A rationing device is a method used to resolve who gets what of available goods and
resources.
a. True
b. False
A theory is an abstract representation of reality. This means a theory
a. is descriptive of the way the world is.
b. is an unrealistic representation of reality.
c. omits certain factors when trying to explain something.
d. is usually expressed in professional jargon.
e. none of the above
When the official dollar price of a foreign currency is set below its equilibrium level,
the foreign currency
a. has been depreciated.
b. is overvalued.
c. is undervalued.
d. is devalued.
e. is revalued.
If natural monopolies are regulated to produce where there is a normal profit, they
produce where
a. price equals average total cost.
b. marginal revenue equals marginal cost.
c. price equals marginal cost.
d. marginal revenue equals average total cost.
The interest rate on a loan will be lower,
a. the shorter the term of the loan.
b. the less risk associated with the loan.
c. the lower the processing costs of the loan.
d. the lower the administrative costs of the loan.
e. all of the above
Suppose you go to a high school and identify groups of students sitting at different
lunch tables. To you it appears that everyone on the football team sits at one table,
everyone who gets really high grades sits at another table, everyone who is in the drama
club sits at another table, and so on.This outcome could be
a. the result of everyone preferring to sit at a table with dissimilar students, but not want
to be at a table if he or she is in a 30 percent minority or less.
b. because people naturally discriminate against (and make feel unwelcome) those
people who are not like them.
c. because the school authorities have instituted a one-week experimental plan to keep
students segregated (at lunch) according to certain key interests.
d. b and c
e. all of the above
Exhibit 23-4
The market equilibrium price is P1and the firm produces Q1. At this level of output,
average variable cost and average total cost are indicated by the dots. Given this
situation, the firm is
a. receiving a profit equal to area 3.
b. taking a loss equal to area 2 + area 3.
c. earning total revenue equal to area 1 + area 2.
d. receiving a profit equal to area 2.
e. none of the above
The physical and mental talents people bring to production processes comprise the
resource called
a. entrepreneurship.
b. natural resources.
c. capital.
d. labor.
The price elasticity of demand for many agricultural products is (absolute value) less
than 1, meaning that these products are inelastic in demand.
a. True
b. False
Exhibit 21-1
In this example, marginal utility
a. constantly increases.
b. constantly diminishes.
c. increases then diminishes.
d. diminishes then increases.
Which of the following is a positive economic statement?
a. The temperature is too high today.
b. The temperature is 105 degrees today.
c. It is too hot to jog today.
d. I enjoy summer evenings when it cools off.
Which of the following conditions makes it most likely for a quota to be imposed?
a. The benefits of the quota are spread over many and the costs are concentrated on a
few.
b. The benefits of the quota are spread over many and the costs are spread over many.
c. The benefits of the quota are spread over few and the costs are spread over many.
d. The benefits of the quota are spread over few and the costs are spread over few.
e. There is not enough information to answer the question.
If a person’s income falls, his or her budget constraint moves
a. inward toward the origin, and its slope changes.
b. outward away from the origin, and its slope remains the same.
c. inward toward the origin, and its slope remains the same.
d. outward away from the origin, and its slope changes.
e. none of the above
Exhibit 35-4
Under a fixed exchange rate system, at the exchange rate of E1, the peso is __________
and there is a __________.
a. overvalued; surplus of dollars
b. undervalued; shortage of pesos
c. overvalued; shortage of dollars
d. undervalued; surplus of pesos
The answer is: “There is a net loss to society.” What is the question?
a. What causes the distributional effects to outweigh the aggregate effects?
b. What is an effect of a reduction in producers’ surplus?
c. What is an effect of consumers’ surplus?
d. What is the effect of a tariff instead of a quota?
e. none of the above
Research by economists Bloom, Draca, and Van Reenen revealed that imports from
China were associated with not only lower consumer goods prices, but also a
______________ cost of inputs for domestic firms, a(n) ______________ in the variety
of products those domestic firms sold, and a(n) _______________ in U.S. productivity.
a. lower; increase; increase
b. higher; decrease; increase
c. lower; increase; decrease
d. higher; increase; decrease
e. €lower; decrease; decrease
The quantity supplied of land is constant regardless of price. Suppose a tax is imposed
on the rental price of land. Who will pay the greater share of such a tax?
a. The buyers will pay the entire share.
b. The sellers will pay the entire share.
c. The buyers and the sellers will pay equal shares.
d. The buyers will bear the greater share of the tax.
The elasticity of demand for a factor is lower,
a. the higher the elasticity of demand for the product the factor helps to produce.
b. the higher the factor cost-total cost ratio.
c. the fewer substitutes for the factor.
d. a and c
e. all of the above