Piketty’s analysis concludes that unequal ownership of capital, rather than unequal pay,
is responsible for notably high levels of inequality in the decades since the 1980s.
a. True
b. False
A firm will tend to select the least costly input combination to produce its output.
a. True
b. False
A market is contestable if
a. the number of firms is larger than oligopoly.
b. firms spend a lot on advertising.
c. there is free entry and exit.
d. firms have kinked demand curves.
Under perfect competition, a firm’s:
a. demand curve and average revnenue curve are identical, but the marginal revenue
curve is different.
b. demand curve is different, but the average revenue curve and the marginal revenue
curve are identical.
c. demand curve, average revenue curve and marginal revenue curve are identical.
d. none of these is true.
Consumer surplus is the difference between the worth of a commodity to the consumer
and the price the consumer pays for the commodity.
a. True
b. False
The opportunity cost to you of an action is
a. how much you must pay for the opportunity to take the action.
b. the value to you of the next best action you could have taken.
c. the cost to society of giving you the opportunity to take the action.
d. the dollar cost to you of the action.
To the extent that high incomes can be attributed to very high demand for very scarce
abilities, the labor supply effects of a substantial increase in the tax rate
a. will be zero as long as the labor supply curve is vertical.
b. will be significant because the demand curve is fixed.
c. cannot be predicted because the substitution and income effects offset each other.
d. will be zero as long as there is no economic rent in the income.
Which of the following statements is true?
a. Economic theory does not make unrealistic assumptions.
b. Economists should not ignore details while focusing on complex problems.
c. Abstraction forms an important part of economic analysis.
d. The word theory means same for both economists and laymen.
If the marginal net utility of beer is negative, the consumer should buy more beer in
order to increase the total utility.
a. True
b. False
From 2007 to 2008, the Federal Reserve System reduced interest rates, the price that
borrowers pay. As a result, economists expected demand for money to
a. increase.
b. decrease.
c. not change.
d. be influenced by the interest rate, but with an uncertain effect.
Figure 7-8
Of the graphs in Figure 7-8, which represents fixed cost?
a. 1
b. 2
c. 3
d. 4
The continued position of the United States as the world’s economic leader is:
a. assured
b. predictable
c. automatic
d. uncertain
Between 1980 and 2005, the Vanguard Index Fund earned 12,3%/year, while the
average mutual fund investor earned:
a. 1,9%
b. 2,3%.
c. 5,1%.
d. 7,3%.
If MRP > P, a firm should use less of that input.
a. True
b. False
A bond and stock differ in that a stock is an IOU for a fixed amount and a bond is a
portion of ownership.
a. True
b. False
Demand curves can be affected by the prices of related goods.
a. True
b. False
A duopoly is
a. a cartel in which all members try to cheat on the cartel.
b. an industry with only two sellers.
c. an industry with only two buyers.
d. a cartel with only two members.
When firms have had to defend themselves against the charge that they have adopted
unjustifiably low prices either to drive a competitor out of business or to prevent the
entry of a rival, they have been accused of
a. creating a trust.
b. conspiracy.
c. predatory pricing.
d. price discrimination.
Taxation alters the behavior patterns of individuals.
a. True
b. False
If doubling the quantity of inputs more than doubles the quantity of outputs, the firm is
experiencing
a. increasing returns to scale.
b. decreasing returns to scale.
c. constant returns to scale.
d. increasing costs per unit of output.
When the price of a good changes but the price of the only other good bought by a
consumer stays constant, his
a. budget line shifts.
b. indifference curves shift.
c. budget line changes slope.
d. indifference curves change slope.
A country has a comparative advantage over another in the production of gadgets if it
can produce
a. more gadgets than can the other country.
b. more gadgets than can any other country.
c. gadgets more efficiently than it can produce any other good.
d. gadgets at lower opportunity cost than can the other country.