Which of the following statements is true?
a. Treasury bills mature in 2 to 10 years.
b. Treasury notes mature in 13 or 26 weeks.
c. Treasury bills, notes, and bonds are considered to be very safe investments.
d. Municipal bonds are issued to help the federal government build new projects such as
highways and stadiums.
A consequence of a negative externality is that social costs __________ private costs,
and the socially optimal level of output __________.
a. equal; is not equal to social costs or private costs
b. do not equal; is obtained
c. do not equal; is not obtained
d. equal; is obtained
e. equal; is not obtained
Refer to Exhibit 28-12.The profit-maximizing number of workers to hire for this firm is
Exhibit 28-12
a. 2.
b. 3.
c. 4.
d. 5.
e. 6.
Suppose a regulatory agency makes decisions that seem to require an ever-growing
agency budget and staff of regulators to monitor firms and enforce the decisions. This
would be evidence in support of the __________ theory of regulation.
a. public choice
b. public interest
c. capture
d. Stigler
Moral hazard occurs when the parties on once side of the market, who have information
not known to others, self select in a way that adversely affects the parties on the other
side of the market.
a. True
b. False
Which of the following statements represents a correct and sequentially accurate
economic explanation?
a. Goods X and Y are substitutes. The price of X falls, the quantity demanded of X
rises, and the demand for Y rises.
b. Goods X and Y are substitutes. The price of X rises, the demand for X falls, and the
demand for Y rises.
c. Goods X and Y are substitutes. The price of X falls, the demand for X rises, and the
quantity demanded of Y rises.
d. Goods X and Y are substitutes. The price of X falls, the quantity demanded of X
rises, and the demand for Y falls.
e. Goods X and Y are complements. The price of X falls, the quantity demanded of X
rises, and the demand for Y falls.
Refer to Exhibit 2-7.For which of the following is the statement “In order to get more
military goods, we have to forfeit some civilian goods” true?
Exhibit 2-7
a. a movement from A to C
b. a movement from B to D
c. a movement from F to D
d. a movement from B to A
e. none of the above
Refer to Exhibit 24-8. Average total cost at the profit-maximizing level of output equal
a. $53.00.
b. $58.33.
c. $59.00.
d. $51.50.
e. There is not enough information given to answer this question.
If the monopoly firm’s marginal cost curve is either horizontal or upward sloping, it
follows that its marginal revenue curve will cut its marginal cost curve at a __________
level of output than where its demand curve cuts its marginal cost curve. It also follows
that if the firm were to produce the quantity of output consistent with where its demand
curve cut its marginal cost curve, the firm would be __________.
a. lower; earning profits
b. lower; resource-allocative efficient
c. higher; productive efficient
d. lower; minimizing costs
e. none of the above
Logrolling
a. is vote trading among elected officials.
b. eliminates the influence of special interest groups.
c. puts downward pressure on federal spending.
d. b and c
e. all of the above
Refer to Exhibit 21-5.What value goes in blank (C)?
Exhibit 21-5
a. 28
b. 16
c. 44
d. 50
e. There is not enough information to answer this question.
Which of the following best describes the agricultural sector for much of the 20th
century and today?
a. high productivity, price elasticity of demand less than 1, income elasticity of demand
greater than 1
b. low productivity, price elasticity of demand greater than 1, income elasticity of
demand less than 1
c. high productivity, price elasticity of demand less than 1, income elasticity of demand
less than 1
d. low productivity, price elasticity of demand less than 1, income elasticity of demand
greater than 1
Refer to Exhibit 5-4.If tickets for viewing television show tapings are free, for which
show will fans most likely have the longest wait to get tickets?
Exhibit 5-4
a. A
b. B
c. C
d. Wait times for tickets to all shows are equally long.
In the prisoner’s dilemma, both prisoners end up __________, which turns out to be
__________ confessed.
a. confessing; better for them than if they had both not
b. confessing; worse for them than if they had both not
c. not confessing; better for them than if they had both
d. not confessing; worse for them than if they had both
Is it possible for a perfectly competitive firm to be maximizing profits, but not
achieving resource allocative efficiency?
a. Definitely yes, because it is impossible to achieve both at the same time.
b. Yes, it is possible, but it is not possible to minimize losses without also achieving
resource allocative efficiency.
c. No, it is not possible, because the output at which MR = MC is also the output at
which P = MC.
d. There is not enough information to answer this question.
Refer to Situation 32-l. This episode can be seen as an instance of
a. rational ignorance.
b. logrolling.
c. special interest politics.
d. a zero sum game.
If the price of a good ____________, the demand for its complements will __________.
a. rises; fall
b. falls; rise
c. falls; fall
d. rises; rise
e. a and b
Refer to Exhibit 31-3. Suppose that Firms A, B, and C are the only polluters in the state
and that each emits 4 tons of pollution into the atmosphere. To cut the level of pollution
in half the government issues two transferable pollution permits to each firm.What is
the total cost to society of decreasing pollution to half its present level if firm C buys
one pollution permit from firm A and one pollution permit from firm B?
a. $515
b. $1,300
c. $1,380
d. $965
e. $10,350