The addition to total cost that results from employing one additional unit of a resource
is called
a. average factor cost.
b. marginal factor cost.
c. average total cost.
d. marginal cost.
If goods are not rationed according to price, if follows that
a. they won’t get rationed at all.
b. some non-price rationing device will be used to ration the goods.
c. first-come-first-served will necessarily be the rationing device used in the market.
d. there will be surpluses in the market.
e. none of the above
A political candidate running in a two-person race is likely to occupy
a. an extreme end of the political spectrum and hope that his or her opponent will
gravitate toward the middle so that he or she can then claim that his or her opponent has
flip-flopped.
b. the middle of the political spectrum and label his or her opponent as an extremist
(either liberal or conservative).
c. a position somewhere between the middle of the political spectrum and an extreme
end so that he or she can move either way shortly before the election.
d. one extreme end of the political spectrum early in the race and the other extreme end
near the end of the race.
The answer is: “A reduction in consumers’ surplus.” What is the question?
a. What is an effect of a rise in price?
b. What is an effect of a tariff?
c. What is an effect of a quota?
d. a and b
e. a, b, and c
A person who does not ignore a sunk cost increases the probability that
a. the past will influence the future.
b. the future will influence the past.
c. the future will be like the past.
d. there will be no future.
e. the future will be like the present.
Which of the following statements is true?
a. When production of a good yields positive externalities but output is currently at the
market level, then a change in output to the socially optimal level will certainly be for
the worse.
b. When production of a good yields negative externalities but output is currently at the
market level, then a change in output to the socially optimal level will cause benefits to
increase by an amount greater than costs will increase.
c. When production of a good yields positive externalities but output is currently at the
market level, then a change in output to the socially optimal level will cause benefits to
increase by an amount less than costs will increase.
d. a, b, and c
e. none of the above
If for good Z income elasticity is less than 1 but greater than zero, then demand for
good Z is income __________, and good Z is a(n) __________ good.
a. inelastic; normal
b. inelastic; inferior
c. elastic; normal
d. elastic; an inferior
e. unit elastic; normal
Suppose that all the necessary conditions exist for the realization of equal wage rates in
every labor market, but that currently the wage rate in market X is higher than the wage
rate in market Y. We expect that eventually the wage rate
a. in market X will increase more.
b. in market Y will decrease.
c. in market X will decrease and the wage rate in market Y will increase.
d. will not change in either market, because something out of the ordinary must have
caused the wage rates in the two markets not to be equal.
e. a and b
Some years ago, chemists at 3M Corporation were trying to create a super-strong glue.
Somehow they got their molecules twisted and came up with one of the weakest glues
ever made. But, rather than pouring it down the drain, they tried coating some paper
with it, and the “Post-It Note” was born. In this case, 3M was acting asa(n)
a. utility.
b. rationer.
c. entrepreneur.
d. abstraction.
The need for a rationing device results from scarcity.
a. True
b. False
Noble Prizewinner Ronald Coase argued that firms exist in order to reduce transaction
costs.
a. True
b. False