Exhibit 27-1
What dollar value goes in blank (D)?
a. $12
b. $28
c. $36
d. $18
A perfectly competitive firm that wants to maximize profits or minimize losses will
produce in the short run as long as
a. customers are buying its product.
b. price is above average variable cost.
c. price is above marginal revenue.
d. average variable cost is above price.
e. average total cost is above price.
The perspective from which a factor is viewed matters in terms of determining if, and
how much, economic rent it receives. Which of the following examples illustrates this?
a. Smith currently earns $80,000 as an accountant. If he works as an accountant at
another firm, he would earn $76,000.
b. Jones currently earns $66,000 as an attorney for a large law firm. If he were to work
instead at a small law firm, he would earn $55,000.
c. Smith currently earns $80,000 as an accountant. If he works as an accountant at
another firm, he would earn $78,000, but if he works at a job outside accounting, he
would earn $60,000.
d. Jones will pay Smith more to work for him than Brown will pay Smith to work for
her.
e. a and b
The cigarette industry is a good example of the oligopoly market structure.
a. True
b. False
Exhibit 2-5
The opportunity cost of moving from point A to point B is approximately
a. 5,000 televisions.
b. 5,000 fax machines.
c. 10,000 televisions.
d. 10,000 fax machines.
The term “present value” refers to
a. how much something costs today relative to what it could be sold for in the future
after it depreciates in value.
b. how much you would be willing to pay for a good today if you are not sure that the
good will be available in the future.
c. the current worth of some future dollar amount of income.
d. how much your savings are worth today after having been invested for a certain
number of years.
e. the difference between the price you pay for a good and the costs of producing that
good.
Ronald Coase stressed the necessity of using taxes to internalize negative externalities.
a. True
b. False
Unions often encourage the buying public to “look for the union label” primarily
because
a. they feel that only U.S. and/or union-made goods are of high quality.
b. they feel that it is un-American to buy goods from foreign producers.
c. doing so may increase demand for the product they produce, which in turn may
increase the wage rate paid to union employees.
d. they realize that Americans are too busy to take time to gather all the important
information about a product and these labels are a way of informing the buying public
that union-made goods are well made.
Second-degree price discrimination is discrimination among
a. units.
b. quantities.
c. buyers.
d. prices.
Exhibit 4-4
Which of the following statements is false?
a. Graph (1): A price ceiling set at P2 would not have an impact on the market.
b. Graph (2): As supply increases, equilibrium price remains constant.
c. Graph (3): As demand increases, equilibrium quantity remains constant.
d. Graph (4): As supply increases, equilibrium quantity increases.
The __________ hand is the metaphor used to refer to market coordination, whereas the
__________ hand is the metaphor used to refer to managerial coordination.
a. visible; fast
b. invisible; visible
c. fast; lazy
d. lazy; fast
e. none of the above
The two ways in which the word “interest” is used in economics are as the price for
a. loanable funds and the return earned by entrepreneurship.
b. loanable funds and the return earned by capital as an input in the production process.
c. money and the return for risk taking.
d. loanable funds and the return for risk taking.
Exhibit 22-3
The total cost of producing 45 units of output is
a. $1,100.
b. $950.
c. $1,050.
d. $900.
e. $1,000.
Exhibit 5-1
which shows supply and demand for freeway space at both 8 a.m. and 11 p.m. Suppose
that the government decides to set the money price of driving on the freeway at zero,
but creates programs that encourage drivers to carpool. If the carpooling program is
sufficiently successful to eliminate the shortage of freeway space at 8 a.m., graphically
the result of the increase in carpooling would be a
a. rightward shift of the supply of freeway space curve.
b. leftward shift of the demand for freeway space curve from D8a.m. to D11p.m.
c. movement up along D8a.m. to the point where D8a.m. intersects the supply curve.
d. leftward shift of the supply of freeway space curve.
If the demand for a product that labor produces is highly elastic, a small percentage
increase in price will __________ quantity demanded of the product by a relatively
__________ percentage, which, in turn, will __________ the demand for the labor that
produces the product.
a. increase; small; slightly reduce
b. decrease; small; greatly increase
c. decrease; large; greatly increase
d. decrease; large; greatly reduce
e. increase; large; greatly reduce
Average fixed cost
a. is greater at lower levels of output than at higher levels.
b. does not change as output changes.
c. exists only in the short run.
d. is usually greater at higher levels of output than at lower levels of output.
e. a and c
A seller that has the ability (to some degree) to control the price of the product it sells is
called a price
a. taker.
b. searcher.
c. breaker.
d. twister.
The Lorenz curve is a graphical representation of
a. the income to poverty ratio.
b. economic growth.
c. the percentage of total income left to spend after taxes.
d. the distribution of income.