Question 1

A production function describes the

Accepted Answer

A)  technological possibilities for converting factor inputs into outputs. 
B)  intellectual possibilities for converting factor inputs into outputs. 
C)  amount of resources available to the representative firm. 
D)  actual process of converting factor inputs into outputs. 
A)  technological possibilities for converting factor inputs into outputs. 
B)  intellectual possibilities for converting factor inputs into outputs. 
C)  amount of resources available to the representative firm. 
D)  actual process of converting factor inputs into outputs.

Question 2

In a one-period economy,all of the following are equivalent expressions of the budget constraint except

Accepted Answer

A)  C = w(N? + l) + ? - T. 
B)  C = wN? + ? - T. 
C)  C = w(h - l) + ? - T. 
D)  C = wl = wh + ? - T. 
A)  C = w(N? + l) + ? - T. 
B)  C = wN? + ? - T. 
C)  C = w(h - l) + ? - T. 
D)  C = wl = wh + ? - T.

Question 3

The real wage denotes

Accepted Answer

A)  the number of units of consumption goods that can be exchanged for one unit of labor time. 
B)  the number of units of labor time that can be exchanged for one unit of consumption goods. 
C)  the number of units of labor time that can be exchanged for one unit of leisure time. 
D)  the number of units of leisure time that can be exchanged for one unit of labor time. 
A)  the number of units of consumption goods that can be exchanged for one unit of labor time. 
B)  the number of units of labor time that can be exchanged for one unit of consumption goods. 
C)  the number of units of labor time that can be exchanged for one unit of leisure time. 
D)  the number of units of leisure time that can be exchanged for one unit of labor time.

Question 4

A Cobb-Douglas production function is

Accepted Answer

A)  a production function for the textile industry. 
B)  a particular production function that fits the data well. 
C)  a production function applicable in the service industry. 
D)  the production function that Henry Ford applied in his firm. 
A)  a production function for the textile industry. 
B)  a particular production function that fits the data well. 
C)  a production function applicable in the service industry. 
D)  the production function that Henry Ford applied in his firm.

Question 5

The questions below deal with the Gizmo Company, which has the following production function.
  
-Labor demand is decreasing in the wage because

Accepted Answer

A)  the substitution effect is larger than the income effect. 
B)  the income effect is larger than the substitution effect. 
C)  the production function is concave. 
D)  the marginal product of labor is increasing in labor. 
A)  the substitution effect is larger than the income effect. 
B)  the income effect is larger than the substitution effect. 
C)  the production function is concave. 
D)  the marginal product of labor is increasing in labor.

Question 6

An increase in total factor productivity shifts the production function

Accepted Answer

A)  upward and increases the marginal product of labor. 
B)  upward and decreases the marginal product of labor. 
C)  downward and increases the marginal product of labor. 
D)  downward and decreases the marginal product of labor. 
A)  upward and increases the marginal product of labor. 
B)  upward and decreases the marginal product of labor. 
C)  downward and increases the marginal product of labor. 
D)  downward and decreases the marginal product of labor.

Question 7

An indifference curve

Accepted Answer

A)  connects a set of consumption bundles among which the consumer is indifferent. 
B)  is only useful in analyzing apathetic consumers. 
C)  connects a set of consumers who each have the same preferences. 
D)  is only useful in microeconomics. 
A)  connects a set of consumption bundles among which the consumer is indifferent. 
B)  is only useful in analyzing apathetic consumers. 
C)  connects a set of consumers who each have the same preferences. 
D)  is only useful in microeconomics.

Question 8

The household budget constraint may have a kink because

Accepted Answer

A)  there is uncertainty. 
B)  households prefer diversity. 
C)  households may substitute consumption for leisure, or the reverse. 
D)  leisure is limited by the number of available hours. 
A)  there is uncertainty. 
B)  households prefer diversity. 
C)  households may substitute consumption for leisure, or the reverse. 
D)  leisure is limited by the number of available hours.

Question 9

If dividend income increases,the following does not happen

Accepted Answer

A)  the consumer chooses to consume more leisure. 
B)  the consumer chooses to consume more consumption goods. 
C)  the budget constraint shifts to the right. 
D)  the substitution effect exceeds the income effect. 
A)  the consumer chooses to consume more leisure. 
B)  the consumer chooses to consume more consumption goods. 
C)  the budget constraint shifts to the right. 
D)  the substitution effect exceeds the income effect.

Question 10

We assume that the representative consumer's preferences exhibit the properties that

Accepted Answer

A)  they are convex and that more is always preferred to less. 
B)  more is always preferred to less and that each consumer has one strictly favorite good. 
C)  each consumer has one strictly preferred good and that consumption and leisure are both normal goods. 
D)  consumption and leisure are both normal goods and that the consumer likes diversity in his or her consumption bundle. 
A)  they are convex and that more is always preferred to less. 
B)  more is always preferred to less and that each consumer has one strictly favorite good. 
C)  each consumer has one strictly preferred good and that consumption and leisure are both normal goods. 
D)  consumption and leisure are both normal goods and that the consumer likes diversity in his or her consumption bundle.

Question 11

In a one-period economy,real consumption

Accepted Answer

A)  is always less than disposable income. 
B)  is typically greater than disposable income. 
C)  is exactly equal to disposable income. 
D)  can be greater than, less than, or equal to disposable income. 
A)  is always less than disposable income. 
B)  is typically greater than disposable income. 
C)  is exactly equal to disposable income. 
D)  can be greater than, less than, or equal to disposable income.

Question 12

The profit-maximizing quantity of labor equates the marginal product of labor with

Accepted Answer

A)  total factor productivity. 
B)  the marginal product of capital. 
C)  the real wage. 
D)  the average product of labor. 
A)  total factor productivity. 
B)  the marginal product of capital. 
C)  the real wage. 
D)  the average product of labor.

Question 13

A barter economy

Accepted Answer

A)  cannot be a market economy. 
B)  is an economy without monetary exchange. 
C)  is an economy with no business firms. 
D)  is not a competitive economy. 
A)  cannot be a market economy. 
B)  is an economy without monetary exchange. 
C)  is an economy with no business firms. 
D)  is not a competitive economy.

Question 14

The consumer wants to work because he/she

Accepted Answer

A)  is told to work. 
B)  likes to work. 
C)  likes leisure. 
D)  wants the income. 
A)  is told to work. 
B)  likes to work. 
C)  likes leisure. 
D)  wants the income.

Question 15

As the quantity of labor increases,the marginal product of capital

Accepted Answer

A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease. 
A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease.

Question 16

As the quantity of labor increases,the marginal product of labor

Accepted Answer

A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease. 
A)  is constant. 
B)  increases. 
C)  decreases. 
D)  may either increase or decrease.

Question 17

The consumer's work-leisure choice problem focuses on how a consumer's work-leisure decision is affected by the consumer's

Accepted Answer

A)  preferences and productivity. 
B)  productivity and psychology. 
C)  psychology and preferences. 
D)  preferences and constraints. 
A)  preferences and productivity. 
B)  productivity and psychology. 
C)  psychology and preferences. 
D)  preferences and constraints.

Question 18

When consumers act as price-takers,we say that they behave

Accepted Answer

A)  cooperatively. 
B)  competitively. 
C)  monopsonistically. 
D)  irrationally. 
A)  cooperatively. 
B)  competitively. 
C)  monopsonistically. 
D)  irrationally.

Question 19

When consumption and leisure are both normal goods,after an increase in real dividend income minus taxation,the rational consumer

Accepted Answer

A)  increases consumption and increases labor supply. 
B)  increases consumption and reduces labor supply. 
C)  reduces consumption and increases labor supply. 
D)  reduces consumption and reduces labor supply. 
A)  increases consumption and increases labor supply. 
B)  increases consumption and reduces labor supply. 
C)  reduces consumption and increases labor supply. 
D)  reduces consumption and reduces labor supply.

Question 20

The questions below deal with the Widget Company, which produces widgets according to the following table.
  
-If the real wage is equal to 7 widgets,and only an integer number of workers can be hired,the Widget company should hire

Accepted Answer

A)  2 workers. 
B)  3 workers. 
C)  4 workers. 
D)  5 workers. 
A)  2 workers. 
B)  3 workers. 
C)  4 workers. 
D)  5 workers.

A production function describes the

In a one-period economy,all of the following are equivalent expressions of the budget constraint except

The real wage denotes

A Cobb-Douglas production function is

The questions below deal with the Gizmo Company, which has the following production function. -Labor demand is decreasing in the wage because

An increase in total factor productivity shifts the production function

An indifference curve

The household budget constraint may have a kink because

If dividend income increases,the following does not happen

We assume that the representative consumer's preferences exhibit the properties that

In a one-period economy,real consumption

The profit-maximizing quantity of labor equates the marginal product of labor with

A barter economy

The consumer wants to work because he/she

As the quantity of labor increases,the marginal product of capital

As the quantity of labor increases,the marginal product of labor

The consumer's work-leisure choice problem focuses on how a consumer's work-leisure decision is affected by the consumer's

When consumers act as price-takers,we say that they behave

When consumption and leisure are both normal goods,after an increase in real dividend income minus taxation,the rational consumer

The questions below deal with the Widget Company, which produces widgets according to the following table. -If the real wage is equal to 7 widgets,and only an integer number of workers can be hired,the Widget company should hire

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption-Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters

Exam 4: Consumer and Firm Behavior: The Work-Leisure Decision and Profit Maximization

A production function describes the

In a one-period economy,all of the following are equivalent expressions of the budget constraint except

The real wage denotes

A Cobb-Douglas production function is

The questions below deal with the Gizmo Company, which has the following production function. -Labor demand is decreasing in the wage because

An increase in total factor productivity shifts the production function

An indifference curve

The household budget constraint may have a kink because

If dividend income increases,the following does not happen

We assume that the representative consumer's preferences exhibit the properties that

In a one-period economy,real consumption

The profit-maximizing quantity of labor equates the marginal product of labor with

A barter economy

The consumer wants to work because he/she

As the quantity of labor increases,the marginal product of capital

As the quantity of labor increases,the marginal product of labor

The consumer's work-leisure choice problem focuses on how a consumer's work-leisure decision is affected by the consumer's

When consumers act as price-takers,we say that they behave

When consumption and leisure are both normal goods,after an increase in real dividend income minus taxation,the rational consumer

The questions below deal with the Widget Company, which produces widgets according to the following table. -If the real wage is equal to 7 widgets,and only an integer number of workers can be hired,the Widget company should hire

Introduction

Measurement

Business Cycle Measurement

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: The Consumption-Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking

Inflation, the Phillips Curve, and Central Bank Commitment

Filters