Hank goes to a Korean restaurant for the first time and he has no prior knowledge
ofKorean. He orders the Daenjang Chigae prepared medium hot and hopes for the best.
Here an information __________ is __________ a market outcome.
a. symmetry; affecting
b. symmetry; not affecting
c. asymmetry; affecting
d. asymmetry; not affecting
If X is the actual amount of income or receipts and i is the interest rate (in decimals)
that could be earned on alternative uses of money that face the same risk, the present
value of X in t years from now is computed by
a. (it)(1 + X).
b. (Xt)(1 + i).
c. i/(1 + X)t.
d. X/(1 + i)t.
e. X/(1 – i)t .
Brain researchers think that the best reason the brain might weight the present high and
the future low when faced with a present-future tradeoff is that:
a. responding quickly and definitively to present rewards might have come with an
evolutionary advantage.
b. people are naturally short-run thinkers.
c. the future is harder to visualize than the present.
d. people naturally think they may die in the future.
e. a and c
Demand for a given good is inelastic, so it follows that if price rises, __________ will
rise, too.
a. quantity demanded
b. total revenue
c. total cost
d. income
e. supply
The reason the change in total cost divided by the change in output is equal to the
change in total variable cost divided by the change in output, is because
a. total variable cost rises as output rises.
b. of the law of diminishing marginal returns.
c. total fixed cost does not change as output changes.
d. total cost does not change as output changes.
The Robinson-Patman Act of 1936
a. made interlocking directorates illegal.
b. set up the Federal Trade Commission (FTC) to deal with “unfair methods of
competition.”
c. made monopolization of trade a misdemeanor.
d. prohibited suppliers from offering special discounts to large chain stores without
offering them to everyone else.
e. empowered the FTC to deal with false and deceptive acts or practices.
As Jamal’s income rises, his demand for pizza does not change. It follows that, for
Jamal, pizza is a(n)
a. normal good.
b. inferior good.
c. neutral good.
d. substitute good.
e. complementary good.
The current international monetary system is best described as a
a. fixed exchange rate system.
b. flexible exchange rate system.
c. managed flexible exchange rate system.
d. dollar standard.
e. gold standard.
The excess capacity theorem states that a monopolistic competitor
a. will produce an output level smaller than the one that would minimize its unit costs.
b. will produce an output level where MR > MC.
c. generally does not attain long run equilibrium, and thus charges a higher price than it
should.
d. typically produces too much of a good at too low a quality.
Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive
firm, MR = MC at 233 units of output. At 233 units, ATC is $12, and AVC is $9. The
best policy for this firm is to __________ in the short run. Also, total fixed cost equals
__________ for this firm.
a. continue to produce; $3
b. shut down; $699
c. continue to produce; $699
d. shut down; $2,796
e. continue to produce; $2,796
What is the Herfindahl index of an industry made up of ten equal-sized firms?
a. 1,800
b. 10,000
c. 100
d. 1,000
Pure economic rent is
a. the payment to factors owned by entrepreneurs.
b. economic profits.
c. the payment to factors whose supply is perfectly elastic.
d. a payment made to land.
e. the payment to factors whose supply is perfectly inelastic.
X-inefficiency refers to
a. the tendency for an economy to allocate too many resources to the monopolist.
b. the increase in costs and organizational slack in a monopoly resulting from the lack
of competitive pressure.
c. the resources used to regulate the behavior of a monopolist.
d. a and b
e. a and c
If the Gini coefficient is zero (0), this means that
a. there is complete income inequality.
b. there is some income inequality.
c. there is perfect income equality.
d. the area between the line of perfect income equality and the actual Lorenz curve is
very large.
e. a and d
There are 30 students in a class. The average grade for the first 29 students is 87. The
grade of the remaining student is 84. Given this student’s grade, the average grade of the
30-student class will be
a. 87.
b. higher than 87.
c. lower than 87.
d. 84.
Situation 27-1 A company is trying to decide whether it should produce good X in the
U.S. or in Mexico.Suppose a U.S. worker earns $15 per hour and a worker in Mexico
earns $4 per hour.Also suppose that the marginal physical product (MPP) of the U.S.
worker is 12 units of good X and the MPP of the Mexican worker is 3 units of good X.
If good X is produced in the U.S. the output per $1 of cost would be
___________________ than if good X were produced in Mexico, thus it would be best
to produce good X in
a. higher; Mexico.
b. lower; Mexico.
c. higher; the United States.
d. lower; the United States.
Which of the following is not an example of a legal barrier to entry?
a. a beautician’s license
b. a patent
c. exclusive ownership of raw materials
d. a public franchise
e. a copyright
In 2009, the lowest 20 percent of households in the United States earned approximately
what percent of the total income of all households?
a. 1%
b. 3%
c. 8%
d. 16%
e. 20%