Universities sometimes hire professors who are poor teachers but have good research
skills because
a. research ability is more important in education than teaching ability
b. students don’t listen to professors anyway
c. teaching can be learned; research ability cannot
d. research skills are easier to measure than teaching skills
e. research skills are difficult to measure
Firms in monopoly or monopolistically competitive market structures do not have
traditional supply curves as firms in perfect competition do.
a. True
b. False
If the supply of a product increases, then
a. more will be purchased at the same price
b. the price of the product must have declined
c. demand for the good must have increased
d. producers are willing to accept a lower price for each unit sold
e. producers offer less for sale at each possible price
Sugar and honey are viewed as substitutes for each other in many cooking applications.
If the price of sugar rises, we would expect
a. the demand for honey to increase
b. the demand for honey to decrease
c. the quantity demanded of honey to decrease
d. the price of honey to decrease
e. the quantity demanded of honey to increase
The merchandise trade balance measures
a. the value of goods and services exported
b. the value of all goods and services exported minus the value of all goods and services
imported
c. the value of all goods and services exported minus the value of all goods and services
imported, and transactions to finance the difference
d. the value of all tangible products exported minus the value of all tangible products
imported
e. the value of all tangible products exported minus the value of all tangible products
imported, and transactions to finance the difference
Japan has more vending machines per capita than any other country in the world. One
explanation for this phenomenon is that
a. vending machines are expensive in Japan
b. the Japanese sales clerks’ union requires that vending machines be used wherever
possible
c. labor is scarce in Japan, and vending machines help conserve on labor
d. labor is abundant in Japan, and vending machines help conserve on labor
e. vending machines were invented in Japan
Dumping refers to selling a commodity abroad at a price that is below its cost of
production or below the price charged in the domestic market.
a. True
b. False
The search model predicts that
a. singles bars will be popular
b. computer dating services would reduce the amount of search
c. supermarket price advertisements in the newspaper provide consumers no benefit
d. as a consumer’s wage rises, they search more, ceteris paribus
e. common knowledge has no value
In the short run, producers derive surplus from market exchange because
a. total revenue is greater than the minimum they would require to sell the good
b. total revenue is equal to the minimum amount they would require to sell the good
c. total revenue is less than the minimum amount they would require to sell the good
d. marginal revenue equals average revenue
e. they can rob consumers of most of their consumer surplus
Exhibit 1-16
Refer to exhibit 1-16. Which of the graphs illustrates no relationship between variable
X and variable Y?
a. a
b. b
c. c
d. d
e. e
If a seller knows more about the good than the buyer does, there exists
a. perfect information
b. an externality
c. a low marginal benefit of information for the buyer
d. asymmetric information
e. optimal search
Assume that a perfectly competitive increasing-cost industry is in long-run equilibrium
when market demand suddenly increases. Which of the following statements is
notcorrect?
a. Existing firms will earn economic profits in the new long-run equilibrium
b. Existing firms will increase output in the short run
c. New firms will enter the industry in the long run
d. Some resource suppliers to the industry will earn higher income
e. The new long-run equilibrium price will exceed the original equilibrium price
In the game theory model of oligopoly,
a. firms will be successful in colluding to raise prices
b. one firm raises its prices, and other firms follow suit
c. firms will match other firms’ price cuts but not their price increases
d. firms may attempt to avoid the worst outcome but may achieve a less-than-optimal
outcome
e. firms never avoid the worst outcome
Exhibit 2-2
According to Exhibit 2-2, if Maria does one fewer load of laundry, how many pages can
she type in the time saved on laundry?
a. 4 pages
b. 6 pages
c. 2/3 of a page
d. 3/2 of a page
e. it cannot be determined
An impartial observer who listens to both sides in a labor-management dispute and
makes suggestions as to how the two sides could compromise is called
a. a mediator
b. an arbitrator
c. a litigator
d. a scab
e. a judge
If price elasticity of demand is -0.5,
a. a 1% decrease in quantity demanded leads to a 0.5% decrease in price
b. a 1% decrease in price leads to a 0.5% increase in quantity demanded
c. a 50% decrease in price leads to a 1% increase in quantity demanded
d. a 50% decrease in price leads to a 100% increase in quantity demanded
e. demand is elastic
Under the initial Bretton Woods system,
a. foreign currencies could be converted into U.S. dollars, which could be redeemed for
gold at a rate determined by supply and demand
b. foreign currencies could be converted into U.S. dollars, which could be redeemed for
gold at a rate of $35 per ounce
c. foreign currencies could be converted into gold at a rate determined by supply and
demand
d. foreign currencies could be converted into gold at a rate of $35 per ounce
e. gold was the international medium of exchange
If the Money Store earns a normal profit this year, its
a. economic profit is equal to its accounting profit
b. economic profit is zero
c. economic profit is equal to the average accounting profit in other industries
d. accounting profit is zero
e. accounting profit is less than its economic profit
The law of demand says that as the price of a good rises,
a. buyers recognize that price may be even higher in the future, and so they buy now
b. buyers purchase less in hopes that the price will fall in the future
c. buyers purchase less, in part because their real income has fallen
d. buyers purchase more, in part because the price of a substitute has risen
e. buyers purchase more, in part because it has higher status at a higher price
In the United States, most income comes from
a. capital gains
b. stocks and bonds
c. providing labor resources
d. illegal transactions
e. government transfer payments
If the supply of oceanfront lots is fixed and perfectly inelastic,
a. the demand for the resource determines its price and the level of economic rent
b. the supply of the resource determines its price and the level of economic rent
c. the supply of the resource determines its price and the demand for the resource
determines the level of economic rent
d. the demand for the resource determines its price and the supply of the resource
determines the level of economic rent
e. the supply curve is horizontal
The price paid to a resource in totally fixed supply is called
a. economic rent
b. economic profit
c. wages
d. interest
e. opportunity cost
Exhibit 19-1
Exhibit 19-1 shows the production possibilities frontiers for the countries of Lambda
and Beta for fish and coconuts. What can you say about comparative advantage from
the information in Exhibit 31-9?
a. Lambda has a comparative advantage in the production of coconuts and Beta has a
comparative advantage in the production of fish
b. Lambda has a comparative advantage in the production of fish and Beta has a
comparative advantage in the production of coconuts
c. Lambda has a comparative advantage in the production of both coconuts and fish
d. Beta has a comparative advantage in the production of both coconuts and fish
e. neither Lambda nor Beta has a comparative advantage in either coconuts or fish
Which of the following does notreflect a positive rate of time preference?
a. People are willing to pay high prices to see new movies at first-run theaters.
b. A bank pays interest on savings accounts.
c. Ed puts money in his mattress for a rainy day.
d. Dry cleaners that provide faster service can charge more.
e. A college freshman parties all semester, then stays awake studying for 50 straight
hours during final exam week.
Which of the following is not true of declining industries?
a. Job loss is not a problem in a declining industry because the workers can easily find
jobs in expanding industries.
b. Jobs may be lost by declining industries but new jobs are created in expanding
industries.
c. Over 60 million new jobs have been created in the United States since 1960.
d. One way to solve the problems posed by declining industries is for the government to
fund programs to retrain workers for jobs that are in greater demand.
e. One way to solve the problems posed by declining industries is for the government to
offer wage subsidies or special tax breaks that decline over time.
Exhibit 9-14
The firm in Exhibit 9-14 will have an economic
a. profit of $85
b. loss of $48
c. profit of $132
d. loss of $96
e. loss of $34
If the production possibilities curve is a downward-sloping straight line, that would
indicate
a. that society cannot decide which good it prefers
b. an absence of scarcity
c. constant opportunity cost
d. inefficiency
e. specialization
If the total revenue curve lies completely below the total cost curve, economic profit is
zero.
a. True
b. False
The relationship between price and quantity supplied after firms fully adjust to any
short-term economic profit or loss resulting from a change in demand is illustrated by
the
a. long-run industry supply curve
b. Dutch auction model
c. short-run firm supply curve
d. constant-cost industry supply curve
e. short-run industry supply curve
Which of the following economic explanations describes “cabin fever”?
a. The marginal utility of winter is greater than zero.
b. Each additional cold day brings more disutility.
c. The law of increasing marginal utility as applied to cabins.
d. Spending winter in a cabin is a normal good.
e. Each additional cold day brings more utility.
If all of the returns to a resource are in the form of economic rent,
a. the demand curve for that resource must be horizontal
b. the demand curve for that resource must be vertical
c. the supply curve of that resource must be horizontal
d. the supply curve of that resource must be vertical
e. the demand curve for that resource must be perfectly elastic
Exhibit 8-4
Consider Exhibit 8-4. If the market price is $8.50, what are the profit-maximizing
output and profit?
a. output = 40; profit = $35
b. output = 40; profit = $0
c. output = 0; profit = -$50
d. output and profit cannot be determined because marginal revenue cannot be
calculated
e. output and profit cannot be determined because average variable cost cannot be
calculated