If a good has a price elasticity of demand coefficient less than one, then:
a. this good has an elastic demand.
b. this good has an inelastic demand.
c. a 10 percent increase in the price will result in a greater than 10 percent decrease in
the quantity demanded.
d. the demand curve will be vertical.
Exhibit 6-4 Total utility for multiplex tickets, video rentals, and popcorn
In Exhibit 6-4, assume the Multiplex tickets cost $6 each, video rentals cost $2 each,
and bags of popcorn cost $1 each. What is the marginal utility of renting a third video?
a. 6 utils.
b. 8 utils.
c. 10 utils.
d. 30 utils.
Exhibit 15-2 Production possibilities curves for U.S. and Mexico
As shown in Exhibit 15-2, in Mexico, producing 1 additional ton of wheat costs:
a. 1/2 ton of cloth. c. 1 ton of cloth.
b. 2/3 ton of cloth. d. 1 1/2 tons of cloth.
“More productive workers receive higher wages than less productive workers.” This
observation is a major flaw in which of the following arguments for protectionism?
a. The infant industry argument. c. The employment argument.
b. The national security argument. d. The cheap foreign labor argument.
Which of the following would most likely increase the demand for televisions?
a. A decrease in the price of televisions.
b. A decline in consumer income.
c. A decrease in the price of home stereo systems, a substitute for televisions.
d. A decrease in the price of DVD players, a product that is complementary with
televisions.
Exhibit 6A-2 Consumer equilibrium
Given the budget line and indifference curves shown in Exhibit 6A-2, assume the
consumer is initially at point Y. To maximize total utility, the consumer should:
a. purchase more of good Y and less of good X.
b. remain at point Y.
c. move to point X and then point Y.
d. purchase more of good X and less of good Y.
How would a decrease in the price of the feed grains used to feed cattle affect the
market for beef?
a. The demand for beef would increase, increasing beef prices.
b. The demand for beef would decrease, decreasing beef prices.
c. The supply of beef would increase, decreasing beef prices.
d. The supply of beef would decrease, increasing beef prices.
Of factors which affect any economy’s production potential, the best two listed below
are:
a. resources and technology.
b. prices and outputs.
c. wages and prices.
d. taxes and prices.
e. resources and prices.
Which of the following best describes a cartel?
a. As a monopolist, a group of monopolistically competitive firms that jointly reduce
output and raise the price.
b. As a monopolist, a group of cooperating oligopolists that jointly reduce output and
raise the price.
c. A monopolist that reduces output and raises price.
d. A group of identical non-cooperative oligopolists that are able to reproduce a
monopoly equilibrium through price rivalry.
If a firm acquires the stock of a competing firm that causes a substantial lessening of
competition, it would be in violation of the:
a. Clayton Act.
b. Robinson-Patman Act.
c. Sherman Antitrust Act.
d. Federal Trade Commission Act.
e. Interstate Commerce Act.
A restriction on the quantity of a good that can be imported into a country is a(n):
a. tariff. c. embargo.
b. quota. d. restricted exchange rate.
Which of the following economies is an example of a mixed system?
a. The United States. c. Sweden.
b. The United Kingdom. d. All of these.
Exhibit 1A-4 Straight line
Straight line A-D in Exhibit 1A-4 shows that:
a. increasing value for X will increase the value of Y.
b. increasing value for X will decrease the value of Y.
c. increasing values for X do not affect the value of Y.
d. all of these.
Under monopoly, a firm:
a. is a price taker.
b. maximizes profit by setting marginal cost equal to marginal revenue.
c. will shut down in the short-run if price falls short of average total cost.
d. always earns a pure economic profit.
The Sherman Antitrust Act:
a. prohibited restraint of trade.
b. created the Federal Trade Commission.
c. prohibited fraudulent advertising.
d. regulated the railroads.
Monopsony means a product market with single buyer.
Assuming an economy is already experiencing full employment, then it must produce
more consumer goods and fewer capital goods if it wishes to experience greater rates of
economic growth over time.
Consuming one more of a good increases its marginal-utility-to-price ratio, and
consuming one less of the other good lowers its marginal-utility-to-price ratio.
Karl Marx predicted that the exploitation of workers would cause capitalism to
self-destruct.
What are the conditions for price discrimination?
Deadweight loss results from too few or too many resources used in a given market.
A nation’s current location on its production possibilities curve can determine the future
location of that nation’s production possibilities curve.
In general, GDP per capita is highly correlated with alternative measures of quality of
life.