Which of the following is not a source of inequality in incomes?
a. redistribution of income
b. differences in intensity of work
c. differences in ability
d. risk taking
Marginal utility is
a. the difference in price between one store and another.
b. the difference in value between ‘some” of a thing and “none” of a thing.
c. the difference between any two successive total utility figures.
d. acquired only with the first few units of a good or service.
e. utility that is barely satisfactory.
Some authors claim that any point not on the frontier cannot be best. What is their
reasoning to support this?
a. A point inside the frontier implies that society is not facing up to the problem of
scarcity.
b. A point inside the frontier limits growth, and growth is always a goal worth pursuing.
c. A point inside the frontier represents inflation, and inflation is a dangerous situation.
d. A point inside the frontier results in fewer goods, and more is always better.
e. A point inside the frontier is inefficient, and represents wasted resources.
A production indifference curve shows all combinations of input quantities capable of
producing a given quantity of output.
a. True
b. False
A stockholder’s investment is usually riskier than a bondholder’s.
a. True
b. False
Scarcity and choice are the basic problems of economics; the supply and demand
mechanism is the basic investigative tool of economics.
a. True
b. False
The cost disease of the service sector in recent years is the result of
a. market failure.
b. government intervention.
c. collective bargaining by unions.
d. uneven productivity growth.
Monopolies can misallocate resources by restricting output in an attempt to raise prices
and profits.
a. True
b. False
Regarding new inventions, which of the following statements is not true?
a. a new invention typically has little competition
b. this effective monopoly on the market earns the inventor abundant profit
c. that profit gets the attention of other potential inventors, who create competing
products
d. reduced to zero economic profits, the inventor goes out of business
Table 11-1
Table 11-1 shows demand and total cost schedules for the monopolist Monopoliteria.
Monopoliteria’s profit-maximizing price per unit in dollars is
a. 1.
b. 3.
c. 5.
d. 4.
e. 6.
Which of the following indicates an input is being overused relative to the optimal
level?
a. MRP = P of input.
b. MRP > P of input.
c. MRP < P of input.
d. MPP > P of output.
Marginal physical product is
a. the increase in input usage resulting from an increase in revenue.
b. the same as marginal revenue product.
c. equal to average physical product when a monopoly firm is in equilibrium.
d. the increase in output stemming from a one-unit increase in input.
If at an output of 4,000 units Sloan Company is making an economic profit and
marginal profit is $20 per unit, the firm should
a. reduce output to maximize total profit.
b. increase output until marginal profit falls to zero.
c. do whatever is necessary to increase marginal profit.
d. There is not enough information to make a decision.
Figure 4-2
If the government has stated that it will buy any amount of good X offered at $30,
which demand curve in Figure 4-2 is appropriate?
a. 1
b. 2
c. 3
d. 4
Cost-plus pricing and guaranteed profit regulation give the same results.
a. True
b. False
Rent control is usually justified on the grounds that it protects moderate- to low-income
families from the burden of rapidly rising rents and from eviction if they are unable to
pay. It also prevents landlords from reaping windfalls as property values rise.
Opponents note that rent controls usually lead to a reduced supply of rental housing and
shortages. The proponents of rent controls support them primarily on the grounds of
a. efficiency.
b. equality.
c. externalities.
d. cost disease of services.
In a situation of free trade
a. countries with comparative advantage will export more than countries with
comparative disadvantage import.
b. the total quantity of an item exported will be greater than the total quantity imported.
c. importing countries will always produce some good, so that total quantity imported is
less than total quantity exported.
d. the total quantity of an item exported will equal the total quantity imported.
Policies that preclude the deliberate creation of monopoly and undesirable practices are
called
a. antitrust policies.
b. anti-monopoly policies.
c. anti-competitive policies.
d. socialism.
Following the sharp increases in oil prices in the United States caused by the OPEC oil
embargo of 1973-1974, U.S. automakers started building smaller, more fuel-efficient
cars. This development caused the
a. demand curve for oil to shift out.
b. demand curve for oil to shift in.
c. supply curve of oil to shift out.
d. supply curve of oil to shift in.