Which of the following is true for a profit-maximizing competitive firm in the long run
but not a monopolist?
a. MC = MR
b. MC = P
c. AR = P
d. Q > 0
A rise in price will always result in an increase in the total amount consumers spend on
a product.
a. True
b. False
The Social Security system works exactly like any private retirement trust system.
a. True
b. False
Most consumers in stores use marginal analysis to make their buying decisions.
a. True
b. False
Advertising has no effect on the demand schedule for a good.
a. True
b. False
Figure 11-1
The Red Cross is virtually the only operator of blood banks in the United States. In
Figure 11-1 are the demand and cost curves facing the Red Cross blood bank. If the Red
Cross were to set price and quantity at the level that it would obtain in the long run in a
competitive industry, how much blood would it sell?
a. OA
b. OB
c. OD
d. OC
Define the following terms completely and concisely.
a. marginal revenue
b. average revenue
c. optimal decision
d. satisficing
e. marginal profit
Figure 10-8
In the short run, the firm in Figure 10-8 will shut down if the price falls below
a. $8.
b. $6.
c. $5.
d. $1.
In 2013, the U.S. spending on research and development was:
a. the lowest among developed countries
b. more than any other country
c. more than most countries, but not China
d. consistent with spending on R&D in 2012
Total expenditure by a buyer is equal to the
a. slope at any point along the demand curve.
b. price times quantity demanded at any point along the demand curve.
c. elasticity times price at any point along the demand curve.
d. elasticity times quantity demanded at any point along the demand curve.
A country can gain by importing a good that it can make itself if
a. this enables the country to make another good in which it is extremely efficient.
b. it has an absolute disadvantage in the good.
c. this permits the country to establish comparative advantage in the good.
d. All of the above are correct.
“Anticompetitive practices” are actions by a powerful firm that:
a. threaten to destroy competitors
b. force competitors to compete less vigorously
c. prevent the entry of new rivals.
d. all of these are true.
Firms can make decisions using marginal analysis even if they do not know the shape
of a demand curve.
a. True
b. False
Indirect taxes are levied on specific economic activities.
a. True
b. False
An import quota on a product normally does all of the following except
a. reduces the volume of that product traded.
b. raises the price in the importing country.
c. increases the price everywhere.
d. reduces the price in the exporting country.
The consensus among researchers is that union workers earn 15 percent more than
otherwise identical nonunion workers. This means unions have probably raised wages
a. exactly 15 percent.
b. less than 15 percent.
c. at least 15 percent.
d. more or less than 15 percent, but one cannot tell exactly.
Direct controls have a clear advantage when a total ban is necessary.
a. True
b. False
The product supplied by a monopoly firm has
a. a few substitutes.
b. no close substitutes.
c. a large number of substitutes.
d. two or three close substitutes.
Why does the supply curve of the perfectly competitive industry shift to the right
whenever a new firm enters the industry?
Why do economists consider perfect competition to be the most efficient market
structure?
Are property taxes progressive or regressive?
The Antitrust Division of the Department of Justice carefully scrutinizes mergers. Why?
How might a court use cross elasticity in an antitrust case?
What important changes have occurred in the composition of the labor force since
1960? Is the popular image of the American worker as a factory worker accurate?
Describe the types of jobs Americans are working in today.
Explain what a “cap and trade” program is and how it works. Does the U.S. have a cap
and trade program? If so, is it successful?
How is it possible to have a separation between ownership and control of a major
corporation? What specific type of market imperfection can cause this?