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 price of good Y is $30, it follows that the relative
price of one unit of good Y is ___________ unit(s) of good X.
a. 0.33
b. 1.33
c. 3.00
d. 2.00
e. There is not enough information to answer the question.
Refer to Exhibit 22-14. What is the marginal cost of producing this good with 3 and 4
laborers working [blanks (G) and (H)], respectively?
Exhibit 22-14
a. $200; $150
b. $60; $30
c. $12; $40
d. $6; $8
e. none of the above
Refer to Exhibit 27-6. Let AA and MFC represent the value of marginal product curve
and the marginal factor cost curve of a monopolist, respectively. Which of the following
is a possible profit-maximizing factor quantity the monopolist will employ?
Exhibit 27-6
a. QA
b. QB
c. QC
d. none of the above is possible
A toll of $1 per car is imposed on a road regardless of time of day. If the toll creates
equilibrium travel flows at the busiest time of day, it will create a __________ at all
other times.
a. surplus of space
b. shortage of space
c. zero money price for space
d. zero opportunity cost for space
Marginal utility is computed by dividing total utility by the quantity consumed of a
good.
a. True
b. False
Which of the following is false?
a. Even if a corporation is not currently issuing bonds, you could still buy a bond
directly from the corporation.
b. Bonds that are rated AAA from Standard and Poor’s have received the highest rating
possible.
c. A bond that is rated in the D categoryindicates that the bond issuer cannot pay off the
bond.
d. It is possible to buy a bond from someone who purchased and still holds the bond he
bought from the corporation at an earlier date.
Negative externalities arising from the production of a good
a. cause an increase in the demand for the good.
b. cause a decrease in the demand for the good.
c. impose costs on third parties.
d. bring private costs into equality with social costs.
A negative externality is internalized when __________ until the socially optimum
level of production is obtained.
a. supply shifts to the left
b. supply shifts to the right
c. demand shifts to the right
d. b and c
e. none of the above
Refer to Exhibit 31-3. Suppose that Firms A, B, and C are the only polluters in the state
and that each emits 4 tons of pollution into the atmosphere. To cut the level of pollution
in half the government issues two transferable pollution permits to each firm (a cap and
trade policy).What is the total cost savings to society of decreasing pollution to half its
present level if firm C buys one pollution permit from firm A and one pollution permit
from firm B compared to if there were a government mandate for each firm to cut
pollution by one-half?
a. $515
b. $1,300
c. $1,380
d. $965
e. $1,025
If the minimum wage law sets a price floor above the equilibrium wage in the market
for unskilled labor, then the
a. minimum wage will create a surplus of unskilled labor.
b. minimum wage will create a shortage of unskilled labor.
c. minimum wage will not impact the unskilled labor market.
d. unskilled labor market will change, but we cannot be certain how.
As the dollar price of a foreign currency (for example, dollars per yen) decreases,
foreign goods will be __________ expensive, __________ foreign goods will be
purchased, and __________ foreign currency will be demanded.
a. less; more; more
b. less; more; less
c. more; fewer; less
d. more; fewer; more
Theories should be judged based upon how consistently and precisely they predict and
how well they explain things.
a. True
b. False
As a result of an agricultural price support,
a. quantity demanded is greater than quantity supplied.
b. quantity supplied is greater than quantity demanded.
c. fewer exchanges are made.
d. a and c
e. b and c
If a labor union can affect __________, it can affect its wage-employment tradeoff.
a. the availability of substitutes for the product it produces
b. availability of substitute factors
c. the fixed costs of the firm it works for
d. a and b
e. a, b, and c
When a good is perfectly inelastic in demand, or perfectly elastic in supply, the buyers
will pay the full tax that is placed on the sellers.
a. True
b. False
Refer to Exhibit 34-10.Jason’s opportunity cost of mowing the lawn is
a. 0.50 clean houses.
b. 2.40 clean houses.
c. 2.00 clean houses.
d. 0.60 clean houses.
Which of the following statements is true?
a. A person who buys a bond always pays the face value for the bond.
b. If a corporation issues a bond and Dennis buys it, Dennis becomes one of the owners
of the corporation.
c. A stockholder of Firm X is one of the owners of Firm X.
d. The owner of the bond receives periodic payments equal to its coupon rate times the
price he paid for the bond.
The answer is: “rational ignorance.” What is the question?
a. Why do special interest groups lobby politicians?
b. What causes a candidate in a two-person political race to take polls?
c. What explains why voters often know very little about the candidates and the issues?
d. What motivates the free rider?
The demand curve for loanable funds is
a. upward sloping, indicating that lower interest rates are associated with a lower
demand for loanable funds.
b. downward sloping, indicating that businesses will increase their demand at lower
interest rates, but that consumers will probably decrease the supply of loanable funds at
lower interest rates.
c. downward sloping, indicating that both businesses and consumers will increase the
quantity demanded of loanable funds as the interest rate decreases.
d. horizontal at the equilibrium interest rate.
The U.S. real interest rate rises relative to Japan’s. As a result,
a. the yen will depreciate and the dollar will appreciate.
b. the yen will appreciate and the dollar will depreciate.
c. both the dollar and the yen will depreciate.
d. both the dollar and the yen will appreciate.