If the first four units of a good consumed have marginal utilities of 8, 4, 2, and 1,
respectively, this trend is an indication of the:
a. law of consumer equilibrium.
b. law of diminishing marginal utility.
c. law of diminishing consumer surplus.
d. law of supply.
The term “balance of payments” refers to a nation’s:
a. goods exports minus imports.
b. record of all international transactions.
c. capital inflows minus outflows.
d. official reserves inflows minus outflows.
The supply curve of a price-taker firm in the short run is the:
a. firm’s average variable cost curve.
b. portion of the firm’s average total cost curve that lies above average variable cost
curve.
c. portion of the firm’s marginal cost curve that lies above average variable cost curve.
d. firm’s marginal revenue curve.
If Dana can paint his house faster than Luke, a professional house painter, then:
a. Dana has a comparative advantage in house painting.
b. Dana has an absolute advantage in house painting.
c. Luke has a comparative advantage in house painting.
d. Luke has an absolute advantage in house painting.
e. Dana should always paint his own house.
For a monopsonist, the marginal factor cost is always:
a. equal to the wage rate.
b. less than the wage rate.
c. greater than the wage rate
d. the same as the labor supply.
e. the same as the labor demand.
Which of the following is not a characteristic of a perfectly competitive market?
a. There is a large number of small firms.
b. Firms sell a homogeneous product.
c. Firms can easily enter or exit the market.
d. Firms are price makers, not price takers.
The most plausible reason why changes in the price of cotton can cause shifts in the
supply curve for tobacco is:
a. cigarette smokers often wear cotton shirts.
b. when incomes rise, people consume more cotton and tobacco.
c. firms can switch from growing tobacco to cotton and vice versa.
d. tobacco is an input in the production of cotton.
e. cotton and tobacco are unrelated markets in all ways.
If the income elasticity for a particular good is 0.8, we would expect to see more of that
good:
a. d and e.
b. consumed in wealthier countries.
c. on supermarket shelves.
d. consumed in poorer countries.
e. consumed in low-income communities.
The average National Basketball Association player is over 6 feet tall. The average
horse jockey is shorter than 5 1/2 feet tall. This is because height provides NBA players
with:
a. d and e.
b. an absolute advantage for horse racing.
c. an absolute disadvantage for other sports in general.
d. a comparative disadvantage in horse racing.
e. a comparative advantage in basketball.
The minimum price for a good set by the government above the equilibrium price is
called a:
a. price ceiling.
b. price floor.
c. parity price ratio.
d. market-generated price.
e. deficiency price.
Which of the following statements is correct?
a. About 25 percent of the U.S. population earns an income below the poverty line.
b. About 50 percent of blacks earn an income below the poverty line.
c. Since 1980 the fraction of persons below the poverty level has risen sharply.
d. None of these.
Marginal revenue is the change in:
a. total profit brought about by selling one more unit of output.
b. price brought about by selling one more unit of output.
c. total revenue brought about by selling one more unit of output.
d. output brought about by a $1 change in product price.
e. average revenue brought about by selling one more unit of output.
Which of the following describes a situation in which demand must be elastic?
a. Total revenue increases by 15 percent when the price of corn dogs rises by 15
percent.
b. Total revenue increases by less than 15 percent when the price of corn dogs rises by
15 percent.
c. Total revenue decreases by more than 15 percent when the price of corn dogs rises by
15 percent.
d. Total revenue increases by $15 when the price of corn dogs rises by $15.
e. Total revenue increases by more than $15 when the price of corn dogs rises by $15.
In Adam Smith’s competitive market economy, the question of what goods to produce is
determined by:
a. the “invisible hand” of the price system.
b. businesses.
c. unions.
d. the government, through laws and regulations.
A source of economic growth is:
a. unemployment. c. less resources.
b. inefficiency. d. greater entrepreneurship.
If total cost is $1,000 when output is zero, and total cost is $1,200 when output is one,
and total cost is $1,500 when output is two, then which of the following is true?
a. Total fixed cost is $1,500.
b. The marginal cost of producing the first unit of output is $1,200.
c. The marginal cost of producing the second unit of output is $300.
d. The average fixed cost is $750 when two units of output are produced.
A surplus of wheat:
a. is impossible if people are hungry.
b. is impossible if the price of wheat is below equilibrium.
c. will result when the quantity demanded exceeds the quantity supplied at the current
price.
d. is unlikely to cause any change in the price of wheat.
e. indicates that the problem of scarcity of wheat has been solved.
Which of the following is a microeconomics topic?
a. A price of a new home.
b. The inflation rate.
c. The economy’s growth rate.
d. The unemployment rate.
e. Forecasts of a recession next year.
Production possibilities curve analysis includes the idea of:
a. opportunity cost. c. maximum production choices.
b. scarcity. d. all of these.
If a nation remains poor over time, it could be that:
a. c and e.
b. d and e.
c. the population growth rate is at least as much as the national GDP growth rate.
d. the per capita real GDP growth rate is larger than the population growth rate.
e. the national real GDP growth rate is lower than the population growth rate.
An appreciation in the U.S. dollar benefits which of the following groups of people?
a. All people living in the United States
b. U.S. producers who export farm equipment to other countries
c. U.S. consumers who buy imported automobiles
d. Foreigners who wish to travel to the United States
e. U.S. consumers who buy only goods made entirely in the United States