Which of the following is likely to affect the position and shape of society’s production
possibilities frontier?
a. volume of physical resources
b. level of labor skills
c. level of technology
d. amount of factories on hand
e. All of the above are correct.
If a detrimental externality is being produced in the course of producing a good, then
a. P > MSC.
b. MSC < MPC.
c. incidental costs are negative.
d. output is inefficiently large.
In a market with only one firm (a pure monopoly), the Herfindahl-Hirschman Index
(HHI) would equal 10,000.
a. True
b. False
Modern antitrust policy began in response to
a. abuses of market power in the oil industry.
b. the inability of railroads to compete effectively with the new trucking industry.
c. the charge that the rights of big business were not adequately protected.
d. attempts by business leaders to pack Congress with corrupt legislators.
Prices serve the public interest by
a. making resource owners wealthy.
b. rationing scarce resources.
c. keeping poor people from purchasing more than they can afford.
d. forcing the government to participate in the market.
Marginal profit is the addition to a firm’s total profit from a
a. $1 change in its price.
b. one-unit change in its output.
c. reduction in total cost.
d. reduction in marginal cost.
Which of the following statements concerning efficiency is correct?
a. If a toll road is heavily used so that traffic movement is slowed, the price per vehicle
should be reduced since the road is generating more revenue.
b. Economists advocate high prices for abundant resources and low prices for scarce
resources.
c. If a toll road is heavily used and traffic movement is difficult, the price per vehicle
should be increased to shift some traffic to less-crowded roads.
d. None of the above is desirable in promoting efficient use of scarce road space.
Economists generally think that the ____ tax is among the best ways to raise revenue.
a. property
b. personal income
c. sales
d. value-added
Prosperity in the United States is evenly distributed across the fifty states.
a. True
b. False
Throughout the 1980s, accounting departments in U.S. universities were unable to fill
many available faculty positions. This fact suggests that the salaries offered by these
departments
a. suffered from the cost disease of the service sector.
b. were below the market price for qualified accountants.
c. created externalities.
d. failed to reflect productivity growth in teaching.
If California were a separate economy, it would be the ____ largest economy on earth.
a. second
b. third
c. fifth
d. eighth
The second largest source of revenue for the federal government is the
a. import tax.
b. payroll tax.
c. export tax.
d. federal property tax.
On the surface, usury laws are designed to protect consumers from exorbitant interest
rates.
a. True
b. False
Figure 18-3
In which panel of Figure 18-3 would an excise tax be borne entirely by the supplier?
a. 1
b. 2
c. 3
d. 4
If total profit is maximized, then marginal cost must equal marginal revenue.
a. True
b. False
Economies of scope are savings acquired by
a. producing many goods simultaneously.
b. producing enough of one good to reach the minimum efficient scale of production.
c. selling one product at a loss but selling other products at a profit.
d. decreasing the regulation of an industry.