Expert Answers

When a firm exercises monopoly power:
A. the firm increases its profits at the expense of its workers.
B. workers gain but the firm loses
C. workers, consumers, and owners of the firm are made better off.
D. both the firm and the workers gain.

8. In 1991, the base year, you were earning $350/week. Your wages rose to $450 in 2000, the current year, when the Consumer Price Index stood at 135. What statement can you make about what happened to your wages over this period?
A. They rose.
B. They fell.
C. They remained the same.
D. There is not enough information to determine whether they rose, fell, or remained the same.

Suppose your economics professor earns an equal annual salary of $40,000. The professor loves teaching and would not quit her job if her pay were reduced to $15,000 per year. Your professor is earning annual economic rent of:
A. $40,000
B. $25,000
C. $55,000
D. $15,000

According to the theory of the backward-bending labor supply curve, as the wage rate rises:
A. first the substitution effect sets in, and then the income effect.
B. first the income effect sets in, and then the substitution effect.
C. the substitution effect and the income effect set in at the same time.
D. there is neither a substitution effect nor an income effect.

Which statement is true?
A. The highest paid professional athletes earn economic rent.
B. Economic rent is paid on land, but not in the form of wages.
C. Economic rent is earned mainly by the poor and the lower middle class.
D.Economic rent is paid in proportion to the marginal revenue product of a resource.

Conservative economics would like to help younger workers get work experience by:
A. setting up a government jobs program
B. raising the minimum wage rate.
C. lowering the minimum wage rate.
D. passing a law requiring employers to hire teenagers ahead of older workers who are equally qualified.

During the decade of the 1980’s, our Lorenz curve:
A. moved inward, toward the line of perfect equality.
B. moved outward, away from the line of perfect equality.
C. stayed about the same distance from the line of perfect equality.
D. crossed the line of perfect equality.