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If the price elasticity of demand for radios is 2,5 (dropping the minus sign), then a 50
percent reduction in the price of radios will lead to
a. the sale of 200 additional radios.
b. the sale of 125 percent more radios than before.
c. the sale of 150 percent more radios than before.
d. the sale of 25 percent more radios than before.
Price floors lead to market surpluses.
a. True
b. False
One of the virtues of rising resource prices is they encourage innovation, especially the
discovery of other more abundant resources.
a. True
b. False
An argument that has been advanced to explain high teenage unemployment is
a. lack of job experience.
b. limited education.
c. a minimum-wage requirement higher than their marginal revenue products.
d. all of the above.
Equilibrium price and quantity are determined by the intersection of the demand and
supply curves.
a. True
b. False
Since 1970, the share of income going to the richest fifth of the population in the U.S.
has
a. diminished.
b. grown.
c. remained unchanged.
Figure 10-8
In the long run, the perfectly competitive firm in Figure 10-8 will leave the industry if
the price falls below
a. $10.
b. $9.
c. $5.
d. $2.
The market for toothpaste is a good example of perfect competition.
a. True
b. False
In 2013, plowback accounted for nearly ____ in corporate financing.
a. $65 billion
b. $100 billion
c. $2 trillion
d. −$2 billion
MC and MU are set equal to one another in a market economy because
a. producers and consumers are free to communicate with one another.
b. producers and consumers both respond to the same price.
c. consumers must accept the prices set by producers.
d. producers must accept the price set by consumers.
Economic theory simplifies relationships to explain how the relationships interact.
a. True
b. False
One of the more powerful forces leading to an end in economic discrimination is
a. pure competition.
b. pure monopoly.
c. government regulation.
d. oligopolistic rivalry.
Tariffs and quotas are effective in protecting industry
a. but at very high cost per job saved.
b. and at very low cost per job saved.
c. but have not saved any jobs in the industries.
d. and do not distort the economy in the process.
A restriction of imports that is accomplished by a quota normally
a. can be accomplished also by a tariff.
b. cannot be replicated exactly by imposing a tariff.
c. can be accomplished also by an export subsidy.
d. can be accomplished also by negotiations within GATT.
The role of government in a market economy includes all of the following except
a. providing services such as national defense.
b. collecting taxes.
c. extensive ownership of productive resources.
d. making and enforcing laws.
Antitrust laws are designed to
a. preserve competition.
b. protect the environment.
c. protect the public's trust in the government.
d. all of the above.
Derivatives:
a. can be used to reduce risk
b. can be a source of risk
c. made the financial crisis of 2007-2009 not as bad as it would otherwise have been
d. a and b only
e. all of these
Give a complete and concise definition of each of the following terms.
a. deliberately erected entry barriers
b. inefficiency of monopoly
c. price discrimination
d. profit-maximizing equilibrium for a monopolist
The United States has less income inequality than most other developed countries.
a. True
b. False
If total utility declines as an additional unit of a commodity is purchased,
a. marginal utility must be rising.
b. marginal utility is negative.
c. marginal utility is positive but falling.
d. its price must have risen.
e. marginal utility is zero.
For a ____, if incomes rise and prices do not change, quantity demanded will increase.
a. normal good
b. inferior good
c. Giffen good
d. substitute good
Beneficial externalities would be removed if the recipients of the benefit paid the
producer of the externality.
a. True
b. False
Figure 4-1
If the government has stated that it will pay whatever it must to obtain 1,000 units of
good X, which demand curve in Figure 4-1 is appropriate?
a. 1
b. 2
c. 3
d. 4
The quantity of goods exchanged in a market will be below the equilibrium quantity
a. when the price is either held above or below the equilibrium price.
b. only when the price is held above the equilibrium price.
c. only when the price is held below the equilibrium price.
d. only when the price is rising.
A mixed economy is one in which
a. a mixture of businesses exist and function.
b. there is a mixture of public influence over government.
c. government plays a dominant role, and private markets are secondary.
d. there is some public influence over free markets.
Write a short note on the regulation of the U.S. securities markets.
Draw individual demands for caviar for Al, Barbara, Chuck, and Denise where Al's
demand is relatively inelastic, Barbara's is elastic, Chuck's is upward sloping, and
Denise refuses to eat caviar at any price. Then draw the corresponding market demand.
Tour companies and cruise lines often offer last minute fares that are far below the
prices paid by customers who have booked their trips far in advance. Use marginal
analysis to explain this pricing tactic.
What is the relationship between the long-run industry supply curve and the short-run
supply curve in a perfectly competitive market?
During World War II, Hitler would often order his army to hold a particular town or
river "at all costs." Was this rational? If so, explain. If not, indicate which economic
idea it violated.
Explain whether or not the ability-to-pay principle of tax equity is consistent with the
benefits received principle of taxation.
What are the two approaches followed by the U.S. government to ease the burden on
the victims of free trade?
Why is diversification recommended for investors?
