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High interest rates make a firm's long-term investment in new capital
a. riskless.
b. less attractive.
c. more attractive.
d. no more attractive than short-term investment.
Any change in a firm's fixed costs will change its profit-maximizing level of output.
a. True
b. False
Which of the following observations is true?
a. A market produced with allocative efficiency if a monopoly exists.
b. A market can provide "public goods."
c. A market makes public and personal services inexpensive.
d. A market distributes income equally.
In Country X, the government requires employers to collect 9 percent of every
employee's compensation as payroll tax. This is an example of
a. progressive tax.
b. regressive tax.
c. digressive tax.
d. proportional tax.
A monopolist's cost curves may shift down because
a. large-scale input purchases may permit the monopolist to take quantity discounts.
b. of advertising expenditure.
c. competitors are pushed out of the market.
d. of bureaucratic inefficiencies.
Corporations obtain funds when their previously issued stock is traded.
a. True
b. False
When determination of rent is left to the market,
a. that rent price is almost entirely determined by the supply side.
b. that price can settle at politically unpopular levels.
c. land is fairly distributed among the members of society.
d. the supply of land will be perfectly elastic.
Air quality in most U.S. cities has ____ since World War II.
a. worsened
b. improved
c. remained unchanged
d. improved slightly before a recent deterioration
Any increase in efficiency increases output available for distribution.
a. True
b. False
The sales of the 50 largest corporations in the U.S. economy amount to nearly 37
percent of GDP.
a. True
b. False
Economists ordinarily favor setting price equal to marginal cost when this option is
feasible.
a. True
b. False
Perfectly competitive markets are not the best at producing the goods that are desired
by consumers.
a. True
b. False
In a long-run equilibrium in a perfectly competitive market, firms are selling at a price
equal to average cost.
a. True
b. False
The perfectly competitive firm's short-run shutdown rule is to shut down immediately if
a. TR < TC.
b. TR < SRFC.
c. TR < SRVC.
d. TR < MC > Q.
A model that is an oversimplification for one purpose will likely be an
oversimplification for other purposes as well.
a. True
b. False
Profit is the return to entrepreneurship.
a. True
b. False
Which factor of production receives the greatest share of the U.S. national income?
a. land
b. labor
c. capital
d. entrepreneurship
"Peak pricing" involves setting lower prices at peak times so that people can afford a
good or service.
a. True
b. False
The production possibilities frontier can be used to show a manufacturer's possible
combinations of output of two goods.
a. True
b. False
Federal tax loopholes in personal income tax provide benefits only to very high-income
people.
a. True
b. False
Figure 11-3
Using the graph in Figure 11-3, the profit-maximizing monopolist will charge a price
a. of more than $3.
b. of $3.
c. between $2 and $3.
d. of $2.
Tacit collusion is
a. collusion which is carried out without any explicit agreement among firms.
b. collusion about tacits, rather than strategy.
c. agreements which are sponsored by government.
d. similar to pure competition.
Black-market prices are below equilibrium prices because sellers want to sell large
quantities.
a. True
b. False
If the marginal cost of producing vanity license plates is virtually zero (by prison
inmates with little else to do), then states would maximize their profits on plate sales at
the point on a linear demand curve where
a. demand is inelastic.
b. demand is elastic.
c. demand is unit elastic.
d. the demand curve crosses the horizontal axis.
If the price of a depleting resource does not rise as anticipated, it may be because:
a. new reserves of the resource were discovered.
b. new methods of mining or refining were developed.
c. price controls were passed by law.
d. All of the above are correct.
How is the dividing line between poverty and nonpoverty measured? Does this method
overstate the degree of poverty?
Economists often say that trade is a win-win situation. How do you justify this?
Suppose a presidential candidate campaigns on the need to improve U.S. infrastructure,
a term for capital goods like bridges, highways, and technology (much of it publicly
owned). Which would lead to faster growth: government expenditure on capital goods
or expenditure on consumption goods such as sports stadiums? Illustrate your answer,
drawing appropriate production possibilities frontiers accompanied by an explanation.
Why do many economists rate the income tax high in efficiency and equity terms?
Is wage discrimination more likely in competitive or monopolistic markets?
Why is it that the consumer can maximize total net utility only if the purchase quantity
brings marginal utility as close as possible to equality with price?
