Population density varies little between the fifty states.
a. True
b. False
Which of the following quotations best captures the idea of opportunity cost?
a. “Opportunity knocks but once.”
b. “Every choice involves a sacrifice.”
c. “Let’s not ask for the moon; we have the stars.”
d. “Fools rush in where wise men fear to tread.”
e. “All that glitters is not gold.”
The share of the burden of an emissions tax on output borne by the consumer of the
polluting output will rise as
a. the tax rises.
b. demand elasticity falls.
c. demand elasticity rises.
d. the tax falls.
The danger of using the national defense argument to protect domestic industries
necessary to wage war is that
a. it has no validity on non-economic grounds.
b. it is unrelated to the United States’ ability to wage war.
c. other nations will retaliate with tariffs against U.S. producers of war material.
d. industries with only the most peripheral relationship to defense are likely to invoke
this argument on their behalf.
Displayed below is the payoff matrix of firm B for four different strategies, B1, B2, B3,
and B4, and the potential retaliatory responses of firm A (A1, A2, A3, A4).
Table 12-2
If firm B uses the maximin criterion, which strategy will it choose?
a. B1
b. B2
c. B3
d. B4
If England uses one week’s time to produce ten yards of cloth or two barrels of wine
and Portugal uses one week’s time to produce twelve yards of cloth or six barrels of
wine, then England has a comparative advantage in the production of cloth.
a. True
b. False
In a market with perfectly competitive firms, the market demand curve is usually ____
and the demand curve facing each individual firm ____.
a. upward sloping; horizontal
b. downward sloping; horizontal
c. horizontal; downward sloping
d. downward sloping; downward sloping
Figure 7-16
In Figure 7-16, as we move from A to B,
a. the relative price of machines falls.
b. total cost falls.
c. output increases.
d. labor becomes less productive relative to capital.
Wages will tend to be high in labor markets where supply is relatively high and demand
is relatively weak.
a. True
b. False
If labor markets are competitive, discriminating employers
a. will have to pay higher wages since the available labor supply is smaller.
b. will have higher costs and therefore be at a competitive disadvantage.
c. will be driven out of business by nondiscriminators.
d. All of the above are true.
An economist might be hired to answer which of the following questions?
a. What will the price of oil be next year?
b. Why is the median income of women about half the median income of men?
c. How much will interest rates change as the federal deficit decreases?
d. How much will inflation change if import restrictions are imposed?
e. All of the above are correct.
____ mean that the costs involved cannot be recouped for a considerable period of time.
a. Sunk costs
b. Opportunity costs
c. Overheads
d. Restructuring costs
A common characteristic in oligopolistic markets is
a. consideration of rivals’ reactions.
b. standardized products.
c. high profits.
d. unused capacity.
The term ‘satisficing” indicates an optimal choice.
a. True
b. False
Externalities are commonly generated from
a. purely competitive retail industries.
b. modern computer technologies.
c. ordinary consumption and production activities.
d. benefits from further pollution abatement, which are zero.
The high unemployment of 2008-2010 caused a substantial decrease in inflation which
created fears of deflation.
a. True
b. False
Producing more cabbage is efficient if
a. cabbage production can be increased without reducing production of other goods.
b. the opportunity cost of more cabbage is less than its marginal utility.
c. society values the additional cabbage more highly than the lettuce it must give up to
produce the extra cabbage.
d. All of the above are correct.
In 1984, the South Carolina State Supreme Court ruled that a 20 percent admission tax
on X-rated movies was unconstitutional. When the affected cinemas sought a refund of
collected taxes, they were denied on the grounds that the tax, although collected by the
theater, was indeed paid by the theatergoers. The Supreme Court apparently believed
a. the supply of X-rated movies was perfectly elastic.
b. the demand for X-rated movies was perfectly inelastic.
c. the legislation intended that the theatergoers pay the tax.
d. the burden fell on the theatergoers-there are no excess burdens on the theater.
Marginal land is land on the borderline of
a. producing revenue.
b. being used profitably.
c. producing economic rent.
d. a facility that produces output.
The logic of why international trade increases well-being is
a. a major revision of the logic of why trade within a country increases well-being.
b. completely different from the logic of why trade within a country increases
well-being.
c. a narrow, special case of the logic of why trade within a country increases well-being.
d. no different from the logic of why trade within a country increases well-being.
Central planners in command economies
a. generally set production targets for firms.
b. always consult consumers on the output of goods they want to consume.
c. allow prices to organize the economy’s production.
d. depend upon the invisible hand to coordinate economic activities.
The government’s budget accounts for about 80 percent of GDP in the United States.
a. True
b. False
The slope of the budget line
a. always equals 1.
b. equals income divided by price.
c. equals the ratio of the prices.
d. decreases as we move from left to right.