1. When a worker retires, the labour force ________________ and the unemployment rate ____________?
Increases; increases
Increases; decreases
Decreases; increases
Decreases; remains constant
Decreases; decreases
2. Which of the following is a cost of unemployment?
health problems
retraining costs
union power
urban congestion
all of the above
3. Consider the market for bicycles. The Total Cost function is given by TC = 100 + 10q + q2 and there are 20 firms. The demand function is given by P = 120 - q. However, there are significant externalities to the production of bicycles. The government hires economists to investigate and they find that there is a positive consumption externality of E=22q which implies a marginal externality of 22 per bike.
Which of the following policies could possibly be implemented to correct for this externality?
a subsidy for producers
Tradeable permits
A price ceiling
A price floor
More than one of the above
4. Consider the market for bicycles. The Total Cost function is given by TC = 100 + 10q + q2 and there are 20 firms. The demand function is given by P = 120 - q. However, there are significant externalities to the production of bicycles. The government hires economists to investigate and they find that there is a positive consumption externality of E=22q which implies a marginal externality of 22 per bike.
If the government decides to implement a subsidy for buyers, what is the optimal level for the subsidy?
$0
$11
$20
$22
None of the above
5. Consider the market for bicycles. The Total Cost function is given by TC = 100 + 10q + q2 and there are 20 firms. The demand function is given by P = 120 - q. However, there are significant externalities to the production of bicycles. The government hires economists to investigate and they find that there is a positive consumption externality of E=22q which implies a marginal externality of 22 per bike.
If the government implements the optimal subsidy for buyers, what is the deadweight loss?
0
80
225
450
None of the above
6. Which of the following could possibly increase inflation?
A rise in wages
Tax cuts
An oil shortage
Budget deficits
All of the above
7. Which of the following is a goal of Reserve Bank of Australia?
Full employment
Price stability
Economic prosperity
A strong Australian Dollar.
a, b, and c
8. A competitive fertilizer firm produces a large amount of toxic by-product as part of its production process, producing a marginal, negative production externality ME = 15+q. Demand for fertilizer is given by P = 90-2q. The marginal cost and average cost of production is constant and equal to 30. What is the deadweight loss from producing at the competitive equilibrium?
0
337.5
450
627.5
None of the above
9. Jazzy Jeff and the Fresh Prince live together in a small apartment. They want to hire a cleaner. Each has a demand curve describing their willingness to pay for each hour of cleaning. If the price of a cleaner is $15 an hour, what is the socially optimal amount of cleaning for the duo (in hours)?
DJeff = 40-P
DPrince = 80-2P
25
35
50
75
None of the above
10. Consider a firm that has a marginal product of capital K given my MP = 30 - K. The firm is in both a competitive output and input market. The current rental price for capital is $500 per unit and the interest rate is 10%. The firm sells into a competitive market at an output price of $8. How much capital does the firm hire, K=?.
22
23.75
24.2
29.2
None of the above