Economists predict that the __________ the cost of shirking to an individual, the
__________ shirking that individual will undertake, ceteris paribus.
a. lower; less
b. higher; less
c. lower; more
d. higher; more
e. b and c
Which of the following is not a condition of price discrimination?
a. The seller must be a price searcher.
b. The seller must be able to distinguish among customers who would be willing to pay
different prices.
c. The possibility of arbitrage must not exist.
d. The seller must have zero fixed costs.
e. The seller must exercise some control over price.
A firm’s factor demand curve is also its _______________________ curve.
a. average physical product
b. marginal physical product
c. average revenue product
d. marginal revenue product
In the United States, the average household in the top quintile (of total money income)
contains fewer persons than the average household in the bottom quintile.
a. True
b. False
All sellers may be tempted to raise the price of what they sell, but a negative unintended
effect of raising the price could be __________ in units sold large enough to
__________ the seller’s total revenue earned.
a. an increase; raise
b. an increase; lower
c. a decrease; raise
d. a decrease; lower
What is a roundabout method of production?
a. It refers to an inefficient way of producing goods.
b. It refers to the production of capital goods that are used to enhance productive
capabilities.
c. It refers to hiring more workers and using fewer capital goods.
d. It refers to producing more consumer goods and fewer capital goods.
e. none of the above
Situation 27-1 A company is trying to decide whether it should produce good X in the
U.S. or in Mexico.Suppose a U.S. worker earns $15 per hour and a worker in Mexico
earns $4 per hour.Also suppose that the marginal physical product (MPP) of the U.S.
worker is 12 units of good X and the MPP of the Mexican worker is 3 units of good X.
The output produced per $1 of cost in Mexico is
a. 12.0 units of good X.
b. 1.0 units of good X.
c. 1.33 units of good X.
d. 0.75 units of good X.
Suppose a regulatory agency makes decisions that seem to require an ever-growing
agency budget and staff of regulators to monitor firms and enforce the decisions. This
would be evidence in support of the __________ theory of regulation.
a. public choice
b. public interest
c. capture
d. Stigler
All economists agree that the European Union is an example of a true a optimal
currency area.
a. True
b. False
Exhibit 21-8
If the price of good X rises, the budget constraint moves from budget constraint
a. 1 to 2.
b. 2 to 3.
c. 3 to 1.
d. 1 to 3.
e. a or c
Exhibit 34-11
PW is the price that exists in the market before a tariff is imposed and PW + T is the price
that exists in the market after a tariff is imposed. As a result of the tariff, producers’
surplus __________ by the area __________.
a. rises; EBCF
b. falls; DBE
c. rises; FCG
d. falls; DBCG
e. none of the above
Economists assume that the goal of consumers is to maximize marginal utility.
a. True
b. False
Increased productivity in the agricultural sector during much of the twentieth century
shifted the
a. demand curve for farm products rightward.
b. supply curve of farm products leftward.
c. demand curve for farm products leftward.
d. supply curve of farm products rightward.