The profit-maximizing single-price monopolist will charge a price
a. equal to marginal revenue.
b. greater than marginal cost.
c. less than marginal revenue, but greater than marginal cost.
d. greater than marginal revenue, but equal to marginal cost.
e. a and b
If there is a decrease in the expected inflation rate, then,
a. the nominal interest rate will increase.
b. the nominal interest rate will decrease.
c. the real interest rate will increase.
d. a and c
e. b and c
One reason that helps to explain the law of demand is the law of
a. diminishing marginal utility.
b. diminishing marginal returns.
c. increasing opportunity costs.
d. supply.
Refer to Exhibit 39-4. At the competitive equilibrium price and quantity, the total
revenue of wheat farmers will be
Exhibit 39-4
a. $1,400.
b. $1,800.
c. $2,400.
d. $2,800.
e. $5,000.
Suppose a given marginal cost curve starts out downward sloping and at some level of
output turns upward and becomes upward sloping. The point at which it turns upward is
the point at which
a. marginal physical product increases.
b. total cost rises.
c. average fixed cost declines.
d. average variable cost is below marginal cost.
e. diminishing marginal returns set in.
The natural monopolist might have an incentive to let costs increase under
a. price regulation.
b. profit regulation.
c. output regulation.
d. a and b
Many people buy one newspaper per day, but rarely do they buy two of the same
newspapers on the same day.What is the economic justification for this behavior?
a. The marginal benefit of purchasing the second newspaper exceeds the marginal cost
of purchasing that paper.
b. The marginal cost of purchasing the second newspaper exceeds the marginal benefit
of purchasing that paper.
c. The marginal benefit of purchasing the second newspaper equals the marginal cost of
purchasing that paper.
d. none of the above is an appropriate economic justification for this behavior.
Refer to Exhibit 20-8. The market for good X is initially at point A. A tax is then placed
on the production of good X. As a result, the equilibrium price changes to __________,
and sellers now receive __________ per unit they sell and they get to keep __________
for each unit they sell. Exhibit 20-8
a. $11; $10; $9
b. $11; $11; $9
c. $12; $11; $10
d. $12; $11; $9
e. $11; $12; $10
Under a fixed exchange rate system, if the dollar price of Mexican pesos is above its
equilibrium level, the peso is referred to as overvalued and the dollar is necessarily
undervalued.
a. True
b. False
Refer to Exhibit 32-4.At the market equilibrium price of the good, consumers’ surplus is
the area
Exhibit 32-4
a. D + E
b. A + B + C + D + E
c. A + B + C
d. C + E
e. none of the above
A labor union undertakes a training program for its members. The objective of the
training program is to
a. increase substitute factor prices.
b. increase the marginal physical product of its members and therefore increase the
demand for their services.
c. reduce the availability of substitutes for the product it produces.
d. lower the supply of its labor.
e. none of the above
Refer to Exhibit 34-6. The opportunity cost of 1 unit of cheese in terms of units of wine
is __________ for country B.
Exhibit 34-6
a. 1
b. 5
c. 10
d. 15
One way to reduce the degree of income inequality is to
a. increase transfer payments going to people with low labor and asset incomes and
increase taxes on people with high labor and asset incomes.
b. decrease transfer payments going to people with low labor and asset incomes and
decrease taxes on people with high labor and asset incomes.
c. increase transfer payments going to people with low labor and asset incomes by less
than taxes are increased on the same people.
d. increase transfer payments going to people with high labor and asset incomes by
more than taxes are increased on the same people.
e. a and c
In which market structure can the good being produced be either homogeneous or
differentiated?
a. monopolistic competition
b. oligopoly
c. monopoly
d. perfect competition
e. none of the above
Political candidates running for the same office tend to voice
a. the same views on how things should be accomplished so that one candidate does not
gain an advantage over the other.
b. the same views on how things should be accomplished, simply because there usually
is no difference between their views.
c. quite different views on how things should be accomplished so that voters will see
that one approach is better than another.
d. the same views on what things should be accomplished, but not speak specifically on
how things should be accomplished.
If the government increased licensing requirements for beauty salons, the supply curve
for salon services would shift to the left.
a. True
b. False
In long run equilibrium, a monopolistic competitive firm’s price will
a. exceed ATC, but equal MC.
b. exceed both MC and ATC.
c. be less than both MC and ATC.
d. exceed MC, but equal ATC.