Figure 22-9
In Figure 22-9, at price OC total quantity demanded exceeds quantity supplied and
price will rise to
a. OJ in Pastaland.
b. OA in Pestoland.
c. OA in both countries.
d. OJ in both countries.
Increasing productivity in a society
a. always results in a better quality of life as society views it.
b. can never make a nation poorer.
c. guarantees that personal services will cost less.
d. makes improved personal services available to everyone.
Regarding the financial crisis of 2008-2009, and Americans’ spending habits, it is
correct to say that:
a. After 2000, the ratio of consumer debt to GDP dropped steadily.
b. After the financial crisis of 2008-2009, many U.S. consumers incurred more debt.
c. Since 2009, the ratio of consumer debt to GDP has come down notably.
d. None of these is correct.
A buyer’s response to a change in income is an example of a “change in demand.”
a. True
b. False
The major advantage of the corporation is
a. limited liability for owners.
b. greater profit incentive than the other forms of business organization.
c. lower taxes for owners, who are taxed only once.
d. ability of owners to have hands-on management of the firm.
American consumers decide to boycott grapes in support of the farm workers’ union.
Everything else being equal, the
a. price of grapes will rise.
b. supply of grapes will fall.
c. quantity supplied of grapes will fall.
d. demand curve for grapes will shift to the right.
The technique called input-output analysis was invented by
a. Adam Smith.
b. Milton Friedman.
c. Wassily Leontief.
d. Mountifort Longfield.
The optimal combination of goods for a consumer to purchase is shown by
a. any intersection of the indifference curve and the budget line.
b. the point where the budget line touches the vertical axis.
c. a point of tangency between the budget line and the indifference curve.
d. the point at which the indifference curve parallels the horizontal axis.
e. the intersection of two indifference curves.
The total amount of income in a society is independent of how income is distributed.
a. True
b. False
The demand for labor is a derived demand. Employers hire workers until the
a. wage rate equals the average product of labor.
b. wage rate equals the marginal revenue product of labor.
c. last worker hired adds nothing to total output.
d. average product of labor is zero.
A firm uses two inputs, A and B. At its optimal choice of input proportions,
a. MRP of A = MRP of B.
b. MRPA/PA = MRPB/PB.
c. MPP of A = MPP of B.
d. All of the above are correct.
Along with changes in the level of economic activity, measured by GDP, what other
economic variable tends to rise and fall as a consequence?
a. precipitation
b. regulation
c. circulation
d. unemployment
Usury laws interfere with the automatic workings of the market mechanism.
a. True
b. False
Universal service may require making a service available in small communities where
the limited scale of operations may make costs extremely high.
a. True
b. False
Less than 13 percent of U.S. workers belong to unions.
a. True
b. False
Which of the following observations concerning price discrimination is true?
a. It only occurs in monopolies.
b. It is easier for a monopolist than for a firm that is affected by competition.
c. It means that sales to all customers are equally profitable.
d. It is considered as a bad business practice under all circumstance.
Suppose that a curve has a slope equal to zero at some point A. To the right of A, the
curve may
a. have a positive slope.
b. have a negative slope.
c. be a straight line.
d. All of the above are correct.
“Optimal input curve analysis is useless. Since firms never know the demand for their
product with certainty, they will rarely operate at the optimal input combination.” Agree
or disagree?
What are the reasons for preferring competition to monopoly?
Sally Rand owns a ceiling fan company. She sells 1,000 ceiling fans at $50 each. Each
fan costs her $20. She uses her own money to buy the fans; she withdraws the money
from her savings account where it earns 5 percent interest. Before going into the ceiling
fan business, she worked as a fan-dancer at $25,000 a year. Should Sally remain in
business?
What happens to the price of the product and total revenue for a perfectly competitive
firm if it doubles the amount of output it supplies in the market?
Is it a good thing to go to a point where marginal profit is zero? Explain.