The demand for capital is
a. directly related to the interest rate.
b. inversely related to the interest rate.
c. unrelated to the interest rate.
d. first falls, and then rises, in relation to the interest rate.
All large firms have monopoly power.
a. True
b. False
Tax loopholes are equally available to all taxpayers.
a. True
b. False
When pollution emissions can be measured taxation will tend to be more effective than
any other method of controlling pollution.
a. True
b. False
The coordination task of any economy that answers the question of how output shall be
divided among consumers may best be described as
a. output selection.
b. production planning.
c. distribution.
d. None of the above is correct.
A market system (market economy) depends on the market to
a. find the most efficient way of using resources.
b. determine how large the budget deficit should be.
c. decide how much government regulation there should be.
d. provide minimum incomes for everyone.
e. All of the above are correct.
What is the most probable reason why garbage men have higher wages than nurses?
a. marketplace discrimination
b. active unionization in the garbage collection field
c. higher demand for garbage men than nurses
d. the nonmonetary attractiveness of garbage collection causing fewer people to want to
be garbage men
Invention is the discovery of a new process or idea. Innovation is
a. the continuing search for inventions.
b. copying ideas from rival firms.
c. putting an invention to work.
d. basic research.
Despite the monies spent by the federal and state governments, many observers believe
which of the following?
a. public infrastructure such as bridges and roads is only adequate
b. our educational system is lacking
c. not enough monies are spent on homeland defense
d. all of these are correct
In a mixed economy
a. all economies choose the same mix of private and public involvement in the
economy.
b. the government is more important than the private sector in generating output.
c. there is some government influence over the workings of the free market.
d. all of the above.
Big Alice Ice Cream Parlor reduced its price of an ice cream cone from $1 to 90 cents.
Sales consequently increased from 1,000 cones per week to 1,050 The approximate
price elasticity is
a. 0,20
b. 0,46
c. 2,16.
d. 5,00
Figure 15-2
The firm illustrated in Figure 15-2 is producing
a. less than it would if the external costs were internalized.
b. more than it would if external costs were internalized.
c. a beneficial externality.
d. at the socially optimal point.
Every economic decision involves a trade-off because of
a. theory.
b. opportunism.
c. consumption.
d. scarcity.
e. efficiency.
A firm uses workers and seed to grow lettuce. Its lettuce output rises from 100 tons to
200 tons when the number of workers increases from 25 to 75 Its production process
shows
a. decreasing returns to scale.
b. diminishing returns to labor.
c. increasing long-run average cost.
d. decreasing short-run average variable cost.
The key element in preserving a monopoly is keeping rivals out of the market.
a. True
b. False
Pure monopoly is not studied because of its descriptive realism, but because it is a
stepping stone toward more realistic models.
a. True
b. False
A decrease in the price of rice from 50 cents to 40 cents a pound increases consumption
from 16 to 20 tons a week in Gainesville and from 160 to 200 tons in the larger city of
Miami. The elasticity of demand for rice is
a. greater in Miami than in Gainesville, even taking into account the population
difference.
b. greater in Gainesville than in Miami in spite of the population difference.
c. equal in Gainesville and Miami regardless of the population difference.
d. impossible to compare because of the population difference.
In high schools, all teachers were paid the same based on years of service and
regardless of specialization. Beginning in the 1970s, a shortage of science and math
teachers developed as private industry paid more for math and science skills than
schools could offer. At the same time, a decline in the number of school-age children
tended to reduce the demand for all other teachers, which led to a surplus. The
economist’s solution to this problem would be
a. merit pay to reward the best teachers.
b. recognition that all teachers do comparable work and should be paid the same.
c. to raise the wages of all teachers.
d. to raise the wages of teachers in fields that are in short supply and lower those of
others.
Tariffs are different from quotas because they
a. increase government revenue.
b. increase profits.
c. increase the quantity traded.
d. place all the burden on foreigners.
The goal of a union may be to maximize the
a. number of union members.
b. income received by workers in the relevant industry.
c. number of workers employed in the relevant industry.
d. All of the above are correct.
New stock issues are typically handled by
a. commercial banks.
b. insurance companies.
c. investment banks.
d. stock exchanges.
Marginal revenue equals the change in total revenue that is earned by selling one more
unit of output.
a. True
b. False
Exhibit 4-1
The following are the equations for the supply and demand curves in the market for
weezils:
Demand: Qd = 20 − 2P
Supply: Qs = 5 + 3P
where Qd is the quantity demanded, Qs is the quantity supplied, and P is the price per
weezil in dollars
Refer to Exhibit 4-1. If consumers decide that they want 20 percent fewer weezils at
every price, the equation for the new demand curve for weezils will be
a. Qd = 20 − 1.6P.
b. Qd = 0.2(20 − 2P).
c. Qd = 0.8(20 − 2P).
d. Qd = 80(20 − 2P).
Use the concept of economic rent to explain how rent controls could have an effect
quite opposite to the intention.
If the MRP per dollar is greater for labor than that for tools, a producer should spend
more money on labor than originally planned and less on tools. How long can he
continue this switch in spending? Why?
How long is the long run?
Explain why environmentally minded firms in a competitive industry will find it
difficult to take environmental action.
If a firm’s fixed cost (overhead) increases, what happens to its profit-maximizing price
and output?
List three primary ways in which profits above “normal” interest rate levels can be
earned.
Wage negotiations in baseball can fit the bilateral monopoly situation when a star player
negotiates with an owner. Explain how collective bargaining would be used in wage
negotiations and the role of player strikes.
Suppose that elasticity has been reliably measured as 1,55 and the unit price decreases
from $20 to $17,50 How much will quantity demanded increase?