Refer to the graph shown. If this monopolist produces 700 units of output per day, it:
A. can increase profit by producing more.
B. can increase profit by producing less.
C. will be maximizing profit.
D. will incur economic losses.
Answer:
Immediately after World War II, the United States ran trade:
A. deficits and was an international lender.
B. deficits and was an international borrower.
C. surpluses and was an international lender.
D. surpluses and was an international borrower.
Answer:
Which statement is not consistent with the law of supply?
A. More of a good will be supplied, the higher the price, other things constant.
B. Less of a good will be supplied, the lower the price, other things constant.
C. Quantity supplied of a good is directly related to the good’s price.
D. Quantity supplied of a good is inversely related to the good’s price.
Answer:
The reason for the merger of two businesses that sell unrelated goods but can share
business practices and sales forces might best be explained by:
A. indivisible costs.
B. learning by doing.
C. economies of scope.
D. economies of scale.
Answer:
Which of the following is not a policy implication of the traditional model?
A. For the most part, the government needs to stay out of people’s way and let them
trade.
B. There is a potential role for government if there are positive externalities.
C. The government should take moral and social incentives into account when
considering intervention.
D. There is a potential role for government if there are negative externalities.
Answer:
A four-firm concentration ratio of 75 tells you that the top:
A. firm in the industry produces 75 percent of the industry’s output.
B. four firms in the industry produce 75 percent of the industry’s output.
C. four firms in the industry produce 25 percent of the industry’s output.
D. four firms in the industry earn 75 percent of the industry’s profits.
Answer:
A price-discriminating monopolist will produce an output:
A. below that of a normal monopolist.
B. the same as that of a normal monopolist.
C. above that of a normal monopolist.
D. above that of a competitive market.
Answer:
Given the graph shown, the quantity that would be associated with the price of $1 in a
supply table would be:
A. 3.
B. 2.
C. 1.
D. 0.
Answer:
Refer to the graph shown. The marginal cost of producing the 60th unit is:
A. $6.50.
B. $5.00.
C. $3.00.
D. $3.50.
Answer:
To address the problems created by negative externalities, economists prefer programs
that:
A. require government to conserve, using general tax revenues to pay for the program.
B. require all people to reduce consumption equally.
C. make people who have the lowest benefit of reducing consumption choose to
undertake the most reduction.
D. make people who have the lowest cost of reducing consumption choose to undertake
the most reduction.
Answer:
Which of the following is a legal right to control who may produce a good?
A. a proxy
B. a patent
C. a controller
D. a legal controller
Answer:
An isocost line is a line that represents combinations of:
A. factors of production that produce equal amounts of output.
B. factors of production that cost the same amount.
C. output that can be produced from the same quantity of inputs.
D. output that can be produced at the same cost.
Answer:
Refer to the graph shown. What is the market quantity that would be supplied at a price
of $2.00?
A. 2 CDs per week
B. 3 CDs per week
C. 4 CDs per week
D. 7 CDs per week
Answer:
Adam Smith argued that greater specialization and division of labor are likely to:
A. improve standards of living.
B. reduce standards of living.
C. reduce worker productivity.
D. replace workers with machines, resulting in massive unemployment.
Answer:
Robert needs to raise $100,000 to pay for an operation that will save his wife’s life. The
only way he can raise the money is to sell one of his kidneys to a wealthy man in need
of a kidney transplant. This is an example of a trade that:
A. would never be permitted in any society.
B. may benefit each party but cannot be considered efficient.
C. may benefit each party but may not be permitted in a society that believes selling
body parts is morally wrong.
D. should be permitted as long as each party enters into the agreement voluntarily.
Answer:
Shadow prices:
A. affect decisions just as money prices do.
B. are not binding and so do not affect decisions.
C. are illegal but still affect decisions.
D. exist only when money prices are paid in the market.
Answer:
Bruce R. Domazlicky has estimated the elasticity of demand for baseball tickets to be
0.23. Using this information, a club that wants to raise revenues should:
A. lower ticket prices.
B. increase ticket prices.
C. leave ticket prices unchanged, because it is maximizing revenue.
D. raise the prices of other goods sold at games.
Answer:
Refer to the following graph.
A monopolist’s inefficiency per unit of output at the profit-maximizing level of output is
limited to cost per unit:
A. A minus B.
B. B minus C.
C. A minus C.
D. C.
Answer:
Refer to the graph shown. The short-run equilibrium output level for the
monopolistically competitive firm represented is:
A. 300.
B. 500.
C. 900.
D. 1,000.
Answer:
When a purely competitive market is in equilibrium:
A. marginal cost equals marginal benefit.
B. total cost equals total benefit.
C. average cost equals average benefit.
D. the sum of marginal cost and marginal benefit is maximized.
Answer:
Refer to the following graph.
Which of the following pairs of equations describes the supply and demand curves?
A. Qs = 0.4P + 10; Qd = 30 + P, respectively
B. Qs = 0.4P + 10; Qd = 30, respectively
C. Qs = 2.5P – 25; P = 30 + P, respectively
D. Qs = 2.5P – 25; P = 30, respectively
Answer:
Refer to the graph shown. If hamburger dinners are produced by a pure monopoly firm
that maximizes profit, the price of hamburger dinners will be:
A. $2.
B. $4.
C. $5.
D. $6.
Answer:
A precept is:
A. the application of models combined with judgment.
B. a policy rule that concludes that a particular course of action is preferable.
C. a proposition that is logically true based on the assumptions of a model.
D. a set of equations that define a model.
Answer:
A(n)__ price is the implicit price of an action whose value is measured in opportunity
costs.
A. relative
B. guaranteed
C. equilibrium
D. shadow
Answer:
If a model assumes that people take into account other people’s interests, it is probably
a:
A. traditional model.
B. heuristic model.
C. behavioral model.
D. natural model.
Answer:
Price tends to be in equilibrium where supply and demand intersect because when
quantity supplied:
A. equals quantity demanded, prices don’t change.
B. exceeds quantity demanded, prices have a tendency to rise.
C. is less than quantity demanded, prices tend to fall.
D. equals quantity demanded, prices will fall.
Answer:
Refer to the graphs shown. The market is caviar. Which graph best represents the
impact of an increase in consumer incomes on the market for caviar?
A. a
B. b
C. c
D. d
Answer:
If the United States were to stop trading with other nations, economists would predict
that in the long run the United States would end up with:
A. more jobs.
B. lower prices.
C. a higher standard of living.
D. a lower standard of living.
Answer:
A deliberate design within the choice architecture that alters people’s behavior in
predictably positive ways is called an example of:
A. a push.
B. a nudge.
C. purposeful behavior.
D. traditional behavior.
Answer:
An increase in the wages of truck drivers might be explained by which of the following
factors?
A. A reduction in the price of rail transportation
B. An increase in competition within the trucking industry
C. A reduction in the demand for transportation
D. An increase in the price of gasoline
Answer:
Other things held constant in a competitive labor market, if workers negotiate a contract
in which the employer agrees to pay an hourly wage rate of $17.85 while the market
equilibrium hourly wage rate is $16.50, the:
A. quantity of workers supplied will exceed the quantity of workers demanded.
B. quantity of workers demanded will exceed the quantity of workers supplied.
C. demand for labor will increase until the equilibrium wage rate is $17.85.
D. supply of labor will decrease until the equilibrium wage rate is $17.85.
Answer:
A perfectly price-discriminating monopolist:
A. creates more consumer surplus for the consumer.
B. increases both consumer surplus and producer surplus.
C. reduces or eliminates the welfare loss from monopoly.
D. increases the welfare loss from monopoly.
Answer:
The Code of Silence attributed to the Mafia is one way to avoid the prisoner’s dilemma.
Answer: