The most basic investigative tool of economics is the
a. concept of scarcity.
b. mechanism of supply and demand.
c. coordination and trade syndrome.
d. inflation-unemployment trade-off.
e. regulation of business.
For the typical student, taking an introductory course in economics should
a. turn the student into an economist.
b. teach the student solutions to most social problems.
c. teach the student how to answer complex social questions.
d. help the student learn to make rational decisions.
e. All of the above are correct.
A firm should keep producing output as long as the marginal profit is greater than zero,
no matter how small it is.
a. True
b. False
Figure 3-2
In Figure 3-2, a point such as D
a. can be obtained through new technology.
b. can never be obtained.
c. can only be obtained by a capitalist society.
d. represents a misallocation of resources.
Since World War II,
a. air pollution has worsened in most U.S. cities.
b. many new pollutants have been introduced or identified.
c. the federal government has reduced its reliance on economic incentives as a means of
reducing pollution.
d. All of the above are correct.
Stock prices can be described as “random walks” if there is no relationship between one
day’s prices and the following day’s prices.
a. True
b. False
One disadvantage of corporations is the double taxation of income to the owners.
a. True
b. False
How does scarcity affect the range of possible choices that decision makers face?
a. It narrows the choice to a single option.
b. It narrows the range of choices.
c. It increases the possible methods for solving problems.
d. It clarifies the choices by highlighting the best solutions.
e. It simplifies the choices and therefore widens the range.
How does the imposition of a tariff reduce the price of imports?
a. At the lower quantity supplied, the price to the importer is lower than if there were
free trade.
b. At the lower quantity demanded, the price to the importer is lower than if there were
free trade.
c. Supply of the product is increased from domestic production, reducing the price of
the imports.
d. Demand for the product is decreased, so that price must fall.
The marginal revenue product
a. tells how many dollars the marginal physical product is worth.
b. is the marginal physical product times price of the product under perfect competition.
c. is the marginal physical product times marginal revenue.
d. All of the above are correct.
Eliminating important details in economic analysis is necessary to understand the
complexity of the economy.
a. True
b. False
The key explanation for the prevalence of waterway pollution is
a. the inclusion in production of all costs involving use of the waterway.
b. that there are private costs but no costs to society.
c. that waterways are not private property and can be used free of charge.
d. that waterways are subject to the market’s normal control procedures.
Invention is the act of generating a new idea.
a. True
b. False
Figure 12-3
Oligopolist A cuts price in an attempt to enlarge his share of the market. His
competitors retaliate with identical price cuts. In this case, in Figure 12-3, oligopolist A
will move from point A to which point?
a. B
b. C
c. D
d. E
A change in input prices has no impact on the budget line.
a. True
b. False
Which of the following were invented centuries ago in China?
a. gunpowder
b. the wheelbarrow
c. printing with movable type
d. all of the above
Figure 7-8
Of the graphs in Figure 7-8, which resembles marginal cost?
a. 1
b. 2
c. 3
d. 4
What is the approximate number of Americans who have jobs?
a. 144 million
b. 200 million
c. 290 million
d. 310 million
e. 3.1 billion
Price and quantity decisions made by a company have vital influences on
a. the firm’s labor requirements.
b. consumer response to the product.
c. future success of the company.
d. All of the above are correct.
An increase in income shifts indifference curves outward.
a. True
b. False
At its long-run equilibrium level of output, the demand curve facing an individual
perfectly competitive firm is tangent to its
a. total economic profit curve.
b. long-run average cost curve.
c. marginal cost curve.
d. marginal profit curve.
What would the Herfindahl-Hirschman Index equal for an industry consisting of 20
firms with each holding a 5% market share?
a. 20
b. 100
c. 500
d. 2,500
If price rises, what happens to supply for a product?
a. It increases.
b. It decreases.
c. It does not change.
d. Uncertain-economic theory has no answer to this question.