If an industrial union would strike if it does not receive a particular wage rate, then the
supply curve of labor in this market
a. is horizontal at that particular wage rate until it intersects the original supply of labor
curve
b. is vertical at that particular wage rate until it intersects the original supply of labor
curve
c. shifts to the left
d. disappears
e. slopes downward
Exhibit 20-4
Suppose the Swiss government wants to set the exchange rate at A in Exhibit 20-4. The
appropriate action for the government to take after the demand shift shown is
a. to reduce its demand for dollars from Canada
b. to reduce its supply of francs to Canada
c. to increase its supply of francs to Canada
d. to raise the price of foreign exchange in Canada
e. to increase the U.S. demand for goods and services from Switzerland
A resource price taker’s resource demand curve is
a. horizontal
b. the same as its marginal resource cost curve
c. the same as its marginal revenue product curve
d. the same as its marginal product curve
e. the same as its average variable cost curve
Household production is more likely to occur when
a. it requires many specialized resources
b. technology makes it more costly than market production
c. tax avoidance is undesirable
d. less control over the final product is desirable
e. the opportunity cost of household work is relatively small
Exhibit 19-3
In Exhibit 19-3, if the world price of corn is $2 and there are no trade restrictions, the
United States will
a. produce 3,000, consume 7,000, and export 2,000 bushels of corn
b. have an excess supply of corn
c. be a net exporter of corn
d. not produce any corn
e. consume all of the corn that it produces
A public good, such as a community’s emergency warning sirens, typically
a. imposes benefits on only a few individuals but imposes costs on many people
b. imposes both benefits and costs on relatively few individuals
c. imposes benefits on many individuals but imposes the costs on relatively few people
d. imposes both benefits and costs on many individuals
e. only imposes costs on individuals when logrolling is prevalent in the government
A consumer maximizes utility when the marginal utilities of all goods
a. having positive money prices that are equal to zero
b. are equal
c. are maximized
d. are equal to the opportunity costs for all goods that are considered necessities
e. are exactly proportional to their market prices
If Dian chooses a job with a lower income over one with a higher income, she cannot
be maximizing utility.
a. True
b. False
Exhibit 5-27
Consider Exhibit 5-27. Which graph depicts a perfectly elastic demand?
a. Graph A
b. Graph B
c. Graph C
d. Graph D
e. both graphs A and B
A prisoner’s dilemma can be described as a situation in which
a. a decision maker is uncertain about the potential punishment for something done in
the past
b. an individual decision maker finds it in his best interest to pursue a course of action
that can lead to a less than desirable outcome for the group
c. producers act so as to avoid maximizing profits because of government retaliation
d. individual firms seeks to maximize their own profits with no regard for the group
e. the summation of individual demand curves creates an inelastic demand curve facing
the industry
As an example of how interrelated the global economy has become, the increased
demand for biofuels to replace fossil fuels is a major driver of
a. oil exploration
b. increased gasoline refinery capacity
c. deforestation
d. tariffs
e. increased rainforest acreage
Scarcity is best defined as
a. unlimited resources
b. a shortage — when buyers cannot obtain the goods they want
c. a surplus — when sellers cannot sell the goods they produce
d. insufficient resources to satisfy unlimited wants
e. the private ownership of society’s resources
The marginal product of labor is the
a. cost of one worker
b. average output per worker
c. change in revenue from selling one more unit of output
d. change in revenue from using one more unit of labor
e. change in output from using one more unit of labor
According to a 2011 survey by PayScale.com, the increase in median pay for
economics majors with 10-20 years of experience compared to economics majors with
0-5 years of experience is:
a. 150%
b. 100%
c. 80%
d. 60%
e. 25%
According to a 2011 PayScale.com survey, among college majors with 10-20 years of
experience, economics ranks second only to computer engineering in terms of the
median pay.
a. True
b. False
If, as a result of a change in demand in a perfectly competitive increasing-cost industry,
price and quantity rise, demand must have risen
a. True
b. False
Although some of the statements below are true of both normal goods and inferior
goods, only one of the statements defines a normal good. Which one?
a. Normal goods are those for which the income effect is positive.
b. Normal goods are those for which the income effect is negative.
c. Normal goods are those for which the substitution effect overrides the income effect.
d. Normal goods are those for which the income effect overrides the substitution effect.
e. Normal goods are those for which demand increases when price increases.
Exhibit 2-2
According to Exhibit 2-2, if Maria types one fewer page, how many loads of laundry
can she do in the time saved on typing?
a. 4 loads
b. 6 loads
c. 2/3 of a load
d. 3/2 of a load
e. it cannot be determined
One effect of the work requirements of welfare reform has been
a. to make the demand curve for welfare upward sloping
b. to lower the “price” of welfare to recipients
c. to make the supply curve of welfare upward sloping
d. to reduce the amount of hassle involved with going on welfare
e. to raise the “price” of welfare to the recipients
The market value of a bond is __________ related to the rate of interest.
a. directly
b. inversely
c. exactly
d. sometimes
e. never
Which of the following is a credit item (+) in the U.S. balance of payments?
a. U.S. companies sell merchandise abroad.
b. Foreign companies sell merchandise to U.S. consumers.
c. U.S. consumers send money to foreign companies.
d. Immigrants to the United States send presents of money back to their families in their
native countries.
e. Immigrants to the United States send presents of goods back to their families in their
native countries.
If Debbye is willing to pay $50 for a pair of shoes but only has to pay $20 because the
shoes are on sale, then her consumer surplus on that pair of shoes is
a. $50
b. $20
c. $70
d. $30
e. $25
Which of the following is not an example of derived demand?
a. More people want to plant gardens in the spring; therefore, demand for hoes and
shovels increases then.
b. Strong ticket sales for a concert cause the producers to schedule an extra show and
demand more ushers.
c. Increased use of robots leads to a decrease in demand for labor.
d. The development of alternative fuels made from corn leads to an increase in demand
for corn.
e. Increasing demand for music leads to the construction of more recording studios.
The Sherman Antitrust Act of 1890
a. immediately reduced the number of trusts and the incidence of anticompetitive
behavior
b. established the Antitrust Division of the Department of Justice
c. did not apply to farmers
d. was not fully enforced at first
e. prohibited price discrimination
Social Security and Medicare, programs that benefit the elderly primarily, make up the
greatest share of federal redistribution programs since 1962.
a. True
b. False
Marginal social cost is equal to
a. total private cost
b. marginal private cost
c. marginal external cost
d. marginal private cost plus marginal external cost
e. marginal private cost divided by marginal external cost
Exhibit 10-15
Exhibit 10-15 depicts the payoff matrix facing Eagle Tobacco and Dan”l Boone
Tobacco with respect to their decisions to advertise or not. Eagle Tobacco’s dominant
strategy is not to advertise.
a. True
b. False
Two important roles of government in the economy are to safeguard private property
and enforce contracts.
a. True
b. False
Resource owners supply resources in ways that
a. maximize their utility
b. maximize their income
c. minimize the amount of work
d. maximize the amount of work
e. maximize the demand for their resource
It is difficult to say whether welfare “causes” daughters from welfare families to be
more likely to participate in the welfare system themselves because
a. the same factors that contribute to a mother’s welfare status can also contribute to her
daughter’s welfare status
b. no research has been done on this topic
c. economists are unconcerned with questions about welfare status
d. if two factors occur together, then one must cause the other
e. it is possible that the daughter’s welfare status “causes” the welfare programs