Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Figure 5-5
In Figure 5-5, if the household is spending enough of its budget to purchase 4 orders of
fries and the price of an order of fries is $2, the remainder of the budget available for
hamburgers is
a. $10.
b. $12.
c. $16.
d. $20.
Suppose that because of climatic conditions, the smog levels in Los Angeles suddenly
soar to dangerous levels. The most successful policy in this case would be
a. direct controls to limit driving.
b. taxes on drivers at rush hours.
c. voluntary cooperation to reduce driving.
d. removal of autos with excessive emissions.
The rule for the optimal use of any input says that
a. when MRP is less than price, it pays to expand resource use.
b. when MRP is greater than price, it pays to expand resource use.
c. when MRP equals price, resource use should be cut back.
d. resources should be used only if MRP exceeds price.
What is defined as the ability of a firm to earn high profits by raising and keeping the
prices of its products substantially above the levels at which those products would be
priced in competitive markets?
a. Economies of scope
b. Tacit collusion
c. Monopoly power
d. Perfect competition
If stock prices follow a random walk,
a. speculation in the stock market destabilizes prices.
b. a stock's past performance is not a good indicator of its future performance.
c. rumors, news, and other 'signals" have no effect on stock prices.
d. the stock market does not participate in channeling resources toward firms with high
stock prices.
The total burden of a tax equals tax receipts plus excess burden.
a. True
b. False
On a world scale, how populous is the U.S. economy?
a. first
b. second
c. third
d. fourth
e. fifth
A pure monopoly is defined as having only one seller.
a. True
b. False
A perfectly competitive firm should continue to expand output until
a. total revenue exceeds total costs.
b. total revenue exceeds variable costs.
c. marginal revenue equals marginal costs.
d. average revenue equals variable costs.
Figure 7-12
Which of the graphs in Figure 7-12 shows a marginal physical product curve that
exhibits first increasing, and then diminishing, marginal returns to sunlight?
a. (a)
b. (b)
c. (c)
d. (d)
Under perfect competition, the lure of profits makes producers try to equate marginal
cost and price.
a. True
b. False
Figure 10-9
Figure 10-9 shows supply and demand conditions in a perfectly competitive industry
and for a firm in that industry. Assume the industry initially has supply curve S1 and
demand curve D1. If demand shifts to D2, then in the short run price will
a. rise to A.
b. rise to some level between A and B.
c. remain at B.
d. fall to C.
Game theory may be used to solve problems of interdependent decision making by
large firms.
a. True
b. False
____ is a doctrine that holds that exports are good for a country, whereas imports are
harmful.
a. Supply-side economics
b. Mercantilism
c. Free trade
d. Monetarism
A successful cartel may end up charging the ____ price and obtaining ____ profits.
a. monopolistic competition; zero economic
b. oligopoly; monopoly
c. monopoly; zero economic
d. monopoly; monopoly
