Exhibit 6-5
In Exhibit 6-5, the marginal utility of consuming the fourth scone is
a. 4
b. 7
c. 6
d. 24
e. 2
If two large firms from different industries merge,
a. industry concentration rises
b. industry concentration falls
c. the total assets of the top 200 firms in the country will stay the same
d. industry concentration rises in one market and falls in the other
e. industry concentration is not affected
Exhibit 10-18
In Exhibit 10-18, the monopolistic competitor’s profit-maximizing level of output is
a. 1 unit
b. 2 units
c. 3 units
d. 4 units
e. 5 units
Exhibit 7-8
In Exhibit 7-8, A is marginal cost, B is average variable cost and C is average total cost,
the vertical distance between lines B and C at any level of output represents
a. marginal cost
b. average total cost
c. average variable cost
d. average fixed cost
e. average marginal cost
Exhibit 10-1
The monopolistic competitor in Exhibit 10-1 is in
a. long-run equilibrium because price equals average total cost
b. long-run equilibrium because marginal cost equals marginal revenue
c. long-run equilibrium because price exceeds marginal cost
d. short-run equilibrium because it is earning a positive economic profit
e. short-run equilibrium because price equals average total cost
Winner-take-all labor markets are commonly found in
a. sports and entertainment industries
b. unionized industries
c. the government sector
d. the legal services industry
e. service industries in general
Which of the following could explain an increase in the equilibrium wage rate for a
particular job?
a. a decrease in the amount of training needed to perform this job
b. an increase in the amount of risk associated with this job
c. a decrease in the amount of risk associated with this job
d. an improvement in the working conditions associated with this job
e. increased migration of workers to this geographic location
The opportunity cost of going to college includes the costs of tuition, books, fees, and
a. nothing else
b. housing
c. housing and food
d. earnings forgone by not working full-time
e. housing, food, and earnings forgone by not working full-time
Economists generally believe that
a. buyers and sellers have all the information they can use
b. additional information is costly to acquire
c. decision makers have complete knowledge of all the alternatives available
d. economic decisions result from random behavior
e. decision makers never make mistakes
If the Baloney Store earns more than a normal profit, its
a. economic profit must be greater than its accounting profit
b. economic profit is positive
c. economic profit is, therefore, equal to its accounting profit
d. accounting profit is zero
e. accounting profit is less than its economic profit
Rent controls can result in
a. deteriorating or abandoned buildings
b. strong incentives to oust protected tenants
c. payments to motivate tenants to move out
d. benefits to rich people who get a windfall from low rents
e. All of the answers are correct.
In order to reduce labor supply, a union must be able to
a. do all of the following
b. force all employers in the industry to hire only union members
c. set wages
d. agree to wage concessions
e. increase union membership
Exhibit 17-9
In Exhibit 17-9, the optimal water quality level is
a. 4
b. 5
c. 6
d. 7
e. 8
Census data on the income distribution among families in the United States in recent
years show
a. a rising share earned by the top fifth and a declining share earned by the bottom fifth
b. a rising share earned by the bottom fifth and a declining share earned by the top fifth
c. both the share earned by the top fifth and the share earned by the bottom fifth rising
d. both the share earned by the top fifth and the share earned by the bottom fifth falling
e. falling total income in the top fifth
The difference between a positive economic statement and a normative statement is that
a. a positive statement must be true; a normative statement is often not true
b. a normative statement must be true; a positive statement is often not true
c. a positive statement can be verified; a normative statement cannot
d. a normative statements can be verified; a positive statement cannot
e. a positive economic statement is a moral judgment; a normative economic statement
is not a moral judgment
Exhibit 12-9
In Exhibit 12-9, the labor supply and labor demand in a unionized labor market is
represented by the demand curve D0 and Supply curve S0. Which of the market
equilibria is the most likely outcome of the union imposing more restrictive licensing
requirements?
a. a
b. b
c. c
d. d
e. either a or d
If an industry currently has a Herfindahl index of 900 and a merger would raise that to
950, then the Department of Justice would generally
a. challenge the merger because the index would become too large
b. challenge the merger because the change in the index is too large
c. not challenge the merger because the postmerger index is less than 1,800
d. not challenge the merger if it is a horizontal merger
e. challenge the merger if it is a vertical merger
Which of the following is not a part of the scientific method in economics?
a. normative statements
b. comparing predictions to evidence
c. formulating a hypothesis
d. a hypothesis
e. behavioral assumptions
A payment of $105 next year can be more valuable than a payment of $100 now.
a. True
b. False
Which of the following best illustrates the concept of derived demand?
a. As income rises, the demand for TVs rises.
b. A fall in the price of cameras will increase the demand for film.
c. A fall in the demand for tires will reduce the demand for rubber.
d. When the price of gasoline rises, the demand for automobile repair falls.
e. If consumers expect the price of coffee to rise, demand for coffee rises.
In an economic model of consumer behavior, rational self-interest would likely be
a. a key variable
b. the hypothesis of the model
c. a behavioral assumption
d. a prediction of the model
e. a method of testing the model
Exhibit 9-17
Which area in Exhibit 9-17 represents deadweight loss under monopoly without price
discrimination?
a. area a
b. area b
c. area c
d. area f
e. area e
If the market interest rate is 5 percent, the opportunity cost of $100 worth of present
consumption
a. is $105 today
b. is $105 next year
c. is $5 today
d. is $5 next year
e. cannot be determined unless we know the consumer’s rate of time preference
One difference between arbitrageurs and speculators is that
a. arbitrageurs buy and sell foreign exchange; speculators do not
b. speculators only buy foreign exchange but do not sell it
c. arbitrageurs take more risks than do speculators
d. speculators take more risks than do arbitrageurs
e. arbitrageurs buy foreign exchange in the hope that its value will increase
If Arnold has a positive rate of time preference, he desires to
a. save in case of inflation
b. consume now rather than later
c. invest in stocks and bonds
d. invest in education
e. plan for retirement
Which of the following is true of the relationship between price and marginal cost under
monopolistic competition?
a. P = MC at all levels of output
b. P = MC only at the profit-maximizing quantity
c. P > MC at the profit-maximizing quantity
d. P < MC at the profit-maximizing quantity
e. P < MC at the quantities below the profit-maximizing quantity
Among the 25 most developed countries in the world where does the United States rank
in terms of recycling?
a. 5th
b. 10th
c. 18th
d. 20th
e. 25th
As a result of international trade,
a. the gain to producers in the importing country exceeds the loss to consumers in the
importing country
b. the loss to producers in the importing country is less than the gain to consumers in
the importing country caused by a decrease in price
c. the loss to producers in the importing country exceeds the gain to consumers in the
importing country caused by an increase in price
d. the loss to producers in the importing country is equal to the gain to consumers in the
importing country because price increases and equilibrium quantity decreases
e. the loss to producers in the importing country is equal to the gain to consumers in the
importing country because price decreases and equilibrium quantity increases
Diseconomies of scale are pictured on a graph by the upward-sloping portion of the
a. marginal product curve
b. short-run marginal cost curve
c. long-run marginal cost curve
d. short-run average cost curve
e. long-run average cost curve
Assume that you divide your food budget between fish and chicken. Which of the
following would not alter the position of a budget line drawn with fish on the horizontal
axis and chicken on the vertical axis?
a. an increase in the price of fish
b. a decrease in the price of chicken
c. a change in your preference for fish
d. an increase in your food budget
e. an increase in the price of fish combined with an increase in your food budget
The marginal utility of a second copy of today’s New York Times is
a. infinite
b. practically zero
c. positive and greater than the marginal utility of the first copy
d. equal to the marginal utility of the first copy
e. 50 cents
Which of the following people is least likely to clip store coupons?
a. a retired person
b. an unemployed person
c. a low-income worker
d. a high-priced consultant
e. a graduate student on summer break