For a factor price taker, the demand for labor curve is horizontal at the going market
wage.
a. True
b. False
Exhibit 39-4
At the government-established support price of $5 per bushel, the wheat surplus that
government buys equals
a. 600 bushels.
b. 400 bushels.
c. 200 bushels.
d. 0 bushels.
The public choice theory of regulation states that a regulatory agency makes decisions
based on
a. surveys of what the public believes is in the best interest.
b. its own conception of what is in the public’s best interest.
c. how these decisions affect the well-being of the agency itself.
d. how these decisions affect the economic profits of the regulated firms.
Colleges and universities use such things as grade point averages and standardized test
scores as
a. a measure of consumer utility.
b. non-price rationing devices.
c. a means to shift the supply curve for a college education.
d. solely to frustrate prospective students.
Which statement uses the term ceteris paribus correctly?
a. If you exercise regularly, you will be healthier, ceteris paribus.
b. Blue is to green, ceteris paribus, as red is to purple.
c. Most people consider Sunday to be the first day of the week, ceteris paribus.
d. Interest rates usually rise in October, ceteris paribus.
e. a and d
To an economist, utility refers to the
a. usefulness of a good or service.
b. satisfaction that results from the consumption of a good.
c. relative scarcity of a good.
d. rate of decline in the demand curve.
Ari is currently consuming 10 hot dogs and 8 hamburgers per week. The last hot dog
she consumed yielded 20 utils while the last hamburger she ate gave her 25 utils. If hot
dogs cost $2 and hamburgers cost $2.50, is Ari consuming the correct quantities of
these two goods to be in consumer equilibrium?
a. No, she should consume more hamburgers and fewer hot dogs.
b. No, she should consume more hot dogs and fewer hamburgers.
c. Yes, so there is no need to change her eating habits.
d. There is not enough information to answer the question.
We would expect the total utility of water to be high but its marginal utility to be low.
Why?
a. Because water is a fluid and we don’t need fluids to live as much as we need food.
b. Because we need water to live and there is so much of it.
c. Because we need water to live and there is very little of it.
d. Because water’s price is low.
The perfectly competitive firm should produce in the
a. short run if price is below average variable cost.
b. long run if price is below average variable cost.
c. short run if price is below average total cost but above average variable cost.
d. long run if price is below average total cost but above average variable cost.
Income elasticity of demand for good A is -0.22. Good A is income __________ and is
a(n) __________ good.
a. unit elastic; normal
b. elastic; inferior
c. inelastic; normal
d. elastic; normal
e. inelastic; inferior
An agricultural price support is an example of a price ceiling.
a. True
b. False
Marginal revenue is
a. total revenue divided by the quantity of output.
b. total profit minus total costs.
c. the change in total output brought about by using an additional unit of a variable
input.
d. the change in total revenue brought about by selling an additional unit of the good.
e. the change in total revenue minus the change in total costs.