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The corporate income tax is the single largest source of revenue for the federal
government.
a. True
b. False
A monopolistic competitor can expect to earn an economic profit in the long run.
a. True
b. False
Recently, Dow Chemical 8,5 percent bonds maturing in 2006 closed at $92 with a face
value of 100 This means the Dow bonds
a. sold for $92 each.
b. increased in value $92 that day.
c. sold at 92 percent of par value.
d. had the year of maturity changed to 1992
In a market economy, government decides the answers to the three economic decisions.
a. True
b. False
Which of the following acts prohibited false advertising?
a. Sherman Act
b. Clayton Act
c. Federal Trade Commission Act
d. Celler-Kefauver Act
Since price tends to equal total utility, the price of water is low and the price of
diamonds is high.
a. True
b. False
A monopolist's cost curves may shift up because of
a. advertising expenditure.
b. bureaucratic inefficiencies.
c. coordination problems.
d. All of the above are correct.
Figure 10-3
In Figure 10-3, the perfectly competitive firm is realizing a
a. loss equal to ABCE.
b. profit equal to ABCE.
c. profit equal to ABDF.
d. loss equal to ABDF.
Total utility can be thought of as the
a. total satisfaction derived from a bundle of goods.
b. minimum amount of money a consumer is willing to spend on a bundle of goods.
c. additional satisfaction a consumer receives from the marginal unit of a good.
d. willingness to pay for the marginal unit of a good.
Cross-elasticity of demand measures the responsiveness of the quantity demanded of
one good to a change in the price of another good.
a. True
b. False
In the short run, perfectly competitive firms can
a. make an economic profit.
b. take a loss.
c. break even.
d. All of the above are correct.
An economy is operating with optimum efficiency if
a. the price of the product is greater than marginal cost.
b. the production of more of commodity A entails the production of less of commodity
B.
c. marginal cost of output is greater than marginal utility of output.
d. an increase in output would result in a decrease in average cost per unit.
One major tax loophole intended to help state & local governments raise funds is:
a. fiscal federalism
b. tax exempt municipal bond interest
c. tax deductible mortgage interest
d. tax credits for solar panels
Figure 22-9
In Figure 22-9, Pestoland exports pasta to Pastaland. Equilibrium will occur when
a. points E and B are reached simultaneously.
b. either E or B is reached.
c. exports equal imports.
d. exports are maximized.
A commodity is ____ if it is used up when someone consumes it.
a. marginal
b. scalable
c. depletable
d. replaceable
Marginal, average, and total figures are bound together. If any two are known, the third
can be calculated.
a. True
b. False
The short run for the industry is defined as a period
a. too brief for new firms to enter the industry.
b. too brief for old firms to leave the industry.
c. in which the number of firms in the industry is fixed.
d. All of the above are correct.
Profit maximization occurs when MC = MR.
a. True
b. False
