The United States is a fairly good example of
a. a mixed economy.
b. a pure market system.
c. a government-dominated economy.
d. a manufacturing economy.
e. a transitioning economy.
The three major sources of economic profit are
a. risk-bearing, innovation, and exercise of monopoly power.
b. risk-bearing, rent seeking, and discounting.
c. innovation, invention, and speculation.
d. exercise of market power, marginalization, and speculation.
Rhode Island has enacted a substantial increase in the tax on employers that finances
the workman’s compensation system. For some employers, the tax is about $25 per
$100 paid in wages. Employers claim they cannot afford to pay the tax. Under which of
the following conditions will the actual burden of the tax fall on employers?
a. The employers’ demand for labor is perfectly elastic.
b. The supply of labor is perfectly inelastic.
c. The employers’ demand for labor is perfectly inelastic.
d. The demand for the good they produce must be perfectly inelastic.
Roughly 144 million people in the United States hold jobs.
a. True
b. False
Demand for labor is
a. derived demand.
b. highly elastic.
c. dependant on its supply.
d. directly proportional to capital employed.
Scarcity limits the volume of goods that an economic system can produce, but does not
limit the production of services.
a. True
b. False
The laws of supply and demand did not apply to elephant tusks.
a. True
b. False
Table 22-4
Table 22-4 presents the demand and supply schedules for television sets in Japan and
the United States. If the United States and Japan decide to trade with each other, what
will happen to the output of television sets in Japan?
a. TV production in Japan will fall by 10,000 units.
b. TV production in Japan will fall by 20,000 units.
c. TV production in Japan will fall by 30,000 units.
d. TV production in Japan will increase by 10,000 units.
A demand curve can be thought of as
a. a graphical display of “market potential.”
b. a graphical representation of the information in a demand schedule.
c. showing how much people want to buy.
d. a forecasting tool.
e. All of the above are correct.
A duopoly is a form of oligopoly with two firms.
a. True
b. False
Maureen left her teaching job, which paid $30,000 per year, and invested $20,000 of
her retirement fund (which was earning 10 percent interest) in a new real estate
business. Her accountant predicted a $60,000 revenue the first year. Her husband, an
economist, forecast her profit to be
a. $10,000.
b. $28,000.
c. $32,000.
d. $60,000.
A rightward shift in the demand curve for a product will ordinarily result from
a. a decrease in the advertising budget.
b. a decrease in the price of a competing product.
c. an increase in consumer income.
d. an increase in the price of a complementary good.
If in some range of production average cost is falling, the firm is experiencing
a. increasing returns to scale.
b. decreasing returns to scale.
c. constant returns to scale.
d. increasing costs per unit of output.
Figure 11-9
In Figure 11-9, how much more than the long-run competitive price will the
profit-maximizing monopolist charge?
a. $1
b. $2
c. $3
d. $11
Explain whether a firm’s decisions are optimal if economic profit is (a) positive, (b)
zero, or (c) negative.
Which of the following suggests that the “laws” of supply and demand are being
disobeyed?
a. outside forces disturbing an equilibrium
b. persistent shortages or surpluses
c. the market never moving from an equilibrium
d. “other things” not always being equal
During one winter quarter at Frozen U., snow falls every Friday night. Students assume
that, on their campus, Fridays cause snow. This hypothesis
a. should more properly be considered a theory.
b. assumes that correlation implies causation.
c. assumes that causation implies correlation.
d. reflects the fallacy of composition.
Productivity growth tends to affect all industries to the same degree.
a. True
b. False
Figure 3-7
What is the opportunity cost of moving from point B to point A in Figure 3-7?
a. 20 units of X
b. 50 units of X
c. 25 units of X
d. 75 units of X
An example of rent seeking is
a. lobbying by industrial groups.
b. lawsuits between rival firms.
c. battles over exclusive licenses.
d. All of the above are correct.
Corporate profits are taxed twice.
a. True
b. False
The marginal revenue curve for a monopolist is the same as its demand curve.
a. True
b. False
Perfect Competition is an industry in which there is only one supplier of a product that
has no close substitutes.
a. True
b. False
If the objective of economic policy is to decrease the amount of pollution by an industry
in the long run, the
a. most effective policy action would be a subsidy to firms for the reduction of
emissions.
b. most effective policy action would be a tax on polluting firms.
c. appropriate course of action for government is to do nothing.
d. appropriate course of action for government is to increase R&D outlays to develop
technology to remove the emissions from the environment.
Figure 20-1
Which of the diagrams in Figure 20-1 shows the situation of an individual firm that
hires labor in a perfectly competitive market?
a. A
b. B
c. C
d. D