Exhibit 34-11
If the world price (PW) is operational in the market, then U.S. imports equal
a. Q4 – Q2.
b. Q2 – Q3.
c. Q4 – Q3.
d. Q2 – Q1.
e. Q3 – Q1.
Suppose that when the price of water rises by 30 percent, the quantity demanded falls
by 10 percent. The price elasticity of demand for water is ____________, making water
an _______________ good (in this example).
a. 0.33; inelastic
b. 3.0; elastic
c. 1.0; unit elastic
d. 0.33; elastic
Price elasticity of supply and price elasticity of demand are likely to be __________ in
the __________ than in the __________.
a. higher; short run; long run
b. lower; long run; short run
c. higher; long run; short run
d. lower; past; future
e. higher; past; future
It is very important for the seller of a good to know whether the good is elastic, unit
elastic, or inelastic in demand so that she will know what will happen to total revenue
when she changes the price of the good.
a. True
b. False
Under the target price program,
a. the government ends up buying the surplus product that results.
b. taxpayers pay the difference between the price consumers pay and the target price.
c. deficiency payments are made to both rich and poor farmers.
d. the surplus that results is sometimes dumped or otherwise wasted.
e. b and c
If it is assumed that people vote for the candidate who comes closer to matching their
own views, then
a. candidates will label themselves as right-wingers.
b. candidates will label themselves as left-wingers.
c. candidates will label their opponents as middle-of-the-roaders.
d. candidates will discuss the means to accomplishing ends.
e. a candidate who is trailing in the polls will modify his or her position to become
more like his or her opponent.
Exhibit 27-2
What type of firm are we dealing with?
a. definitely a product price searcher (monopolist, oligopolist, etc.)
b. definitely a product price taker (perfectly competitive firm)
c. definitely a factor price taker
d. definitely a factor price searcher
What does it mean if a woman has a positive rate of time preference?
a. She prefers to arrive early (instead of on time) to an employee interview.
b. She prefers to buy resources before they rise in price.
c. She prefers earlier availability of goods over later availability of goods.
d. She prefers “having more time” to “having less time.”
e. none of the above
The lower the elasticity of demand for a product,
a. the higher the ratio of labor costs to total costs.
b. the lower the ratio of labor costs to total costs.
c. the lower the elasticity of demand for the labor that produces the product.
d. the higher the elasticity of demand for the labor that produces the product.
e. none of the above
When a firm earns zero economic profit, it has
a. not covered all its explicit costs.
b. not covered all its implicit costs.
c. not earned enough to stay in business.
d. definitely earned an accounting profit if implicit costs are positive.
e. none of the above
Individual income is equal to labor income less income taxes.
a. True
b. False
Exhibit 22-1
The numbers that go in blanks (E) and (F) are, respectively,
a. 25 and 20.
b. 20 and 22.
c. 15 and 10.
d. 22 and 20.
e. none of the above
Price falls from $9 to $8, and the quantity demanded rises from 360 units to 400 units.
What is the approximate price elasticity of demand between these two prices?
a. 0.89
b. 10.51
c. 0.68
d. 3.80
e. 1.12
Which of the following statements is false?
a. If total utility rises, so must marginal utility.
b. If marginal utility rises, so must total utility.
c. If marginal utility falls, so must total utility.
d. If total utility falls, marginal utility is negative.
e. a and c
If a union seeks to maximize the total wage bill received by its members, then it
a. should seek to establish the highest possible wage rate.
b. should seek to establish the lowest possible wage rate.
c. will find that this cannot be done under any circumstances.
d. none of the above
Elite colleges and universities use standardized test scores (such as SAT and ACT
scores) and high school grades as
a. a means to raise student utility.
b. a means to turn a university education from a “good” to a “bad.”
c. rationing devices.
d. none of the above
The slope of a (nonlinear) curve varies from one point to another.
a. True
b. False