The cross price elasticities among substitute goods will be extremely high when:
a. b and d.
b. they are very similar to each other.
c. people are consuming them frequently.
d. people consume them in equal quantities.
e. they are imperfect substitutes.
When airplanes take off and land at Logan airport, residents of East Boston complain
about the noise. The same planes make the same noise during the trip to Boston from
Paris, but there are no ____ for most of the trip because ____.
a. jet sounds; noise doesn’t travel at high altitudes
b. third parties; there are no externalities
c. externalities; there are no third parties
d. complaints; airplanes are insulated
e. free riders; passengers must pay to board the plane
Total utility is measured by a mythical unit called the:
a. bliss unit.
b. useful unit.
c. pleasure unit.
d. util.
Producer surplus measures the value between the actual selling price and the:
a. price sellers are willing to sell the product.
b. deadweight loss price.
c. lowest price sellers are willing to sell the product.
d. profit-maximization price.
Suppose a U.S.-made machine costs $500 and the exchange rate is 100 yen = $1. Now
the exchange rate changes to 90 yen = $1. Then the:
a. machine would now cost more dollars.
b. machine would now cost the Japanese citizen less yen.
c. machine would now cost less dollars.
d. machine would now cost the Japanese citizen more yen.
e. yen has depreciated in value.
Computers and software programs are:
a. inferior goods.
b. complementary goods.
c. goods with a cross-price elasticity of demand of 0.
d. substitute goods.
e. perfectly elastic goods.
Which of the following is not an obstacle to achieving environmental efficiency through
markets?
a. Transactions costs. c. Free-rider problems.
b. Income effects. d. Private negotiations.
Which of the following does not hinder economic development?
a. Low birth rates.
b. Low GDP that limits saving and investment.
c. Lack of knowledge.
d. Lack of technology.
e. Lack of physical capital.
The law of demand is graphically demonstrated by a(n):
a. perfectly vertical demand curve.
b. perfectly horizontal demand curve.
c. downward-sloping demand curve.
d. upward-sloping demand curve.
e. curved demand line.
If quantity demanded is greater than quantity supplied, then according to the market
process:
a. an excess supply exists.
b. the market is in equilibrium.
c. the price will rise.
d. the supply curve must be vertical.
e. there will be no tendency for the situation to change.
Which of the following firms operates in a natural monopoly?
a. Telephone company.
b. Electric company.
c. Water company.
d. All of these.
Exhibit 8-2 Total revenue and total cost graph
At an output of 250 units, as shown in Exhibit 8-2, marginal cost is:
a. greater than marginal revenue.
b. equal to marginal revenue.
c. less than marginal revenue.
d. none of these.
The Celler-Kefauver Act made it illegal to:
a. provide selective discounts.
b. set prices below marginal cost.
c. conspire to collude.
d. buy with cash a competitor’s patents, plants, or equipment.
e. price discriminate.
An economist left her $100,000-a-year teaching position to work full-time in her own
consulting business. In the first year, she had total revenue of $200,000 and business
expenses of $100,000. She made a(n):
a. economic profit.
b. economic loss.
c. implicit profit.
d. accounting loss but not an economic loss.
e. zero economic profit.
Which of the following statements is true?
a. TC = TFC TVC.
b. AVC = TC / Q.
c. TFC = TC TVC.
d. MC equals the change in ATC divided by the change in Q.
According to most economists, reducing automobile emissions to zero would be:
a. optimal. c. beneficial.
b. inefficient. d. impossible.
Producer surplus:
a. measures the value between the actual selling price of a product and the price at
which sellers are willing to sell the product.
b. is illustrated by the area above the supply curve and below the market price.
c. is maximized in market equilibrium.
d. all of these.