A contour map illustrates which of the following?
a. the cause-effect relationship between two variables
b. the cause-effect relationship between three variables
c. the way that three variables are correlated
d. the way that one variable affects another, which in turn affects a third variable
e. the way that two variables are correlated and in turn cause changes in a third variable
Define the following terms and explain their importance to the study of economics.
a. greenhouse gases
b. externality
c. emissions permits
d. known reserves
A progressive tax is one for which the percentage of each added dollar of income paid
in taxes
a. increases as income increases.
b. remains the same as income increases.
c. decreases as income increases.
d. is zero after a certain maximum income is reached.
In the United States, the money for loans to businesses comes mainly from
a. corporate profits.
b. the federal government.
c. savings held in lending institutions.
d. state and local governments.
The excess capacity theorem states that
a. society is worse off with fewer monopolistic competitors.
b. costs of production under monopolistic competition can be lowered by reducing the
number of producers.
c. lack of excess capacity leads to shortages during periods of unexpected growth in
demand for goods produced by monopolistic competition.
d. there is too much choice in our economy.
Environmental problems occur exclusively in capitalist economies.
a. True
b. False
Contrary to most thinking, governments play ____ in causing pollution.
a. almost no role
b. a large but decreasing role
c. a major role
d. a reconstructive role
A minimum wage law is predicted to produce
a. higher unemployment among young and inexperienced workers.
b. higher unemployment among all workers.
c. lower unemployment among young and inexperienced workers.
d. increased hiring of young and inexperienced workers.
According to Baumol and Blinder, recognition of the usefulness of markets
a. labels a person as an apologist (defender) of capital.
b. extends to some socialist countries, for example, China.
c. should make totally free markets good for any society.
d. makes one a radical.
Even though international trade in undertaken voluntarily, a country that engages in
trade may not benefit from it.
a. True
b. False
Gross domestic product is the money value of all final goods and services produced in
an economy in a year.
a. True
b. False
Issuing stocks with little or nothing to back them up is described as “plowing back.”
a. True
b. False
Although monopoly has lower output than competition, the level of output is efficient.
a. True
b. False
Probably the most important factor affecting material well-being is
a. inflation rates.
b. unemployment rates.
c. budget deficits.
d. growth in productivity.
e. monopoly power.
For about the last 45 years, state and local taxes have remained relatively constant as a
percentage of GDP.
a. True
b. False
When a resource is being depleted and becomes scarce, the market’s way of
encouraging conservation is for the price of the resource to rise, without any
government intervention.
a. True
b. False
The position of a demand curve is unaffected by changes in the price of the good.
a. True
b. False
Which of the following is a valid effect of monopoly power?
a. Desirable effects on the distribution of wealth.
b. Efficient resource allocation.
c. Fostering of innovation.
d. Obstacle to efficiency.
Compared to most other industrialized nations, the United States has greater income
inequality.
a. True
b. False
The opportunity cost of a given investment is the potential earnings forfeited by tying
up money in the investment.
a. True
b. False
To find its profit-maximizing output level, a firm should operate where
a. AVC = MC.
b. MC = MR.
c. TFC = TVC.
d. AFC = AVC.
Although economic science can contribute theoretical and factual knowledge on a
particular issue, the final decision on policy questions often depends on:
a. information that is not currently available
b. social values
c. ethical considerations
d. all of these
A tax that reduces economic efficiency is always bad policy.
a. True
b. False
For a given production possibilities frontier, which points are attainable?
a. points inside the frontier
b. points outside the frontier
c. points on or outside the frontier
d. points on the frontier only
e. points on or inside the frontier