The explanation for the law of demand begins with
a. a small number of wants satisfied by scarce resources
b. finite wants satisfied by infinite resources
c. unlimited wants confronting scarce resources
d. unlimited wants matching up with unlimited resources
e. prices acting as signals to existing and potential suppliers
Which of the following is a cause of higher birth rates in developing countries?
a. Children are viewed as a source of farm labor
b. Children are viewed as economic and social security as the parents age
c. Higher child mortality rates engender higher birth rates
d. All the answers are correct
e. None of the answers is correct
Long-run equilibrium for a perfectly competitive firm occurs when
a. P = MC = MR = ATC
b. MC = MR = AFC = ATC
c. MC = MR = P > ATC
d. P > MC > MR > ATC
e. TR > TC
Which of the following would not explain why academic economists earn less than
corporate economists?
a. more freedom in daily schedules
b. less restrictions on attire
c. less freedom in choice of research topics
d. less control over their public statements
e. None of the answers is correct.
Which of the following does not determine a good’s price elasticity of demand?
a. the time interval considered
b. the number of substitutes there are for the good
c. expenditures on the good as a percentage of the total consumer budget
d. the slope of the demand curve
e. the more of a luxury a particular good is
Claude’s Copper Clappers sells clappers for $40 each in a perfectly competitive market.
At its present rate of output, Claude’s marginal cost is $39, average variable cost is $25,
and average total cost is $45. To improve his profit/loss situation, Claude should
a. increase output
b. reduce output but not to zero
c. maintain the present rate of output
d. shut down
e. raise the price
Bank deposits denominated in Mexican pesos are an example of foreign exchange.
a. True
b. False
Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or
15 pens in one hour. Which of the following statements is correct?
a. Don has an absolute advantage over Bob in the production of pencils and Bob in the
production of pens
b. Bob has an absolute advantage over Don in the production of pencils
c. Bob has a comparative advantage over Don in the production of pens
d. Don has a comparative advantage over Bob in the production of pens
e. Don does not have a comparative advantage in the production of either good
A rise in marginal income tax rates would likely increase the size of the underground
economy.
a. True
b. False
The market labor supply curve is usually __________ over the relevant range of market
wage rates.
a. positively sloped
b. negatively sloped
c. backward bending
d. vertical
e. horizontal
When there are barriers to entry, a profit-maximizing firm already in the industry can
charge any price it wants, even in the long run.
a. True
b. False
Which of the following is an example of a durable good?
a. a cowboy
b. a cherry pie
c. a newspaper
d. a hand-held calculator
e. a pencil
Exhibit 5-23
Refer to Exhibit 5-23. Demand curve D is an example of a(n)
a. curvilinear demand curve
b. linear demand curve
c. linear supply curve
d. unit-elastic demand curve
e. total revenue curve
In the long run, the economic profit of Hoot’s Pump Chicken ‘n’ Ribs, a monopolistic
competitor,
a. is not eliminated because competition is not perfect
b. is not eliminated because the demand curve slopes downward
c. is eliminated because of new firms entering the industry
d. is eliminated because of firms leaving the industry
e. is not eliminated because new firms cannot enter the industry
iIf a voter expects to have little effect on government choices, that voter’s behavior will
reflect
a. rational ignorance
b. a cyclical majority
c. rent seeking
d. vote trading
e. a zero-sum game
Exhibit 17-3
In Exhibit 17-3, the optimal air quality level is
a. 0
b. 40
c. 50
d. 70
e. 100
If the exchange rate changes from 1 euro per U.S. dollar to 1.2 euros per U.S. dollar, the
Euro has
a. appreciated, since its value has increased
b. appreciated, since the price of U.S. dollars has increased
c. appreciated, making U.S. goods cheaper in Euros
d. depreciated, since its value has declined
e. depreciated, since its value has increased
Exhibit 8-19 A Single Firm in a Perfectly Competitive Market
Consider Exhibit 8-19. When the market price is P3, which of the following most
acurately reflects the firms short-run situation?
a. The firm will choose to produce quantity Q3and earn exactly 0 profit
b. The firm will choose to produce quantity Q3and earn a profit
c. The firm will choose to produce quantity Q3and suffer a loss
d. The firm will choose to produce quantity Q5and earn a profit > 0
e. The firm will choose to produce quantity Q5and earn exactly 0 profit
Once ABC Corp. sells shares of stock to the public, the stock’s price tends to
a. fluctuate inversely with the profit prospects of ABC Corp.
b. fluctuate inversely with the dividend payout of ABC Corp.
c. fluctuate directly with the dividend payout of ABC Corp.
d. fluctuate directly with the profit prospects of ABC Corp.
e. remain constant
If taxpayers can enjoy mosquito abatement whether or not they pay for it and, therefore,
they tend to understate their true valuation of the spraying, this is an example of
a. private goods
b. the median-voter model
c. an open-access good
d. the free-rider problem
e. irrational ignorance
A study found that privately-operated juvenile correction facilities in Florida had
__________ costs but experienced __________ rates of recidivism than state-operated
juvenile corrections facilities.
a. lower, higher
b. lower, lower
c. higher, equivalent
d. higher, lower
e. lower, equivalent
“Natural resources” refers
a. bodies of water
b. trees
c. oil reserves
d. minerals
e. All of the answers are correct.
A private firm that sustains a financial loss because of an antitrust violation may be able
to recover three times the actual damages.
a. True
b. False
If every firm is a price taker, then which of the following characteristics does their
industry have?
a. large number of sellers
b. many versions of the product
c. limited resource mobility
d. few consumers
e. market power
Because more than half the federal welfare budget goes for health care, almost zero
U.S. residents lacked health insurance in 2009.
a. True
b. False
The defining characteristic of oligopoly is product differentiation.
a. True
b. False
A tariff is
a. a tax on imports
b. a legal limit on quantities of goods that can be imported
c. a voluntary limit on quantities of goods that can be imported
d. a quality restriction on imports
e. a subsidy for exports
Exhibit 4-8
In a rental market like the one in Exhibit 4-8, a government-imposed rule that rent
cannot exceed $750 per month would be called a
a. surplus of supply
b. quantity demanded
c. price ceiling
d. price floor
e. market equilibrium
Exhibit 10-16
In Exhibit 10-16, the monopolistic competitor will
a. lose $10
b. lose $15
c. break even
d. earn $25 profit
e. earn $30 profit
Exhibit 14-3
In Exhibit 14-3, if Jira gathers an amount of information equal to 40 minutes,
a. she has made the optimal search
b. she has avoided the cost of acquiring information
c. she has searched too much
d. further information will be costless to her
e. she should increase her search
Exhibit 9-5
The total cost for the nondiscriminating monopolist at its profit-maximizing quantity in
Exhibit 9-5
a. is $16,500
b. is $24,200
c. is $16,200
d. is $19,800
e. cannot be determined, as no fixed costs are given