If one country has an absolute advantage in every commodity, there is no reason for it
to trade.
a. True
b. False
Which of the following attitudes will be held by a typical firm in a typical cartel?
a. If I alone cheat, I’m better off; if everyone cheats, I’m worse off.
b. I can never do better for myself than by following agreed-upon cartel policies.
c. If everyone cheats, I’m better off and so is everyone else in the cartel.
d. If I suspect others are planning to cheat, I’ll do best for myself by deciding not to
cheat.
In 1964, the poverty line for a family stood at about which of the following figures?
a. $2,100
b. $3,000
c. $4,500
d. $7,500
A change in the price of a good will shift the indifference curves.
a. True
b. False
In the Santa Rita silver mines in Arizona in 1870, Mexican miners received about $12
per month while “American” miners received $70 Although the wages of both groups
tended to rise over time, the gap persisted until at least 1910. Mexican and American
miners did the same work and were equally productive. Economists call this pay
differential
a. prejudicial differentials.
b. compensating differentials.
c. economic discrimination.
d. Lorenz discrimination.
What rule must be followed to obtain an efficient allocation of resources?
a. P = AC.
b. P = MC.
c. P = AR.
d. MR = AC.
The slope of the demand curve conveys all the useful information about elasticity.
a. True
b. False
Cannon Mills used to be virtually the only employer in Kannapolis, North Carolina.
What is the name for a single hirer of labor, and how do wages and the number of jobs
available compare to a competitive labor market?
Which of the following would cause a movement up (or leftward) along the demand
curve for European autos in the United States?
a. an increase in the price of American autos
b. a decrease in the price of American autos
c. an increase in income in the United States
d. an increase in the price of European cars
If American imports run chronically above our exports, a trade deficit develops.
a. True
b. False
Al’s Donuts produces about 600 dozen doughnuts daily. If flour prices increase 20
percent
a. only marginal cost will shift up.
b. only marginal cost and average total cost will shift up.
c. marginal cost, average variable cost, and average total cost will shift up.
d. marginal cost, average total cost, average variable cost, and average fixed cost will
shift up.
To maximize its profit, a monopolistically competitive firm produces at the output level
at which
a. its price elasticity of demand equals one.
b. MR = MC.
c. its D curve is tangent to its ATC curve.
d. MR = AVC.
The opportunity cost of increased production of some good can be measured with
a. the slope of a ray to the production possibilities curve.
b. the area under the curve of a production possibilities curve.
c. the area of the rectangle bounded by the axes and the point on the production
possibilities curve.
d. the slope of the production possibilities curve.
e. All of the above are correct.
Although all points on the PPF are efficient, that alone does not tell us which point is
“best” for the society.
a. True
b. False
The quantity supplied by domestic producers in an importing country must be less than
the quantity demanded by its population.
a. True
b. False
In order to make an optimal choice we must use
a. percentage analysis.
b. total analysis.
c. average analysis.
d. marginal analysis.
The demand for computers has risen dramatically at the same time that the unit cost of
production has decreased. As a result, we can expect
a. a decrease in price and no predictable impact on output.
b. a definite decrease in price and increase in output.
c. an increase in output with no predictable change in price.
d. no predictable changes in either price or output.
The argument that the minimum wage law has significantly increased teenage
unemployment is not supported by recent statistical analysis.
a. True
b. False
Figure 5-13
In Figure 5-13, the slope of the budget line (dropping all minus signs) equals
a. price of good X/price of good Y.
b. price of good Y/price of good X.
c. the minimum number of units of good Y the consumer would have to receive to make
him willing to give up one unit of good X.
d. the minimum number of units of good X the consumer would have to receive to
make him willing to give up one unit of good Y.
Under a system of free, competitive markets,
a. a society can usually achieve efficiency only at the expense of equality.
b. poverty cannot exist in the long run.
c. employers do not practice statistical discrimination.
d. income is distributed equally across the population.