Price discrimination is always illegal.
a. True
b. False
The external costs of cigarettes are related to the health problem smoking produces for
both smokers and nonsmokers. One estimate places these costs at 29 cents per pack.
Presently, sales and excise taxes on cigarettes average about 37 cents per pack. These
estimates suggest that (i) cigarette consumption is below the optimal or efficient
quantity; (ii) cigarette taxes should be reduced.
a. i and ii
b. i but not ii
c. ii but not i
d. neither i nor ii
Figure 6-9
In 1983, government price supports raised the price of sugar above its equilibrium
value. Which graph in Figure 6-9 illustrates the impact of sugar price supports on the
sugar substitute fructose?
a. 1
b. 2
c. 3
d. 4
Some of the newer pollutants that have appeared
a. are far more visible to the eye than older pollution.
b. cause damage that is easily reversible.
c. pose no significant long-term hazards.
d. are far more dangerous than older forms of pollution.
A futures contract is an agreement to buy a commodity at a specific future date, at a
price set today.
a. True
b. False
Figure 22-10
Figure 22-10 shows the effect on the market for disk drives of a(n)
a. quota.
b. tariff.
c. export subsidy.
d. import subsidy.
e. export tax.
Random walk theory says
a. throwing darts will pick winners.
b. random selection of stocks will do as well as other methods of stock choice.
c. speculation can’t lose if you wait long enough.
d. investment in stocks can’t be profitable.
A decrease in the price of a good will cause a movement along the demand schedule to
a higher quantity demanded.
a. True
b. False
Refer to Table 4-1. At $10, what is the surplus?
a. 4,500
b. 3,000
c. 1,500
d. 0
A stockholder who owns 1,000 shares of the corporation’s 100,000 shares is entitled to
what percentage of the vote in an election of corporate officers?
a. 1%
b. 2%
c. 5%
d. 10%
In scientific language, a theory is an untested assertion of alleged fact.
a. True
b. False
In general, productivity levels are much higher in richer countries like the U.S.
a. True
b. False
If a resource is in fact becoming scarcer, then one should expect
a. the price of the resource to rise.
b. less demand for the resource as people try to conserve.
c. greater supply as people reduce inventories before it is all gone.
d. all of the above.
The former communist countries of eastern Europe and the Soviet Union
a. have a better track record in environment protection than market economies.
b. have a dismal environmental record.
c. epitomize the ability of planned economies to protect the environment.
d. have no water pollution problems.
The equilibrium rent for marginal land
a. equals zero.
b. depends on the supply and demand of land.
c. exceeds the opportunity cost of the land.
d. is always greater than the equilibrium rent for nonmarginal land.
The federal government employs more civilians than state and local governments.
a. True
b. False
Employment discrimination is a source of
a. economic inefficiency.
b. increased economic growth.
c. innovation.
d. shifting production possibilities.
e. All of the above are correct.
Cartels are relatively rare because
a. they are illegal in some countries, including the United States.
b. members find it difficult to agree on key decisions.
c. members frequently have an incentive to cheat on the cartel.
d. All of the above are correct.
In the short run, which are most important in determining changes in output?
a. marginal costs and revenue
b. total costs and revenue
c. average costs and revenue
d. fixed costs
Economics examines the options open to households and business firms, but ignores the
options of governments and entire societies.
a. True
b. False
Adam Smith believed that monopoly is the most efficient market structure.
a. True
b. False
An oligopolist’s effective demand curve will be kinked if the firm
a. is acting as a price leader in the industry.
b. expects other firms to match price cuts but not price increases.
c. expects other firms to match all price changes.
d. fears new entry into the industry.
Why does quantity supplied increase when price increases?
a. Producers find it more profitable to make the item.
b. People “drop out” of the market, so buyers find it more abundant.
c. As demand decreases with a high price, surpluses appear.
d. All of the above.
A firm that is earning zero economic profit should go out of business.
a. True
b. False
What involves taking the risks that are necessary to seek out business opportunities?
a. Invention
b. Benchmarking
c. Averaging
d. Entrepreneurship