The major coordination tasks can be summarized with the questions
a. who, what, when, where?
b. how, what, for whom?
c. how, what, why?
d. how, why, for whom?
e. who, how, what?
Low interest rates will persuade corporations to invest more right now.
a. True
b. False
Who of the following has been prominently accused of acting on the basis of the
“edifice complex?”
a. the Environmental Protection Agency?
b. A. C. Pigou
c. the Army Corps of Engineers
d. environmental activists
The concept of “government failure” implies
a. laissez faire is always best.
b. government intervention is always justified since government never fails.
c. no market failure can be corrected by government intervention.
d. government intervention to correct a “market failure” sometimes fails.
A corporation with “plowback”
a. deliberately earns negative profit on some activities in order to get better tax
treatment.
b. buys back shares of its stock from shareholders.
c. retains some of its earnings for investment.
d. issues unsecured stock.
Capital is a flow of resources into the production of investment goods.
a. True
b. False
The U.S. has the biggest national economy in the world solely because of the U.S.
population.
a. True
b. False
If an oligopolist cuts the prices of its products,
a. customers will switch to a rival firm.
b. customers will remain unchanged in number.
c. customers will switch from rival firms to buy from them.
d. rival firms will not react.
An example of overt collusion is
a. a cartel.
b. price leadership.
c. tacit collusion.
d. a perfectly contestable market.
A corporation may be reluctant to raise capital by issuing stock because
a. issuing stock to obtain money for investment is riskier than selling bonds.
b. holders of already-existing stock will gain more voting power in the corporation.
c. obtaining government permission to issue stock can be time-consuming and
expensive.
d. All of the above are correct.
Figure 14-2
In Figure 14-2, which of the points are efficient allocations of resources?
a. A, B, and C
b. B and C only
c. C and B and D
d. B only
If total profit is at a maximum, then average profit is zero.
a. True
b. False
Almost all of the rent that tenants pay to landlords of apartments buildings is economic
rent.
a. True
b. False
A perfectly competitive firm has a horizontal demand curve because it can sell as much
as it wants at the market price.
a. True
b. False
Indifference curves show all combinations of commodities that are equally desirable to
the consumer.
a. True
b. False
When the price of one product falls,
a. consumers’ real income will increase.
b. consumers will buy less of that product.
c. consumers will not change their buying patterns.
d. consumers’ real income will decrease.
A monopoly price reflects a good’s marginal utility.
a. True
b. False
Entrepreneurial profits are very low because entrepreneurs are generally
a. overly pessimistic and receive psychological rewards for their work.
b. overly pessimistic and incur psychological costs from their work.
c. overly optimistic and receive psychological rewards for their work.
d. overly optimistic and incur psychological costs from their work.
Figure 12-2
In Figure 12-2, which of the graphs represents a firm that is a sales revenue maximizer?
a. 1
b. 2
c. 3
d. 4
If polluters are forced to pay for their pollution, they will reduce pollution toward a
socially optimal amount.
a. True
b. False
In 2013, per capita real GDP was roughly half its value in 1960.
a. True
b. False
A tax on polluting emissions will
a. provide incentives for firms to reduce the volume of polluting materials.
b. raise revenue sufficient to eliminate the deficit.
c. necessarily lower the price of the products.
d. require no agency to administer the tax.
Bonds can be risky investments because
a. bondholders are paid from whatever remains after stockholders have been paid what
the corporation owes them.
b. if the corporation loses its assets, the bondholders may never recover their
investments.
c. the general price level may fall.
d. the voting power of an individual bondholder may be more apparent than real.