When it is cheaper for one firm to produce a number of different commodities together
than it is for a group of small firms to produce those commodities, ____ exist(s).
a. economies of scale
b. economies of scope
c. diminishing marginal returns
d. marginal-cost pricing
Airline deregulation led to the demise of many smaller airlines but large carriers were
not materially affected.
a. True
b. False
Division of labor has caused output to rise dramatically since the industrial revolution.
a. True
b. False
In order for a natural monopoly to develop, it
a. is important that the firm be very large.
b. is important that the firm prices its product below cost.
c. is not the absolute size of the firm but its size relative to the total market demand that
is important.
d. must be in the presence of government intervention.
If the MU of half gallon of milk is $3.50 and the MU of gallon of milk is $3.25, and
they both sell for the same price, we would expect consumers to
a. increase their purchases of gallons of milk.
b. increase their purchases of half gallons of milk.
c. not change their purchasing habits.
d. buy only gallons of milk.
One of the most famous cartels is OPEC.
a. True
b. False
For collusion to make sense, the payoff matrix must be a
a. positive-sum game.
b. zero-sum game.
c. negative-sum game.
d. negative-positive-sum game.
The distribution of income in a market economy is determined by
a. the level of employment and prices of the factors of production.
b. the prices of factors of production.
c. largely unknown forces which economists seek to discover.
d. decisions of government offices related to distribution.
Which of the following groups has had declining labor force participation over the last
30 years?
a. Women
b. Men
c. Teenagers
d. Americans
Marginal social cost is defined as marginal private cost
a. plus opportunity cost.
b. plus marginal opportunity cost.
c. minus incidental cost.
d. plus incidental cost.
Deregulation has dramatically decreased airline safety.
a. True
b. False
A person’s portfolio of investments is the package of all the stocks, bonds, and other
assets the person owns.
a. True
b. False
Monopolistically competitive firms can earn large profits in the long run.
a. True
b. False
Double taxation of corporate earnings means
a. for individuals who get dividends on personal income, tax rates are twice as high as
for wage earners.
b. stockholders pay personal income taxes and corporation taxes on profits.
c. stockholders don’t get the plowback but still pay taxes on it.
d. the corporation tax raises stock prices so individuals also pay a capital gains tax in
addition to a tax on dividends.
Consumers should purchase quantities of a good to the point where MU > P.
a. True
b. False
Among young Americans aged 19 to 25, _____% have no health insurance.
a. 11%
b. 17%
c. 22%
d. 26%