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Fl 4econ330mt21. California State University, Fullerton
Department of Economics/MCBE
Comparative Economic System (Econ 330-01)
Midterm Two
Fall, 2014/Nek Buzdar
Note: Please answer all questions. Each question is worth 2 points. A=True, B=False
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Service sector in USA increased because income elasticity of demand for services is greater
than t.
The prices of service sector products in USA are high because of low service sector
productivity.
Service sector in USA increased because the composition of labor force in the country
changed.
Deindustrialization hypothesis says that service sector in USA increased because Americans
are more competitive compared to the rest of the world.
The service sector expansion has increased équality in USA.
Around the end of nineteenth century giant American corporations emerged because of lack of
a national market in the country.
Market share in case of a dominant firm is more than 90 percent.
The four firm concentration ratio in case of a competitive industry is less than 40 percent.
Labor unionization in USA declined because service sector contribution to GDP increased.
. Downward inflexibility of wages lowers unemployment rate in USA
. The American “rugged individualism” philosophy supports welfare programs in the country.
. Demand curve shows the lowest possible price that a consumer will be willing to pay for each
unit of the product.
The replacement rate is the percentage of normal take home pay that an employee continues
to receive after loss of employment.
Producer’s surplus is the difference between total costs of production and total revenues.
Supply curve shows the lowest possible price at which some producer will be willing to
supply each unit.
When a closed economy opens to international trade, consumer's surplus increases and
producer's surplus decreases.
The whole area under the demand curve measures the total value to consumers from buying a
given quantity of output.
The imposition of a tariff results in a gain in consumer surplus and a loss in producer’s
surplus.
. As a result of imposition of a tariff, combined gains in producer’s surplus and in government
tariff revenues exceed total losses in consumer’s surplus.
From a beginning position of tree trade, the formation of a customs union results in higher
consumer’s surplus and lower producer’s surplus.
Scigniorage is the difference between costs of production of a currency note and its value.
The benefits of a single currency to a member of EU include availability of exchange rate
policy as a means of balancing the external accounts.
. Labor mobility in Europe is high, so faced with a negative shock workers move quickly from
the impacted region to areas of high labor demand.
