Externalities affect only the buyer and seller involved in an exchange.
a. True
b. False
Rising prices help control the process of resource depletion by
a. discouraging consumption and waste.
b. stimulating more efficient use of the depletable resource.
c. encouraging resource-saving innovation.
d. doing all of the above.
If a firm’s average cost is declining, setting price equal to marginal cost will
a. maximize the firm’s profits.
b. minimize the firm’s losses.
c. guarantee that the firm will lose money.
d. help the firm earn the opportunity costs of its resources.
Firms share technology with rivals,
a. in order to better compete with their rivals.
b. in order to help out when their rivals are in trouble.
c. to share the substantial risks of innovation.
d. because they are required to by law.
e. in order to pass false information to their rivals in order to drive them out of business.
Over the long run, stock prices have
a. generally fallen.
b. generally stayed roughly constant.
c. generally risen.
d. shown no identifiable pattern of change.
Under the U.S. patent system, a patent application must provide evidence that the
invention works, and that is based on another invention.
a. True
b. False
It is in society’s best interest that the MC of the last unit produced of a good is equal to
its MU.
a. True
b. False
In Egypt, in 1970, the Aswan Dam was completed. By preventing the annual flood of
the Nile (thereby providing millions of acres of arable land) and by providing
electricity, the dam was expected to raise the living standard of the Egyptian people-and
it has. However, it has also led to a rise in the water table which causes Egypt’s
limestone structures, including the pyramids, to absorb more salt water and to suffer
serious erosion from crystallized salts. Combined with air pollution and traffic
vibration, this erosion is turning the pyramids to dust. Economists analyze this type of
problem with the concept of
a. an externality.
b. the antiquity problem.
c. a free-rider problem.
d. the public good problem.
e. the trade-off between equity and output.
As more firms are attracted to an industry, the supply curve can be expected to shift to
the right.
a. True
b. False
If mining companies are indifferent between operating and not operating a quarry, that
quarry is
a. discounted.
b. usurious.
c. marginal.
d. nonexcludable.
The United States is known worldwide as being a low tariff nation.
a. True
b. False
If a depletable resource is selling in a perfectly competitive market, its price will rise by
greater and greater dollar amounts each year.
a. True
b. False
In terms of innovation and growth, the U.S. economic system has far exceeded the
achievements of any other type of economy, even in ancient history.
a. True
b. False
Stocks are riskier for buyers because there is no commitment to pay dividends.
a. True
b. False
Advertising by the monopolist
a. is not done because the monopolist has the only supply of the product and doesn’t
need to advertise.
b. would have the effect of shifting its demand curve to the left.
c. may lead to expanded production by the monopolist.
d. makes no sense because there are no substitute commodities available to consumers.