they enter college. 
B) docility and deference to authority learned in the classroom. 
C) analytic ability of the highly educated worker. 
D) work habits picked up in the home and school. 
A) skills that people who attend college have already acquired before they enter college. 
B) docility and deference to authority learned in the classroom. 
C) analytic ability of the highly educated worker. 
D) work habits picked up in the home and school.

Question 11

If the income effect of a change in the wage dominates the substitution effect, then workers will want to work more when the wage increases.

Accepted Answer

A) True 
 B)False

Question 12

One implication of human capital theory is that college graduates should earn substantially less than high school graduates.

Accepted Answer

A) True 
 B)False

Question 13

Inventions like gunpowder and the wheelbarrow were created by the Chinese hundreds of years ago. The fact that such items were not put to productive use was caused primarily by a lack of ____.

Accepted Answer

A) available financial capital 
B) incentives for entrepreneurship 
C) an adequate price system 
D) ingenuity 
A) available financial capital 
B) incentives for entrepreneurship 
C) an adequate price system 
D) ingenuity

Question 14

Regarding new inventions, which of the following statements is not true?

Accepted Answer

A) A new invention typically has little competition. 
B) This effective monopoly on the market earns the inventor abundant profit. 
C) That profit gets the attention of other potential inventors, who create competing products. 
D) Reduced to zero economic profits, the inventor goes out of business. 
A) A new invention typically has little competition. 
B) This effective monopoly on the market earns the inventor abundant profit. 
C) That profit gets the attention of other potential inventors, who create competing products. 
D) Reduced to zero economic profits, the inventor goes out of business.

Question 15

Recent studies have shown increases in the minimum wage have significantly reduced employment of teenagers.

Accepted Answer

A) True 
 B)False

Question 16

Unions can only achieve wage gains by sacrificing employment.

Accepted Answer

A) True 
 B)False

Question 17

Briefly and concisely define the following terms and explain their relevance to the study of economics. 
a. industrial and craft unions 
b. closed shop 
c. union shop 
d. bilateral monopoly 
e. collective-bargaining agreement

Accepted Answer

a. Industrial unions represent all types

Question 18

Firms share technology with rivals,

Accepted Answer

A) in order to better compete with their rivals. 
B) in order to help out when their rivals are in trouble. 
C) to share the substantial risks of innovation. 
D) because they are required to by law. 
E) in order to pass false information to their rivals in order to drive them out of business. 
A) in order to better compete with their rivals. 
B) in order to help out when their rivals are in trouble. 
C) to share the substantial risks of innovation. 
D) because they are required to by law. 
E) in order to pass false information to their rivals in order to drive them out of business.

Question 19

The labor demand curve slopes down because

Accepted Answer

A) fewer workers work at low wages. 
B) capital will substitute for labor as wages decrease. 
C) of the diminishing marginal product of labor. 
D) of the income effect of rising wages. 
A) fewer workers work at low wages. 
B) capital will substitute for labor as wages decrease. 
C) of the diminishing marginal product of labor. 
D) of the income effect of rising wages.

Question 20

Economists would describe a labor union as a

Accepted Answer

A) trade organization. 
B) necessity for competitive labor markets. 
C) labor monopoly. 
D) monopsony. 
A) trade organization. 
B) necessity for competitive labor markets. 
C) labor monopoly. 
D) monopsony.

Exam 19: Labor and Entrepreneurship: the Human Inputs

Price competition among firms has proved to be more important than the introduction of new products.

Which of the following is not a reason unions became much less effective in the 1990s?

Most innovation comes from universities and governments, which are inherently market driven.

What are the three noteworthy labor market trends that Americans have experienced for about two decades?

Which of the following makes invention and entrepreneurship more likely in today's economy?

A labor union can increase wages by exercising market power on behalf of workers.

When a patent is awarded, no one but the patent owner may produce the invention without the owner's permission.

Which of the following is not true of minimum wages?

Briefly explain Schumpeter's model of innovation. Why does an innovator's economic profit eventually reduce to zero?

Those who view education as a sorting mechanism emphasize that employers value the

If the income effect of a change in the wage dominates the substitution effect, then workers will want to work more when the wage increases.

One implication of human capital theory is that college graduates should earn substantially less than high school graduates.

Inventions like gunpowder and the wheelbarrow were created by the Chinese hundreds of years ago. The fact that such items were not put to productive use was caused primarily by a lack of ____.

Regarding new inventions, which of the following statements is not true?

Recent studies have shown increases in the minimum wage have significantly reduced employment of teenagers.

Unions can only achieve wage gains by sacrificing employment.

Briefly and concisely define the following terms and explain their relevance to the study of economics. a. industrial and craft unions b. closed shop c. union shop d. bilateral monopoly e. collective-bargaining agreement

Firms share technology with rivals,

The labor demand curve slopes down because

Economists would describe a labor union as a

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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