Which of the following is a major import for the United States?
a. corn
b. soybeans
c. coal
d. fish
e. none of the above
Refer to Exhibit 22-13.What dollar amounts go in blanks (I) and (J), respectively?
Exhibit 22-13 Quantity of Output (Q) Total Fixed Cost (TFC) Average Fixed Cost
(AFC) Total Variable Cost
a. $100; $50
b. $25; $32.50
c. $500; $40
d. $50; $32
e. There is not enough information to answer this question.
An unrecoverable cost that should be disregarded in any current or future decision is
also called a(n) __________ cost.
a. sunk
b. explicit
c. implicit
d. variable
Refer to Exhibit 35-4. Under a fixed exchange rate system, at the exchange rate of E1,
the dollar is __________ and there is a __________ of pesos.
Exhibit 35-4
a. overvalued; surplus
b. undervalued; surplus
c. overvalued; shortage
d. undervalued; shortage
The free-rider problem arises if goods are
a. nonrivalrous in consumption.
b. rivalrous in consumption.
c. nonexcludable.
d. excludable.
e. a and d
When a positive externality exists, _______________________ and thus
_______________ intervention may be needed to achieve efficiency.
a. external costs are necessarily greater than private costs; government
b. social costs equal private costs; no government
c. social costs are less than private costs; government
d. social costs are greater than private costs; government
e. none of the above
In long-run equilibrium, a monopolistic competitive firm will most likely produce a
level of output for which price equals average total cost.
a. True
b. False
Refer to Exhibit 28-7. For technological reasons, this monopsonist can hire labor only
in increments of 10 workers. The profit-maximizing number of workers is
Exhibit 28-7
a. 10.
b. 20.
c. 30.
d. 40.
e. 50.
Consumers receive more consumers’ surplus when __________.
a. tariffs exist.
b. tariffs and quotas do not exist.
c. quotas exist.
d. a and c
The nominal interest rate is determined
a. by the Federal Reserve system.
b. in the loanable funds market.
c. by the U.S. Treasury.
d. by the average rate of change in the price of capital goods.
If the U.S. dollar appreciates in the foreign exchange market, U.S. exports will be
__________ and U.S. imports will be __________.
a. relatively less expensive; relatively less expensive
b. relatively less expensive; relatively more expensive
c. relatively more expensive; relatively less expensive
d. relatively more expensive; relatively more expensive
e. unaffected; relatively less expensive
Increased productivity in the agricultural sector has __________ the output and
__________ the prices of agricultural goods.
a. increased; reduced
b. increased; increased
c. decreased; reduced
d. decreased; increased
e. had no impact on; had no impact on
Some people see the government as being more heavily involved in taking sides than in
serving the common interest.
a. True
b. False
Economists perceive a college applicant’s grade point average and standardized test
scores (such as SAT and ACT scores) to be rationing devices.
a. True
b. False
Refer to Exhibit 5-5. If the airline charges price P1 for both aisle seats and middle seats,
the result will be
Exhibit 5-5
a. a surplus of middle seats and the equilibrium quantity of aisle seats.
b. a surplus of aisle seats and the equilibrium quantity of middle seats.
c. a shortage of middle seats and the equilibrium quantity of aisle seats.
d. a shortage of aisle seats and the equilibrium quantity of middle seats.
If labor is immobile between two countries, changes in relative demand for goods and
services may pose major economic problems
a. whether exchange rates are flexible or fixed.
b. but the problems will not be as significant as they would be if labor were mobile.
c. when exchange rates are flexible, but not when they are fixed.
d. when exchange rates are fixed, but not when they are flexible.
Refer to Exhibit 3-10. At a price of $10, __________ units of the good will be
exchanged.
Exhibit 3-10
a. 100
b. 200
c. 300
d. none of the above
If company A and B combine under single ownership of control, this would be a
__________ merger.
a. horizontal
b. vertical
c. conglomerate
d. Herfindahl
e. There is not enough information to answer the question.
Ford Mustangs would tend to be more elastic in demand than all cars because there are
more substitutes for Ford Mustangs than for cars.
a. True
b. False
Refer to Exhibit 3-5.In the market shown, if equilibrium was originally at point W and
is now at point X, the new equilibrium price is __________ it was originally and the
new equilibrium quantity is ____________ it was originally.
Exhibit 3-5
a. greater than; greater than
b. less than; greater than
c. greater than; less than
d. less than; less than
The condition in an economy that makes a “rationing device” a necessity is:
a. the economy is organized around free markets.
b. the economy is centrally planned by the government.
c. scarcity exists.
d. there are fewer types of goods than there are people in the economy.
Which of the following statements is a public choice economist most likely to agree
with?
a. People who work for the federal government are naturally lazy, whereas people who
work for private firms are naturally hard working.
b. Good government comes from good people, bad government comes from bad people.
c. Change the institutional arrangements, and you will change behavior.
d. Bad people naturally gravitate toward a career in politics.
e. Good people naturally gravitate toward a career in politics.
The monopolistic competitor is a
a. price taker.
b. price searcher.
c. single seller of a good with no close substitutes.
d. firm that faces a horizontal demand curve.
e. b and c
Refer to Exhibit 34-7.Assume that the current price of good X is $25 (which includes a
$10 tariff on imports of good X).The government collects tariff revenue on good X in
the amount of
Exhibit 34-7
a. $100
b. $200
c. $250
d. $300
e. There is not enough information to answer this question.