An increase in the number of producers of a good will
a. increase the market supply because the price will rise
b. increase the market supply only if market demand increases too
c. increase the market supply because market supply is the sum of all individual supply
curves
d. increase the market supply only if all suppliers have an identical supply curves
e. decrease the market supply because firms compete with each other and each firm will
supply more
One economic application of the slope of a line is
a. measuring unlimited wants
b. behavioral analysis
c. marginal analysis
d. allocative efficiency
e. rational self-interest
Exhibit 1-2
In Exhibit 1-2, when y is greater than 12, the
a. value of x is larger on curve A than on curve B
b. value of x is smaller on curve A than on curve B
c. value of x is the same on curve A as on curve B
d. slope of line A is negative
e. slope of line B is positive
Technological efficiency means that
a. technology is constantly improving in this industry
b. there are economies of scale in this industry
c. the same inputs could not be purchased at a lower cost
d. the same output could not be produced with fewer resources
e. the same output could not be produced at a lower cost
The more elastic the supply of a resource,
a. the greater is economic rent as a proportion of total earnings
b. the greater is opportunity cost as a proportion of total earnings
c. the fewer alternative uses the resource has
d. the greater the derived demand for the resource
e. the lower the derived demand for the resource
In the United States, imports have exceeded exports in every year since 1979.
a. True
b. False
Since 1930, U.S. government spending as a percent of GDP has
a. increased
b. decreased
c. stayed the same
d. showed no particular trend
e. increased by the same percent each year
Along a consumer’s demand curve, price reflects
a. the costs of production
b. the dollar value of the total utility from the good
c. the dollar value of the marginal utility of each additional unit of the good
d. the maximum quantity that could be purchased, given income
e. non-rational decision making
Exhibit 10-7
At the profit-maximizing output level, the firm in Exhibit 10-7 is
a. earning economic profit of $760
b. earning economic profit of $950
c. earning zero economic profit
d. earning economic profit of $990
e. suffering a loss of $1,000
Exhibit 1-2
In Exhibit 1-2, when y is less than 12, the
a. value of x is larger on curve A than on curve B
b. value of x is smaller on curve A than on curve B
c. value of x is the same on curve A as on curve B
d. slope of line A is negative
e. slope of line B is positive
A profit-maximizing monopolist will always operate where demand is unit elastic.
a. True
b. False
When sellers have better information about product quality than do buyers,
lower-quality products tend to become more common in the market.
a. True
b. False
Which of the following is not a basis for trade between two nations?
a. different skill levels of the labor forces
b. one nation’s absolute advantage
c. a difference in tastes between countries
d. economies of scale
e. different capital stocks
Exhibit 9-9
Maximum profit for the nondiscriminating monopolist in Exhibit 9-9 is
a. $4
b. $14
c. $3.50
d. $21
e. not measurable with the information given
Exhibit 10-5
In the long run, the firm in Exhibit 10-5 can expect
a. to shut down
b. entry into the industry which will reduce the demand for their product and lower their
profit
c. exit from the industry which will increase demand for their product and increase their
profitability
d. competitors to differentiate their products which will reduce the demand for their
product and lower their profit
e. no change in the industry
Most people on welfare
a. are not U.S. citizens
b. are poorly educated and have few job skills
c. do not qualify for food stamps, child care, or Medicaid
d. have jobs
e. are below the age of 16
Exhibit 10-12
The profit-maximizing (or loss-minimizing) price the firm would charge in Exhibit
10-12 is
a. nonexistent, since the firm should shut down
b. $3.25
c. $3.00
d. $2.50
e. between $2.50 and $3.00
According to William Niskanen, bureaucrats seek to
a. maximize profits
b. maximize tax revenues
c. maximize budgets
d. minimize variable costs
e. minimize total costs
If supply is more elastic than demand is, the
a. less the impact it will have on the consumers before tax income
b. more likely it is to lead to tax avoidance
c. less likely it will have any impact on market transactions
d. more the tax will fall on consumers
e. more the tax will fall on producers
Which of the following is likely to occur when a two-person game can be played
repeatedly?
a. Collusion and cooperation among the players
b. The prisoner’s dilemma
c. The industry demand curve will become perfectly elastic
d. The industry demand curve will become perfectly inelastic
e. There is no solution possible because of the indeterminate price quantity
combinations
Adverse selection is a situation in which
a. only men are hired for particular jobs
b. comparable worth laws actually reduce the number of women in certain professions
c. people who use illegal drugs apply for jobs where employers do not use drug testing
d. employers have a better knowledge of the productivity of labor suppliers than do the
labor suppliers
e. employers attempt to quantify the productivity of their workers
As long as scarcity exists,
a. product prices play no role in utility maximization
b. income plays no role in utility maximization
c. income and product prices must both be considered in utility maximization
d. consumers maximize utility by consuming all products until their marginal utility is
zero
e. product prices will be zero
If the government imposes a ceiling price on apartment rents, we would expect to
observe all of the following except one. Which is the exception?
a. an increase in the number of new apartment complexes being built
b. long waiting lists for apartment seekers
c. lower maintenance of existing apartments
d. conversion of some apartment complexes to condos
e. a shortage
Sharing music files is not a(n)
a. victimless crime
b. example of decisions about the use of capital
c. issue regarding intellectual property
d. current problem
e. important issue for the Recording Industry of America
Private markets can allocate resources optimally
a. under all circumstances
b. only if property rights are well defined and can be easily enforced
c. whenever property rights are well defined, regardless of whether they can be easily
enforced
d. whenever property rights can be easily enforced, regardless of whether they are well
defined
e. whenever there is no government intervention in the market
According to some economists, the protection granted to infant industries should be
a. terminated after one year.
b. for new firms that eventually would develop significant economies of scale in their
production processes
c. restricted to firms that face little competition
d. based on current absolute advantage
e. permanent
Exhibit 11-12
Exhibit 11-12 depicts a single firm hiring labor in a perfectly competitive labor market.
Initially, the marginal revenue product of labor is represented by MRP1 and the firm
operates at point D. Suppose there is an increase in the market price of the product
produced by labor, which point depicts the likely impact on this firm in their hiring
decision?
a. point C
b. point E
c. point A
d. point D
e. cannot tell from the information provided
Economies of scale can be caused by
a. all of the following
b. short-run increases in marginal productivity
c. the use of larger, more specialized machines
d. higher information costs as a firm expands
e. bureaucratic red tape as a firm expands
Exhibit 7-7
Fixed cost in Exhibit 7-7 equals
a. $20
b. $30
c. $50
d. $280
e. we cannot calculate fixed cost
Whether we look at marginal tax rates or average tax rates, the U.S. income tax is
a. progressive
b. based on the benefits received
c. proportional
d. regressive
e. All of the answers are correct.
In the United States, most income comes from stocks and bonds
a. True
b. False