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In a properly functioning economy, money costs approximate opportunity costs.
a. True
b. False
A positive aspect of monopolies is that they may aid innovation in the marketplace.
a. True
b. False
Which of the following makes invention and entrepreneurship more likely in today's
economy?
a. increasing morality of inventors
b. government rules within society
c. positive marginal costs
d. positive marginal revenues
The behavior of the monopolistic firm:
a. maximizes the benefits to consumers, given the resources available to the economy.
b. reduces output in order to raise prices in the short-term.
c. results in excess capacity and inefficiency.
d. both b and c
The law of diminishing marginal utility states that total utility will increase at a
decreasing rate as additional units of a commodity are acquired.
a. True
b. False
Absolute advantage states that a country has an advantage over another if it can produce
a good with fewer resources.
a. True
b. False
Previously a creditor nation, in the 1980s the U.S. became a debtor nation.
a. True
b. False
Since the end of World War II, corporate income taxes have accounted for
a. an increasing share of federal revenue.
b. a steady share of federal revenue.
c. a declining share of federal revenue.
d. a rising share of revenue until 1980, and then a falling share.
The primary reason unionization in the United States has been declining is the shift of
the U.S. labor force into service industries and out of manufacturing.
a. True
b. False
Direct controls that impose equal percentage reductions in emissions on all firms in the
area
a. impose the same costs on all firms.
b. minimize the cost of pollution reduction.
c. penalize firms that have already incurred some costs to reduce pollution.
d. are the fairest way to distribute the burden
Investors must rely on stockbrokers to give detailed, day-to-day reports on stocks and
bonds.
a. True
b. False
A correct formula (dropping all minus signs) for the calculation of the elasticity of
demand between point Q1, P1 and point Q2, P2 is
a. [(P2 − P1)/(P2 + P1)]/[(Q2 − Q1)/(Q2 + Q1)].
b. [(P2 − P1)/P1]/[(Q2 − Q1)/Q1].
c. [(Q2 − Q1)/(Q2 + Q1)]/[(P2 − P1)/(P2 + P1)].
d. [(Q2 − Q1)/Q2)]/[(P2 − P1)/P2].
Which factor receives the profit from production?
a. land
b. labor
c. capital
d. entrepreneurship
A company may borrow money from
a. banks.
b. insurance companies.
c. other firms.
d. All of the above are correct.
A monopoly firm operates with declining marginal cost. If regulators impose marginal
cost pricing, the market will
a. remain a monopoly but behave like a perfectly competitive industry.
b. become perfectly competitive.
c. be entered by additional firms but will not necessarily become perfectly competitive.
d. be exited by the existing firm if the regulators will let the firm leave the market.
In 2013, the U.S. spent more on research and development than any other country in the
world.
a. True
b. False
Statistical correlation always implies causation.
a. True
b. False
If a firm has a U-shaped long-run average cost curve,
a. its fixed cost rises as output rises.
b. it must have increasing returns to scale at low levels of production and decreasing
returns to scale at high levels of production.
c. it must have increasing returns to each input at low levels of production and
decreasing returns to each input at high levels of production.
d. the firm can maximize its output by operating at the point of minimum long-run
average cost.
In an efficient market, a scarce good generally has a ____ than a less-scarce good.
a. higher price
b. higher total utility to consumers
c. more even distribution across income classes
d. lower price in off-peak periods
The U.S. distribution of income was more unequal in 1990 and 1980 than in 1970.
a. True
b. False
