Which of the following must a firm in a market economy do today to succeed?
A) Produce the goods and services that consumers want at a lower cost than consumers
themselves can produce.
B) Organize the factors of production into a functioning, efficient unit.
C) Have access to sufficient funds.
D) Market firms today must do all of these things.
Figure 5-7
What is the incremental cost of increasing the quantity of pollution reduction from QBto
QE units?
A) PE
B) the value of the area QBBEQE
C) PEQE
D) the value of the area BEF
Why might a producer practice price discrimination?
A) to make its products more affordable to those with low incomes
B) to maximize economic efficiency
C) to maximize profits
D) to maximize quantity demanded
At a recent company meeting, Ravi Batra, sales manager of Life’s a Beach, a surfboard
producer announced, “We have increased our sales by 13 percent in just 9 months.”
Suppose 9 months ago, its sales amounted to $245,000, what is the value of its sales
today?
A) $31,850
B) $207,638
C) $276,850
D) $359,905
Over the past several decades there has been a rapid growth in international trade. This
growth has been due to all except one of the following factors. Which factor has not
contributed to the growth of international trade?
A) the spread of reliable communications
B) a change in the tariffs charged on many goods
C) a reduction in shipping costs
D) favorable changes in government policies
If the price of muffins, a normal good you enjoy, rises
A) the income and substitution effects offset each other but the price effect leads you to
buy fewer muffins.
B) both the income and substitution effects lead you to buy fewer muffins.
C) the substitution effect which causes you to decrease your muffin consumption
outweighs the income effect which causes you to increase your muffin consumption,
resulting in fewer muffins purchased.
D) the income effect which causes you to decrease your muffin consumption outweighs
the substitution effect which causes you to increase your muffin consumption, resulting
in fewer muffins purchased.
An increase in the price of MP3 players will result in
A) a smaller quantity of MP3 players supplied.
B) a larger quantity of MP3 players supplied.
C) a decrease in the demand for MP3 players.
D) an increase in the supply of MP3 players.
The De Beers diamond mining and marketing company of South Africa became one of
the most profitable and longest-lived monopolies in history. Which of the following has
always threatened De Beers’ control of the diamond market?
A) Since few diamonds are ever destroyed, De Beers has constantly faced possible
competition from other firms reselling diamonds.
B) Competition from imitation diamonds. Technology has made it possible to make
fake diamonds look exactly like real diamonds.
C) Competition from other gemstones, including rubies and emeralds, that have become
more popular over time.
D) At different times in the past some countries have banned the importation of
diamonds from South Africa for political reasons.
Figure 6-1
A perfectly elastic demand curve is shown in
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
How do lower taxes affect aggregate demand?
A) They increase disposable income, consumption, and aggregate demand.
B) They reduce disposable income, consumption, and aggregate demand.
C) they increase corporate investment and aggregate demand.
D) They increase aggregate supply and thus increase aggregate demand as well.
The actual division of the burden of a tax is called
A) tax credit.
B) tax incidence.
C) excess burden.
D) tax dispersion.