Exhibit 8-1 Quantity and total revenue data for a firm
Exhibit 8-1 indicates that this firm is operating in which type of market structure?
a. Price-maker. c. Perfect competition.
b. Unprofitable. d. Nonhomogeneous.
According to the law of diminishing marginal utility, the marginal utility curve is ____.
a. vertical
b. flat.
c. upward sloping.
d. downward sloping.
A union can influence the equilibrium wage rate by:
a. collective bargaining.
b. featherbedding.
c. lobbying for legislation to reduce immigration.
d. all of these.
Other things being equal, the effects of an increase in the price of computers would best
be represented by which of the following?
a. A movement up along the demand curve for computers.
b. A movement down along the demand curve for computers.
c. A leftward shift in the demand curve for computers.
d. A rightward shift in the demand curve for computers.
Exhibit 8-4 Marginal cost and revenue for a firm
In Exhibit 8-4, this firm is currently producing 14 units of output. What would you
advise this firm to do?
a. Decrease output to 13.
b. Increase output to 15.
c. Remain at 14 units of output.
d. Increase output to 16.
e. Increase output to 17.
Exhibit 11-2 Labor and output data
In Exhibit 11-2, if product price is fixed at $8, the MRP of the 2nd worker is equal to:
a. $25.
b. $125.
c. $200.
d. $175.
e. $45.
If finding the last stamp to complete your collection makes you happier than finding the
first, then:
a. marginal utility is zero.
b. marginal utility is negative.
c. total utility is decreasing.
d. total utility is constant.
e. marginal utility is not diminishing.
Exhibit 6-1 Total utility for good X
As shown in Exhibit 6-1, the law of diminishing marginal utility is first observed at the:
a. first unit.
b. second unit.
c. third unit.
d. fourth unit.
e. fifth unit.
A drought destroys much of the grape crop. As a result, consumer surplus in the market
for wine:
a. decreases. c. remains unchanged.
b. increases. d. depends on the deadweight loss.
An oligopoly:
a. and monopolistically competitive market produce less and charge higher prices than
if their markets were perfectly competitive.
b. is characterized by mutual interdependence of pricing decisions.
c. may be characterized by a kinked demand curve.
d. all of these.
Ceteris paribus, an increase in the supply of a good causes which of the following?
a. Lowers the equilibrium price, and reduces the quantity bought and sold.
b. Raises the equilibrium price, and raises the quantity bought and sold.
c. Raises the equilibrium price, and increases the quantity bought and sold.
d. Lowers the equilibrium price, and increases the quantity bought and sold.
e. Equilibrium price and equilibrium quantity change are indeterminate.
Above the shutdown point, a competitive firm’s supply curve coincides with its:
a. marginal revenue curve.
b. marginal cost curve.
c. average variable cost curve.
d. average total cost curve.
The law of diminishing returns applies to which of the following segments of the
marginal product of labor curve?
a. The entire curve.
b. The downward-sloping segment only.
c. The upward sloping segment only.
d. The point where labor input is zero.
Exhibit 7-4 A marginal product curve
As shown in Exhibit 7-4, which of the following conclusions can you draw about the
firm’s total output curve?
a. It slopes downward throughout the range of 010 units of input.
b. It reaches a maximum at 5 units of output.
c. It has an inflection point at 5 units of input.
d. It has zero slope at 5 units of input.
Which of the following is not a common effect of imposing a rent control?
a. Discriminatory practices by landlords.
b. More time on waiting lists and searching for housing.
c. A “black market” for rentals.
d. An excess supply of rentals at the controlled price.
If fixed cost is $200,000 and variable cost is $30 per unit over the relevant range of
output, when 10,000 units are produced, the average total cost will be:
a. $20.
b. $30.
c. $50.
d. $70.
Exhibit 6A-1 Budget line
The equation for a budget line for goods X and Y, with Px being the price of X, Py being
the price of Y, and B being the budget, can be written as:
a. PxX + PyY = B.
b. PxX + PyY = 1 / B.
c. PxX = B + PyY.
d. PxX / PyY = 1 B.
Which of the following countries has the most unequal distribution of income?
a. The United States. .
b. Czech Republic.
c. Brazil.
d. cannot be determined.
The rule of reason refers to the interpretation of the courts that dominant firms should
be broken up because of their:
a. market share dominance. c. monopolistic behavior.
b. illegal business practices. d. All of these.
Protectionist policies such as tariffs and quotas are beneficial to the nation imposing
those trade barriers.
In response to a price change for good Y, if the cross-elasticity of demand for good Y is
negative, good X and good Y are substitutes.
If the price elasticity of demand coefficient equals 2, this means a 10 percent increase in
price will result in a 20 percent decrease in the quantity demanded.
Under fair-return pricing, a regulated natural monopoly will earn zero economic profit.
Critics of an equal distribution of income argue that the effect would be to raise the
incentive to be productive.
Use the idea of interpersonal comparisons of utility to argue for a progressive income
tax system where people in higher income brackets are charged higher tax rates on their
extra income.
Necessities have a much smaller price elasticity of demand, ceteris paribus, than goods
that have many close substitutes.
If the managers of the bus system found that revenues increase when fares are raised,
they would conclude that price elasticity demand for subway service is inelastic.