A corporate bond sold in 2000 with a face value of $10,000, a $100 coupon, and a
maturity date in 2010
a. will pay the bondholder $100 a year every year from 2000 to 2010 and will also pay
him $9,000 in 2010.
b. will pay the bondholder $100 a year every year from 2000 to 2010 and will also pay
him $10,000 in 2010.
c. requires the bondholder to pay $100 a year every year from 2000 to 2010 and will
pay him $10,000 in 2010.
d. requires the bondholder to pay $100 in 2000 only and will pay him $10,000 in 2010.
Which of the following observations is not true of a budget line?
a. It indicates what choices are available to the consumer.
b. It is a curve of constant expenditure.
c. Its slope reports the market terms on which the consumer can trade one good for
another.
d. It helps examine the consumer’s preferences.
Figure 22-9
In Figure 22-9, hostilities break out between Pastaland and Pestoland after Pestoland
violates the Treaty of Basil. Consequently, trade stops and the price of pasta
a. rises to OJ in both countries.
b. falls to OC in both countries.
c. falls to OC in Pastaland and rises to OJ in Pestoland.
d. rises to OJ in Pastaland and falls to OC in Pestoland.
If savers do not have fixed savings goals, the supply curve of loanable funds will
generally be
a. horizontal.
b. downward sloping.
c. vertical.
d. upward sloping.
The key element in preserving a monopoly is
a. government subsidy of critical enterprises.
b. keeping potential rivals out of the market.
c. guaranteeing availability of substitute products.
d. increased advertising expenditure.
Economists generally consider the use of taxes as the most efficient way of solving
pollution problems.
a. True
b. False
In the long run, a perfectly competitive firm earns no accounting profits.
a. True
b. False
Which of the following could explain a fall over time in the price of the depletable
resource aloe?
a. The productivity of aloe mines fell.
b. New deposits of aloe were discovered.
c. Demand for aloe increased over time.
d. All of the above are correct.
Individuals face scarcity; whole societies do not.
a. True
b. False
Rent seeking refers to unproductive activity in the pursuit of profit.
a. True
b. False
Table 11-2
In Table 11-2, average cost at the profit-maximizing output is how much?
a. $5
b. $8
c. $10
d. $11
A theory can best be defined as
a. an untested assertion of untested fact.
b. a collection of assumptions that simplify the real world.
c. an opinion of a reliable person who studies a subject or discipline.
d. a deliberate simplification of factual relationships that attempts to explain how those
relationships work.
e. the body of knowledge that has been scientifically verified by the scientific
community.
In a planned economy the concept of efficiency is
a. more important than in a market economy.
b. less important than in a market economy.
c. not important at all.
d. as important as in a market economy.
A firm that is earning zero economic profit should go out of business.
a. True
b. False
In an attempt to reduce poaching of elephant tusks for ivory, officials in Kenya burned
illegally gathered ivory. Economists tend to point out that
a. poaching can be reduced with price supports for ivory.
b. the supply of ivory has fallen, leading to an increase in price and reward for
poaching.
c. burning ivory decreases demand, leading to lower prices and reward for poaching.
d. the demand for ivory is higher, leading to an increase in price and reward for
poaching.
e. burning ivory raises demand, and controlled prices will lead to even greater
poaching.
If the firm’s marginal physical product is 8, and its handicrafts sell for $70, at a labor
cost of $150, the firm is operating
a. short of an optimal input point.
b. at the optimum input point.
c. beyond the optimum input point.
d. There isn’t enough information to determine if the input point is optimal.
Figure 22-6
From the graph in Figure 22-6, the opportunity cost of a unit of bananas is
a. 4 units of corn for England; 1/2 unit of corn for Honduras.
b. 1/4 unit of corn for England; 2 units of bananas in England.
c. 8 units of corn in England; 3 units of corn in Honduras.
d. 4 units of corn in England; 12 units of corn in Honduras.
Figure 8-4
In Figure 8-4 at output level 2,
a. MR > MC.
b. the slope of the total profit curve is negative.
c. there are negative profits.
d. marginal revenue is rising compared to output.
A corporation has legal status like an individual citizen.
a. True
b. False
Cartels provide uniform management, but none of the advantages of economies of
scale.
a. True
b. False
The relationship between a change in consumer income and a resulting change in
demand for a good is
a. demand elasticity.
b. income elasticity of demand.
c. cross elasticity of income demand.
d. supply elasticity.
Unions typically ____ deregulation because it generally makes pricing ____
competitive.
a. oppose; more
b. oppose; less
c. support; more
d. support; less
One of the most important changes in the composition of the labor force in the United
States has been
a. the major increase in the number of women who work outside the home.
b. the drop in the number of men who only work part-time.
c. the steady decline in the number of women who work.
d. the increase in the ratio of male workers to female workers.
e. the major increase in the number of men who work away from the home or farm.
As a student, one of the costs of sleeping in rather than going to class is likely to be a
lower grade in the class.
a. True
b. False
Define the following terms:
a. Recession
b. Mixed economy
c. Transfer payments
d. Progressive taxation