You always have math problems to work in class whenever you forget to bring your
calculator to school. Concluding that forgetting your calculator causes your professor to
assign math problems is an example of the
A) fallacy of composition.
B) fallacy of inductive reasoning.
C) ceteris paribus conditions.
D) post hoc, ergo propter hoc fallacy.
A fall in the price of 7-UP that causes a household to shift its purchasing pattern away
from Sprite and toward 7-UP is the ________ effect of a price change.
A) income
B) substitution
C) complementary
D) diminishing marginal utility
We can derive a firm’s total cost curve from its isoquant and isocost curves by varying
A) the prices of capital and labor and keeping total expenditure constant.
B) the production technologies, but keeping input prices and total expenditures
constant.
C) total expenditures while keeping input prices and the production technology
constant.
D) the price of either capital or labor while keeping total expenditures and the
production technology constant.
XYZ Computer Company has a monopoly on the sale of a specialized color printer. If it
sells two of these printers its total revenue is $1,000, and if it sells three color printers
its total revenue is $1,600. The marginal revenue of the third color printer sold is
A) $200.
B) $300.
C) $600.
D) $1,300.
Economics is the study of
A) how to invest in the stock market.
B) how society uses limited resources.
C) the role of money in markets.
D) how government officials decide which goods and services are produced.
The advantage in the production of a product enjoyed by one country over another
when it uses ________ to produce that product than the other country does is an
absolute advantage.
A) fewer resources
B) more technology
C) more labor
D) more capital
The Smoot-Hawley tariff set off an international trade war in the
A) 1930s.
B) 1950s.
C) 1970s.
D) 1990s.
Figure 5.4
Refer to Figure 5.4. Along the given demand curve, which of the following is true?
A) Demand is less elastic along the segment AB than the segment EF.
B) Demand is less elastic along the segment EF than the segment AB.
C) Since the demand curve is linear, the price elasticity of demand between each of the
points is the same.
D) All of the above are true.
Table 20.1
Refer to Table 20.1. Before specialization, Germany produces 45 cases of beer and 30
cases of wine, and Chile produces 18 cases of beer and 24 cases of wine. After
specialization, the increase in beer production is
A) 0 cases of beer.
B) 2 cases of beer.
C) 8 cases of beer.
D) 12 cases of beer.
Recent studies suggest that ________ of the population of the developing nations have
annual incomes insufficient to provide for adequate nutrition.
A) 10%
B) 25%
C) 40%
D) 75%
The most common argument for income redistribution is that a society as wealthy as the
United States has a ________ obligation to provide its members with ________.
A) legal; the best that money can buy
B) legal; the basic necessities of life
C) moral; the best that money can buy
D) moral; the basic necessities of life
If revenues exceed ________, profit is ________.
A) total cost; negative
B) fixed cost; positive
C) variable cost; negative
D) total cost; positive
Related to the Economics in Practice on page 226: Because land is demand determined,
an acre of land in downtown San Francisco, California ________ an acre of land in
downtown Knoxville, Tennessee.
A) would most likely cost more than
B) would most likely cost less than
C) should cost approximately the same as
D) would cost exactly the same as
Figure 15.3
Refer to Figure 15.3. In the long run, this monopolistic competitive firm should expect
A) nothing to change; it will continue to make a profit.
B) firms to exit the industry and profits to increase.
C) firms to enter the industry until all economic profits are eliminated.
D) firms to enter the industry and profits to increase.
Strawberries, a normal good, are produced in a perfectly competitive market. Average
consumer incomes decrease. This will cause the individual strawberry farmer’s marginal
revenue to ________ and his profit maximizing level of output to ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
The demand for Egg McMuffins will likely be ________ the demand for breakfast
foods.
A) more price elastic than
B) less price elastic than
C) equally price elastic as
D) indeterminate from the given information.
If your tuition is $2,000 this semester, your books cost $400, you can only work 10
rather than 40 hours per week during the 15 weeks you are taking classes and you make
$12 per hour, and your room and board is $4,000 this semester (same as if not attending
college), then your opportunity cost of attending college this semester is
A) $2,400.
B) $2,760.
C) $7,800.
D) $11,800.
Figure 8.6
Refer to Figure 8.6. ________ is Outdoor Equipment’s average fixed cost.
A) Curve 1
B) Curve 2
C) Curve 3
D) The vertical distance AB
If firms in a monopolistically competitive industry are incurring losses, in the long run
firms will ________ this industry until the remaining firms ________.
A) stay in; shut down
B) leave; are earning a normal profit
C) stay in; are earning a normal profit
D) leave; shut down
The explanation for why marginal cost is positive and rising in the short run is
________ marginal product of labor in the production process.
A) a zero
B) a constant
C) an increasing
D) a diminishing
Which of the following is an example of a compensating differential?
A) A plastic surgeon must train for five more years than an internist and on average
plastic surgeons earn 40% more per year than internists.
B) A bank hires both men and women who have just graduated from college. The
women are assigned positions as bank tellers, and the men are assigned to the
management training program.
C) It takes the same amount and type of training to be either a prison guard or a parole
officer. Prison guards earn about 15% more than parole officers with the same amount
of experience. About 3% of prison guards, but only 1% of parole officers, are injured on
the job each year.
D) Bill was injured on the job and as a result of his injuries he can no longer work. He
now qualifies for $1,000 a month in disability payments.
Marginal cost is a good measure of
A) the social value of a marginal unit of a good.
B) the least costly way to produce all units of a good.
C) what society gives up by using resources to produce more of a good or service.
D) what society gains by using resources to produce more of a good or service.
Figure 8.4
Refer to Figure 8.4. Micro Oven’s average fixed costs are ________ if it produces three
microwave ovens.
A) $33.33
B) $83.33
C) $166.67
D) indeterminate from this information
As far as the debate about the welfare effects of advertising, it is generally thought that
A) advertising always leads to industry concentration.
B) advertising always leads to positive economic profits in an industry.
C) advertising always improves the functioning of the market.
D) there is no right answer.
At the point where marginal cost equals average total cost, average total cost will be
A) at its maximum.
B) decreasing.
C) increasing.
D) at its minimum.
If the price of chili increases, there will be ________ of chili cheese fries.
A) an increase in the supply
B) a decrease in the supply
C) an increase in the quantity supplied
D) a decrease in the quantity supplied
The burden of a regressive tax ________ as a percentage of income as income
________.
A) rises; falls
B) rises; rises
C) does not change; falls
D) does not change; rises
If someone has a comparative advantage in growing pineapples,
A) they can grow pineapples at a lower opportunity cost than other pineapple growers.
B) they also have an absolute advantage in growing pineapples.
C) they can grow more pineapples using the same resources than other pineapple
growers.
D) pineapples are the only product they can grow.
The Earned Income Tax Credit is ________.
A) a non-refundable tax credit
B) available only to low-income families
C) a very simple program that is widely understood
D) only a small program and claimed by very few households annually
Consider the following game. You roll a six-sided die and each time you roll a 6, you
get $30. For all other outcomes you pay $6. The $30 when you “win” and the -$6 when
you “lose” are called ________.
A) payoffs
B) tradeoffs
C) incentives
D) expected values
Figure 15.2
Refer to Figure 15.2. In this monopolistically competitive industry, in the long run,
A) firms will enter until all firms earn a normal profit.
B) firms will continue to earn economic profits.
C) demand for the product will decrease so that profits are decreased.
D) the government will impose price controls to eliminate any economic profits.
The Package Store hires workers to wrap packages. The store sells this service for $5.
The marginal revenue product of this store’s fifth worker is $50. The marginal product
of the fifth worker is
A) 01 package.
B) 1 package.
C) 10 packages.
D) indeterminate from this information.
Figure 6.2
Refer to Figure 6.2. Mr. Lingle’s budget constraint is AC. Point E is
A) an available option and Mr. Lingle exactly spends all of his income.
B) an available option and Mr. Lingle does not spend all of his income.
C) not in Mr. Lingle’s opportunity set but is on his budget constraint.
D) not available because it represents a combination of gardenburgers and beer that Mr.
Lingle cannot purchase with his current income.