1) The low-energy mental shortcuts or heuristics that the human brain commonly
employs is one major reason for the systematic errors in decision-making that people
make which is the focus of behavioral economics.
2) Noncash gift-giving involves value loss when the marginal utility of the gift to the
receiver is less than the product price.
3) A corporation is a type of business firm where the debt of the firm is considered its
owners’ personal responsibility.
4) The average person in the United States generates about 10 pounds of trash per day.
5) Specialization may expand total output even though the individuals involved may
have identical abilities.
6) Labor market discrimination increases the size of the nation’s GDP by promoting
specialization on the basis of race.
7) Property rights give the government the right to own, use, and dispose of resources in
an economy.
8) The U.S. Internet search market:
A.is best characterized by pure competition.
B.is dominated by Google, which controls about 70 percent of the market.
C.has a few prominent firms that each possesses a relatively equal market share.
D.has no barriers to entry.
9) Which of the following is a normative economic statement?
A.The Federal budget deficit rose by 120 billion dollars
B.The unemployment rate is expected to fall next month
C.A trade surplus of 200 billion dollars should be our policy goal
D.The federal funds rate was reduced by half a percentage point
10) Answer the question on the basis of the following information. Suppose the
members of population A, consisting of Al, Bob, Curt, Doris, and Ellie, receive annual
incomes of $5,000, $2,500, $1,250, $750, and $500, respectively.
Refer to the given information. What percentage of total income is received by the
lowest 60 percent of the income receivers in population A?
A.60
B.50
C.25
D.20
11) Wage differentials may result from all the following except:
A.differences in the nonmonetary aspects of various occupations.
B.differences in the education and skills of workers.
C.geographic and sociological immobilities of workers.
D.the tendency of qualified workers to move from lower pay jobs to higher pay jobs.
12) All of the following can file antitrust charges under the Sherman Act except:
A.the U.S. Justice Department.
B.state attorneys general.
C.injured private parties.
D.the Federal Energy Regulatory Commission.
13) If the four-firm concentration ratio for industry X is 80:
A.the four largest firms account for 80 percent of total sales.
B.each of the four largest firms accounts for 20 percent of total sales.
C.the four largest firms account for 20 percent of total sales.
D.the industry is monopolistically competitive.
14)
Refer to the diagrams. The solid lines are production possibilities curves; the dashed
lines are trading possibilities curves. The data suggest that:
A.West Lothian should specialize in, and export, beer.
B.both countries will be better off if they do not engage in specialization and trade
involving these two products.
C.West Lothian should specialize in, and export, pizza.
D.East Lothian should specialize in, and export, beer.
15)
In a competitive market illustrated by the diagram above, a price ceiling of $10 per unit
will result in:
A.A shortage of 200 units
B.A surplus of 200 units
C.A surplus of 250 units
D.A shortage of 250 units
16) Economic profit in the long run is:
A.possible for both a pure monopoly and a pure competitor.
B.possible for a pure monopoly but not for a pure competitor.
C.impossible for both a pure monopolist and a pure competitor.
D.only possible when barriers to entry are nonexistent.
17) Consumers express self-interest when they:
A.Seek the lowest price for a product
B.Reduce business losses
C.Collect economic profits
D.Exclude others in their thinking
18) The market system is an economic system that:
A.Produces more consumer goods than capital goods
B.Produces more capital goods than consumer goods
C.Gives private individuals the right to own resources used in production
D.Emphasizes the government’s power to control markets and direct economic activity
19) The competitive market system:
A.encourages innovation because government provides tax breaks and subsidies to
those who develop new products or new productive techniques.
B.discourages innovation because it is difficult to acquire additional capital in the form
of new machinery and equipment.
C.discourages innovation because firms want to get all the profits possible from
existing machinery and equipment.
D.encourages innovation because successful innovators are rewarded with economic
profits.
20)
The graph above represents the supply and demand for labor in a purely competitive
market. The area 0abc represents:
A.Total revenue of the firm
B.Total earnings of labor
C.Marginal revenue product of labor
D.Marginal labor cost
21) The production possibilities curve tells us:
A.the specific combination of two products that is most desired by society.
B.that costs do not change as society varies its output.
C.that costs are irrelevant in a society that has fixed resources.
D.the combinations of two goods that can be produced with society’s available
resources.
22)
Refer to the diagram. The movement down the production possibilities curve from point
A to point E suggests that the production of:
A.computers, but not bicycles, is subject to increasing opportunity costs.
B.bicycles, but not computers, is subject to increasing opportunity costs.
C.both bicycles and computers is subject to constant opportunity costs.
D.both bicycles and computers is subject to increasing opportunity costs.
23) What is a major characteristic of a natural monopoly?
A.The firm is a single seller of a resource
B.Its sets price equal to marginal revenue
C.There is extensive product advertising
D.There is a large range for economies of scale
24) In which of the following instances is the effect on equilibrium price dependent on
the magnitude of the shifts in supply and demand?
A.Demand rises and supply rises.
B.Supply falls and demand remains constant.
C.Demand rises and supply falls.
D.Supply rises and demand falls.
25) Describe the international costs associated with farm price supports.
26) Describe the interest-rate cost-of-funds curve as it relates to R&D expenditures and
as presented in this chapter.
27) Can government raise birthrates?
28) Compare the long-run supply curve for a constant-cost industry, a decreasing-cost
industry, and an increasing-cost industry. Give an example with an explanation for each.
29) What are four criticisms of social regulation?
30) What is a monopsony? Explain its characteristics as applied to a labor market.
31) Define consumer surplus.