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Comparative advantage is the rule that ordinarily prevents a nation from independently
producing all of the goods it requires.
a. True
b. False
At least two demand curves are present in an international equilibrium model.
a. True
b. False
A diversified portfolio only makes sense for large institutional investors, not for small
investors.
a. True
b. False
Why do price ceilings tend to cause persistent imbalances in the market?
a. Quantity demanded exceeds quantity supplied but price cannot rise to remove the
shortage.
b. Quantity demanded exceeds quantity supplied but price cannot fall to remove the
surplus.
c. Quantity supplied exceeds quantity demanded but price cannot rise to remove the
shortage.
d. Quantity supplied exceeds quantity demanded but price cannot fall to remove the
surplus.
Which of the following observations is true?
a. Environmental damage can be reduced to zero.
b. Pollution results from a price mechanism malfunction.
c. Charging those who emit pollution is not a way of dealing with pollution problems.
d. Public interest requires pollution be maintained at its free-market level.
The trade philosophy of the Clinton administration is best characterized as
a. protectionist.
b. mercantilist.
c. free trade.
d. strategic trade.
Approximately half of all U.S. workers are employed by various levels of government.
a. True
b. False
To analyze policy options, economists are forced to deal with:
a. politicians
b. business people
c. rotating statistical values
d. things that have not occurred
e. None of these is correct.
The government prefers a market-based approach to reduce firms' emissions of a toxic
gas but wants to make certain that no more than 1,000 cubic yards of the gas are ever
emitted in a single day. The most efficient policy under these circumstances is likely to
be a system of
a. per-unit taxes on emissions of the gas.
b. per-unit taxes on the goods produced by firms that emit the gas.
c. subsidies to firms that agree not to emit the gas.
d. sales of permits to emit specified quantities of the gas on specified days.
Figure 11-1
The Red Cross is virtually the only operator of blood banks in the United States. In
Figure 11-1 are the demand and supply curves facing the Red Cross blood bank. If it
were to operate like a profit-maximizing business, how many units of blood would it
sell?
a. OA
b. OB
c. OC
d. OD
From a purely economic point of view, discrimination exists when
a. black teenagers earn more than white teenagers.
b. all factors are earning average products.
c. women earn less than men.
d. equivalent factors earn different payments for equal contributions to output.
If the four-firm concentration ratio in an industry increases, the industry
a. must have become more competitive.
b. must have become a monopoly.
c. must have become less competitive, although not necessarily a monopoly.
d. may or may not have become less competitive.
Susan argues that she is the victim of economic discrimination. The primary technical
difficulty for an economist investigating her claim will be
a. defining economic discrimination.
b. finding a worker with the same productivity as Susan for comparison purposes.
c. defining statistical discrimination.
d. measuring Susan's human capital.
For any firm, price always equals
a. average revenue.
b. marginal revenue.
c. marginal cost.
d. marginal profit.
Figure 5-3
In Figure 5-3, a decline in price from 3 to 1 will increase market quantity demanded by
a. 30.
b. 40.
c. 50.
d. 60.
The most threatening and damaging detrimental externality at issue today is:
a. The explosion and oil spill at the Deepwater Horizon
b. the continued pollution of city air due to factory emissions
c. water shortages
d. global warming
Economic rent is a payment for a factor of production that elicits an increase in the
quantity supplied.
a. True
b. False
Global warming of the past century, and especially in the past decade, is at least partly a
consequence of human activities that have increased ____ in the atmosphere.
a. smog
b. PCBs
c. ozone
d. "greenhouse gases"
Total revenue
a. can be calculated directly from the demand curve.
b. can be calculated directly from the average revenue curve.
c. is found by multiplying price times quantity.
d. All of the above are correct.
Which of the following most resembles a perfectly competitive market?
a. the stock market
b. the publishing industry
c. the steel industry
d. the new car market
