In the range of increasing marginal returns, total product is
a. increasing at a constant rate
b. increasing at an increasing rate
c. increasing at a decreasing rate
d. decreasing at an increasing rate
e. decreasing at a decreasing rate
A relaxation of U.S. immigration laws and regulations would
a. further reduce wages in poorer countries
b. turn some permanent resource differentials into temporary ones
c. increase the demand for labor in the United States
d. turn some temporary resource differentials into permanent ones
e. increase the supply of labor in poorer countries
Exhibit 4-2
Consider Exhibit 4-2. Which of the following represents a decrease in the quantity
supplied?
a. a movement from C to D
b. a movement from C to B
c. a movement from E to D
d. a movement from F to E
e. none of the above represents an increase in the quantity supplied
When marginal product is negative, the slope of the total product curve must be
negative.
a. True
b. False
In order to increase society’s well-being, education might be
a. taxed to discourage production
b. subsidized to encourage production
c. taxed to encourage production
d. subsidized to discourage production
e. provided without government intervention
Which of the following best states the main criticism of the Sherman Act?
a. It was overly harsh.
b. It was unnecessary at the time.
c. It was too vague.
d. It duplicated existing law.
e. It came too late in the Industrial Revolution.
A profit-maximizing monopolist that produces in the short run will
a. produce the level of output where marginal revenue exceeds marginal cost by the
largest amount
b. increase output as long as the marginal revenue exceeds the marginal cost of
producing that unit
c. produce the level of output where average total cost is at a minimum
d. increase price as long as the average revenue exceeds the average total cost
e. produce the level of output where average revenue exceeds average total cost by the
largest amount
Which of the following best defines foreign exchange?
a. a trade between two countries
b. the market where exporting and importing activities take place
c. the price of a currency relative to another currency
d. the currency of another country used for trading
e. the dollars that the United States uses to buy goods from other countries
Firms may easily enter a monopolistically competitive market.
a. True
b. False
Exhibit 6-30
Consider Exhibit 6-30. Assume that you have $600 to spend on books and compact
disks. What happens if the price of books falls to $5?
a. The budget line shifts inward along the horizontal axis.
b. The budget line shifts inward along the vertical axis.
c. The budget line does not move.
d. The budget line shifts outward along the vertical axis.
e. The budget line shifts outward along the horizontal axis.
If marginal utility is positive, then total utility is
a. constant
b. negative
c. increasing
d. decreasing
e. 0
Today’s supply curve of dorm rooms on campus is likely to be
a. downward sloping
b. relatively flat
c. vertical
d. horizontal
e. price elastic
A greater supply of video rental outlets along with the increased availability of
substitutes like cable channels made rental rates
a. decrease slightly
b. remain unchanged
c. crash
d. fluctuate wildly up and down
e. increase
Profit is the payment received by resource owners for the use of their capital.
a. True
b. False
At Tony’s Car Wash, a team of four workers washes and rinses each car by hand, and
one worker dries the car by hand. Which of the following is true?
a. Tony will have no principal-agent problems.
b. Tony will have more principal-agent problems in washing and rinsing than in drying
the cars.
c. Tony will have more principal-agent problems in drying than in washing and rinsing
the cars.
d. Tony will be awash in severe principal-agent problems.
e. Tony will have no incentive to monitor the car wash.
Government antitrust laws were designed to
a. encourage the production of public goods
b. prevent natural monopolies
c. prevent collusion among firms
d. regulate natural monopolies
e. correct the outcomes of positive and negative externalities in private markets
In order to increase society’s well-being, measles vaccinations might be
a. taxed to discourage production
b. subsidized to encourage production
c. taxed to encourage production
d. subsidized to discourage production
e. provided without government intervention
Ad valorem tariffs on imports are based on a percentage of an import’s value; specific
tariffs are based on a lump sum per physical unit imported.
a. True
b. False
In most markets, each consumer
a. faces the same money price and time price
b. faces different money prices and different time prices
c. faces the same money price but different time prices
d. faces different money prices but the same time price
e. has the same individual demand curve for the product
If all my savings are invested in my consulting company, an increase in the interest rate
increases my implicit costs.
a. True
b. False
When faced with a choice, a person assesses alternatives as long as the expected
marginal __________ of gathering more information about the person’s opinions
__________ the expected marginal __________.
a. benefit, is less than, cost
b. cost, exceeds, benefit
c. benefit, exceeds, cost
d. benefit, is greater than, benefit
e. cost, is greater than, benefit
If General Electric finds that when it doubles both its plant size and the amount of
associated inputs, its output level does not double, then
a. the law of diminishing returns is in effect
b. long-run average costs must be decreasing
c. the firm is experiencing diseconomies of scale
d. the firm should increase production
e. the firm is experiencing constant returns to scale
Which of the following involves signaling?
a. high wage rates attracting a larger pool of applicants for a job
b. firms taking advantage of outsourcing when transactions costs are low
c. reporting one’s college GPA on a resume
d. paying higher wages to workers who produce more
e. requiring the sales staff to work strictly on commission
The market labor supply curve is the
a. vertical sum of the individual labor supply curves
b. horizontal sum of the individual labor supply curves
c. vertical difference of the individual labor supply curves
d. horizontal difference of the individual labor supply curves
e. average of the individual labor supply curves
An example of a poverty trap is
a. extended time periods without war
b. a lack of mineral wealth
c. a dysfunctional or corrupt government
d. laws and regulations to help detect fiscal fraud
e. None of the answers is correct
The trade balance is
a. the services balance plus the current account balance plus the capital account balance
b. merchandise exports minus merchandise imports
c. the current account balance plus the capital account balance
d. foreign purchases of domestic assets minus domestic purchases of foreign assets
e. the services balance plus the capital account balance
Other things equal, if the government increased the quantity of pollution rights to be
sold,
a. pollution would not be affected
b. the price of pollution rights would rise, and the amount of pollution would decrease
c. the price of pollution rights would fall, and the amount of pollution would decrease
d. the price of pollution rights would fall, and the amount of pollution would increase
e. the price of pollution rights would rise, and the amount of pollution would increase
A signal works best if
a. it is acquired with equal ease by all workers
b. it is not acquired with equal ease by all workers
c. it is not understood by the employer
d. it is not understood by the employee
e. wages are allowed to vary
According to Coase, the optimal allocation of resources is guided by
a. the decisions of a firm’s managers
b. market prices when market transaction costs are greater than the firm’s internal
organization costs
c. the decisions of a firm’s managers when market transaction costs are greater than the
firm’s internal organization costs
d. the decisions of a firm’s managers when market transaction costs are less than the
firm’s internal organization costs
e. entrepreneurs
If a good is offered to you free of charge, then you
a. never stop consuming it
b. stop consuming it when its marginal utility begins to fall
c. stop consuming it when its marginal utility begins to increase
d. stop consuming it when its marginal utility equals 0
e. stop consuming it when its total utility equals 0
For which of the following groups has the poverty rate declined most in the United
States?
a. unmarried heads of households
b. married heads of households
c. less-educated African-Americans
d. African-Americans with high school but not college educations
e. people 65 and older
The increased labor force participation of married women in the United States is most
often explained by
a. declining productivity in agricultural production
b. a rise in average household size
c. increased education and an increased demand for labor
d. the decreased opportunity cost of working in the home
e. declining productivity in household production