If a supply curve is a horizontal line, supply is said to be
A) perfectly inelastic.
B) unit-elastic.
C) inelastic.
D) perfectly elastic.
If, for the last bushel of apples produced and sold by an apple farm marginal revenue
exceeds marginal cost, then in producing that bushel the farm
A) added more to total cost than it added to total revenue.
B) added an equal amount to both total revenue and total cost.
C) added more to total revenue than it added to total cost.
D) maximized its profits or minimized its losses.
Each member of OPEC can increase its income by selling more oil than its output quota
because
A) by selling more at OPEC’s cartel price, a member will automatically earn more
income.
B) each member’s demand is more elastic than the total demand for oil.
C) the demand for oil is inelastic so total revenue increases.
D) the demand for oil is perfectly elastic.
Table 3-3
The table contains information about the sorghum market. Use the table to answer the
following questions. a. What are the equilibrium price and quantity of sorghum?
b. Suppose the prevailing price is $6 per bushel. Is there a shortage or a surplus in the
market?
c. What is the quantity of the shortage or surplus?
d. How many bushels will be sold if the market price is $6 per bushel?
e. If the market price is $6 per bushel, what must happen to restore equilibrium in the
market?
f. At what price will suppliers be able to sell 36,000 bushels of sorghum?
g. Suppose the market price is $14 per bushel. Is there a shortage or a surplus in the
market?
h. What is the quantity of the shortage or surplus?
i. How many bushels will be sold if the market price is $14 per bushel?
j. If the market price is $14 per bushel, what must happen to restore equilibrium in the
market?
Government transfer payments include which of the following?
A) interest on the national debt
B) grants to state and local governments
C) Social Security and Medicare programs
D) national defense
Suppose that in Canada the government places a $1,500 tax on the buyers of new
snowmobiles. After the purchase of a new snowmobile, a buyer must pay the
government $1,500. How would the imposition of the tax on buyers be illustrated in a
graph?
A) The tax will shift the supply curve to the left by $1,500.
B) The tax will shift the demand curve to the right by $1,500.
C) The tax will shift both the demand and supply curve to the right by $1,500.
D) The tax will shift the demand curve to the left by $1,500.
Which of the following statements best describes the concept of consumer surplus?
A) “I paid $89 for a microwave oven last week. This week the same store is selling the
same microwave oven for $69.”
B) “I sold my hard copy of Harry Potter and the Half-Blood Prince to a used book
store for $10 even though I was willing to sell it for $5.”
C) “Target was having a sale on tube socks so I bought 5 pairs.”
D) “I was going to pay $200 for new sunglasses that I had seen at the Oakley store, but
I ended up paying only $140 for the same sunglasses.”
Marginal revenue is
A) total revenue divided by the total quantity of output.
B) the change in profit divided by the change in the quantity of output.
C) the change in total revenue divided by the change in total cost.
D) the change in total revenue divided by the change in the quantity of output.
Table 14-8
Two rival oligopolists in the athletic
supplements industry, the Power Fuel Company and the Brawny Juice Company, have
to decide on their pricing strategy. Each can choose either a high price or a low price.
Table 14-8 shows the payoff matrix with the profits that each firm can expect to earn
depending on the pricing strategy it adopts. If the firms cooperate, what prices will they
select?
A) Both firms will select a low price.
B) Brawny Juice will select a high price, Power Fuel a low price.
C) Both firms will select a high price.
D) Brawny Juice will select a low price, Power Fuel a high price.
If a firm is in an antitrust court case being accused of monopolizing a product, the firm
would hire an economist to show
A) the cross-price elasticity of demand between the firm’s good and another is negative.
B) the cross-price elasticity of demand between the firm’s good and another is positive.
C) the price elasticity of demand for the firm’s good is highly inelastic.
D) the income elasticity of the firm’s good is inferior.
Figure 11-1
Suppose the per-worker production function in the figure above represents the
production function for the U.S. economy. If the United States decided to double its
support of university research, this would cause a movement from
A) A to B.
B) B to C.
C) B to A.
D) D to C.
According to Douglass North, the Industrial Revolution occurred in England because
A) the British Parliament took control of the government and could credibly commit to
upholding property rights.
B) the British monarchy took control of the government and pledged not to raise taxes
arbitrarily.
C) the British courts became tied to the king and began to refuse to enforce property
rights.
D) the British Parliament instituted a command economy structure and implemented a
planned economy.
When the price level in the United States rises relative to the price level of other
countries, ________ will rise, ________ will fall, and ________ will fall.
A) imports; exports; net exports
B) exports; imports; net exports
C) net exports; exports; imports
D) net exports; imports; exports