Perfect central planning is nearly impossible for all of these reasons except:
a. production processes between industries are often interdependent.
b. some processes must be decided together, and not individually, because of their
interdependence.
c. if the output target for one industry is adjusted, many others must also be adjusted.
d. all of these reasons are correct.
An example of a policy to combat poverty is
a. TANF.
b. food stamps.
c. Social Security.
d. All of the above are correct.
Figure 7-10
In Figure 7-10, the curve B is
a. average fixed cost.
b. average total cost.
c. average variable cost.
d. marginal cost.
Money costs and opportunity costs are concepts that are
a. not related in any meaningful way.
b. used by tax accountants.
c. related through relative prices of goods and services.
d. used by economists to learn the most efficient level of output.
Average hours worked per week have ____ since the early 1900s.
a. declined by almost 7 percent
b. risen by almost 15 percent
c. risen by almost 7 percent
d. declined by almost 35 percent
Marginal land can be defined as land that earns neither profits nor losses.
a. True
b. False
Some costs cannot be varied no matter how long the period in question. These are
called
a. overheads.
b. total costs.
c. fixed costs.
d. variable costs.
A monopolist’s cost curves will
a. be identical to those of a competitive firm.
b. be higher than a competitive firm’s cost curves.
c. be peculiar to the individual producer since there is only one.
d. drop more steeply as output increases.
Why would it be a mistake to treat opportunity costs and explicit monetary costs as
identical?
a. Because sometimes the market does not function well.
b. Because opportunity costs are different for different goods.
c. Because there are trade-offs involved in any decision.
d. Because of existence of efficient markets.
Labor is defined as cheap only if its productivity is very low.
a. True
b. False
Under monopoly
a. too small a share of society’s resources is used to produce the monopolized
commodity.
b. Adam Smith’s invisible hand assures efficient resource allocation.
c. too large a share of society’s resources is being used to produce the monopolized
commodity.
d. MC > MU.
Currently, the U.S. net national debt is almost 60 percent of GDP, but this percentage is
smaller than that of many fiscally healthy countries.
a. True
b. False
A firm in a monopolistically competitive market makes no economic profit in the long
run because
a. long-run marginal cost will be too high to make any economic profit.
b. long-run price will be equal to long run marginal cost.
c. long-run marginal cost will be equal to long run marginal revenue.
d. long-run price will be equal to long run average cost.
A profit-maximizing firm always
a. sells its output at P = MR.
b. produces at the output at which MR = 0.
c. hires labor until the MRP of labor = 0.
d. produces every unit of output for which MR > MC.
The demand curve for capital is
a. its entire marginal physical product curve.
b. the downward-sloping portion of its marginal physical product curve.
c. its entire marginal revenue product curve.
d. the downward-sloping portion of its marginal revenue product curve.
Economic theory
a. is a deliberate simplification of factual relationships.
b. seeks to disprove a hypothesis.
c. is based mainly on assumptions.
d. seeks to prove political ideals.
If the price of a commodity is above marginal cost, then the economy will tend to
a. overproduce the item.
b. underproduce the item.
c. produce the optimal amount of the item.
d. overproduce and underproduce the item cyclically.
Table 7-4
Table 7-4 shows a production relationship. The cost of one day of labor is $65 and the
product price is $1 per unit. How much will the labor input increase if the capital stock
were increased from 3 to 4?
a. from 3 to 4
b. from 4 to 5
c. from 4 to 6
d. stays the same