1. A labor supply elasticity of 1.4 means that a wage increase of: 14 percent wi
ID: 1099666 • Letter: 1
Question
1. A labor supply elasticity of 1.4 means that a wage increase of:
14 percent will increase the quantity of labor supplied by 10 percent.
2. When the top marginal tax rate fell from 40 to 35 percent, with other things the same, the U.S. income tax system became:
3. If the productivity of labor diminishes only slowly as output increases, labor:
4. In economics, the purpose of competition is to:
5. To remedy unfairness in the distribution of income, many Americans look to all of the following except:
6. In the Justice Department's antitrust case against Microsoft, the Court ruled that there was:
7. Harvard University once paid two financial managers, who helped manage Harvard's $20 billion endowment, each about $25 million. Harvard defended their pay "as normal in the community of hedge-fund managers with which Harvard Management competes for talent." An economist probably would say that these pay levels:
8. Predatory pricing:
10 percent will reduce the quantity of labor supplied by 14 percent. 10 percent will increase the quantity of labor supplied by 14 percent. 10 percent will increase the quantity of labor supplied by 1.4 percent.14 percent will increase the quantity of labor supplied by 10 percent.
2. When the top marginal tax rate fell from 40 to 35 percent, with other things the same, the U.S. income tax system became:
more progressive. less progressive. proportional. regressive.3. If the productivity of labor diminishes only slowly as output increases, labor:
demand will most likely be inelastic. demand will most likely be elastic. supply will most likely be elastic. supply will most likely be inelastic.4. In economics, the purpose of competition is to:
ensure that every firm survives. motivate firms to make the highest possible profit. motivate firms to make better goods at lower cost. prevent unemployment.5. To remedy unfairness in the distribution of income, many Americans look to all of the following except:
affirmative action laws. comparable worth laws. social welfare programs. regressive taxes.6. In the Justice Department's antitrust case against Microsoft, the Court ruled that there was:
insufficient evidence to reach a ruling. no evidence of unfair business practices, and Microsoft was not a monopoly. evidence of unfair business practices, and Microsoft was a monopoly. evidence of unfair business practices, but Microsoft was not a monopoly.7. Harvard University once paid two financial managers, who helped manage Harvard's $20 billion endowment, each about $25 million. Harvard defended their pay "as normal in the community of hedge-fund managers with which Harvard Management competes for talent." An economist probably would say that these pay levels:
make sense if their marginal factor costs exceed $25 million. make sense if the value of their marginal product exceeds $25 million. makes sense if their efficiency value calculates out to that level. does not make sense because Harvard has the option of simply putting its funds into a random selection of assets that would do as well.8. Predatory pricing:
will always work if markets are contestable. is always successful because it produces profits in the long run. is never successful because it produces losses in the short run. is likely to be successful only if firms cannot enter an industry easilExplanation / Answer
1. 10 percent will increase the quantity of labor supplied by 14 percent.
2. less progressive.
3. demand will most likely be elastic
4. motivate firms to make better goods at lower cost.
5. regressive taxes.
6. evidence of unfair business practices, and Microsoft was a monopoly.
7. make sense if the value of their marginal product exceeds $25 million
8. is likely to be successful only if firms cannot enter an industry easily
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