- Which of the following would improve the effi-
ciency of a monopoly market?
(A) The government regulates the monopolist
to produce the output where marginal rev-
enue equals marginal cost.
(B) The government provides additional legal
barriers to entry.
(C) The government subsidizes the monopolist
so that they achieve even greater economies
of scale.
(D) The government eliminates trade barriers
on potential foreign producers.
(E) The government regulates the monopolist
to produce the output where monopoly
profits are maximized.
- Which of the following increases the demand
for interstate truck drivers?
(A) An increase in the wage of truck drivers
(B) An increase in the supply of truck drivers
(C) An increase in the price of diesel fuel, which
is used to power semitrucks
(D) A decrease in the demand for interstate
shipping
(E) A decrease in the price of semitrucks
- A monopsony employer hires labor up to the
point where
(A) Wage =Marginal factor cost.
(B) Marginal factor cost =Marginal product of
labor
(C) Marginal factor cost = Marginal revenue
product of labor
(D) Wage =Marginal revenue product of labor
(E) Wage =Price of the good produced by the
labor
- The price of labor is $5 and the price of capital
is $10 per unit. Using the table below, what is
the least-cost combination of labor and capital
that should be hired to produce 18 units of
output?
MARGINAL MARGINAL
UNITS OF PRODUCT OF UNITS OF PRODUCT OF
LABOR LABOR CAPITAL CAPITAL
1618
2426
3335
4244
5152
(A) 1 Labor and 2 Capital
(B) 4 Labor and 8 Capital
(C) 2 Labor and 1 Capital
(D) 5 Labor and 5 Capital
(E) 3 Labor and 2 Capital
- A cartel is often the result of
(A) perfectly competitive firms that agree to
produce a homogenous product.
(B) oligopoly competitors that agree to restrict
output to maximize joint profits.
(C) a monopoly that has been regulated by the
government.
(D) a natural monopoly that has evolved into a
perfectly competitive industry.
(E) monopolistically competitive firms that
have agreed to earn normal profits in the
long run.
- Suppose the state requires hairdressers and man-
icurists to pass a series of exams to be certified
cosmetologists. How does this policy change the
supply of cosmetologists, the equilibrium wage,
and the price of a manicure?
SUPPLY OF PRICE OF
COSMETOLOGISTS WAGE MANICURES
(A) Decrease Increase Increase
(B) Decrease Decrease Decrease
(C) Increase Decrease Decrease
(D) Increase Decrease Increase
(E) Increase Increase Increase
AP Microeconomics Practice Exam 2 ‹ 197
