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How does the U.S. economy rank in size?
a. first in economic output
b. second in economic output
c. third in economic output
d. fourth in economic output
e. fifth in economic output
One of the following is not a characteristic of perfect competition. Which is it?
a. Firms advertise to increase their market share.
b. Profits are low in the long run.
c. Consumers pay little attention to brand names.
d. Firms pay no attention to their competitors' output levels.
Given total cost and the quantity of output, marginal cost and average cost can be
determined.
a. True
b. False
The effect of opening trade between countries is
a. living standards rise in the country with efficient, high-pay workers.
b. both countries can exploit comparative advantage and increase productivity.
c. total world production increases as both countries specialize in specific goods.
d. All of the above are correct.
Rising labor productivity means that less labor is needed to produce the same level of
output.
a. True
b. False
From a society's viewpoint, when all resources are fully employed, a decision to have
more of one thing means we must give up some of another thing.
a. True
b. False
Which of these contributes to the existence of monopoly power?
a. a continuously decreasing long-run average cost curve
b. possession of a patent
c. control over essential output
d. All of the above are correct.
The U.S. Postal Service enjoys a monopoly position because of patent rights.
a. True
b. False
Programs that reduce the incentive to work make income redistribution inefficient.
a. True
b. False
A monopolist firm may be more innovative than a competitive firm.
a. True
b. False
If indifference curves and budget lines are used to analyze consumer choice, an inferior
good will
a. escape detection when income rises.
b. be easily identified because the quantity purchased will fall as income rises.
c. be easily identified because the quantity purchased will rise as income rises.
d. be easily identified because it will change the slope of the budget line.
e. escape detection because this model does not show that relationship.
Scarcity is the fundamental problem of the economy.
a. True
b. False
Define the following terms and explain why they are important in the study of
economics.
a. efficient allocation
b. laissez faire
c. peak pricing
d. input-output analysis
e. coordination tasks
In recent decades, other countries have caught up to the U.S. and even surpassed it in
some important economic arenas.
a. True
b. False
Part of the reason why barely used cars sell for much less than new cars is that
a. buyers and sellers have symmetric information about cars and both have less
information about used cars than about new cars.
b. buyers and sellers have symmetric information about cars and both have more
information about used cars than about new cars.
c. buyers have more information about used cars than sellers do.
d. sellers have more information about used cars than buyers do.
Table 10-2
Refer to Table 10-2 Which firm is better off staying in business in the short run?
a. Firm A
b. Firm B
c. Firm C
d. Firm D
