Government regulation of the prices and entry conditions in an industry is an example
of
a. safety regulation
b. economic regulation
c. Herfindahl regulation
d. antitrust regulation
e. Social Security legislation
A profit-maximizing firm will hire units of an input to the point at which
a. MRP > price of the input
b. MRP < MRC
c. MRP = the supply of the input
d. MRP = MRC
e. MRP < the supply of the input
The fact that people have unlimited wants means that
a. they always want more of at least one good
b. each person has an unlimited desire for every good
c. labor unions demand wage increases
d. selfish people are not concerned about others
e. people buy goods without regard to what they can afford
Firms in a perfectly competitive market achieve both allocative and productive
efficiency in the short run
a. True
b. False
Exhibit 20-1
Net exports of goods -2,000
Net exports of services 500
Net unilateral transfers -1,000
Net investment 100
Statistical discrepancy -20
Given the hypothetical data in Exhibit 20-1, what is the balance on current account?
a. -$1,500
b. -$2,000
c. -$2,400
d. -$2,420
e. -$2,500
Exhibit 4-14
Refer to exhibit 4-14. An increase in the birth rate would cause which of the following
to happen?
a. movement from b to a on demand curve D1
b. demand shift from D2 to D1
c. movement from d to c on demand curve D2
d. demand shift from D1 to D2
e. movement from d on demand curve D2 to a on demand curve D1
A monopolist maximizes profit at the quantity where its total revenue curve equals total
cost.
a. True
b. False
“More elastic” means
a. unchanging
b. less desirable
c. more desirable
d. less responsive
e. more responsive
Fish are
a. always renewable resources
b. renewable resources whenever property rights are well defined
c. renewable resources if they are taken and replaced at rates that provide a steady
supply
d. renewable resources only if they are replaced at a rate that exceeds the rate at which
they are caught
e. renewable resources whenever property rights are well defined and can be easily
enforced
Ron weighs 150 pounds. A graph relating Ron’s weight on the vertical axis to Nancy’s
consumption of ice cream on the horizontal axis would be
a. a horizontal line at weight = 150
b. a horizontal line at weight = 0
c. a positively sloped line with decreasing slope
d. a vertical line at weight = 150
e. the origin
In a free market, a firm’s rate of output is determined
a. where marginal social cost equals marginal social benefit
b. where marginal private benefit equals marginal social benefit
c. where marginal social cost equals marginal private cost
d. where marginal private cost equals marginal private benefit
e. by government
The term strategy in terms of game theory refers to
a. the relationship between price and marginal cost
b. the relationship between individual firm demand curves and the market demand
curve
c. each firm’s game plan in making decisions
d. the interrelationship between price and marginal revenue
e. the tendency for collusive firms to generate normal profits
A newly acquired microwave oven and a food processor will increase Chuck’s
productivity in the kitchen. Accordingly, he will
a. cook more and eat out less
b. cook less and eat out more
c. buy more ready-to-eat foods
d. be more likely to hire a cook
e. increase the quality of what he cooks but may or may not cook more
For a monopolist that produces in the short run and does not price discriminate, price
always has to be
a. equal to marginal cost at the profit-maximizing quantity
b. equal to marginal revenue at the profit-maximizing quantity
c. greater than marginal cost at the profit-maximizing quantity
d. less than marginal cost at the profit-maximizing quantity
e. less than marginal revenue at the profit-maximizing quantity
If a firm has a downward-sloping long-run average cost curve over the entire range of
market demand, it is a
a. local monopoly
b. resource monopoly
c. monopsony
d. output monopoly
e. natural monopoly
Exhibit 20-4
Imagine that there are only two nations in the world, Canada and Switzerland. Which of
the following is true of the suppliers and demanders in this market, as represented in
Exhibit 20-4?
a. The demanders want Canadian dollars and are offering Swiss francs.
b. The suppliers want Canadian dollars and are offering Swiss francs.
c. Both the suppliers and the demanders are offering Canadian dollars.
d. Both the suppliers and the demanders are offering Swiss francs.
e. Francs are being exchanged by unknown suppliers and demanders in a money market
in Switzerland; anyone could be trading.
One result of asymmetric information in the market for bank loans is that
a. few loans are offered
b. few bad loans are made
c. more bad loans than good loans may be made
d. lenders benefit at the expense of borrowers
e. the interest on good loans will be higher than otherwise
Historically, the U.S. steel industry has been a good example of
a. monopolistic competition
b. a cartel
c. a pure monopoly
d. the kinked demand curve model of oligopoly
e. the price leadership model of oligopoly
Which of the following is not true regarding a change in quantity demanded?
a. A change in quantity demanded is shown by a movement along a given demand
curve.
b. The demand curve shifts whenever the quantity demanded changes.
c. A change in the price of a good, other things constant, will lead to a change in
quantity demanded.
d. The lower the price of a product, other things constant, the higher the quantity
demanded.
e. A shift of the supply curve might cause a change in quantity demanded.
The term underground economy refers to
a. the coal-mining industry
b. all ore mining
c. the subway system
d. purely illegal activity
e. market activity not reported to the government
A positive externality is one in which there is an external benefit bestowed on a third
party>
a. True
b. False
Exhibit 19-4
In Exhibit 19-4, if the world price of tulips is $4 and there are no trade restrictions, The
Netherlands will
a. produce 10,000, consume 4,000, and import 6,000 tulips
b. produce 10,000 and consume 10,000 tulips
c. produce no tulips
d. import all of the tulips that it consumes
e. consume only some of the tulips it produces
Which of the following is not classified as a service in the current account?
a. transportation
b. insurance
c. tourist expenditures
d. income earned from foreign investments
e. unilateral transfers
Allocative efficiency means that
a. firms have maximized production
b. all mutually beneficial trades have taken place
c. the next unit sold will increase total surplus
d. producer surplus is maximized
e. no mutually beneficial trades have occurred
Exhibit 7-18
Consider Exhibit 7-18. The rotation from AB to AC reflects a(n)
a. increase in the price of labor
b. increase in the price of land
c. decrease in the price of labor
d. decrease in the price of land
e. increase in the amount the producer can spend
Exhibit 11-3
In Exhibit 11-3, total resource earnings at equilibrium equal
a. $40
b. $60
c. $400
d. $1,000
e. $300
If the demand for airline tickets to Fort Lauderdale is price elastic,
a. airline revenue will increase if supply increases
b. airline revenue will increase if supply decreases
c. a small change in price will cause a large shift in the demand curve
d. a large change in price will cause a small shift in the demand curve
e. a large change in price will cause a large shift in the demand curve
Exhibit 12-4
In Exhibit 12-4, when the wage rate rises above $12, the substitution effect outweighs
the income effect.
a. True
b. False
Suppose a single firm supplies all the ceramic windlasses in the U.S. The demand curve
that firm faces is
a. elastic everywhere
b. unit elastic everywhere
c. inelastic everywhere
d. perfectly inelastic everywhere
e. elastic at the profit-maximizing quantity
When the marginal rate of return expected from a purchase of equipment is less than the
market interest rate, then the firm should
a. seek government assistance in decreasing the market interest rate
b. inform stockholders that the company can expect increased earnings from the
purchase
c. either purchase or not purchase the equipment depending on the marginal resource
cost of the equipment
d. purchase the equipment
e. not purchase the equipment
Experimental evidence suggests that
a. markets quickly adjust to equate quantities demanded and supplied
b. markets often do not adjust as quickly as economists previously believed
c. large numbers of buyers are necessary in order for a market to behave competitively
d. large numbers of sellers are necessary in order for a market to behave competitively
e. large number of buyers and sellers are necessary in order for markets to behave
competitively
The additional output obtained by adding another unit of labor to the production process
is called
a. the marginal cost of labor
b. the average output of labor
c. a variable cost
d. the marginal product of labor
e. the marginal utility of labor
In the United States, federal efforts to clean up the environment are coordinated by the
a. Environmental Protection Agency
b. Department of the Interior
c. State Department
d. Department of Agriculture
e. Department of Justice