The Coase theorem
a. shows that under certain conditions the market can internalize externalities.
b. states that economic units should specialize in the production of those goods in which
they have a comparative advantage.
c. asserts that the firm should produce that output at which marginal cost is equal to
marginal revenue.
d. holds that the firm should produce that output at which marginal factor cost is equal
to marginal revenue product.
Minerals, animals, water and forests are all considered to be part ofthe resource
category known as
a. capital
b. entrepreneurship
c. labor
d. land
e. none of the above
Refer to Exhibit 28-4. If a labor union successfully organizes the labor market and sets
the wage rate at W4, the quantity of labor hired will be
Exhibit 28-4
a. Q1.
b. Q2.
c. Q3.
d. Q4.
e. cannot be determined
The effects of tariffs and quotas are: a(n) __________ in the prices of imported goods
to domestic consumers, and a(n) __________ in imports.
a. increase; increase
b. increase; decrease
c. decrease; increase
d. decrease; decrease
Refer to Exhibit 34-10.Danielle’s opportunity cost of mowing the lawn is
a. 0.50 clean houses.
b. 2.40 clean houses.
c. 2.00 clean houses.
d. 0.60 clean houses.
Let X be the number of hours you spend studying for an exam on Wednesday afternoon
and Y be your chances of winning the Wednesday night state lottery. What kind of a
relationship do you most likely expect between X and Y?
a. direct
b. inverse
c. linear
d. 45-degree line
e. independent
In a given community, if the government builds more freeways, then the supply curve
for freeway space shifts rightward and the demand curve for freeway space shifts
leftward.
a. True
b. False
Refer to Exhibit 3-17.At a price of $16, the quantity demanded of good X is
____________ than the quantity supplied of good X, and economists would use this
information to predict that the price of good X would soon ______________.This
would push the price __________ the equilibrium price.
a. greater; fall; toward
b. greater; rise; toward
c. less; fall; toward
d. less; rise; away from
e. greater; rise; away from
There is evidence that __________ were the main lobbyists behind passage of the
Factory Acts which put restrictions on women and children working in early 19th
century England.
a. male workers
b. female workers
c. child-care advocates
d. factory owners
Cartels often dissolve because
a. their members often set a time limit as to how long the cartel should exist.
b. their members often cheat on the cartel agreements because they have incentive to.
c. their members often find that they do not earn as high profits from the cartel as they
had hoped to.
d. firms in a cartel face different costs than firms outside a cartel.
e. none of the above
Refer to Exhibit 31-2. If Exhibit 30-2 exhibits a positive externality situation, then what
is Q2?
Exhibit 31-2
a. It is the quantity of output at which marginal
social benefits (MSB) equal marginal private benefits (MPB).
b. It is the quantity of output at which MPB > MSB.
c. It is the market output-the quantity of output that exists if the external benefits
associated with the positive externality are not taken into account.
d. It is the socially optimal output-the quantity of output that exists if the external
benefits associated with the positive externality are taken into account.
e. none of the above
The profit-maximizing monopolistic competitive firm produces the level of output at
which
a. price equals marginal cost.
b. marginal revenue equals marginal cost.
c. there is resource allocative efficiency.
d. average total cost is at a minimum.
The capture theory of regulation specifies that
a. a firm will attempt to capture a large share of its market and then force its
competitors out of business.
b. regulators of monopolies capture or control the market behavior of monopolies to
suit the best interests of society.
c. industries or firms can sometimes gain control of the agencies that are attempting to
regulate them.
d. directors of one company often sit on the board of directors of another company in
the same industry and thereby capture control of the industry.
The absolute price of a good is the price of that good in terms of another good.
a. True
b. False
A union shop is an organization that
a. requires individuals to join a union within a certain period of time after becoming
employed.
b. requires individuals to be members of the union before they can be hired.
c. is legal in all fifty states.
d. is set up by labor unions to train new entrants and inform members of jobs in
different states.
e. a and c
Why is bad weather sometimes good news for farmers?
a. Bad weather shifts the supply curve of agricultural products leftward, driving up
price and total revenue (assuming demand is inelastic).
b. Bad weather shifts the supply curve of agricultural products leftward, driving down
price, and raising total revenue (assuming demand is elastic).
c. Bad weather increases the demand for and price of agricultural products.
d. Bad weather increases both the demand for and supply of agricultural products.