Increasing marginal opportunity cost means that the production possibility curve is:
A. bowed in so that for every additional unit of one good given up, you get fewer and
fewer units of the other good.
B. bowed in so that for every additional unit of one good given up, you get more and
more units of the other good.
C. bowed out so that for every additional unit of a good given up, you get fewer and
fewer units of the other good.
D. bowed out so that for every additional unit of one good given up, you get more and
more units of the other good.
Answer:
Refer to the graph above. Which curve represents the firm’s derived demand for labor
curve?
A. D.
B. S1.
C. S2.
D. MRP.
Answer:
Refer to the graph shown. The profits earned by the monopolistically competitive firm
represented equal:
A. $15.
B. $45.
C. $120.
D. $0.
Answer:
In the case of a public good, a demand curve that shows the marginal benefit of the
good is:
A. nonexistent.
B. the horizontal sum of individual demand curves.
C. the vertical sum of individual demand curves.
D. perfectly inelastic.
Answer:
Which of the following is one of the macroeconomic goals established by the 1946
Employment Act?
A. Preventing large fluctuations in exchange rates
B. Maintaining a constant level of consumer expenditure
C. Providing an economic environment conducive to growth
D. Ensuring that employers pay workers a minimum wage sufficient to escape poverty
Answer:
The United States imports:
A. only manufactured goods.
B. only services.
C. neither manufactured goods nor services.
D. both manufactured goods and services.
Answer:
Joan is deciding where to spend her spring break. If she goes to Cancún, Mexico, the
trip will give her 9,000 units of utility and will cost her $300. If she travels to Florida
instead, the trip will give her 8,000 units of utility and will cost her only $200. Joan will
do best going to:
A. Mexico because her total pleasure will be greater.
B. Florida because her total cost will be lower.
C. Mexico because her pleasure per dollar will be greater.
D. Florida because her pleasure per dollar will be greater.
Answer:
Refer to the graph shown. When the market is in equilibrium, consumer surplus is equal
to:
A. 1,125.
B. 1,500.
C. 2,250.
D. 2,500.
Answer:
The long-run average cost of producing 12 units of output is $54; the long-run average
cost of producing 13 units is $56. These numbers imply that:
A. economies of scale are present.
B. diseconomies of scale are present.
C. economies of scope are present.
D. diminishing marginal productivity is present.
Answer:
Refer to the graphs shown. The curve that best illustrates the law of supply is:
A. I.
B. II.
C. III.
D. IV.
Answer:
Microsoft has just taken some senators out to dinner in Paris in a private jet. This is
probably an example of an attempt to influence:
A. economic forces.
B. political forces.
C. social forces.
D. the price mechanism.
Answer:
Economies of scale are associated with:
A. indivisible setup costs.
B. zero setup costs.
C. the short run.
D. diminishing marginal productivity.
Answer:
The concentration ratio is defined as the:
A. percentage of industry output produced by a specific firm.
B. percentage of total industry output produced by the top firms.
C. squared value of the market shares of all the firms in an industry.
D. squared value of the market shares of the largest four firms in the industry.
Answer:
If average movie attendance is 250 million when prices are $7 a ticket and 200 million
when prices are $9 a ticket, the elasticity of demand for movie tickets is about:
A. 0.0.
B. 0.9.
C. 1.1.
D. 1.8.
Answer:
If the quantity of Arizona green teas demanded falls from 4.0 million to 3.0 million as
the price of Lipton green tea falls from $2.70 to $2.50, Arizona’s teas and Lipton’s teas
are:
A. substitutes.
B. complements.
C. luxuries.
D. inferior goods.
Answer:
Which of the following is most likely an example of constant returns to scale?
A. The per-unit costs of Excel Publishing Company’s manuals fell after a large order
was received from the government.
B. Alpha-Beta Inc. raised its price 10 percent after a 5 percent increase in production
costs.
C. Widget Manufacturing doubled its production by opening a new plant that was
identical to its old plant.
D. The XYZ Co. increased production 25 percent and experienced a 30 percent increase
in its total cost.
Answer:
Using indifference curve analysis, you can identify the point at which a consumer
maximizes utility where the slope of the:
A. indifference curve is -1.
B. budget line is -1.
C. indifference curve is equal to the slope of the budget constraint.
D. indifference curve is greater than the slope of the budget constraint.
Answer:
The Sherman Antitrust Act of 1890 was passed primarily because of:
A. the practices of various trusts in the railroad, steel, tobacco, and oil industries.
B. the popularity and political influence of John D. Rockefeller.
C. multiple examples of false and misleading advertising.
D. the monopoly abuses committed by ALCOA.
Answer:
A supply and demand model is a:
A. path-dependent model.
B. model that considers only important feedback effects.
C. model that considers all feedback effects.
D. model that does not consider feedback effects.
Answer:
If market demand increases in a perfectly competitive decreasing-cost industry:
A. new firms will enter the industry, factor prices will rise, and the price at which each
firm earns zero economic profit will increase.
B. new firms will enter the industry, factor prices will fall, and the price at which each
firm earns zero economic profit will fall.
C. some firms will exit the industry, factor prices will rise, and the price at which each
firm earns zero economic profit will increase.
D. some firms will exit the industry, factor prices will fall, and the price at which each
firm earns zero economic profit will fall.
Answer:
Refer to the graph shown. The quantity demanded when price is $16.00 per week is:
A. 2 CDs per week.
B. 4 CDs per week.
C. 6 CDs per week.
D. 8 CDs per week.
Answer:
Refer to the graph shown. If government establishes a minimum wage at $7.25 per
hour:
A. employers will be unable to find enough qualified applicants to fill the available
positions.
B. the number of job seekers will exceed the number of job vacancies, resulting in some
unemployment.
C. employers will be forced to hire 900 workers, resulting in reduced profits.
D. there will be a shortage in this labor market.
Answer:
If the United States imposes tariffs on steel imports:
A. the demand for steel shifts to the left and lowers its market price.
B. the supply of steel shifts to the right and lowers its market price.
C. the supply of the imported steel shifts to the left and raises its market price.
D. the demand for steel shifts to the left and raises its market price.
Answer:
At one time many economists were suspicious of brand names. They saw them as a
barrier to entry with no benefits to consumers. In the 1970s economists began to see a
possible benefit of brand names to consumers. They discovered that brand names were
a way to:
A. signal quality.
B. market public goods.
C. overcome negative externalities.
D. overcome the free rider effect.
Answer:
College education provides higher income for the individual but also a more productive
and more educated person who will contribute to society in many ways. Higher
education is an example of:
A. a positive externality.
B. a negative externality.
C. a nonexcludable service.
D. adverse selection.
Answer:
A reduction in the supply of labor will cause wages to:
A. decrease and employment to decrease.
B. increase and employment to decrease.
C. increase and employment to increase.
D. decrease and employment to increase.
Answer:
One advantage of a corporation over a sole proprietorship is:
A. greater accountability.
B. avoidance of double taxation.
C. ease of formation.
D. greater ability to obtain funds.
Answer:
For the purpose of determining whether a family is officially considered to be living in
poverty, poverty figures do not include:
A. after-tax income of the poor.
B. food stamps.
C. earned income.
D. profits of a small business owner.
Answer:
Consider the following payoff matrix facing Harry and Sally when each chooses to go
to the coffee shop listed. Harry wants to avoid Sally at the coffee shop and is not happy
when Sally ends up in the same shop he chooses. Sally would like to see Harry, and so
she is not happy when Harry ends up in a different coffee shop.
Assuming that Sally and Harry go to the coffee shop each day, what is Harry’s best
strategy?
A. Go to Starbucks because Sally won’t go there.
B. Go to Dunkin’ Donuts because Sally won’t go there.
C. Go to Starbucks one day and Dunkin’ Donuts the next and maintain that pattern.
D. Randomly choose between going to Starbucks and going to Dunkin’ Donuts.
Answer:
A widget has an opportunity cost of 4 wadgets in Saudi Arabia and 2 wadgets in the
United States. Given these opportunity costs, you would suggest that:
A. Saudi Arabia specialize in widgets and the United States in wadgets.
B. No trade should take place.
C. Saudi Arabia specialize in wadgets and the United States in widgets.
D. Both countries should produce an equal amount of each.
Answer:
Which of the following is the best example of an economic precept?
A. Predictable irrationality
B. The supply/demand model
C. The production possibility model
D. Laissez-faire
Answer:
The demand curve for a monopolist is:
A. perfectly elastic.
B. not relevant since the monopolist sets price.
C. downward-sloping.
D. perfectly inelastic.
Answer:
Countries such as Brazil, India, and Moldovawell-known sources of donorshave banned
buying and selling organs. This legal action comes at the risk of driving the trade
underground. What idea from Chapter 1 of the text does this story best illustrate?
A. Legal and social forces can eliminate economic forces.
B. Marginal revenue should equal marginal cost.
C. Economic forces always operate despite legal forces.
D. The invisible hand is not always invisible.
Answer: