As the marginal physical product curve rises,
a. the marginal cost curve rises.
b. the marginal cost curve falls.
c. the total cost curve rises.
d. the total cost curve falls.
The side effect of an action that increases the well-being of others is called
a. an augmentation.
b. an elasticity.
c. a passive benefit.
d. a positive externality.
If an economy can produce a maximum of 100 units of good X and the opportunity cost
of 1X is always 5Y, then what is the maximum number of units of good Y the economy
can produce?
a. 250
b. 100
c. 20
d. 500
e. none of the above
When a good is nonexcludable, then individuals
a. will purchase the good for less than it cost to produce.
b. can obtain the benefits of the good without paying for it.
c. have an incentive to become free riders.
d. will purchase more than the optimum amount.
e. b and c
A nonexcludable public good is
a. nonrivalrous in consumption.
b. rivalrous in consumption.
c. asymmetric.
d. a good for which it is impossible (or prohibitively costly) to exclude someone from
receiving the benefits of its services.
e. a and d
Diamonds are more expensive than water because
a. markets do not always reflect value.
b. they have fewer uses.
c. they are relatively scarce and they yield higher marginal utility.
d. they yield higher total utility.
e. all of the above
Exhibit 3-10
$20 is the
a. equilibrium price.
b. market-clearing price.
c. price at which there is neither a surplus nor a shortage.
d. all of the above
If a firm is earning an economic profit, it is earning an accounting profit, too.
a. True
b. False
An advance in technology in the production of good X causes
a. a rightward shift in the supply curve for good X.
b. a leftward shift in the supply curve for good X.
c. the supply curve for good X to change from upward sloping to vertical.
d. the supply curve for good X to change from vertical to upward sloping.
The slope of a horizontal line is always equal to zero.
a. True
b. False
An increase in the expected rate of inflation will shift the demand for loanable funds
curve __________, while shifting the supply of loanable funds curve __________.
a. rightward; rightward
b. rightward; leftward
c. leftward; rightward
d. leftward; leftward
The PPF between goods X and Y will be a downward-sloping
a. straight line if increasing opportunity costs exist.
b. straight line if decreasing opportunity costs exist.
c. curve that is bowed inward if increasing opportunity costs exist.
d. straight line if constant opportunity costs exist.