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The presence of large sunk costs often serves as a naturally imposed barrier to entry.
a. True
b. False
How the price of a depletable resource changes over time depends on
a. how the technology of resource extraction changes.
b. the interest rate.
c. how the technologies of production change in firms that use the resource.
d. All of the above are correct.
A quota is
a. a tax on exported items.
b. a tax on imported items.
c. a limit on the amount of imports.
d. a subsidy to export.
Figure 6-8
Libya sold more crude oil in 1985 than it sold five years earlier, but revenues were 17
percent less. Which graph in Figure 6-8 is consistent with this set of facts?
a. 1
b. 2
c. 3
d. 4
If one includes in-kind income in the calculation, the
a. official poverty rate becomes meaningless.
b. incidence of poverty actually increases.
c. poverty rate is unchanged.
d. fraction of the population in poverty drops.
The market level of rent
a. is entirely determined by the demand side.
b. is determined by its elastic supply.
c. is difficult to determine because of shifts on the supply side.
d. generally settles at levels below any rent controls favored politically.
As long as TVC < TR, a firm will have a positive level of output in the short run.
a. True
b. False
One benefit of U.S. society that helped foster entrepreneurship was free public high
school education.
a. True
b. False
Price controls usually enhance efficiency in the allocation of resources.
a. True
b. False
A fall in the price of a competing product will produce an outward shift in the demand
curve for most products.
a. True
b. False
Julie is in the 28 percent tax bracket. She earns an 8 percent rate of return after taxes on
a tax-free municipal bond. What will the after-tax rate of return be on a taxable bond
(with equal risk)?
a. 36 percent
b. 28 percent
c. 14 percent
d. 8 percent
A large government faces a production possibilities frontier much like a business firm
does.
a. True
b. False
The slope of a consumer's indifference curve between two commodities represents
a. her marginal rate of substitution between the commodities.
b. the relative prices of the goods.
c. her marginal revenue from selling the commodities.
d. her marginal revenue product from consuming the commodities.
According to Piketty, economic history is the story of a race between:
a. capital accumulation
b. population growth
c. technological progress
d. all of the above
e. a and c only
The major drawback of a price ceiling is
a. it causes a surplus.
b. government regulations of this kind are difficult to enforce.
c. it causes a shortage.
d. There is no drawback.
Table 22-1
From Table 22-1, the United States
a. has an absolute advantage over Great Britain in the production of textiles.
b. has an absolute advantage over Great Britain in the production of wheat.
c. has a comparative advantage in the production of textiles.
d. should export textiles to Great Britain.
Some college students have claimed that because their incomes will be higher as a
result of attending college, there is no opportunity cost of attending college. Do you
agree? Explain.
Why might the money price for something be higher than the opportunity cost? Why
might it be lower? Give an example of each to illustrate your answer.
List appropriate criteria for deciding whether a merger of two firms producing similar
products should be permitted.
Why do economists abstract, and is it appropriate?
Explain the relationship between opportunity costs and money costs. Can they be
treated as identical?
Americans are creating an enormous amount of solid waste daily-over 4 pounds per
person per day. How is the United States coping with this extraordinary problem?
Discuss the role of individuals and governments in committing environmental damage.
How do income redistribution programs affect equality and efficiency?
How do economists define efficiency? Elaborate.
Define equilibrium as it relates to markets. Describe the process by which a market
reaches a new equilibrium. Include an appropriate diagram.
