Firms that emit toxins into the air tend to
a. underproduce because the private cost of production exceeds the social cost
b. overproduce because the social cost of production exceeds the private cost
c. produce the same as nonpolluting firms
d. produce at the socially optimal amount
e. cover pollution costs in the product’s price
Which of the following might cause the demand for ice cream, a normal good, to
increase?
a. an increase in the price of ice cream
b. an increase in the price of sherbet
c. cooler weather
d. a decrease in the number of consumers
e. a decrease in consumer income
As the wage rate falls, a utility-maximizing individual’s quantity of labor supplied
a. increases
b. decreases
c. increases if the income effect outweighs the substitution effect
d. decreases if the substitution effect outweighs the income effect
e. decreases if the income effect outweighs the substitution effect
Comparative advantage is
a. the ability of an individual to specialize and produce a greater amount of some good
than can another individual
b. the number of units of one good given up in order to acquire something
c. the ability of an individual to produce a good at a lower opportunity cost than some
other individual can
d. an expression for the amount of labor a particular individual needs to produce a fixed
amount of capital goods
e. a reference to an individual having the greatest opportunity cost of producing the
good and produces it with the fewest resources
To enhance social welfare, the government should encourage the production of
a. all goods
b. no goods
c. goods that provide positive externalities
d. goods whose social cost exceeds their private cost
e. goods that provide negative externalities
Every individual has a labor supply curve in each market where there is a possible use
for his/her labor.
a. True
b. False
Which of the following is a microeconomic topic?
a. the job search behavior of a college graduate
b. the impact of policy on the unemployment rate
c. the impact of policy on the inflation rate
d. the national debt
e. the balance of payments
Exhibit 1-2
In Exhibit 1-2, when x is greater than 10, the
a. value of y is larger on curve A than on curve B
b. value of y is smaller on curve A than on curve B
c. value of y is the same on curve A as on curve B
d. slope of line A is negative
e. slope of line B is positive
Suppose a graph with Ron’s weight on the vertical axis and his consumption of ice
cream on the horizontal axis indicated that for each serving of ice cream he ate, Ron
would gain 3 pounds, regardless of how much ice cream he had already eaten. This
graph would show a
a. horizontal line at weight = 3
b. straight line with slope = 3
c. straight line with slope = 1/2
d. straight line with slope = -3
e. straight line with slope = -1/3
In Connecticut, the apple market is perfectly competitive. Suppose that consumer tastes
change so that the market demand for apples increases. In that case, the demand curves
faced by individual firms will
a. not change
b. become less elastic
c. shift upward
d. shift leftward
e. shift downward
Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing
According to Exhibit 2-12, Maria’s opportunity cost of typing a page is
a. 4 loads of laundry
b. 6 loads of laundry
c. 2/3 of a load of laundry
d. 3/2 of a load of laundry
e. impossible to compute
Assume that corn and soybeans are alternatives that could be grown by most farmers.
An increase in the price of corn will
a. increase the supply of corn
b. increase the supply of soybeans
c. decrease the supply of soybeans
d. decrease the supply of corn
e. have no effect on the supplies of corn and soybeans
Resources employed to persuade government to redistribute income and wealth to
special interests are unproductive.
a. True
b. False
Which of the following is the best example of complements?
a. milk and cheese
b. coffee and tea
c. CDs and DVDs
d. hiking boots and athletic shoes
e. film and film processing (developing)
For which of the following nations does international trade account for the largest
percentage of GDP?
a. Japan
b. The Netherlands
c. Germany
d. Great Britain
e. the United States
Perfectly competitive firms respond to changing market conditions by varying their
a. price
b. output
c. market share
d. information
e. advertising campaigns
Exhibit 2-2
According to Exhibit 2-2, Maria’s opportunity cost of doing a load of laundry is
a. 4 pages
b. 6 pages
c. 2/3 of a page
d. 3/2 of a page
e. impossible to compute
If people specialize in producing those goods for which they possess a comparative
advantage, then the economy as a whole can produce a greater quantity of goods.
a. True
b. False
Exhibit 1-10
In Exhibit 1-10, the slope of the line is
a. negative for all values of x
b. positive for all values of x
c. zero at x = 7
d. first negative, then positive as x increases
e. negative for all values of y
If good B is a complement to good A, then a rise in the price of B
a. increases the quantity demanded of A
b. decreases the demand for A
c. increases the demand for A
d. decreases the quantity demanded of A
e. will cause the demand for B to increase
When ruling on a price-fixing case under the per se rule, the U.S. courts need only
examine
a. market structure
b. market conduct
c. market performance
d. market structure and conduct
e. market structure, conduct, and performance
Because it is based on the demand for products, the demand for labor is called
a. a substitution demand
b. a complementary demand
c. an income demand
d. a derived demand
e. a marginal demand
Exhibit 7-12
For the total product curve in Exhibit 7-12, the marginal product between points a and b
is:
a. 5
b. 10
c. 20
d. 30
e. unable to be determined
Exhibit 2-2
According to Exhibit 2-2, if Hans does one fewer load of laundry, how many pages can
he type in the time saved on laundry?
a. 12 pages
b. 8 pages
c. 3/2 of a page
d. 2/3 of a page
e. it cannot be determined
Puerta Vallarta International Airport is near the coast. At night planes take off and land
from the west, over the water. During the day planes approach and leave from the east,
over Puerta Vallarta neighborhoods. Night flights into and out of Puerta Vallarta are
more dangerous than day flights. Which rights are in conflict in this situation?
a. residents’ right to enjoy the ocean and their right to peace and quiet
b. residents’ right to enjoy the ocean and air passengers’ right to enjoy the ocean
c. residents’ right to peace and quiet and air passengers’ right to safety
d. residents’ right to peace and quiet and safety
e. air passengers’ right to safety and convenience
Exhibit 1-2
In Exhibit 1-2, at x = 10, the
a. value of y is larger on curve A than on curve B
b. value of y is smaller on curve A than on curve B
c. value of y is the same on curve A as on curve B
d. slope of line A is negative
e. slope of line B is positive
A perfectly competitive firm is currently producing where price is $8 and both marginal
cost and average variable cost are $9. To maximize profit or minimize loss in the short
run, this firm should
a. raise its price
b. increase its output
c. reduce its output
d. lower its price
e. shut down
The Agricultural Marketing Act of 1937 was supposed to
a. prevent ruinous competition among farmers
b. encourage competition among farmers
c. help farmers find a market for their goods
d. lower the price of milk to consumers
e. subsidize advertising of farm products
Privatizationis the process of turning government enterprises into private enterprises in
transitional economies.
a. True
b. False
The demand curve facing Imelda’s Shoe Boutique, a monopolistically competitive firm,
a. is horizontal because Imelda’s is small relative to the market as a whole
b. is horizontal because Imelda’s is large relative to the market as a whole
c. slopes downward because Imelda’s is small relative to the market as a whole
d. slopes downward because Imelda’s sells a differentiated product
e. slopes downward because Imelda’s firm is the entire industry
Normal profit is defined as
a. accounting profit
b. economic profit
c. profit necessary to ensure that opportunity costs are covered
d. accounting profit minus economic profit
e. economic profit minus accounting profit