At an equilibrium price, quantity demanded
a. exceeds quantity supplied.
b. equals quantity supplied.
c. is less than quantity supplied.
d. Any of the above is possible.
Which of the following illustrates government acting as a referee?
a. taxing high income persons
b. enforcing contract provisions between buyer and seller
c. buying new weapons for defense
d. mailing checks to social security recipients
e. collecting data on imports and exports
When an economist says a change in the market for land causes a farmer to use his land
more intensively, he means that the farmer
a. produces more output than before, so the marginal product of his land falls.
b. produces less output than before, so the marginal product of his land rises.
c. uses greater amounts of nonland inputs than before, so the marginal revenue product
of his land rises.
d. uses smaller amounts of nonland inputs than before, so the marginal revenue product
of his land falls.
Taxation can promote good social policy while minimizing economic inefficiency.
a. True
b. False
In a free market for rental housing, the average rental rate
a. includes a large amount of economic rent.
b. includes zero economic rent.
c. is entirely economic rent, since rental housing is fixed in supply.
d. is about 10 percent economic rent.
The largest single source of revenue for the federal government is the
a. corporate income tax.
b. federal excise tax.
c. personal income tax.
d. Social Security tax.
The relatively low rate of inflation coupled with a low unemployment rate that occurred
in the 1990s represented a “normal” economic situation.
a. True
b. False
The resolution of Adam Smith’s diamond-water puzzle is based on the distinction
between marginal and total utility.
a. True
b. False
The current deregulatory movement began to change laws to deregulation in the
a. early 1970s.
b. late 1970s.
c. early 1980s.
d. early 1990s.
The prices of most services have risen much faster than inflation in recent years
because
a. wages and salaries of service providers have risen much faster than inflation.
b. wages and salaries of service providers have risen but their productivity has not.
c. the productivity of service providers has risen dramatically.
d. the demand for services has risen.
Pure monopoly
a. is defined as having only one supplier.
b. has no close substitutes for its product.
c. exists when entry and survival of potential competitors is extremely unlikely.
d. All of the above are correct.
In the U.S. the percentage of the population that directly encounters poverty is
exceedingly high.
a. True
b. False
To efficiently manage traffic on a system of bridges,
a. the more-crowded bridges should have lower tolls, so that they are affordable.
b. the tolls should be equal for all bridges, so that people can choose the most
convenient routes.
c. tolls should be higher on more-crowded bridges and lower on less-crowded bridges.
d. there should be no tolls on bridges, because people should not have to pay to drive to
their jobs.
At a given output level, a monopolist earns a profit only if the
a. slope of its TR curve exceeds the slope of his TC curve.
b. height of its MR curve exceeds the height of his MC curve.
c. height of its demand curve exceeds the height of his MR curve.
d. height of its demand curve exceeds the height of his ATC curve.
An individual who acquires a bond from a corporation
a. lends money to the corporation.
b. borrows money from the corporation.
c. buys part of the corporation.
d. promises to pay part of any debts of the corporation.
The major problem with direct controls as an environmental protection measure has
been
a. inept administrators.
b. corrupt judges.
c. illegal dumping.
d. legislation with no teeth.
Economists make assumptions because
a. they need to incorporate value judgments into their models.
b. analysis without assumptions would be impossibly complex.
c. they always have imperfect information about reality.
d. assumptions are the final product of careful economic analysis.
e. assumptions allow economists to ignore things that they cannot explain.
If a market is contestable, then
a. long-run economic profits are minimal due to inefficiency.
b. long-run economic profits are zero.
c. short-run and long-run economic profits are zero.
d. positive economic profits are maximized due to the efficient production spurred by
the threat of entry.
Chicken and fish are substitutes. Therefore, the cross elasticity of demand between
chicken and fish is
a. negative.
b. positive.
c. zero.
d. Any of the above is possible.
A perfectly competitive firm is a price
a. giver.
b. taker.
c. maker.
d. leader.
Most business people calculate marginal cost and marginal revenue to decide how much
to produce.
a. True
b. False
Workers in American industry are more productive than those in many other countries
because of
a. the large supplies of machinery available.
b. abundant natural resources.
c. technical know-how.
d. All of the above contribute to American worker productivity.
Firms use collective bargaining to set higher market prices for their products.
a. True
b. False