The total amount of consumption of a society can be increased if
a. firms allow each worker to perform multiple tasks.
b. resources are allocated by a central planning group.
c. individuals engage in specialization and voluntary trade.
d. barter exchange is used in place of money.
In perfect competition, a firm’s marginal revenue equals the price of the product.
a. True
b. False
An investor in an index fund earning 12,3% per year would see an investment of
$10,000 increase to approximately ____ in 25 years.
a. $11,000
b. $48,000
c. $54,000
d. $170,000
In an ideal free unregulated market
a. supply curves reflect all negative externalities.
b. external benefits are abundant.
c. all individual and social needs are met by the market.
d. optimal quantities of all goods and services are produced.
The United States has approximately
a. 80,000 businesses.
b. 5.1 million businesses.
c. 12.5 million businesses.
d. 28.million businesses.
To an economist, theory can be thought of as
a. abstraction for the sake of argument.
b. one person’s opinion, which is just as good as another’s.
c. another term for the description of a situation.
d. beliefs which cannot necessarily be verified.
e. explanation of mechanisms behind observed phenomena.
Marginal revenue product is the
a. additional revenue from one additional dollar increase in price.
b. change in the revenue product resulting from one additional unit of input.
c. additional revenue from one additional unit of input.
d. change in revenue resulting in one additional dollar in price.
In which of the following examples is excess burden not present?
a. Harriet decides to give up her Saturday hours at her law office after income tax rates
rise.
b. Rudolf still smokes three packs a day even after the excise tax on cigarettes rose 10
cents a pack.
c. Wilma reduced the automatic payroll deduction to her savings account after the tax
on interest was imposed.
d. Harper decided to take a vacation in Bermuda rather than invest in stocks after the
tax rate on capital gains was increased.
Centrally planned economies do not use the price system for anything.
a. True
b. False
Table 7-2
Table 7-2 contains information on widget production. The average physical product of
the seventh pound of plastic is calculated as ____.
a. 9/25
b. 2
c. 25/9
d. 19/7
A budget line is a straight line designed to show
a. how income is related to hours worked.
b. all combinations of two goods that can be purchased with a given income.
c. the way a homemaker should divide money among several commodities.
d. that if more money is spent on one good, the breadwinner must work all the harder to
maintain a satisfactory level of living.
e. preferences for goods and services.
Generally, economists agree that the economic outlook for the U.S. is seriously
challenged.
a. True
b. False
Which principle states that as the production of one good expands, the opportunity cost
of producing another unit of this good generally increases?
a. Principle of total cost
b. Principle of increasing cost
c. Principle of opportunity cost
d. Principle of increasing marginal utility
All other things being equal, an increase in the supply of labor will lead to a fall in the
wage.
a. True
b. False
The U.S. spends more on education, and achieves far worse results. The underling
cause of this disparity may have to do with:
a. the cost per student spent
b. the high degree of inequality in the U.S.
c. the difference in property tax rates
d. both the high degree of inequality in the U.S. and the difference in property tax rates
Invention alone does not explain why free market societies have experienced such rapid
rates of economic growth.
a. True
b. False
Expenditures for attending college can be viewed as an investment in human capital.
a. True
b. False
An oligopoly is a market in which at least some firms are large enough to influence
market price.
a. True
b. False
The supply curve for funds
a. is generally positively sloped.
b. depends upon people’s savings plans.
c. is a function of the interest rate.
d. All of the above are correct.
It is easy to discern the difference between vigorous competition and the exercise of
monopoly power.
a. True
b. False
For economic efficiency, which of the following conditions should be met?
a. Scarcer goods should have lower prices.
b. More abundant goods should have lower prices.
c. More abundant goods should have higher prices.
d. All goods should have equal prices.