Dividend refers to
a. a corporation’s regular payments to lenders.
b. part of the revenue given to stockholders of a corporation.
c. a lender’s legal claim on the assets of a bankrupt corporation.
d. a prepayment of a corporation’s legal obligation.
It is not true in the long run of monopolies that
a. other firms seeking positive economic profit enter the market.
b. they earn positive economic profit.
c. they sell their output at a price greater than marginal cost.
d. they benefit from barriers to entry.
The market demand schedule in perfect competition is horizontal.
a. True
b. False
Vertical equity refers to the notion that equally situated individuals should be taxed
equally.
a. True
b. False
What are the two characteristics that are essential to economic analysis of invention?
a. fixed-costs and public goods
b. fixed-costs and private goods
c. variable-costs and public goods
d. variable-costs and private goods
Suppose that Captain Canada can produce 100 hockey sticks or 10 gallons of maple
syrup in a typical work week, while Captain Germany can produce 90 hockey sticks or
10 gallons of maple syrup in a typical work week. From these numbers, we can
conclude
a. Captain Canada has a comparative advantage in the production of hockey sticks.
b. Captain Germany has a comparative advantage in the production of maple syrup.
c. Captain Canada has an absolute advantage in the production of hockey sticks.
d. All of the above conclusions are correct.
Modern economists measure how much utility Fred gets from a hot dog by
a. asking Fred how many utils he gets from its consumption.
b. examining the price of the hamburger Fred chose not to buy.
c. asking Fred how much of some other good he would give up to get the hot dog. The
“other good” can be any good except money.
d. asking Fred how much of some other good he would give up to get the hot dog. The
“other good” can be any good, including money.
Julia knows the price elasticity of movie rentals is 3 She knows, therefore, that if she
raises her price from $2 to $2.50, her rentals will drop by approximately
a. 150 percent.
b. 100 percent.
c. 75 percent.
d. 33 percent.
Figure 7-3
Government provides many goods and services to the public because they are not
provided by free markets. Some economists believe bureaucrats who manage the
programs have no interest in maximizing net benefits (profits) but instead maximize the
size of a program constrained only by the need to have total benefits exceed total costs.
Figure 7-3 shows total benefits and cost curves for a program. What point is the
efficient point, and what point will the bureaucrat choose?
a. A and B, respectively
b. B and D, respectively
c. D and C, respectively
d. D and A, respectively
Table 11-1
Table 11-1 shows demand and total cost schedules for Monopoliteria. At its
profit-maximizing level of output, Monopoliteria’s profit is
a. $10.
b. $15.
c. $22.
d. $30.
Historical demand curves are always suspect because their demand curves are likely to
have shifted over time.
a. True
b. False
All actions and purchases, even those of wealthy people, involve a sacrifice.
a. True
b. False
Models are used to describe cause-and-effect relationships.
a. True
b. False
One reason why critics argue that large firms should not be broken up is that in some
cases
a. large firms have a concentration of economic power.
b. large firms are less-efficient producers.
c. many smaller firms would be less-efficient producers.
d. there is no economic reason to break up large firms that may have some control over
the market.
Deregulation of the airline and trucking industry has (i) resulted in considerable entry of
new firms, and (ii) has forced unions in these industries to make large concessions on
wages and working conditions.
a. i and ii
b. i but not ii
c. ii but not i
d. neither i nor ii
The problem of scarcity
a. has been “cooked up” by disenchanted anticapitalists.
b. exists because resources are limited relative to wants.
c. is solved by promoting economic growth.
d. is caused by artificially high prices.
Suppose that a quota is imposed on imports of minivans. Show graphically what the
effect is in terms of price and quantity of imports. Be sure that your graph is completely
and correctly labeled. What determines how much of the quota is paid by the buyers of
the minivans?
“I oppose a free trade agreement with Mexico because American workers will lose jobs
to low-paid Mexican workers.” Explain whether you agree or disagree with this
statement.
Why is the total profit curve shaped like a hill?
You have invested $1,000 in a stock whose price is increasing at 10 percent a year. Your
stock broker, who is never wrong, recommends a stock rising at 20 percent a year.
Assuming the broker earns 4 percent of the stock’s value on any purchase or sale of the
stock, should you take her recommendation?
Describe the types of entry barriers which can exist and their importance to the study of
monopoly.
In the 1960s, the lyrics of a rock song asked, “Did you ever have to make up your mind
to say yes to one and leave the others behind?” What economic principle was
demonstrated in the song? Explain.
What is strategic trade policy? What are the pros and cons of such a policy by a nation
in its dealings with other nations?
See table below. Does production exhibit increasing costs? Which ring and machine
combination will achieve the highest growth in the production of mood rings?
Saturn Rings Machines
30 0
20 5
10 8
0 10