The slope of the budget line is determined only by the prices of the commodities
purchased.
a. True
b. False
Sales maximization may be a goal of a firm if
a. firms are managed by irrational persons.
b. the firm has no way to measure profitability.
c. the firm is privately held, and there is no separation between ownership and control.
d. managerial bonuses are based on sales revenue instead of profitability.
If goods X and Y are complements, the
a. quantities demanded of X and Y tend to move in opposite directions.
b. quantities demanded of X and Y tend to move in the same direction.
c. prices of X and Y tend to move in the same direction.
d. supply curves for X and Y tend to move in the same direction.
If on a given product indifference curve a firm is using an insufficient (nonoptimal)
amount of one of its inputs
a. output will be below optimal.
b. the MRP of the input will be below its price.
c. costs will not be minimal.
d. relative input prices need to change.
In the long run, a profit-maximizing monopolist
a. earns zero economic profit.
b. produces the same amount as a perfectly competitive industry.
c. receives a higher price for his output than a perfectly competitive firm.
d. produces at the output level that minimizes his long-run average total cost.
The distribution of income in the United States
a. became slightly more equal during the 1980s.
b. did not change significantly during the 1980s.
c. has become more unequal since 1980.
d. has become more equal since 1980.
An increase in wages in the public sector is caused solely by increased labor
productivity in that sector.
a. True
b. False
Innovation refers to the introduction of new products and processes into the market.
a. True
b. False
Income elasticity of demand describes how change in income affects the quantity
demanded of a good.
a. True
b. False
Figure 3-2
In Figure 3-2, a point such as A
a. is preferable over B.
b. is an efficient use of resources.
c. represents a misallocation of resources.
d. is not obtainable.
Figure 10-4
Figure 10-4 shows the industry’s supply and demand curves in panel (1) and the cost
curves of a firm in the industry in panel (2). At S2, the firm is
a. going to shut down.
b. incurring losses.
c. earning zero economic profits.
d. earning economic profit greater than zero.
Innovation is
a. the same thing as invention.
b. the desired result of invention.
c. the necessary precondition of invention.
d. unrelated to invention.
Rent seeking
a. often entails large opportunity costs.
b. prevents waste of resources.
c. often promotes fairness in distribution of resources.
d. cannot occur in a planned economy.
At the interest rate r, the price of a depletable natural resource three years from the
present (price in present = P) will be, everything else being equal, which of the
following?
a. 3P
b. P3
c. P(1 + r)3
d. 3P(1 + r)3
One of the conclusions of A. C. Pigou was that
a. a system of mandatory controls is the only effective means to control pollution.
b. a system of charges can be an effective means to control pollution.
c. pollution will wither away if a socialist system is in place.
d. pollution cannot be adequately addressed in a price system.
The long run for the industry is defined as a period of time long enough for
a. any new firm that desires to enter the industry.
b. any old firm that desires to leave the industry.
c. all aspects of production to vary and there are no fixed costs.
d. All of the above are correct.