One way to reduce pressure for Mexicans to cross the U.S. border illegally is to create
job opportunities in Mexico.
a. True
b. False
The “rules of the game,” the set of conditions that shape individual incentives and
constraints, are determined by
a. the production possibilities frontier
b. scarcity
c. technology
d. the amount of consumer goods in the economy
e. laws about resource ownership and the role of government
A monopolist faces an upward-sloping marginal cost curve. Its profit-maximizing
quantity will be
a. at the minimum point of the marginal cost curve
b. less than the (total) revenue-maximizing quantity
c. equal to the (total) revenue-maximizing quantity
d. in the unit elastic segment of the demand curve
e. in the inelastic segment of the demand curve
Exhibit 6-12
In Exhibit 6-12, at a price of $2, consumer surplus is
a. $4
b. $5
c. $10
d. $80
e. $200
For a resource in a perfectly competitive market, marginal revenue product is equal to
the price of the resource.
a. True
b. False
Suppose a monopolist cannot price discriminate. To maximize profit, it will
a. always produce in the inelastic range of its demand curve
b. never produce in the elastic range of its demand curve
c. never produce in the inelastic range of its demand curve
d. never produce in the elastic range of its marginal cost curve
e. produce in the elastic range of the marginal revenue curve
Which of the following would nothelp identify market structure?
a. number of firms in the industry
b. type of product produced in the industry
c. ease of entry into the industry
d. forms of competition among firms in the industry
e. price of the good
Exhibit 10-5
In the short run, the firm in Exhibit 10-5 should
a. shut down
b. produce 8 units at a price of $11 per unit
c. produce 8 units at a price of $10 per unit
d. produce 8 units at a price of $9 per unit
e. produce 10 units at a price of $9 per unit
The change in total cost of production that results from a change in the amount of a
resource used is
a. average resource cost
b. marginal resource cost
c. marginal product
d. marginal revenue product
e. average revenue product
If average revenue equals average total cost,
a. total revenue is maximized
b. average revenue is maximized
c. average total cost is minimized
d. economic profit is maximized
e. economic profit is zero
As a result of technological changes,
a. it now seems possible that work, as we know it, will disappear
b. capital is replacing labor everywhere
c. some production has shifted away from large, centralized workplaces
d. unemployment has been rising and will continue to rise
e. agricultural production is becoming increasingly urbanized
Unions whose membership includes all workers in a particular product market, whether
skilled or unskilled, are known as
a. craft unions
b. exclusive unions
c. national unions
d. regional unions
e. industrial unions
At the profit-maximizing output, price is greater than marginal cost
a. for a monopolistically competitive firm only in the short run
b. for a monopolistically competitive firm only in the long run
c. for a monopolistically competitive firm in both the short run and the long run
d. for a perfectly competitive firm only in the short run
e. for a perfectly competitive firm only in the long run
Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing
According to Exhibit 2-12, Hans and Maria would be better off if
a. Hans specialized in typing and Maria in doing laundry
b. Hans specialized in doing laundry and Maria in typing
c. each did their own laundry and typing
d. Maria did all of the typing and all of the laundry
e. Hans did all of the typing and all of the laundry
Exhibit 4-1
Consider Exhibit 4-1 which shows 3 demand curves for corn flakes. Which of the
following would be most likely to shift the demand curve from D0 to D1?
a. a report that eating corn flakes increases the risk of cancer
b. a decrease in consumer incomes if corn flakes is a normal good
c. an increase in the price of oatmeal which many consumers consider to be a substitute
for corn flakes
d. an increase in the price milk which many consumers consider to be complement for
corn flakes
e. a widely anticipated recession
The long-run average cost curve is tangent to the minimum point of every short-run
average total cost curve.
a. True
b. False
Producer surplus is usually less than profit
a. True
b. False
Which of the following represents the best example of rental income?
a. the paycheck that Freeda brings home from her job as a computer programer
b. the interest that Hans earns from the savings account he has with USA Bank
c. the revenue that Janet has left over after she pays all the expenses associated with
running her software development business
d. the check that Hunter receives each month for leasing his land to the natural gas
company that is drilling on his land
e. the check that Trisha gets each month from the Social Security Administration
Labor productivity depends on the
a. the effectiveness of government
b. the size of the economy
c. the proportion of the labor force that is unionized
d. the amount of capital
e. All of the answers are correct
In macroeconomics, we analyze
a. all of the following
b. the overall performance of the economy as a whole
c. arrangements through which specific products are exchanged
d. influences on the decision making of particular households
e. the factors that affect the decisions of individual firms
A consumer allocates income between clams and mussels. If clams are a normal good,
then when the price of clams falls, the consumer will definitely buy
a. more clams and more mussels
b. fewer clams and fewer mussels
c. more clams and fewer mussels
d. fewer clams and more mussels
e. more clams, but the effect of the price change on purchases of mussels cannot be
predicted
Marginal revenue is the change in total revenue from selling one more unit of output.
a. True
b. False
One signal that the U.S. dollar was overvalued in the early 1970s was
a. the stable price of gold
b. the volume of international trade
c. the recurring balance of trade deficits in the United States
d. the recurring balance of trade deficits in European countries
e. reduced deposits in the World Bank
Which of the following would not appear on a firm’s accounting statement?
a. sunk costs
b. fixed costs
c. explicit costs
d. implicit costs
e. insurance costs
Exhibit 11-9
In Exhibit 11-9, marginal revenue product begins to decline with the second worker
hired.
a. True
b. False
Private property rights are easily assigned to open-access resources.
a. True
b. False
A government that uses a bureau rather than a private firm to provide some good or
service
a. may have less opportunity for officials and legislators to reward friends and
supporters with jobs
b. will always incur higher costs of production
c. will lose the ability to make decisions via the hierarchy of the market
d. may be better able to control details of production
e. will not be able to sell the good or service after it is produced
Exhibit 9-18
The firm in Exhibit 9-18, who charges the same price to all customers, will earn how
much profit?
a. $0
b. somewhere between $0 and $30
c. somewhere between $30 and $45
d. somewhere between $45 and $60
e. cannot tell from the information available
Movements along a demand curve are called changes in
a. demand
b. opportunity costs
c. quantity demanded
d. the substitution effect
e. preferences
The law of diminishing returns explains why
a. monopolies have a guaranteed profit margin
b. short-run MC and AVC curves are U-shaped
c. the production possibilities curve is bowed out
d. long run supply curves are downward sloping
e. total product is a straight line
The golden rule of profit maximization states that anyfirm maximizes profit by
producing where
a. demand is unit elastic, and total revenue is greatest
b. price equals average revenue
c. price equals marginal revenue
d. price equals marginal cost
e. marginal revenue equals marginal cost
Exhibit 11-2
In Exhibit 11-2, the tenth unit of the resource is earning a wage of
a. $4, all of which is economic rent
b. $4, none of which is economic rent
c. $8, all of which is economic rent
d. $8, none of which is economic rent
e. $8, half of which is economic rent
The difference between the effect of an import quota when quota rights are given away
and the effect of a tariff is that
a. only the tariff results in a higher domestic price
b. only the quota decreases the amount of goods imported
c. the decrease in producer surplus is smaller with the quota
d. under a quota, part of the decrease in consumer surplus is redistributed to foreign
producers; under a tariff, it is redistributed to the domestic government
e. under a tariff, part of the decrease in consumer surplus is redistributed to foreign
producers; under a quota, it is redistributed to the domestic government
There is an inverse relationship between the present value of a future amount and the
interest rate used for discounting.
a. True
b. False