Economists probably agree more often than they disagree.
a. True
b. False
A monopolist is best described as a price
a. taker.
b. searcher.
c. maker.
d. follower.
Colombia produces coffee with less labor and land than any other country; it therefore
surely has
a. an absolute advantage in coffee production.
b. a comparative advantage in coffee production.
c. absolute efficiency in coffee production.
d. a comparatively absolute advantage in coffee production.
“Cream skimming” usually results in
a. cross-subsidization of markets.
b. subsidies to rural consumers of the service.
c. regulations to provide universal service.
d. monopoly.
Economic discrimination and prejudice
a. are synonymous.
b. must both exist in statistical discrimination.
c. often occur together.
d. are mutually exclusive.
Rent seeking is the term given
a. to an attempt by firms to create a profitable monopoly even though resources may be
wasted in the process.
b. to filing a lawsuit, which wastes resources, in the hope of obtaining monetary gain or
a strategic market position.
c. to attempts by firms to obtain earnings without contributing to production.
d. All of the above are correct.
The concept that describes the situation where the economy has used every available
opportunity to make someone better off without making someone else worse off is
a. economic efficiency.
b. the benefits principle.
c. horizontal equity.
d. vertical equity.
Briefly and concisely define the following terms:
a. statistical discrimination
b. compensating wage differential
c. affirmative action
The goal of the manager of a firm is sales maximization. The firm will produce
a. the output level at which MR = 0
b. as much output as it can.
c. the same output that it would if the goal was profit maximization.
d. the same output that it would if the goal was cost minimization.
In a market system, ____ distributes goods among consumers in accord with their tastes
and preferences, using voluntary exchange to determine who gets what.
a. a price system
b. a regulatory framework
c. a democratic government
d. a closed system
An oligopolist cares very much about what other firms in her industry are doing.
a. True
b. False
The difference between the cost of production on a piece of land less the cost of
production on marginal land is called
a. usury.
b. profit.
c. rent.
d. interest.
The risk of financing a project by issuing common stock is borne by
a. the issuing firm only.
b. the stockholders only.
c. both the issuing firm and the stockholders.
d. the government.
A country’s comparative advantage can be illustrated by the graph of the production
possibilities frontier.
a. True
b. False
Because there is a trade-off between total output and equality of income distribution,
a. greater equality of distribution will generally result in higher levels of output.
b. greater output is generally associated with more equal distribution.
c. policies designed to increase output will only succeed if distribution is more equal.
d. policies intended to expand output must necessarily fail.
e. policies designed to equalize distribution may adversely affect the size of output.
The political party that is in power determines the position and shape of the production
possibilities frontier that constrains the choices of the economy.
a. True
b. False
Net utility is
a. equal to total utility from the quantity acquired of a good minus the utility lost by
having to pay for it.
b. equal to the sum of the marginal utilities.
c. equal to an optimal number easily calculated by the consumer.
d. always greater than total utility.
Firm A’s motive in filing an antitrust suit against Firm B may be
a. to seek court protection against genuinely unfair practices by Firm B.
b. to seek financial compensation for damages caused by Firm B.
c. to create an expensive nuisance for Firm B.
d. All of the above are correct.
If marginal cost is rising, then average cost must be rising.
a. True
b. False
Average cost can be thought of as the cost per unit.
a. True
b. False
Invention cannot be successful financially if price is
a. greater than marginal cost because invention is based largely on social costs.
b. greater than marginal cost because invention is based solely on external costs.
c. equal to marginal cost because invention is based largely on variable costs.
d. equal to marginal cost because invention is based largely on fixed costs.
The two basic reasons why a monopoly exists are barriers to entry and cost advantages.
a. True
b. False
A monopolist is a price taker, just like a perfect competitor.
a. True
b. False
The opportunity cost of a college education includes wages lost while enrolled in
school.
a. True
b. False