1. Which of the following does not characterize neoclassical economics? a. the d
ID: 1118341 • Letter: 1
Question
1. Which of the following does not characterize neoclassical economics?
a.
the division of society into the working class, the capitalist class, and the landlord class.
b.
the assumption that businessmen are motivated only by the desire for profit.
c.
the analysis of households and business firms.
d.
the belief that free competition leads to optimal results.
Question 2
The neoclassical theory of production
a.
showed the laborers could not be very productive if they suffered from inadequate food, shelter, and clothing because they were paid such low wages.
b.
stated that the last dollar spent on each factor should yield the same increase in production from all factors.
c.
emphasized the importance of the social and cultural foundations of productive technology.
d.
showed that businessmen did not necessarily attempt to maximize profits in all cases.
10 points
Question 3
Which of the following as not a modification of neoclassical theory that was frequently made by neoclassical economists?
a.
the distribution of ownership of factors of production is so unequal that the entire system is unfair.
b.
some commodities that are consumed socially and are important to society even though they may not be profitable for a capitalist to produce and sell.
c.
large-scale production means that some sellers will necessarily be large enough to affect market prices.
d.
the production of some commodities (e.g., automobiles) often involves social costs (smog) that are far in excess of the private costs of the production.
10 points
Question 4
1. What role should the government play in the economy according to neoclassical economists?
a.
neoclassical economists believe the government should not intervene to stabilize business cycles.
b.
neoclassical economists believe the government should not intervene in the economy except in the area of health care.
c.
neoclassical economists believe the government should intervene in order to increase social equality.
d.
neoclassical economists believe the government should intervene to stabilize business cycles.
10 points
Question 5
1. What is the basic policy conclusion of neoclassical economics
a.
free-market capitalism in inherently unstable and occasionally requires government intervention.
b.
free-market capitalism is exploitative and oppressive and should be replaced by a more equitable system.
c.
free-market capitalism is imperfect but can be reformed to improve social outcomes.
d.
free-market capitalism works well as long as government does not intervene in the economy.
10 points
Question 6
1. The basic unit of analysis in neoclassical economics is
a.
the util
b.
the individual
c.
relationships between groups in the economy.
d.
the economy
10 points
Question 7
1. According to neoclassical economists, the central economic problem is
a.
unchecked population growth.
b.
choice due to the existence of scarcity
c.
rapid technological change
d.
the distribution of income.
10 points
Question 8
1. What is the attitude of neoclassical economists toward scarcity?
a.
scarcity can be solved by the operation of the free market.
b.
scarcity is the result of speculators trying to drive up prices.
c.
scarcity is a hoax perpetuated by radical environmentalists.
d.
scarcity results from the unlimited desires of people.
10 points
Question 9
1. When neoclassical economists assume that individuals are rational, they mean that people
a.
are generally unselfish and self-sacrificing.
b.
make impulsive decisions based on what feels good at the time.
c.
make purposeful choices based on their own self-interest.
d.
rarely show emotion.
10 points
Question 10
1. What does the assumption of diminishing marginal utility mean?
a.
an increase in units of labor will leads to less and less additional output.
b.
as more units are consumed each additional unit will provide less and less additional utility
c.
utility cannot be precisely measured but consumers can produce a ranking of consumption choices.
d.
eventually additional units consumed will lead to a decline in total utility.
10 points
Question 11
1. The income leisure trade off
a.
means that firms can make money in leisure industry.
b.
is the basis of the neoclassical theory of labor supply
c.
means that individuals enjoy making trades during their leisure time.
d.
means that individuals would rather work than enjoy leisure.
10 points
Question 12
1. Sam is currently earning $150,000 per year working an 80 hour week. He has just refused a job offer that would increase his salary to $175,000 and require him to work 90 hours per week. What can we say about Sam’s labor supply curve?
a.
Sam does not have a supply curve, because he turned down the job.
b.
Sam places a very low value on leisure at his current wage rate.
c.
Sam’s labor supply curve is upward sloping.
d.
Sam’s labor supply curve is downward sloping.
10 points
Question 13
1. A key difference between neoclassical theory and the labor theory of value is that
a.
neoclassical theory and the labor theory of value have the same view of production.
b.
neoclassical theory treats production as a process in which three equal inputs – land, labor, and capital – are combined by entrepreneurs to produce products.
c.
neoclassical theory treats production as a process in which labor combines inputs – land and capital – to produce products.
d.
neoclassical theory treats production as a process in which four equal intputs – land, natural resources, capital, and entrepreneurship – are combined in order to produce products.
10 points
Question 14
1. In the neoclassical view of the macroeconomy, a temporary lack of demand for all goods and services will lead to
a.
inflation.
b.
an expansion.
c.
a recession.
d.
a fall in the price level.
10 points
Question 15
1. In the neoclassical view of the macroeconomy, any income not used for consumption
a.
will be used for investment.
b.
will be used for exports.
c.
will be used to pay taxes.
d.
will be used for government projects.
10 points
Question 16
1. In the neoclassical view of the macroeconomy, if there is not enough investment spending to use all available savings
a.
excess savings will be used to pay taxes.
b.
the interest rate will fall.
c.
the Federal Reserve will raise the interest rate.
d.
excess savings will be hoarded.
10 points
Question 17
1. In the neoclassical view of the macroeconomy, too many workers seeking work or unemployment will lead to
a.
government programs to help the unemployed.
b.
rising interest rates.
c.
rising wages.
d.
falling wages.
10 points
Question 18
1. Consider table 1 below:
Labor
(L)
Output
(Q)
Price
(P)
3
150
$3
4
200
$3
5
240
$3
6
270
$3
7
290
$3
8
300
$3
2.
3. What is the marginal revenue product (MRP) of the 7th worker added?
4.
10 points
Question 19
1. Consider table 1 below:
Labor
(L)
Output
(Q)
Price
(P)
3
150
$3
4
200
$3
5
240
$3
6
270
$3
7
290
$3
8
300
$3
What is total revenue when output is 300?
a.
the division of society into the working class, the capitalist class, and the landlord class.
b.
the assumption that businessmen are motivated only by the desire for profit.
c.
the analysis of households and business firms.
d.
the belief that free competition leads to optimal results.
Question 2
Explanation / Answer
Question 1
The division of society into the working class, the capitalist class, and the landlord class was an idea propounded by the Karl Marx as part of his Social Class Theory.
So, this description does not characterize neoclassical economics.
The correct answer is the option (a).
Question 19
Price when output is 300 = $3
Calculate the Total Revenue -
TR = Price * Quantity = $3 * 300 = $900
The Total revenue when output is 300 is $900.
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