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The 1890 law intended to prevent the establishment of more monopolies and to break
up existing ones in the United States was the:
A) Taft-Hartley Act.
B) Sherman Antitrust Act.
C) Affordable Care Act.
D) Federal Trade Commission Act
Taxes on the purchase of specific items such as gasoline, cigarettes, or alcoholic
beverages are called:
A) personal income taxes.
B) excise taxes.
C) property taxes.
D) sales taxes.
In the United States, the government pays _____ of medical costs.
A) 100%
B) between 70% and 80%
C) approximately 50%
D) less than 20%
The poorest 20% of families in the United States pay a _____ share of their total
income in taxes.
A) very large
B) somewhat large
C) small
D) negative
For most families, the marginal utility of income is:
A) increasing.
B) constant.
C) diminishing.
D) unknown; the answer depends on the value of income.
Figure: Consumer Surplus I
(Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. At a price of P2,
consumer surplus equals the area:
A) ABP2.
B) AFP1.
C) AQ30.
D) P1P2BF.
(Table: Cherry Farm) Look at the table Cherry Farm. Which of the following is a point
on the industry short-run supply curve?
A) $5; 100 pounds
B) $4; 200 pounds
C) $4; 400 pounds
D) $2; 500 pounds
De Beers became a monopoly by:
A) establishing control over diamond mines.
B) use of economies of scale.
C) use of technological superiority.
D) ownership of a patent.
If a good is a luxury item that looms large in the household budget, then demand will
tend to:
A) be more price-elastic.
B) be less price-elastic.
C) have price elasticity equal to 1.
D) be the same as that of a necessity.
(Table: Total Cost for a Perfectly Competitive Firm) Look at the table Total Cost for a
Perfectly Competitive Firm. If the market price is $3.50, the profit-maximizing output
is _____ units.
A) 5
B) 7
C) 8
D) 9
A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its
first 100 customers. Ramona camped out for 48 hours before the opening to be one of
the first 100 customers. The cost of the free meal a week for a year for Ramona was:
A) zero.
B) $260.
C) whatever else she would have done with the 48 hours.
D) The cost is impossible to determine.
Figure: Profits in Monopolistic Competition
(Figure: Profits in Monopolistic Competition) Look at the figure Profits in Monopolistic
Competition. A zero economic profit is earned if the profit-maximizing price is _____
in panel _____.
A) A; (A)
B) B; (A)
C) N; (C)
D) E; (B)
Property rights and the role of prices as economic signals are two features that make
markets function effectively.
When an individual continues to eat more turkey, if the principle of diminishing
marginal utility applies, each additional serving yields:
A) more marginal utility.
B) less marginal utility.
C) the same amount of marginal utility.
D) total utility at a maximum while the marginal utility is still increasing.
A tax of $10 on an income of $100, $20 on an income of $200, and $30 on an income
of $300 is:
A) regressive.
B) proportional.
C) progressive.
D) benefits.
In 2012, the largest share of health care costs was paid for by:
A) the government.
B) private insurers.
C) private individuals.
D) charities.
Well-defined property rights:
A) can allow for mutually beneficial trades.
B) will result in government regulation.
C) often result in more market failures.
D) lead to more centralized decision making.
If the opportunity cost of manufacturing automobiles is lower in the United States than
in Britain and the opportunity cost of manufacturing airplanes is higher in the United
States than in Britain, then the United States will:
A) export both airplanes and automobiles to Britain.
B) import both airplanes and automobiles from Britain.
C) export airplanes to Britain and import automobiles from Britain.
D) import airplanes from Britain and export automobiles to Britain.
Total surplus is:
A) the difference between price and the cost to the seller.
B) the sum of consumer and producer surplus.
C) equal to the area below the demand curve.
D) always more for consumers than producers.
(Table: Total Cost and Output) Look at the table Total Cost and Output, which describes
Sergei's total costs for his perfectly competitive all-natural ice cream firm. What is the
minimum price that Sergei needs to receive for a tub of ice cream to stay in business in
the short run?
A) $10.00
B) $20.00
C) $33.33
D) $36.67
If someone did not regard health care as very important, often using home remedies and
other substitutes, his or her demand curve for health care would most likely be more
_____ than that of other people.
A) price-elastic
B) price-inelastic
C) nearly horizontal
D) nearly vertical
Figure: The Shrimp Market
(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government
wants to limit shrimp sales to 500 pounds, it can impose a _____ excise tax on sellers,
and the total tax revenue generated will be _____.
A) $5; $2,500
B) $7.50; $7,500
C) $10; $2,500
D) The answer cannot be determined from the information provided.
Figure: The Shrimp Market
(Figure: The Shrimp Market) Look at the figure The Shrimp Market. If the government
imposes a quota limiting sales of shrimp to 500 pounds, the quota rent per pound is:
A) $15.
B) $10.
C) $5.
D) The quota rent cannot be determined from the information provided.
(Table: Competitive Market for Good Z) Look at the table Competitive Market for
Good Z. A surplus of the good will occur at a price of
A) $0.
B) $5.
C) $10.
D) $15.
(Table: Market for Butter) Look at the table Market for Butter. If the government
imposes a price ceiling of $0.90 per pound of butter, the quantity of butter actually
purchased will be:
A) 10.5 million pounds.
B) 9.0 million pounds.
C) 1.5 million pounds.
D) 10.0 million pounds.
A firm's demand curve for labor in a perfectly competitive market is the
downward-sloping portion of its _____ curve.
A) marginal revenue
B) average total cost
C) value of the marginal product of labor
D) total revenue
If firms are taking economic losses in the short run, firms will leave the industry,
industry output will _____, and economic losses will _____ in the long run.
A) fall; fall
B) rise; fall
C) rise; rise
D) fall; rise
Which of the following trade patterns is best explained by increasing returns?
A) Honduras exports bananas to the United States and the United States exports
airplanes to Honduras.
B) Pakistan exports clothing to the United States and the United States exports airplanes
to Pakistan.
C) Japan exports cars to the United States and the United States exports airplanes to
Japan.
D) Mexico exports beef to the United States and the United States exports airplanes to
Mexico.
Perfect competition is a model of the market that assumes all of the following
EXCEPT:
A) a large number of firms.
B) firms facing downward-sloping demand curves.
C) firms producing identical goods.
D) many buyers.
A decrease in supply is caused by:
A) an increase in the price of goods that are used in production.
B) suppliers' expectations of lower prices in the future.
C) an advancement in the technology for producing the good.
D) an increase in the number of producers.
