Which of the following could be called a virtue of raising prices of depletable
resources?
a. It would discourage consumption and waste.
b. It would stimulate more efficient use of resources.
c. It would encourage innovation and discovery of alternatives.
d. All of the above are true.
Total fixed cost falls as output expands.
a. True
b. False
Poverty and inequality in the U.S. are well below the OECD average.
a. True
b. False
In the long-run, a monopolist charges the same price as a perfectly competitive firm.
a. True
b. False
Price leadership is an example of explicit collusion by oligopolies.
a. True
b. False
A mixed economy blends private and public elements.
a. True
b. False
The dramatic increase in the standard of living since the Industrial Revolution
a. means that societies and individuals face no constraints.
b. has not meant unlimited abundance for societies or persons.
c. means that “opportunity cost” is a meaningless concept.
d. has reduced the choices open to persons.
e. has made economics less useful to persons.
The market’s contribution to the general welfare has been its
a. stimulation of growth in productivity.
b. yield of an abundance of consumers’ goods.
c. contribution to human longevity.
d. All of the above are correct.
Most state governments finance their budgets through ____, and most local
governments finance their budgets through ____.
a. income taxes; property taxes
b. property taxes; sales taxes
c. sales taxes; property taxes
d. income taxes; sales taxes
Firms will continue to enter a perfectly competitive industry until
a. the supply curve is vertical.
b. the supply curve is meaningless.
c. any excess returns have been competed away.
d. all resources are fully employed.
The interest rate is determined by
a. government pronouncements.
b. market forces of supply and demand.
c. banks and lenders.
d. managers of large corporations.
Under a relative concept of poverty, poverty
a. doesn’t really exist.
b. is higher in rich countries than in poor countries.
c. can never be wholly eliminated by public policy.
d. declines as technology advances.
How are money cost and opportunity cost related to each other?
a. If markets function well, they are closely related.
b. They are always identical in any economic system.
c. Opportunity cost always exceeds money cost.
d. Money cost is less than or equal to opportunity cost.
e. In a market economy, they are always equal to each other.
The ____ is the fraction of each additional dollar of income that is paid in taxes.
a. deferred tax rate
b. cumulative tax rate
c. average tax rate
d. marginal tax rate
When the invisible hand is at work,
a. the price system will sometimes give incorrect cost signals to consumers.
b. the price system will allocate resources based only on consumer need.
c. all prices will be set equal to marginal costs.
d. there will be some shortages and surpluses that cannot be avoided.
Explain why greater equality is inevitably gained at the expense of efficiency.
Several writers have helped to popularize the notion that stock prices follow no
discernible pattern. What is meant by a random walk, and how can you explain why
people continue to invest in stocks if the random walk theory is correct?
American producers often complain about dumping. What is dumping, and should it be
prohibited?
What is the stock market’s role in achieving efficient use of resources?
Explain how the demand for labor is determined.
Suppose a professor announces at the beginning of a course that he will give no failing
grades because they are too damaging to self-esteem. How does such a policy affect
equality and efficiency?