The price of food relative to other goods has:
A. fallen, making it easier to live on less income.
B. fallen, making it harder to live on less income because other goods cost so much.
C. increased, making it harder to live on less income.
D. increased, making it easier to live on less income because other goods cost less.
Answer:
In a cooperative duopoly, both firms:
A. will achieve zero profits.
B. may earn profits.
C. will produce at lowest average total costs.
D. will set a price too high for the customers.
Answer:
Refer to the graph shown. Assuming that this monopolist maximizes profit, the
marginal cost of its last unit of output will be:
A. $16.
B. $12.
C. $8.
D. $10.
Answer:
Which of the following views most likely would belong to a behavioral economist?
A. Governments should never intervene in a housing bubble.
B. When people spend too much, they are just reflecting their wants.
C. Change the institutional structure to get people to save more.
D. More growth is needed to make society better off.
Answer:
From the Great Depression in the 1930s until the tax reforms of the 1980s, the United
States government integrated a number of what might best be called ________
institutions into the economy.
A. socialist
B. capitalist
C. entrepreneurial
D. profit-seeking
Answer:
An increase in the number of firms in a perfectly competitive market causes:
A. a movement along the market supply curve.
B. an increase in each firm’s supply curve.
C. an increase in the market supply curve.
D. a decrease in the market supply curve.
Answer:
As long as total utility is increasing, we know that marginal utility is:
A. positive.
B. decreasing.
C. increasing.
D. negative.
Answer:
Which of the following is not a free trade association?
A. EU
B. NAFTA
C. Mercosur
D. NATO
Answer:
An important element that is excluded from U.S. poverty figures is:
A. income taxes.
B. earned income.
C. in-kind transfers such as food stamps and housing assistance.
D. interest income.
Answer:
Diseconomies of scale are associated with:
A. an upward-sloping long-run average cost curve.
B. an upward-sloping short-run average cost curve.
C. a downward-sloping long-run average cost curve.
D. a downward-sloping short-run average cost curve.
Answer:
An effective price ceiling is best defined as a price:
A. imposed by government below equilibrium price.
B. imposed by government above equilibrium price.
C. higher than any consumer is willing to pay.
D. lower than any supplier is willing to sell.
Answer:
Researchers have found that the income of obese women is about 17 percent lower than
that of women who are of the recommended weight. This result implies that:
A. the relationship between obesity and income is accidental.
B. obese women earn less because they are less productive.
C. obese women earn less because employers discriminate against them.
D. obese women earn less either because they are less productive or because employers
discriminate against them.
Answer:
Positive economics is:
A. subjective.
B. neither objective nor subjective.
C. more objective than normative economics.
D. more subjective than normative economics.
Answer:
Average fixed cost:
A. is constant and doesn’t vary with output.
B. increases as output increases.
C. decreases as output increases.
D. equals total cost divided by output.
Answer:
Refer to the table shown. A firm would be most likely to hire between:
A. 1 and 3 workers.
B. 3 and 4 workers.
C. 5 and 8 workers.
D. 8 and 10 workers.
Answer:
The slower the marginal utility declines as more of a good is consumed:
A. the greater the elasticity of demand.
B. the smaller the elasticity of demand.
C. the smaller the opportunity cost of the good.
D. the larger the opportunity cost of the good.
Answer:
Mary buys cell-phone services from a company that charges $30 per month. For that
$30 she is allowed 600 minutes of free calls and then pays 25 cents per minute for any
calls above 600 minutes. Mary has used 300 minutes this month so far. What is her
marginal cost per minute of making two more calls lasting 10 minutes each?
A. $2.50
B. 25 cents
C. 4 cents
D. Zero
Answer:
The standard monopoly model eliminates the monitoring problem by assuming that:
A. the owner does not maximize profit.
B. marginal cost is zero, and so the output at which profit is maximized is the same as
the output at which sales revenues are maximized.
C. the owner of the firm makes all the decisions.
D. the owner of the firm has no control over decisions.
Answer:
Assuming the standard assumptions, in a repeated-play ultimatum game, the first
player’s best strategy in the last round is to:
A. split the money evenly with a bit more going to oneself.
B. give the most money to the opponent.
C. give the most money to oneself.
D. take all the money for oneself.
Answer:
Suppose that the marginal cost of producing cottonseed meal is $170 per ton. If the
cottonseed oil industry is perfectly competitive and in long-run equilibrium, the average
total cost of producing cottonseed oil:
A. is less than $170 per ton.
B. is equal to $170 per ton.
C. is greater than $170 per ton.
D. cannot be determined.
Answer:
If the price of movies on DVD rises while the price of movies purchased on demand
through the Internet remains the same, the law of demand predicts that consumers will:
A. substitute movies on DVD for movies on the Internet.
B. substitute movies on the Internet for movies on DVD.
C. buy only movies on DVD.
D. buy only movies on the Internet.
Answer:
People can reasonably expect that an economic system will decide all of the following
except:
A. what goods to produce
B. how to produce the goods
C. how to assign initial property rights
D. for whom to produce the goods
Answer:
Soda companies pay universities for the exclusive right to sell their products on
campus. For example, the University of Buffalo agreed to sell only Pepsi on campus in
exchange for $220,000 per year. This agreement:
A. is beneficial for students because they no longer have to make a choice about which
soda to purchase.
B. is beneficial for students if Pepsi charges a monopoly price on campus.
C. may be beneficial for students, depending on how the university uses the $220,000.
D. is harmful to students because the extra money gained by the university cannot be
used for their benefit.
Answer:
Critics of advertising sometimes argue that the overall effect of advertising is to make
people believe that possessing lots of material goods is the only route to happiness.
These critics also believe that this is a misleading view of happiness. Hence, these
critics reject:
A. the notion of failure of market outcome.
B. the idea that an equitable distribution of income is important.
C. the concept of inalienable rights.
D. the ideal of consumer sovereignty.
Answer:
The total satisfaction one gets from one’s consumption of a product is called:
A. marginal utility.
B. a unit of utility.
C. total utility.
D. minimum utility.
Answer:
Moore’s Law states that the processing power of the latest computer chips doubles
about every eighteen months. Assuming the graphs demonstrate the market for the latest
computer chips, which of the following diagrams describe this situation?
A. a
B. b
C. c
D. d
Answer:
If market demand increases in a perfectly competitive increasing-cost industry:
A. new firms will enter the industry, factor prices will rise, and the price at which each
firm earns zero economic profit will increase.
B. new firms will enter the industry, factor prices will fall, and the price at which each
firm earns zero economic profit will fall.
C. some firms will exit the industry, factor prices will rise, and the price at which each
firm earns zero economic profit will increase.
D. some firms will exit the industry, factor prices will fall, and the price at which each
firm earns zero economic profit will fall.
Answer:
Refer to the graph below.
Productive efficiency is achieved at what points?
A. A, B, and M
B. C, D, and N
C. A, C, and F
D. M, D, and E
Productive efficiency is achieved when as much output as possible is obtained from a
given amount of resources. Points on the production possibility curve (i.e., A through F)
represent points of productive efficiency. Points inside the curve (i.e., N) represent
points of productive inefficiency (N). Points outside the curve (i.e., M) are unattainable.
Answer:
Refer to the graph shown. If this monopolist sets the price to maximize profit, it will
charge:
A. $16 for its product.
B. $12 for its product.
C. $8 for its product.
D. $10 for its product.
Answer:
Economic engineering:
A. focuses exclusively on social factors that affect incentives.
B. is the process of designing markets and coordinating mechanisms to achieve a
specific goal.
C. simulates virtual economies on the computer and lets coordination mechanisms
emerge.
D. is a scientific approach to economics in contrast to the heuristic supply/demand
model.
Answer:
When applied to labor markets, the law of supply suggests that:
A. an increase in the wages earned by nurses will cause the quantity of nurses supplied
to increase.
B. a decrease in the wages earned by nurses will cause the quantity of nurses supplied
to increase.
C. an increase in the wages earned by nurses will cause the quantity of nurses
demanded to increase.
D. a decrease in the wages earned by nurses will cause the quantity of nurses demanded
to increase.
Answer:
Some economists believe that:
A. giving benefits to the poor will reduce aggregate demand, improving business so that
wealthy stockholders are better off.
B. giving benefits to the rich will expand aggregate output and thus help the poor.
C. taxing the poor will cause them to increase their work efforts.
D. taxing the rich will cause them to increase their work efforts.
Answer:
If a monopolist produces beyond the quantity where MC = MR:
A. the increase in revenue is less than the increase in cost.
B. total revenue is less than total cost.
C. the increase in revenue exceeds the increase in cost.
D. total revenue exceeds total cost.
Answer:
An economist secures volunteers from her college campus and divides them into two
groups that are ushered into different rooms. Both groups are given a test. Those in the
first group who score 90 percent or more receive an Apple iPod. Upon exiting the room,
those given iPods are offered the choice of receiving $150 in exchange for the iPod.
Only a few take the exchange. Those in the second group who score 90 percent are
offered either an Apple iPod or $150. About half the students choose $150. The
professor uses these data to support a principle known as the endowment effect. The
professor is engaging in:
A. experimental economics.
B. natural experiments.
C. the economic decision rule.
D. a market coordination mechanism.
Answer: