In the long run,
a. both monopolists and perfectly competitive firms produce at minimum long-run
average total cost.
b. a monopolist will exit the industry if he is earning zero economic profit.
c. a monopolist will always charge a higher price than he charges in the short run.
d. consumer surplus is smaller if an industry is a monopoly than if it is perfectly
competitive.
A dominant strategy is one that is best for one player regardless of the strategy chosen
by the other player.
a. True
b. False
An increase in interest rates will generally lead to a(n) ____ in present investment and
a(n) ____ in future income and production.
a. decrease, decrease
b. decrease, increase
c. increase, decrease
d. increase, increase
Figure 6-6
The purchase of premium cable channels is an “all or nothing” choice. Which graph in
Figure 6-6 best illustrates the cable market demand curve?
a. 1
b. 2
c. 3
d. 4
There are frequently market solutions that the government can use to deal with
externalities.
a. True
b. False
Wendy retails motor homes, which she buys for a sum that does not vary with the
number she purchases from the manufacturer. She can sell eleven per week at $40,000.
If she limits sales to ten, she can charge $41,000 each. She will sell eleven per week if
the cost of each vehicle is no more than
a. $20,000.
b. $30,000.
c. $40,000.
d. $41,000.
The supply curve for land is perfectly elastic.
a. True
b. False
A negative cross elasticity indicates that two goods are complements.
a. True
b. False
Figure 19-3
Which panel in Figure 19-3 represents the case of an effective usury law?
a. 1
b. 2
c. 3
d. 4
Prejudice leads, inevitably, to economic discrimination.
a. True
b. False
A firm has positive fixed cost and positive variable cost. At its current level of output,
marginal cost equals average cost. The firm must
a. not be producing at its profit-maximizing level of output.
b. be producing the quantity that minimizes average cost.
c. be operating at a point at which total variable cost equals total fixed cost.
d. be earning negative profit.
As a general rule, an increase in the capital available to a society
a. reduces the slope of the production possibilities frontier, making it shallower.
b. increases the slope of the production possibilities frontier, making it steeper.
c. shifts the production possibilities frontier outward, away from the origin.
d. shifts the production possibilities frontier inward, toward the origin.
e. makes the production possibilities frontier more bowed out.
Over the last several years and until recently, the United States has had lower
unemployment rates than most European countries.
a. True
b. False
Corporations produce most of the output in the United States.
a. True
b. False
The opportunity cost of any good or service is the
a. actual dollar cost of doing or making it.
b. highest price that a seller can get for the item.
c. value of the next best alternative.
d. cost associated with a value judgment.
e. cost of producing the good or service.
Average cost is the cost of producing the next unit.
a. True
b. False
Figure 3-4
Which of the following would make point Q in Figure 3-4 attainable?
a. full-employment policies
b. a technological advance in the production of apples only
c. an increase in land available for agriculture
d. a transfer of available resources from apples to wheat
Figure 4-4
Assume that Figure 4-4 shows demand for steak. An increase in income of buyers will
change demand from
a. D1 to D2.
b. D2 to D1.
c. D3 to D2.
d. D3 to D1.
The entry of new firms into a perfectly competitive market shifts the demand curve
outward.
a. True
b. False