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A vertical supply curve represents: a. an inverse relationship between price and quantity supplied. b. an independent relationship between price and quantity supplied. c. an independent relationship between price and supply. d. a direct relationship between price and quantity supplied. […]

On an aggregate level, free trade produces a net __________ and restricted trade produces a net __________. a. loss; loss also b. benefit; benefit also c. benefit; loss d. loss; benefit Opportunity cost is the __________ alternative forfeited when a […]

The face value of a bond is a. the dollar amount that a person would receive if he or she were to sell the bond. b. the dollar amount that a person would receive if he or she were to […]

Marginal productivity theory implies that a worker will be paid an amount a. equal to his or her contribution to the productive process. b. less than his or her contribution to the productive process. c. greater than his or her […]

A price searcher (monopolist, monopolistic competitor, etc.) definitely faces a. a perfectly elastic demand curve for the product it sells. b. a downward-sloping demand curve for the product it sells. c. a perfectly elastic supply curve of factors. d. an […]

Refer to Exhibit 28-7. The marginal factor cost of increasing employment from 40 to 50 workers is Exhibit 28-7 a. $120. b. $18. c. $14. d. $160. e. $15 Total costs are a. fixed costs plus average total costs. b. […]

A line is parallel to the horizontal axis. The slope of the line is a. infinite. b. indicative of an inverse relationship between two variables. c. indicative of a direct relationship between two variables. d. zero. e. b and d […]

Refer to Exhibit 23-4. The market equilibrium price is P1and the firm produces Q1. At this level of output, average variable cost and average total cost are indicated by the dots. Given this situation, the firm is Exhibit 23-4 a. […]

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 150, respectively. The marginal utility of the sixth wing is __________ […]

Refer to Exhibit 28-12. As the firm increases employment from 4 to 5 workers, its marginal factor cost (MFC) is Exhibit 28-12 a. $13. b. $15. c. $5.60. d. $28. If the price of good X is $90 and the […]

If people value clean air over dirty air, and if the air in city A is cleaner than the air in city B (by a wide margin), then we would expect that ____________________, all else equal between the two cities. […]

Refer to Exhibit 3-4. At a price of $2 _______________ units will be exchanged. Exhibit 3-4 a. 5 b. 10 c. 15 d. 20 If the four-firm concentration ratio is 100 percent, this means that the a. top four firms […]

If the quantity demanded of good X is greater than the quantity supplied of good X, then the market for good X is in disequilibrium. a. True b. False If the percentage change in quantity demanded of a good is […]

The difference between profit seeking under perfect competition and profit seeking under monopoly is that a. under the former output will increase and price will decrease, whereas under the latter only output will increase. b. under the former output will […]

At the quantity of output for which total revenue equals total cost, a. economic profit is zero. b. cost is minimized. c. cost is maximized. d. quantity is minimized. e. profit is maximized. Here are three things you could do […]

If a seller is a price taker it means that the seller sells his product at the price a. he chooses. b. determined in the market. c. determined by the biggest firm in the market. d. determined by the largest […]

Refer to Exhibit 22-3. The marginal physical product figures in blanks (D) and (E) are, respectively, Exhibit 22-3 a. 10 and 10. b. 10 and 15. c. 15 and 20. d. 20 and 15. e. 15 and 10. Answer: Refer […]

Which of the following statements is true? a. Nominal interest rate = real interest rate – expected inflation rate. b. Nominal interest rate = real interest rate + expected inflation rate. c. Real interest rate = nominal interest rate + […]

When negative externalities are connected with the production of a good, a. market output will be greater than the socially optimal output. b. private costs and social costs are equal. c. the government should subsidize the production of the good. […]

Refer to Exhibit 21-7. For graph (3), if the price of Y is $200, the price of X is Exhibit 21-7 a. $50. b. $40. c. $30. d. $25. e. $15. For a factor price taker, the demand for labor […]

In the supply-and-demand diagram of the market for peanut butter, the equilibrium point has moved down and to the right. What could have caused this? a. a fall in the price of peanuts b. a rise in the price of […]

Suppose that television show A is much more popular than television show B.The equilibrium price for a ticket to view the taping of show A is $40 and the equilibrium price for a ticket to view the taping of show […]

One major reason for the law of demand is that a. one price changing requires at least one other price to change in the opposite direction. b. people substitute relatively lower-priced goods for relatively higher-priced goods. c. a higher price […]

Refer to Exhibit 20-l. The demand for the good represented by demand curve D3 is Exhibit 20-1 a. inelastic. b. elastic. c. unit elastic. d. perfectly elastic. e. more elastic at higher prices than at lower prices. If the demand […]

The quantity supplied of land is constant regardless of price. Suppose a tax is imposed on the rental price of land. Who will pay the greater share of such a tax? a. The buyers will pay the entire share. b. […]

Suppose at a price of $4 and at a price of $6, John purchases 40 units of good X. Given this information, we know that a. John’s entire demand curve for good X is perfectly elastic. b. John’s entire demand […]

Jones buys two goods, A and B. Currently, Jones receives marginal utility of 24 utils from good A and pays a price of $1.50 per unit. Jones receives a marginal utility of 43 utils from good B and pays a […]

Suppose that for Alicia the marginal benefit (MB) of producing is $75 and that the marginal cost (MC) of producing is $5.Suppose also that her marginal benefit of stealing is $85 and the marginal cost of stealing is $5.Is Alicia […]

Refer to Exhibit 3-3. A shift in demand from D1 to D2 can NOT occur from a change in the Exhibit 3-3 Good Y a. population. b. price of a substitute for good Y. c. average income of good Y […]

We start with a 3 percent real interest rate in the United States and in Japan. Next, the real interest rate in Japan falls to 2 percent, and the U.S. real interest remains constant. As a result, a. the yen […]

Refer to Exhibit 34-12. PW is the price that exists in a free world market. With the imposition of a quota that limits imports to Q4 – Q3, consumers lose more than producers and importers gain. The result of the […]

Refer to Situation 22-4.What are Joe’s explicit costs? a. $125,000 b. $175,000 c. $35,000 d. $200,000 e. $50,000 Which of the following is an illustration of the law of increasing opportunity costs? a. As more cars are produced, the opportunity […]

Applying the least-cost rule to two factors, a firm will a. maximize profits at the output at which MRP = MFC. b. minimize costs when the MPP of factor A equals the MPP of factor B. c. minimize costs when […]

Thomas Edison constructed the first building that was used solely to make a. movies. b. airplanes. c. telephones. d. cameras. Under an acreage allotment program, a. the government sets a limit on the quantity of a product that a farmer […]

University A sets tuition at the equilibrium level based on price and then imposes entrance requirements in the form of minimum high school GPA and SAT scores. Enrollment at this school will likely be a. at the equilibrium level. b. […]

As the interest rate (price for loanable funds) decreases, businesses will a. find it less profitable to invest in capital goods, because the lower interest rate means that they will earn a lower return on their investments. b. find it […]

Oil producers expect that oil prices next year will be higher than oil prices this year. As a result, oil producers are most likely to a. place more oil on the market this year, thus shifting the present supply curve […]

According to the textbook, Iceland used crowdsourcing to a. rewrite its constitution. b. elect members of its parliament. c. elect its president. d. rename its capitol city. Implicit in the solution to the diamond-water paradox is the idea that prices […]

If MRP = VMP = MFC = wages, then the firm is a. selling its product in a perfectly competitive market and is hiring its labor in a perfectly competitive labor market. b. selling its product in a perfectly competitive […]

Refer to Exhibit 34-1. The opportunity cost of one unit of X in country B is Exhibit 34-1 a. 1 unit of Y. b. 0.33 units of Y. c. 2 units of Y. d. 20 units of Y. Refer to […]

Refer to Exhibit 24-10. The profit-maximizing single-price monopolist will produce which quantity of output? Exhibit 24-10 a. Q2 b. Q1 c. Q3 d. Q4 e. none of the above Resource X is necessary to the production of good Y. If […]

Refer to Exhibit 2-6.Which graph depicts the result of a decrease in the unemployment rate? Exhibit 2-6 a. (1) b. (2) c. (3) d. (4) e. none of the above The foreign exchange market is the market where a. goods […]

The profit-maximizing natural monopoly will a. set price equal to marginal cost. b. produce the quantity of output at which MR = MC. c. charge the highest price per unit for the quantity of output it chooses to produce. d. […]

If for good Z income elasticity is greater than 1, then demand for good Z is income __________, and good Z is a(n) __________ good. a. inelastic; normal b. inelastic; inferior c. elastic; normal d. elastic; inferior e. unit elastic; […]

The terms scarcity and shortage are synonyms. a. True b. False Assume the following conditions hold: (1) the demand for every type of labor is the same, (2) there are no special nonpecuniary aspects to any job, (3) all labor […]

Suppose you are eating buffalo wings at a local happy hour. The total utils from doing so after the fourth, fifth, sixth, and seventh wings are 80, 116, 136, 146, respectively. The marginal utility of the seventh wing is __________ […]

If Luke can bake bread at a lower opportunity cost than Jason, and Jason can produce paintings at a lower opportunity cost than Luke, it follows that a. Lukehas a comparative advantage in paintings and Jason has a comparative advantage […]

Under certain circumstances, a congressional district may be a special interest group. a. True b. False Refer to Exhibit 34-3. The world price is PW. If a tariff is imposed, the price rises to PW + T. Because of the […]

Which of the following statements is true? a. Treasury bills mature in 2 to 10 years. b. Treasury notes mature in 13 or 26 weeks. c. Treasury bills, notes, and bonds are considered to be very safe investments. d. Municipal […]

Refer to Exhibit 23-10.What price does this firm charge for its product? Exhibit 23-10 a. $10 b. $20 c. $25 d. $30 e. There is not enough information to answer this question. Which of the following statements is true? a. […]

One of the conditions necessary for price discrimination is that the seller be a price searcher. a. True b. False Refer to Situation 27-1. If good X is produced in the U.S. the output per $1 of cost would be […]

Which of the following statements is true? a. Concentration ratios take into account competition from substitute goods. b. The four-firm concentration ratio is likely to be larger than the eight-firm concentration ratio. c. There are assumed to be insignificant barriers […]

A call option is a contract a. that gives the owner the right, but not the obligation, to buy shares of a stock at a specified price within the time limits of the contract. b. that gives the owner the […]

Which of the following is a major import for the United States? a. corn b. soybeans c. coal d. fish e. none of the above Refer to Exhibit 22-13.What dollar amounts go in blanks (I) and (J), respectively? Exhibit 22-13 […]

An increase in the demand for a good will lead to a a. rightward shift of the MRP of labor curve. b. leftward shift of the MRP of labor curve. c. movement up and along a given MRP of labor […]

Refer to Exhibit 4-1. Suppose the good shown is being sold at the $6 price ceiling. At a quantity of 75 units, what is the maximum per-unit price buyers would be willing to pay for a good “tied” to the […]

The actions of speculators make the speculators better off, but they necessarily make the rest of society worse off. a. True b. False George is a gift giver and Roger is a gift recipient.George has Roger in his utility function, […]

Total industry sales are $90 million. The top four firms (A, B, C, and D) account for sales of $15 million, $3.5 million, $1.3 million and $0.8 million, respectively. What is the four-firm concentration ratio? a. 9.40 b. 0.23 c. […]

Refer to Exhibit 3-6. If an increase in income causes the demand for good X to shift from D1 to D2,then good X is Exhibit 3-6 a. a normal good. b. an inferior good. c. a substitute good. d. a […]

The market demand curve for labor is the horizontal summation of the firms’ demand curves (MRP curves) for labor. a. True b. False The term outsourcing is used to describe work done for a company by individuals working for another […]

Which of the assumptions below assures us that economic profit will be zero in long-run equilibrium for perfectly competitive firms? a. buyers and sellers having all relevant information b. firms producing heterogeneous goods c. too few buyers d. easy entry […]

Which of the following statements represents a correct and sequentially accurate economic explanation? a. Good X is an inferior good and good Y is a substitute for X. Income rises, the demand for X falls, the price of X falls, […]

Refer to Exhibit 2-1. A movement from point B to point D Exhibit 2-1 a. could only happen through economic growth. b. is necessarily a movement from a productive efficient point to a productive inefficient point. c. isa movement from […]

Refer to Exhibit 23-2. What quantity of output does the profit-maximizing (or loss-minimizing) firm produce? Exhibit 23-2 a. Q1, where marginal cost is less than marginal revenue. b. Q2, where marginal cost is equal to marginal revenue. c. Q3, where […]

Which of the following statements is true? a. The concept of opportunity costs cannot be illustrated within a PPF framework. b. If scarcity did not exist, neither would a PPF. c. All PPFs are downward-sloping straight lines. d. There are […]

Simple majority voting sometimes leads to projects being undertaken whose costs are greater than the benefits. How is this possible? a. It is not possible, unless the voting results are rigged. b. Because voters have no way to express the […]

Refer to Exhibit 39-7. Let E1 represent the initial equilibrium in the market for X. Population growth combined with the widely publicized results of medical research extolling the virtues of consuming X will, ceteris paribus, result in a new equilibrium […]

Refer to Exhibit 39-4. The government feels that the present level of farmers’ total revenues is insufficient to support a reasonable standard of living and wants to raise it to exactly $3,000. This can be achieved by Exhibit 39-4 a. […]

Refer to Exhibit 22-5. Diseconomies of scale are present between Exhibit 22-5 a. points A and B. b. points A and C. c. points B and C. d. points B and D. e. points C and D. Concentration ratios are […]

If Jack bought 21 DVDs last year when his income was $30,000 and he buys 23 DVDs this year when his income is $35,000, then his income elasticity of demand is ______________ which means that DVDs are a(n) ______________ good […]

The profit-maximizing single-price monopolist will charge a price a. equal to marginal revenue. b. greater than marginal cost. c. less than marginal revenue, but greater than marginal cost. d. greater than marginal revenue, but equal to marginal cost. e. a […]

Which of the following can bring about an increase in the demand for labor? a. an increase in the demand for the product that labor produces b. an increase in the marginal physical product of labor c. a decrease in […]

Refer to Exhibit 24-9. Total fixed costs are equal to. a. $0. b. $10. c. $25. d. $59. e. There is not enough information to answer the question. Suppose the demand curve for corn is inelastic between the current price […]

If the demand for a particular farm product is inelastic between price P1 and P2 (where P2 > P1), farmers as a group would want to sell their product at the a. higher price, but an individual farmer would rather […]

The law of comparative advantage can be used to explain why many couples divide up their household duties along gender lines. a. True b. False The Alchian and Demsetz theory of why business firms exist suggests that a. there are […]

If the equilibrium exchange rate is $1 = 90 yen, then at an exchange rate of $1 = 80 yen there is a a. surplus of yen. b. shortage of yen. c. shortage of dollars. d. a and c e. […]

A firm that is a price taker can sell a. any quantity of product it wants at any price. b. less of its product at a higher price than at a lower price. c. any quantity of product it can […]

As firms exit an industry, the industry supply curve shifts __________ and the equilibrium price __________ until long-run competitive equilibrium is established and the surviving firms are earning __________ economic profits. a. leftward; rises; zero b. leftward; falls; positive c. […]

For a straight-line downward-sloping demand curve, price elasticity of demand a. increases as we move down along the demand curve from higher to lower prices. b. decreases as we move down along the demand curve from higher to lower prices. […]

The Wheeler-Lea Act of 1938 was designed to close the merger loophole that remained in the Clayton Act. a. True b. False Marginal revenue is defined as a. the difference between costs and revenues. b. the change in total revenue […]

A public franchise is a right granted a. to one firm by another firm; for example, McDonald’s Corporation grants restaurant owners a franchise to make its hamburgers. b. to a firm by government that prevents other firms from producing the […]

According to the text, farming today in the U.S. is __________ productive compared to a century ago, resulting in there being __________ farmers today than at the turn of the previous century. a. about as; fewer b. about as; more […]

Given that fixed costs are constant as output increases, average fixed costs are also constant. a. True b. False The English economist David Ricardo argued that a. grain prices were high because land rents were high. b. land rents were […]

Jimmy borrowed $30,000 to add a room to his house. He financed the loan over 3 years at 8 percent per year. He expects a 2 percent inflation rate each year for the next 3 years. It follows that he […]

Refer to Exhibit 38-1. The yield on bond E is approximately a. 37.5 percent. b. 0.38 percent. c. 0.45 percent. d. 5.0 percent. Refer to Situation 37-2. Ann spends 8 hours of each day producing and 1 hour of each […]

The Coase theorem a. shows that under certain conditions the market can internalize externalities. b. states that economic units should specialize in the production of those goods in which they have a comparative advantage. c. asserts that the firm should […]

“To understand the decisions of regulatory bodies, you must first understand how the decisions affect the regulators themselves.” The person who made this statement probably believes in the __________ theory of regulation. a. capture b. public interest c. social interest […]

Which of the following statements is false? a. Average fixed cost continually declines as output increases. b. Marginal cost is equal to the change in total cost divided by the change in quantity of output. c. The law of diminishing […]

As the price of good Z falls, the quantity demanded of good Z rises, but the quantity supplied of good Z does not change.Based upon this information we can conclude that the demand curve for good Z is ________________ and […]

Municipal bonds a. are issued by state and local governments. b. pay interest that is fully taxable. c. are issued by corporations. d. are issued by the federal government. Refer to Exhibit 22-13.What dollar amounts go in blanks (T) and […]

One of the ways in which some monopolistic competitors try to become more like monopolists is through the use of designer labels. a. True b. False Refer to Exhibit 31-2. If the exhibit represents a positive externality situation, the social […]

Refer to Exhibit 23-2. For the firm that faces the demand curve in the exhibit, Exhibit 23-2 a. marginal revenue is constant. b. price equals marginal revenue. c. if the firm maximizes profits, it produces the quantity of output at […]

Refer to Exhibit 31-3. What is the cost to Firm B of eliminating 2 tons of pollution? a. $350 b. $250 c. $300 d. $140 e. $540 Rational (political) ignorance refers to a. some voters choosing not to vote in […]

One point on a market supply curve represents $4 and 100 units quantity supplied. If there are three suppliers, and at a price of $4 one of the suppliers supplies 23 units, then which of the following combinations of price […]

If MPPX/PX > MPPY/PY, the firm should buy a. more of factor X and less of factor Y. b. less of factor X and more of factor Y. c. more of factor Y and the same amount of factor X. […]

Refer to Exhibit 22-5. Constant returns to scale are present between Exhibit 22-5 a. points A and B. b. points A and C. c. points B and C. d. points B and D. e. points C and D. Refer to […]

Refer to Exhibit 4-8.Suppose that wheat producerslobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the total surplus at PF? Exhibit 4-8 a. area 1 + 2 + 3 […]

If it is assumed that people vote for the candidate who comes closer to matching their own views, then a. candidates will label themselves as right-wingers. b. candidates will label themselves as left-wingers. c. candidates will label their opponents as […]

Which of the following statements is false? a. The Treasury bond information published under the column heading “Yield” is based on the ask price of the bond. b. The Treasury bond information published under the column heading “Yield” is based […]

Refer to Exhibit 2-1. The opportunity cost of moving from point B to A is Exhibit 2-1 a. 10,000 units of butter. b. 20,000 units of butter. c. 50,000 units of guns. d. the maximum amount of butter that can […]

The following statement, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared illegal,” is part of the a. Clayton Act. […]

If 1 percent inflation rather than zero percent inflation is expected by both the suppliers and demanders of loanable funds, then the nominal interest rate will a. fall, ceteris paribus. b. remain constant. c. rise. d. rise, ceteris paribus. The […]

Refer to Exhibit 4-3. Which of the following is true? Exhibit 4-3 a. If price P3 is set as a price ceiling it will have an effect on the market for good X. b. If price P3 is set as […]

Which of the following directly (as opposed to indirectly) raises the price of agricultural products? a. marketing quota system b. acreage allotment program c. paying farmers not to produce d. price supports e. all of the above Third-degree price discrimination […]

If the price of a good rises and as a result total revenue falls, then it must be true that a. cross elasticity of demand for the good is negative. b. price elasticity of demand for the good is less […]

Which of the following founders of the United States used the infant-industry argument to support trade restrictions? a. Thomas Jefferson b. Alexander Hamilton c. James Madison d. John Jay Ceteris paribus, the more risk associated with a loan, a. the […]

Which of the following exchange rates between the dollar and the peso would an American buyer of Mexican goods most prefer? a. $0.10 = 1 peso b. $0.08 = 1 peso c. $0.06 = 1 peso d. $0.04 = 1 […]

It has been suggested by some economists that rent seeking activity often occurs within families, particularly when an inheritance is involved. a. True b. False Refer to Exhibit 29-2.This graph depicts the Lorenz curve for two countries, country 1 (Lorenz […]

The change in the price of a foodstuff will be greater, a. the smaller the change in the supply of the foodstuff. b. the greater the change in the supply of the foodstuff and the more inelastic the demand curve […]

The instructors at College A are regularly late for their office hours.Based on a theory presented in the textbook, we would predict that the gap between the ______________student tuition and ___________equilibrium tuition is ___________ at College A. a. lower; higher; […]

Refer to Exhibit 2-5. The opportunity cost of moving from point D to point C is Exhibit 2-5 a. 5,000 televisions. b. 5,000 fax machines. c. 10,000 televisions. d. 10,000 fax machines. Refer to Exhibit 34-8. Assume that the current […]

Most states have instituted mandatory seatbelt laws to reduce traffic fatalities. An economist may point out that an unintended effect of these laws is a. an increase in the price of automobiles, further reducing fatalities. b. an increase in driving […]

Which of the following is not a necessary condition for price discrimination to hold? a. The seller must be a price searcher. b. The seller must be able to distinguish between customers willing to pay different prices. c. It must […]

A person buys a bond with a face value of $10,000 for $9,325. Each year until the maturity date the bond buyer receives a coupon payment of $650 from the issuer of the bond. The coupon rate on the bond […]

Refer to Exhibit 34-7.Assume that the current price of good X is $25 (which includes a $10 tariff on imports of good X).Americans purchase ______ units of good X from U.S. producers and import _______ units of good X from […]

Refer to Situation 22-2. How many widgets is Alejandro producing? a. 10 b. 15 c. 20 d. 25 e. There is not enough information to answer the question. A shift of the supply curve for farm products to the right […]

The statement, “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce…shall be guilty of a misdemeanor” is a part of the […]

The U.S. dollar currently serves as the “unit of account” of major global products. a. True b. False When income rises for the buyers of good X, the ____________ curve for good X will shift ________________. a. demand; rightward b. […]

Is there a difference between the terms interest and interest rate? a. No. Interest is simply a shorthand version of interest rate. b. Yes. Interest refers to the return that capital earns, whereas interest rate is the payment to someone […]

To lower the elasticity of demand for labor, a labor union might attempt to a. decrease the availability of substitutes for the products union workers produce. b. increase the availability of substitutes for the products union workers produce. c. increase […]

Refer to Exhibit 3-8. A shortage exists at any price below Exhibit 3-8 a. $5.00. b. $4.50. c. $4.00. d. $3.50. e. $3.00. To minimize cost, a firm should hire two factors, X and Y, until a. MPPX/PX = MPPY/PY. […]

There is no difference between building a theory and evaluating a theory. a. True b. False An increase in the number of sellers of a good will, ceteris paribus, __________________for that good. a. increase equilibrium price and quantity b. increase […]

If explicit costs equal $40,000, implicit costs equal $95,000, and accounting profit equals $23,000, it follows that total revenue equals __________ and economic profit equals __________. a. $75,000; $17,000 b. $63,000; -$72,000 c. $68,000; $25,000 d. $22,000; -$68,000 e. There […]

For a monopoly firm, price is __________ marginal revenue, and for a monopolistic competitive firm, price is __________ marginal revenue. a. less than; equal to b. greater than; equal to c. greater than; less than d. greater than; greater than […]

Refer to Exhibit 34-7. The world price of good X is $15. Under a policy of free trade, the U.S. production ofgood X would be Exhibit 34-7 a. 10 units. b. 20 units. c. 25 units. d. 50 units. e. […]

A country has a (an) __________ in the production of a good it produces at lower opportunity cost than another country. a. absolute advantage b. specialization disadvantage c. tariff-efficient advantage d. infant-industry advantage e. none of the above Profits are […]

Refer to Exhibit 3-5. In the market shown, if equilibrium was originally at point Z and the new equilibrium is now at point V, this change may have been caused by Exhibit 3-5 a. a decrease in consumers’ income (assuming […]

Refer to Exhibit 39-1. Given the target price PT, what is the quantity supplied? Exhibit 39-1 a. Q1 b. Q2 c. Q3 d. Q3 – Q1 A bear market is one in which prices are expected to rise. a. True […]

Refer to Exhibit 32-l. The exhibit shows the breakdown of benefits and costs for a four-person town of a proposed $1,200 addition in books to the public library. The members of the community get to vote on the project at […]

Refer to Exhibit 22-3. The total cost of producing 45 units of output is Exhibit 22-3 a. $1,100. b. $950. c. $1,050. d. $900. e. $1,000. Answer: a If income rises, the budget constraint a. moves inward toward the origin. […]

The national defense argumenthas been used in the past to justify trade restrictions by firms in the peanut industry and the pottery industry. a. True b. False There are two universities, A and B, in a city. Tuition rises at […]

In an oligopoly market, unlike in other market structures, firms a. can act interdependently. b. can produce a homogeneous product or a differentiated product. c. use advertising. d. face low barriers to entry and exit. e. a and b The […]

Which of the following statements is false? a. A subsidy can be used to internalize a negative externality; a tax can be used to internalize a positive externality. b. Ronald Coase stressed the reciprocal nature of externalities. c. One way […]

In collective bargaining, a. union members act together as a single unit. b. each union member represents herself in labor-management negotiations. c. the objective of the union is to increase its bargaining power with management. d. a and c e. […]

Economists believe that people’s wants are a. finite. b. infinite. c. irrational. d. unimportant because needs are more important than wants. Two major exports for the United States are a. clothing and office machines. b. soybeans and scientific instruments. c. […]

Refer to Exhibit 21-1. The marginal utility of the fourth plum is Exhibit 21-1 a. 8 utils. b. 2 utils. c. 10 utils. d. 13.5 utils. e. 50 utils. Suppose that on Monday, a Big Mac cost $3.00 in the […]

If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels a. shifts rightward. b. shifts leftward. c. stays constant. d. can shift either rightward or leftward. Refer to Exhibit […]

What is the relationship between the elasticity of demand for a product and the elasticity of demand for labor (that is used in producing the product)? a. The higher the price of the product, the higher the elasticity of demand […]

Total revenue is defined as a. price minus quantity sold. b. price multiplied by quantity sold. c. price divided by quantity sold. d. quantity divided by price sold. e. price plus quantity sold. Refer to Exhibit 2-9. For Alex, the […]

Which of the following statements is false? a. There are more poor white persons than there are poor African-American persons. b. People are more likely to be poor when they are young than at any other time. c. Families headed […]

Approximately how much is $25,000 to be received a year from now worth today at an interest rate of 6 percent? a. $26,500 b. $85,556 c. $23,585 d. $20,385 When a professor announces to the class that she will grade […]

An increase in the price of good B caused an increase in the demand for good C. This indicates that goods B and C are a. complements. b. substitutes. c. neither substitutes nor complements. d. normal goods. The Gini coefficients […]

Which of the following statements is true? a. The perfectly competitive firm produces a level of output at which P=MC. b. The single-price monopolist produces a level of output at which P > MC. c. The perfectly price-discriminating monopolist produces […]

During the twentieth century, the U.S. farm sector experienced a. large increases in its ability to produce output. b. relatively little improvement in its ability to produce output. c. a marked decrease in its ability to produce output. d. relatively […]

Refer to Exhibit 2-4. This economy is productive Exhibit 2-4 a. efficient, if it operates at point B or C. b. efficient, if it operates at point A or D. c. inefficient, if it operates at point A or D. […]

Refer to Exhibit 31-1. If the exhibit represents a negative externality situation, the net social cost of expanding output from Q2 to Q1 is the area of Exhibit 31-1 a. ABC. b. BEA. c. Q2BAQ1. d. Q2EAQ1. If supply is […]

George earns $500,000 playing baseball for team X. His next best alternative to playing baseball is to own a fast-food restaurant, for which he would earn $100,000 a year. His next best alternative to playing baseball for team X is […]

If Japanese real interest rates fall relative to real interest rates in the U.S., the yen will likely appreciate and the dollar will likely depreciate. a. True b. False If the Japanese yen trades at $1 = 98 yen, a […]

The firm’s factor demand curve is the a. MRP curve if the firm is a price taker (perfectly competitive firm). b. MFC curve if the firm is a price taker (perfectly competitive firm). c. VMP curve if the firm is […]

The single-price monopolist produces where price is ___________ than marginal cost because for it price is __________ than marginal revenue and its demand curve lies __________ its marginal revenue curve. a. less; less; below b. greater; greater; above c. greater; […]

Among the stated objectives of the National Collegiate Athletic Association (NCAA) regulations is to a. maintain the amateur standing of college athletes. b. prevent schools with more money from getting all of the good players. c. enhance the competitiveness of […]

One reads the following in a newspaper: “Today the president and Congress agreed to impose new restrictive quotas on Japanese cars coming into the country.” As a result, an economist would predict that the a. supply of cars in the […]

Which of the following statements is true? a. An extra dollar earned by a millionaire necessarily brings him or her less utility than an extra dollar earned by a poor person. b. If marginal utility is constant, then total utility […]

Refer to Exhibit 4-3. If price P3 is a price ceiling, then Exhibit 4-3 a. the price ceiling does not have an effect on the market for good X. b. the price at which exchange takes place is P3. c. […]

Unions provide training programs in an attempt to increase the marginal physical product of union labor, thus shifting the union demand for labor curve rightward. a. True b. False Which of the following is an example of government regulation of […]

As presented in the textbook, research by some economists has shown that even when there is no difference between options provided to people a. the way in which the options are framed has no impact on the outcome (i.e. there […]

Scarcity affects everyone, even billionaires. a. True b. False Suppose the government provides peanut butter to everyone free of charge and everyone consumes it to the point at which he receives no additional satisfaction from another spoonful. Is this necessarily […]

Refer to Exhibit 4-3. If P1 is a price ceiling, the highest price for good Y, which is tied (a tie-in sale) to good X, is Exhibit 4-3 a. P1. b. P2. c. P3. d. P3 – P1. e. P1 […]

A perfectly competitive firm is a price taker. a. True b. False According to public choice theory, low voter turnouts are the result of voters a. being apathetic. b. being uninformed. c. being lazy. d. disliking the candidates. e. calculating […]

If Americans demand goods produced in Mexico, it leads to a demand for Mexican pesos and a supply of U.S. dollars on the foreign exchange market. a. True b. False If a labor union tries to reduce the availability of […]

A French firm sells its good at a lower price in England than in France. It follows that the French firm is necessarily a. dumping. b. saving domestic jobs. c. being subsidized by the French government. d. part of an […]

Refer to Exhibit 34-12. PW is the price that exists in a free world market. A quota is imposed and imports are Q4 – Q3. Importers gain revenues equal to the area __________. Exhibit 34-12 a. GKL + HIJ b. […]

The longer the period of time allowed for the producer of a good to adjust to a change in the price of the good, the ____________ the price elasticity of supply will be.This statement assumes that the quantity supplied __________ […]

Refer to Exhibit 38-3.Which of the two stocks has a bigger gap between its close price and net earnings per share? Exhibit 38-3 a. Stock ABC b. Stock XYZ c. Both stocks have the same gap between its close price […]

Which of the following is the best example of a monopoly? a. a local public utility b. a fast-food restaurant c. a department store d. a wheat farmer Concentration ratios are used to determine a. the number of firms in […]

The term “present value” refers to a. how much something costs today relative to what it could be sold for in the future after it depreciates in value. b. how much you would be willing to pay for a good […]

Refer to Exhibit 34-5. The opportunity cost of one unit of good B is __________ for country 1 and __________ for country 2. a. 20A; 15A b. 1/20A; 1/15A c. 10A; 15A d. 1/2A; 1A e. 2A; 1/2A The major […]

Rational ignorance refers to voter-citizens choosing to be uninformed about politics and government on an individual basis because a. of apathy. b. of ignorance. c. of laziness. d. they believe the benefits of becoming informed are greater than the costs. […]

Refer to Exhibit 4-8.Suppose that wheat producerslobby the government for a price floor and receive one.This price floor is set at PF.What is the size of the consumers’ surplus at PF? Exhibit 4-8 a. area 5 b. area 6 c. […]

Ari is currently consuming 10 hot dogs and 8 hamburgers per week. The last hot dog she consumed yielded 20 utils while the last hamburger she ate gave her 25 utils. If hot dogs cost $2 and hamburgers cost $2.50, […]

A put option is a contract a. that gives the owner the right, but not the obligation, to buy shares of a stock at a specified price within the time limits of the contract. b. that gives the owner the […]