The labor supply curve facing an individual employer in a perfectly competitive labor
market is:
a. upward sloping.
b. downward sloping.
c. horizontal.
d. greater than MFC.
e. the MRP curve.
Excluding foreign competition, which of the following is an oligopoly in the United
States?
a. The computer industry. c. The steel industry.
b. The automobile industry. d. All of these are oligopolies.
Combinations of two goods along the indifference curve yield:
a. equal prices for the two goods.
b. equal marginal utilities.
c. the same total utility.
d. zero total utility.
The law of increasing costs indicates that the opportunity cost of producing a good:
a. is proportional to the production of the good.
b. is constant to the production of the good.
c. increases as more of the good is produced.
d. decreases as more of the good is produced.
e. increases as less of the good is produced.
A monopolized market is characterized by:
a. a sole seller of a product for which there are few suitable substitutes.
b. very strong barriers to entry.
c. a single firm facing the market demand curve.
d. all of these.
The term utility refers to the:
a. usefulness of a good in relation to its scarcity.
b. necessity of a good.
c. price of a good.
d. number of goods a consumer has.
e. pleasure or satisfaction a consumer receives upon consuming a good.
The income effect refers to a change in:
a. income because of changes in the CPI.
b. the quantity demanded of a good because of a change in the buyer’s real income.
c. the quantity demanded of a good because of a change in the buyer’s money income.
d. none of these.
Exhibit 9-2 Demand and cost information for a monopoly
Refer to Exhibit 9-2. Using the rule that focuses on the marginal approach to
maximizing profits, the monopolist maximizes profit by choosing price equal to:
a. $40.
b. $20.
c. $0.
d. $10.
e. $30.
What type of economic system is commonly described as being controlled by an
“invisible hand”?
a. A traditional economy. c. A market economy.
b. A command economy. d. A communist economy.
Suppose a country with a large domestic textile industry removed all tariffs on imported
textiles, we would expect domestic:
a. textile prices to decline. c. textile employment to increase.
b. textile production to increase. d. textile prices to rise.
A fishing boat owner brings 50,000 fish to market and the market price is $4 per fish.
Her average variable cost of 50,000 fish is $1 and the fixed cost of the boat is $100,000.
What is her profit per fish?
a. $1.
b. $500.
c. $5,000.
d. $25,000.
e. $500,000.
Troll Corporation sells dolls for $10.00 each in a market that is perfectly competitive.
Increasing the number of workers from 100 to 101 would cause output to rise from 500
to 550 dolls per day. The marginal revenue product for the 101st worker is:
a. $10.00.
b. $500.
c. $5,000.
d. $1,010.
Exhibit 4-4 Supply and demand curves for good X
An increase in buyers’ income, assuming good X is a normal good, combined with an
increase in the wage rate paid to workers producing good X would be represented by
which of the following changes in equilibrium shown in Graph C of Exhibit 4-4?
a. E1 to E2.
b. E1 to E3.
c. E3 to E2.
d. E1 to E3.
e. E4 to E1.
The nice thing about foreign exchange markets is that the goods are money, and they
are paid for with money. This means that if the U.S. dollar ____ the Japanese yen ____.
a. goes down; goes down
b. goes up; goes up
c. buys more yen; buys more dollars
d. buys fewer yen; buys fewer dollars
e. buys more yen; buys fewer dollars
Exhibit 11-11 Labor wage and cost data
In Exhibit 11-11, the total wage cost of hiring 15 employees is equal to:
a. $11.50.
b. $46.50.
c. $172.50.
d. $126.00.
e. $23.30.
Exhibit 7-1 Production of pizza data
Exhibit 7-1 shows the change in the short run production of pizzas as more workers are
hired. The table shows marginal product increasing between the 0 to 2 hired workers. A
possible reason for this increased marginal product is:
a. increased wages.
b. increases in plant size.
c. decreases in fixed cost.
d. increased division of labor as additional workers are hired.
e. increased product price.
Economics could be defined as the study of scarcity.
Graphically express a production possibilities curve. What do points on, inside and
outside the curve represent? What does a rightward shift of the curve represent? How is
economic growth expressed in terms of the production possibilities model?
Interlocking directorates are illegal under the Clayton Act whether or not the effect is to
lessen competition substantially.
Interpret what an increase in demand and an increase in supply mean. Discuss the
causes of an increase in demand and an increase in supply. How are increases in
demand and supply expressed graphically?
Monopolies may earn economic losses in the long run.
Using supply and demand analysis, customers will stand in line for gasoline when a
price ceiling is in force, even if the price ceiling is at a level higher than the equilibrium
price.
The income effect is the concept that changes in consumption of a good result from
changes in government spending.
A good economic model should capture as many details about real-world behavior as
possible.
A country should export the goods in which it has an absolute advantage.
A perfectly competitive market is characterized by highly advertised goods.