Exhibit 9-6
What is the maximum profit the monopolist in Exhibit 9-6 can earn?
a. -$5
b. $40.80
c. $43.60
d. $44.20
e. $42.60
Which of the following is not a reason for international specialization?
a. some countries have educated, trained workers, while other countries have unskilled
workers
b. tastes and preferences tend to be different in different countries
c. economies of scale can allow larger, specialized producers to operate at lower
average cost
d. mineral resources are often concentrated in particular countries
e. the world price of a good is determined by the world supply and demand for it
If the marginal utility of each good a consumer buys does not diminish but remains
constant, we should see consumers
a. buying no goods at all
b. spending all of their income on the good with the highest marginal utility
c. buying one unit of each good
d. buying only the least expensive good
e. leaving the store in total confusion
Combinations of goods along an indifference curve reflect a level of utility that is
a. constant and measured by a specific number
b. variable along the curve and measured by specific numbers
c. variable along the curve, though unspecified
d. constant, though unspecified
e. inelastic above the midpoint and elastic below the midpoint
Interest is a payment for deferred
a. taxation
b. saving
c. consumption
d. investment
e. none of the above
If there is a shortage in the market for athletic shoes,
a. the price should rise to eliminate the shortage
b. inventories of athletic shoes will grow
c. demand will decrease to restore equilibrium
d. firms will reduce production to restore equilibrium
e. supply will increase to restore equilibrium
Exhibit 2-8
Which of the following would cause the production possibilities frontier in Exhibit 2-8
to shift from AA to BA?
a. a drought that affected food production but had no effect on education
b. a technological improvement in education that had no effect on food production
c. a technological improvement in food production that had no effect on education
d. a disease that affected students’ ability to learn (and therefore education) but not food
production
e. an increase in the size of the labor force that affected both food production and
education
If the price of a resource increases, other things constant, less of that resource will be
hired because
a. producers will substitute away from that resource
b. producers fear starting a trend toward higher resource prices
c. the demand curve for the product will shift to the left
d. highly paid resources don’t produce as much
e. it makes other resources look expensive as well
The Coase theorem says that, if the appropriate property right is assigned to
__________, an efficient solution to an externality problem will be achieved.
a. the party causing the externality
b. the victim of the externality
c. the party that can avoid the externality at the higher cost
d. the party that can avoid the externality at the lower cost
e. either one of the parties involved
How many countries in the world have failed to come up with the rules of the game that
lead to sustained economic growth?
a. none
b. most
c. half
d. one
e. There is not enough data to answer this question
Exhibit 6-25
Which of the following is true of Exhibit 6-25?
a. Points a, c, and e would all cost the same amount to purchase.
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.
Filing a fraudulent income tax return that understates income or overstates deductions is
known as
a. tax evasion
b. logrolling
c. tax avoidance
d. rent seeking
e. profiteering
A monopolist price discriminates by
a. charging different buyers different prices for different products
b. charging different buyers different prices for the same product
c. selling at a price below average total cost
d. selling at a price below marginal cost
e. selling at a price above marginal revenue
Which of the following would notbe considered price discrimination?
a. Long distance telephone rates are cheaper late at night.
b. Airline fares are cheaper if you reserve several weeks in advance.
c. The price of lettuce is 59 cents a head and two for a dollar.
d. The price of a brand-name prescription drug is higher than the price of a generic
brand.
e. Senior citizens pay less for a movie.
Exhibit 16-5
Exhibit 16-5 represents the market for leaf tobacco. In the absence of any government
intervention what would the quantity of leaf tobacco bought and sold be?
a. 3,000 pounds
b. 4,000 pounds
c. 5,000 pounds
d. 6,000 pounds
e. 7,000 pounds
As a result of the economic profit earned by the first video rental outlets,
a. existing firms were able to successfully lobby the government for patent protection
b. competitors were attracted to the industry, and their entry reduced economic profit
c. demand dried up
d. Blockbuster saw an opportunity to take over the industry
e. competitors were discouraged from entering the industry
If a perfectly competitive firm shuts down in the short run, its variable cost equals zero.
a. True
b. False
A resource that earns only economic rent
a. cannot be employed in any other line of production, so its opportunity cost is zero
b. is rental payment for a resource that has already been paid for
c. is impossible because all resources have an opportunity cost associated with their use
d. is not fixed in quantity
e. has a perfectly elastic supply curve
A public good is available to all regardless of who pays for it and who does not.
a. True
b. False
The requirement that firms doing business with the federal government set numerical
hiring, promotion, and training goals to reduce discrimination was
a. included in the Civil Rights Act of 1964
b. signed by President Johnson
c. first proposed in the Nixon administration
d. first proposed in the Carter administration
e. first proposed in the Equal Rights Amendment
If Ford raises the price of its automobiles, the demand curve for GM automobiles
a. shifts to the left
b. is unaffected
c. becomes more elastic
d. shifts to the right
e. becomes vertical
Each point along a nation’s production possibilities frontier represents efficient use of
all resources.
a. True
b. False
The slope of the total revenue curve for a perfectly competitive firm equals
a. marginal revenue, which is less than price
b. marginal revenue, which is greater than price
c. marginal revenue, which is equal to price
d. average revenue, which is less than price
e. average revenue, which is greater than price
To maximize profit, a perfectly competitive firm that decides notto shut down will
choose the rate of output at which
a. price is highest
b. price minus average total cost is maximized
c. price equals marginal cost
d. total revenue is maximized
e. average total cost is minimized
The more complicated a production process is,
a. the lower the transactions cost of using markets
b. the lower the cost of production
c. the more likely the market will be used to organize production
d. the more likely that transaction costs decrease through centralized control of
production
e. the more likely that transaction costs decrease through use of markets
A frim wishing to acquire a monopoly position would be willing to spend an amount up
to its anticipated monopoly profit in rent-seeking activities.
a. True
b. False
If all of a monopolist’s costs are fixed costs, it will produce where demand is unit
elastic.
a. True
b. False
On average throughout the United States,
a. almost all individuals leaving welfare had jobs
b. day-care shortages arose as individuals left welfare for work
c. only about half the individuals leaving welfare had jobs
d. former welfare recipients who are now working find that they no longer qualify for
food stamps, child care, or Medicaid
e. welfare rolls remained stable during the late 1990s and early twenty-first century.
If ball-bearing producers support proposed regulation of their industry, then it is likely
that
a. ball-bearing prices will decrease under regulation
b. profits of firms in the ball-bearing industry will decrease after regulation
c. ball-bearing producers are concerned about the best interests of the public
d. ball-bearing producers will not attempt to influence the adoption of the regulation
e. consumers of ball-bearings will suffer from the proposed regulation
Exhibit 10-13
All of the following statements regarding Exhibit 10-13 are true except one. Which is
the exception?
a. The firm represented in the exhibit will likely be a perfect competitor.
b. There are economies of scale in this industry.
c. The minimum efficient quantity is 1,000 units.
d. At 500 units there is excess capacity.
e. A firm too small to produce at least 1,000 units will have difficulty surviving in this
industry.
For which of the following products would price discrimination be most difficult?
a. photograph developing
b. tooth extractions
c. airline tickets
d. beer
e. college education