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Tag: Economics Mcqs Test from Past Public Service Commission Exams

Economics Mcqs Test from Past Public Service Commission Exams

Economics  Mcqs Test from Past Public Service Commission Exams

1. Which of the following is a characteristic of pure monopoly?
a. one seller of the product
b. low barriers to entry
c. close substitute products
d. perfect information

2. In pure monopoly, what is the relation between the price and the marginal revenue?
a. the price is greater than the marginal revenue
b. the price is less than the marginal revenue
c. there is no relation
d. they are equal

3. In order to maximize profits, a monopoly company will produce that quantity at which the:
a. marginal revenue equals average total cost
b. price equals marginal revenue
c. marginal revenue equals marginal cost
d. total revenue equals total cost

4. Quantity Price Total Cost
1 $100 $ 60
2 95 130
3 90 210
4 85 300
5 80 400

This monopolist should produce:
a. 1
b. 2
c. 3
d. 4
e. 5

5. Compared to the case of perfect competition, a monopolist is more likely to:
a. charge a higher price
b. produce a lower quantity of the product
c. make a greater amount of economic profit
d. all of the above

6. Which of the following is necessary for a natural monopoly?
a. economies of scale
b. a high proportion of the total cost is the cost of capital goods
c. the market is very small
d. all of the above

7. Which of the following is true about the way by which SDG&E has been regulated by the PUC?
a. SDG&E has been allowed to earn very high economic profits
b. The profits of SDG&E are calculated as a percent of the value of the capital goods
c. When the demand for electricity would fall, the price of electricity would also fall
d. All of the above

8. Which of the following best defines price discrimination?
a. charging different prices on the basis of race
b. charging different prices for goods with different costs of production
c. charging different prices based on cost-of-service differences
d. selling a certain product of given quality and cost per unit at different prices to different buyers

9. In order to practice price discrimination, which of the following is needed?
a. some degree of monopoly power
b. an ability to separate the market
c. an ability to prevent reselling
d. all of the above

10. In price discrimination, which section of the market is charged the higher price?
a. the section with the richest people
b. the section with the oldest people
c. the section with the most inelastic demand
d. the section with the most elastic demand
1. Which of the following concepts represents the extra revenue a firm receives from the services of an additional unit of a factor of production?
a. total revenue
b. marginal physical product
c. marginal revenus product
d. marginal revenue

2. Workers Quantity Produced
1 15
2 28
3 39
4 48
5 55
6 60

This company is a profit-maximizing firm selling in a competitive product market and hiring in a competitive labor market. It uses semi-skilled labor to produce dampers used in office building ventilation systems. Assume that the current market price per damper is $50 and that the prevailing weekly salary per semi-skilled worker is $550. This company should employ ______ workers.
a. 2
b. 3
c. 4
d. 5
e. 6

3. The demand for labor is the same as the
a. marginal revenue product
b. marginal physical product
c. marginal cost
d. wage

4. The demand for labor slopes down and to the right because of
a. the law of demand
b. the iron law of wages
c. the law of diminishing marginal returns
d. economies of scale

5. The demand for labor will be more elastic if:
a. there are few substitutes for labor
b. there is a short time under consideration
c. labor is a large percent of the total cost of production
d. the demand for the product is relatively inelastic
e. all of the above

6. Skills that can be transferred to other employers are called:
a. general skills
b. specific skills
c. non-pecuniary skills
d. all of the above

7. Which skills are most likely to be paid for by the employer?
a. General skills
b. Specific skills
c. Educational skills

8. If worker A earns more in wages than worker B, it could be because:
a. The product made by worker A sells for a higher price than that made by worker B
b. Worker A uses more capital per worker than worker B
c. Worker A has more natural ability than worker B
d. All of the above

9. Skills that embodied in a person are called
a. Human capital
b. Embodied skills
c. Physical capital
d. Experience skills

10. “Treating an individual as typical of a group” is the definition of
a. pure discrimination
b. statistical discrimination
c. human capital
d. specific skills

1. If there are 50 firms in a industry, each selling 2% of the total sales, the concentration ratio is:
a. 50%
b. 2% €
c. 100%
d. 8%

2. When Daimler Benz, maker of the Mercedes, bought Chrysler, the merger was
a. horizontal
b. vertical
c. conglomerate

Questions 3 through 10 involve the functions of the government in a world of laissez faire. The functions are the following:
A. Create and Enforce the “Rules”
B. Promote or Maintain Competition
C. Provide Information
D. Provide Public Goods
E. Reduce Negative Externalities (External Costs) through regulations or through taxes
F. Subsidize Positive Externalities (External Benefits)
G. Provide Merit Goods
H. Redistribute Income on the Basis of Need

For each of the following, choose the letter that best describes the function of government.

3. The government provides anti-trust laws.

4. The government subsidizes the building of new stadiums and arenas.

5. The government provides for military defense.

6. The government has a program of social security to provide a pension for the elderly.

7. The government requires that all gasoline stations post their prices in signs large enough
to be seen by a reasonable person from the street.

8. The government requires people to have a smog control device in their cars.

9. The government makes the beach free for everyone

10. The government makes laws that determine certain behaviors that a corporation must engage in and other behaviors that a corporation cannot engage in.