If all firms in an industry sell their product for the same price it is a result of
a. collusion.
b. perfect competition.
c. a government law that specifies all firms must charge the same price.
d. a or b
e. There is not enough information to answer the question.
Economic profit is the difference between total revenue and
a. explicit costs.
b. implicit costs.
c. sunk costs.
d. the sum of explicit and implicit costs.
Exhibit 24-2
Total revenue at the profit-maximizing quantity of output is the
a. area 0P0AQ0.
b. area 0P3FQ0.
c. distance from Q0 to A.
d. distance from Q0 to D.
e. none of the above
Economies of scale are relevant to the __________, whereas the law of diminishing
marginal returns is relevant to the __________.
a. long run; short run
b. short run; long run
c. industry; firm
d. firm; industry
e. firm in the short run; industry in the long run
As the wage rate rises,
a. the supply of labor rises.
b. the quantity demanded of labor rises.
c. the quantity supplied of labor rises.
d. the demand for labor falls.
e. a and d
Given that the demand for unskilled labor curve is downward-sloping, an unintended
effect of raising the minimum wage is that some people who worked at the lower wage
will lose their jobs at the higher wage.
a. True
b. False
Exhibit 5-3
which shows the demand and supply of a college athlete.Suppose that NCAA rules limit
the amount that the college can pay this athlete, such that their payment can not exceed
the cost of attending the college (currently $8,000).The impact of this ruling would be a
loss of income to the athlete of __________ and an equal gain in consumers’ surplus to
the college represented by ________________.
a. $2,000; area 2
b. $8,000; area 3
c. $10,000; area 2 + 3
d. $2,000; area 1 + 2
Which of the following statements is false?
a. The market demand curve in a perfectly competitive market is downward sloping.
b. The firm’s demand curve in a perfectly competitive market is horizontal.
c. The firm’s demand curve in a perfectly competitive market is perfectly elastic.
d. Marginal revenue is equal to the change in total revenue divided by the change in
quantity of output.
e. none of the above
What is the reason for the law of increasing opportunity costs?
a. There is no reason: it is just one of the laws of economics.
b. Resources have varying abilities and those with lower opportunity costs of producing
a good will be used to produce it before resources with higher opportunity costs
produce it.
c. The price of a good rises as more of it is demanded.
d. As more of a good is produced, the taxes applied to the production of the good rise.
e. c and d
Natural monopolies exist because of
a. economies of scale.
b. diseconomies of scale.
c. decreasing returns to scale.
d. public franchises.
e. deregulation.