Some economic studies have shown that mandatory seat belt laws do not lead to a
reduction in traffic fatalities.
a. True
b. False
The answer is: “rational ignorance.” What is the question?
a. Why do special interest groups lobby politicians?
b. What causes a candidate in a two-person political race to take polls?
c. What explains why voters often know very little about the candidates and the issues?
d. What motivates the free rider?
There is no toll charge to drive on freeway A. If there is freeway congestion at 9 a.m.,
there will be greater freeway congestion at 11 a.m. if
a. the demand to drive on the freeway is the same at both times.
b. the demand to drive on the freeway at 11 a.m. is greater than the demand to drive on
the freeway at 9 a.m.
c. the demand to drive on the freeway at 9 a.m. is greater than the demand to drive on
the freeway at 11 a.m.
d. more people carpool at 11 a.m. than at 9 a.m.
e. none of the above.
Evidence seems to indicate that the distribution of income prior to adjusting for taxes
and in-kind transfer payments is
a. less equal than after adjusting for taxes and in-kind transfer payments.
b. more equal than after adjusting for taxes and in-kind transfer payments.
c. the same as after adjusting for taxes and in-kind transfer payments.
d. impossible to determine.
The perfectly price-discriminating monopolist achieves resource allocative efficiency,
while the single-price monopolist does not.
a. True
b. False
If the price of good A decreases by 10 percent and the quantity demanded of good B
decreases by 10 percent, this is evidence that goods A and B are
a. substitutes for one another.
b. complement goods to one another.
c. both inferior goods.
d. both normal goods.
e. not related.
If the Gini coefficient is zero, there is
a. relative income equality.
b. complete income inequality.
c. complete income equality.
d. relative income inequality.
e. none of the above
The key behavioral assumption of the cartel theory is that oligopolists in the industry
act as if
a. all firms in the industry are the same size.
b. all firms in the industry are price takers.
c. there is a dominant firm in the industry and many fringe firms.
d. there is only one firm in the industry.
e. none of the above
Which of the following is the best example of a barrier to entry into a monopolistic
industry?
a. diminishing returns
b. comparative advantage
c. high price elasticity of demand
d. a public franchise
It is unlikely that very many (pure) monopsony firms exist today, given that workers are
increasingly mobile.
a. True
b. False
If a production possibilities frontier (PPF) is concave outward, it follows that
a. opportunity costs are constant between two goods.
b. the opportunity cost (of producing the good on the horizontal axis) rises as more of
the good is produced.
c. the opportunity cost (of producing the good on the horizontal axis) falls as more of
the good is produced.
d. the opportunity cost (of producing the good on the horizontal axis) first rises and then
falls as more of the good is produced.
e. none of the above
Situation 22-4
Joe is the owner-operator of Joe’s Haircuts Unlimited. Last year he earned $200,000 in
total revenues and paid $125,000 to his employees and suppliers. During the course of
the year, he received three offers to work for other barbers, with the highest offer being
$50,000 per year.
What are Joe’s implicit costs?
a. $150,000
b. $175,000
c. $35,000
d. $200,000
e. $50,000