Suppose, as a result of a long-run adjustment in a perfectly competitive industry to a
change in demand, price and output both fell. Therefore, demand must have
__________ in this __________ industry.
a. fallen; increasing cost
b. fallen; decreasing cost
c. increased; increasing cost
d. increased; decreasing costs
e. decreased; constant cost
Studies by the World Bank have underscored the successes of countries that have
adopted trade liberalization policies.
a. True
b. False
Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing
According to Exhibit 2-12, Hans’ opportunity cost of doing a load of laundry is
a. 12 papers
b. 8 papers
c. 1 1/2 pages
d. 2/3 of a page
e. impossible to compute
Producers play a disproportionately large role in influencing public regulation because
they have a strong interest in matters that affect their specialized source of income.
a. True
b. False
Economic profit is defined as total revenue
a. plus total costs
b. minus marginal costs
c. minus variable costs
d. minus total costs
e. minus fixed costs
The association-causation fallacy is the error of assuming that what is true for one
member of a group must be true for the group.
a. True
b. False
If Ed is willing to pay a maximum of $200 for a tweed sport coat but buys one for $180,
that $20 saved is
a. his reservation price
b. the store’s producer surplus
c. his total expenditure
d. his marginal utility
e. his consumer surplus
Exhibit 1-5
In Exhibit 1-5, curve A has a slope of
a. 0
b. 1.25
c. 1.33
d. -1.25
e. -1.33
Since most welfare programs are administered by the federal government, there is
uniformity in both eligibility and the dollar value of benefits in a state by state
comparison.
a. True
b. False
Which of the following would be considered leisure?
a. picking strawberries for your own use
b. running a 10-mile training session
c. studying for a college mathematics class
d. changing the oil and oil filter on your car
e. weeding your garden
An import quota taxes an import but does not set a limit on how much may be
imported.
a. True
b. False
If you will receive $3,000 three years from today and the discount rate is 7 percent, the
present value of the $3,000 is
a. $2,779
b. $3,770
c. $1,658
d. $1,962
e. $2,449
LeBron James went right from high school to the NBA because he had a low
opportunity cost of attending college.
a. True
b. False
In 2010, federal, state, and local redistribution programs were most close to
a. $20.0 trillion
b. $200.0 billion
c. $2.0 billion
d. $200.0 trillion
e. $2.0 trillion
Which of the following would be considered part of the underground economy?
a. selling subway tokens
b. tax avoidance
c. deducting housing interest when figuring your income taxes
d. sales of alcohol and cigarettes
e. paying by credit card to avoid writing a check
The market labor supply curve is
a. the sum of individual labor supply curves at each quantity of labor
b. the sum of individual labor supply curves at each wage rate
c. the average of all individual labor supply curves
d. the sum of the upward-sloping portions of individual labor supply curves
e. the sum of the downward-sloping portions of individual labor supply curves
With increased specialization in the economy, principal-agent problems become
a. more numerous
b. less numerous
c. more severe, but there are fewer of them
d. less severe, but there are more of them
e. easier to solve
The largest regional trading bloc is the
a. North American Free Trade Agreement
b. European Community
c. Latin American Free Trade Agreement
d. Asian Free Trade Agreement
e. East Asian Cooperation Council
Measured in dollar terms, the two largest U.S. antipoverty programs are
a. cash transfers and medical care
b. cash transfers and food assistance
c. food and housing assistance
d. medical care and food assistance
e. medical care and housing assistance
Exhibit 1-1
Point a in Exhibit 1-1 represents
a. the origin
b. x = 0, y = 50
c. x = 50, y = 0
d. x + y = 50
e. y = 0; no information is given about x
Legislation that benefits many individuals at the expense of a few is a natural outcome
of representative democracy.
a. True
b. False
Exhibit 8-18
The increase in demand shown in Exhibit 8-18 increases each firm’stotal revenue
a. from $8 to $12
b. from $16,000 to $30,000
c. from $40 to $50
d. from $320 to $600
e. by an unspecified amount
Exhibit 6-25
Which of the following is true of Exhibit 6-25?
a. Points a, b, and c all represent the same level of utility, which is lower than that
represented by points d, e, and f.
b. Points a, b, and c all represent the same level of utility, which is higher than that
represented by points d, e, and f.
c. Points a, c, and e all represent the same level of utility, which is lower than that
represented by point b.
d. Points a, c, and e all represent the same level of utility, which is higher than that
represented by point b.
e. Point d represents a level of utility higher than any other point on the graph.
Society’s production possibilities frontier
a. helps explain the immense complexity of the real economy
b. demonstrates that, although resources are scarce for individuals, there is no problem
of scarcity for society as a whole
c. is based on unrealistic assumptions and therefore has no value as an economic tool
d. is based on simplifying assumptions, but is still useful for illustrating scarcity,
opportunity cost, and economic growth
e. is based on the assumption that technology is constantly changing
Society’s total cost of producing a good
a. includes only the cost to the firm
b. includes only the external cost
c. includes all private and external costs
d. equals the value of the output level that maximizes the firm’s profit
e. equals the value of the output level that minimizes the firm’s loss
A straight line tangent to a curved line at a point
a. crosses the curved line at that point
b. crosses the curved line at many points
c. has the same slope as the curved line at that point
d. is steeper than the curve at all other points
e. has a smaller slope than all other points on the curve
Exhibit 8-14
In Exhibit 8-14, what area represents fixed cost at the loss-minimizing output?
a. 0cda
b. 0jka
c. 0efa
d. cefd
e. cjkd
The market demand curve is the sum of individual quantities demanded at each price.
a. True
b. False
The foreign exchange rate is the
a. current account
b. the law of comparative advantage
c. the capital account
d. the balance of trade
e. the price of one currency in terms of another
Exhibit 9-20
In Exhibit 9-20, a price discriminating monopolist will charge what price?
a. P1 in segments A and B
b. P2 in segments A and B
c. P3 in segments A and B
d. P1 in segment A and P2 in segment B
e. unable to be determined
If the marginal utilities per dollar are not equal among the final set of goods Joe is
planning to consume, he can increase his total utility by changing the amounts of what
he intends to purchase.