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The law of diminishing marginal utility holds that at some point consumption of
additional units of a commodity adds less to total utility.
a. True
b. False
Elasticity of demand is another way to measure slope.
a. True
b. False
Social Security payroll taxes are examples of
a. progressive taxation.
b. regressive taxation.
c. proportional taxation.
d. marginal taxes.
All two-dimensional graphs must have an origin, a horizontal axis, and a vertical axis.
a. True
b. False
Figure 3-3
In Figure 3-3, a shift from A to B seems most consistent with which of the following?
a. Society decided to give guns lower priority.
b. There have been more technological advances in guns than in butter.
c. There is a massive immigration of labor.
d. There are unemployed resources in both guns and butter.
The interest rate is determined purely by market forces, and not by government
involvement.
a. True
b. False
The price elasticity of demand measure is generally stated as an absolute value.
a. True
b. False
Price discrimination by a firm is
a. illegal under all circumstances.
b. legal if the firm can show that the difference in the prices charged customers is
justified by a difference in the costs of serving them.
c. legal if the firm can show that the demand for its good is relatively elastic.
d. legal under all circumstances.
Entrepreneurship is the act of starting new firms and taking the risks that are necessary
in business opportunities.
a. True
b. False
A bilateral monopoly is a market situation in which there is only one buyer and only
one seller.
a. True
b. False
Currently, college graduates are earning about ____ more than high school grads over
the course of their careers.
a. $100,000
b. $1,000,000
c. 25%
d. 60%
Price and output decisions are two aspects of the same choice.
a. True
b. False
Because resources tend to be specialized, increased production of military goods tends
to
a. decrease the opportunity cost of more military goods.
b. increase the opportunity cost of more non-military goods.
c. increase the opportunity cost of more military goods.
d. change the position of the production possibilities curve.
e. alter the slope of the production possibilities curve.
Equilibrium price in international trade is the common price between exporting and
importing countries.
a. True
b. False
Price supports increase the supply of affordable milk for U.S. families.
a. True
b. False
