The absolute price of a good is the price of that good in terms of another good.
a. True
b. False
Economist Charles Kindleberger (a proponent of fixed exchange rates mentioned in the
text) would agree with which of the following statements?
a. It is better to leave the international value of the domestic currency to the free market
forces than to have to sacrifice domestic economic goals in order to support a certain
predetermined value of the currency.
b. There is too great a chance that the supported exchange rates will diverge
significantly from the equilibrium exchange rates, which would create persistent
problems and lead to an overall decrease in international trade.
c. With no certainty of what one nation’s currency will be worth in terms of other
nations’ currencies, international trade is held below what it could be.
d. a and b
The foreign exchange market is the market where
a. goods and services of different countries are exchanged.
b. currencies of different countries are exchanged.
c. transportation services for foreign goods are contracted.
d. either a or c
e. none of the above
There are few sellers and many buyers in the
a. perfectly competitive market structure.
b. monopolistic competitive market structure.
c. oligopoly market structure.
d. monopoly market structure.
Which of the following statements is false?
a. In some instances, simple majority voting leads to a project being undertaken even
though the total costs of the project exceed the total benefits.
b. Simple majority voting fails to take into account the intensity of individuals’
preferences.
c. Public choice economists often explain low voter turnouts in terms of the individual
costs and benefits of voting.
d. If an individual will only vote if he or she feels that his or her vote will make a
difference in the election, it is likely that he or she will vote.
As long as there are __________ costs, __________ profit will be greater than
__________ profit.
a. implicit; accounting; economic
b. explicit; accounting; economic
c. implicit; economic; accounting
d. explicit; economic; accounting
Economists use the word utility to describe the satisfaction one receives from a good.
a. True
b. False
The capture theory of regulation holds that regulators use their influence and power to
support the well being of the regulatory agency itself.
a. True
b. False
Suppose a producer decides that if the price of his or her product is $10, the quantity
supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,100.
The supply of the good is
a. elastic.
b. inelastic.
c. perfectly elastic.
d. unit elastic.
e. perfectly inelastic.
A society is productive inefficient when
a. it produces at a point inside (below) its PPF.
b. it does not produce the maximum output with its given resources and technology.
c. it can produce more of one good without giving up some of another good.
d. both a and b
e. all of the above
One theory discussed in the textbook is that there is a direct relationship between the
opportunity cost of having children and the number of children a woman will have.
a. True
b. False
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; normal
If the Gini coefficient is equal to 2, we can conclude that
a. 2 percent of the households receive 100 percent of total income.
b. 2 percent of the households receive 50 percent of total income.
c. 50 percent of the households receive only 2 percent of total income.
d. b and c
e. None of the above, because the Gini coefficient cannot exceed 1.
Marginal productivity theory implies that a worker will be paid a wage (W) such that
a. W = MRP, but W < VMP.
b. W < MRP, but W = VMP.
c. W = MRP and W = VMP.
d. W = MFC, but W < MRP.
e. W < MRP and W < VMP.
Why is an oligopolist more likely to be able to earn a profit in the long run compared to
a monopolistic competitive firm?
Define economies of scale and give two reasons why firms may experience economies
of scale.Is economies of scale a long-run concept or a short-run concept?
Describe at least three of the key concepts in economics introduced in Chapter 1 of the
textbook that define how an economist views the world.
What is the difference between a union shop and a closed shop?Are either (or both)
legal in the United States?
Describe the three main options available to a corporation when it needs to raise money
so that it can invest in a new product or a new manufacturing technique.
In making the case against government, discuss the two main points about special
interest groups.
What is the shape of the demand curve faced by the perfectly competitive firm?Why
does it have this shape?
Define the term rationing device and give an example of each of three possible
rationing devices.Explain how scarcity implies the need for a rationing device.
Explain how the conditions for consumer equilibrium help to support the law of
demand. Give an example to support your answer.
Describe how the substitution effect and the income effect influence the slope of an
individual’s supply curve of labor.