One major problem with Social Security is that it is a “pay as you go” system.
a. True
b. False
Increasing GDP generally causes increases in problems of waste disposal.
a. True
b. False
Suppose that Joan, the only consumer of pork, has a downward-sloping demand curve
for pork and faces an upward-sloping supply curve. If her demand curve shifts out
because she develops a craving for pork, then at the new equilibrium (everything else
equal),
a. the price of pork relative to other goods will be higher than before.
b. Joan’s marginal utility from every unit of pork she eats will be higher than before.
c. Joan’s real income will be lower than before.
d. All of the above are correct.
Economic analysis and policy are made more difficult by
a. having so much data to work with.
b. inadequate and imperfect information.
c. an incomplete consensus on the basic goals of social policy.
d. the lack of public interest and opinion on economic questions.
e. the major economic problems society faces.
A tax loophole is
a. an illegal method by which individuals or corporations avoid paying the taxes they
legally owe.
b. a provision in the tax code that allows individuals or corporations to reduce their tax
burdens legally by meeting certain conditions.
c. a tax surcharge on incomes within certain ranges.
d. a provision in the tax code that allows individuals or corporations to shift the
economic incidence of a particular tax on to someone else.
Each firm’s capital stock is fixed in the short run. Therefore, if the price of capital
increases, then in the short run the market demand curve for labor in a perfectly
competitive market will
a. shift inward.
b. be unaffected.
c. shift outward.
d. change slope.
In many high-tech industries in the economy, such as computers, medical equipment,
and automobiles
a. price competition is utilized by firms more than innovation to compete with rivals.
b. firms compete on the basis of innovation only; never engaging in price competition.
c. innovation is utilized by firms to compete with rivals more than price competition.
d. firms use price competition only; never engaging in innovation to compete with
rivals.
e. firms utilize innovation and price competition equally to compete with rivals.
The U.S. economy is unique for both its size and prosperity.
a. True
b. False
A program of protection that results in preserving jobs in certain industries
a. maintains full employment at lower cost than any other program or policy.
b. lowers average pay in the protected industries.
c. improves living standards for the average person in that country.
d. often does so at a cost that is much higher than the average income of persons in
those industries.
The MU of computers is initially larger than the MC of producing them in a free
market. We may expect output of computers to
a. fall, MC to rise, and MU to rise.
b. rise, MC to fall, and MU to fall.
c. rise, MC to rise, and MU to fall.
d. fall, MC to fall, and MU to rise.
Define the following terms and explain their importance to the study of economics.
a. principle of marginal productivity
b. marginal physical product
c. marginal revenue product
d. derived demand
e. economic rent
Which of the following has also been called the command and control approach?
a. Direct controls
b. Voluntary compliance
c. Tradable emissions permits
d. Taxes on pollution
If Brazil voluntarily ships coffee to the United States in return for airplanes,
a. Brazil will benefit, but the United States will lose.
b. one of the two nations will benefit and the other nation will lose since the trade does
not increase the physical quantities of coffee and airplanes available.
c. both Brazil and the United States will benefit since the trade allows each nation to
acquire items.
d. both Brazil and the United States will lose since there is no increase in the production
of coffee or airplanes and the trade will involve certain transaction costs.
Monopolistic competition is a market structure characterized by many small firms
selling a homogeneous product.
a. True
b. False
Marginal land is land
a. that is unprofitable under any circumstances.
b. that is the most productive in the area.
c. that is on the borderline of profitability.
d. of average productivity.
Activist capitalists who seek out or create earnings opportunities and assume risk, for
which they receive profits, are called
a. rent seekers.
b. entrepreneurs.
c. muckrakers.
d. marginalists.
The substitution effect is thought to dominate the behavior of low-wage workers.
a. True
b. False
Most American firms are corporations.
a. True
b. False
Figure 4-21
At price P3 in Figure 4-21, what will tend to happen?
a. There will be a shortage, and the price will fall.
b. There will be a shortage, and the price will rise.
c. There will be a surplus, and the price will rise.
d. There will be a surplus, and the price will fall.
e. Equilibrium will occur in the market.
Increasing opportunity cost tends to occur if
a. management is disorganized.
b. markets do not equate money and opportunity cost.
c. production is inefficient.
d. resources are scarce.
e. resources are specialized.
An increase in the price of poultry would lead to
a. a decrease in quantity demanded of fish and an increase in the demand for poultry.
b. a decrease in quantity demanded of poultry and an increase in the demand for fish.
c. an increase in quantity demanded of fish and a decrease in the demand for poultry.
d. an increase in quantity demanded of poultry and a decrease in the demand for fish.