Comparable worth is the principle that:
a. goods and services priced the same have about the same worth.
b. the wage rate equals the value of productivity.
c. men and women should be paid comparably.
d. employees who perform comparable jobs should be paid the same wage.
Which of the following changes in the exchange rate represents a depreciation of the
dollar?
a. 100 yen = $1 to 110 yen = $1 c. 1 peso = $10 to 1 peso = $11
b. 1 yen = $.10 to 1 yen = $.08 d. 200 francs = $10 to 250 francs = $10
Which of the following would be most likely to improve the standard of living of a
less-developed country?
a. Development of strong labor unions.
b. More foreign investment, attracted by the expectation of economic and political
stability.
c. Adoption of trade barriers (higher tariffs and quotas).
d. Widespread use of price controls to allocate goods and resources.
On Thanksgiving, Jake’s mother gives him a huge platter of food. If Jake were to keep
eating just to please his mother (even when he really wanted to stop), his marginal
utility would be:
a. the same as his total utility.
b. large.
c. minus one.
d. positive.
e. negative.
Someone notices that sunspot activity is high just prior to recessions and concludes that
sunspots cause recessions. This person has:
a. confused association and causation.
b. misunderstood the Ceteris paribus assumption.
c. used normative economics to answer a positive question.
d. built an untestable model.
Exhibit 10-1 A monopolistic competitive firm
If all firms in the industry are the same as the monopolistic competitive firm shown in
this Exhibit 10-1, firms in the long run will:
a. leave the industry.
b. earn positive economic profits.
c. experience less competition because firms will exit the industry.
d. experience competition from new firms that enter the industry.
Exhibit 7-6 Total cost curves
In Exhibit 7-6, the total cost of producing 6,000 units of output is:
a. 1,000.
b. 3,000.
c. 5,000.
d. 6,000.
e. 8,000.
Which of the following pairs is the best example of substitutes?
a. Coffee and cream. c. Tortillas and salsa.
b. Honey and biscuits. d. Hiking boots and athletic shoes.
Exhibit 8-19 Long-run perfectly competitive industry
As shown in Exhibit 8-19, assume that a perfectly competitive industry is in long-run
equilibrium at point A and the demand curve shifts from D1 to D2. The result is a
long-run supply curve drawn from point:
a. A to point B.
b. B to point A.
c. A to point D.
d. A to point C.
Which of the following is true for a pure monopolist?
a. The firm has a perfectly elastic demand curve.
b. The firm will always earn an economic profit.
c. The demand curve is above the marginal revenue curve.
d. None of these is true.
Exhibit 5-10 Supply and demand curves for cigarettes
As shown in Exhibit 5-10, the $1 per pack tax on cigarettes raises tax revenue per day
totaling:
a. $5 million. c. $10 million.
b. $6 million. d. $15 million.
If more people enter medical school, we can expect:
a. the demand for doctors to increase.
b. the supply of doctors to increase.
c. the demand for doctors to decrease.
d. the supply of doctors to decrease.
e. no effect on the supply or demand of doctorsjust a movement along the curves.
Exhibit 13-1 Cable television monopolist
As shown in Exhibit 13-1, regulators might follow a fair return pricing strategy and
require the cable television monopolist to operate at point:
a. A. c. C.
b. B. d. D.
If average fixed costs equal $60 and average total costs equal $120 when output is 100,
the total variable cost must be:
a. $40.
b. $60.
c. $6,000.
d. $8,000.
A monopoly is a sole ____, and a monopsonist is a sole ____.
a. buyer in a product market; seller in a product market
b. seller in a product market; seller in a labor market
c. buyer in a product market; seller in a labor market
d. seller in a product market; buyer in a labor market
e. seller in a labor market; buyer in a product market
Exhibit 12-8 Negative income tax for a family
In Exhibit 12-8, consider a family that earns less than the break-even income level. For
each $1 of earned income, this family’s government payment will be reduced by:
a. $0.10.
b. $0.25.
c. $0.33.
d. $0.50.
The marginal revenue of a price taker is:
a. equal to price.
b. less than price.
c. more than price.
d. unrelated to price.
The opportunity cost of watching television is:
a. all of the alternative programs that appear on other stations.
b. zero because there is no money expenditure involved.
c. the alternative use of the time foregone by watching the program.
d. zero if it benefits you.
The amount of money that could have been made by renting a piece of land to be used
for building an office building instead of using the land for employee parking is a(n):
a. implicit cost.
b. accounting cost.
c. explicit cost.
d. pure economic cost.
Exhibit 4-3 Supply and demand curves
In Exhibit 4-3, which of the following might cause a shift from S2 to S1?
a. A decrease in input prices. c. An increase in input prices.
b. An improvement in technology. d. An increase in consumer income.
The market price for wallets is $20. Your technology is such that at your most efficient
production point, the average total cost of producing a wallet is $2.50. Your manager
runs into your office and shouts, “Boss!!! Average costs are rising!! Average costs are
rising!!” To make a profit-maximizing decision, you should:
a. d or e.
b. immediately stop production.
c. completely ignore your manager.
d. ask the manager about the marginal cost.
e. ask the manager about the average total cost.
Adam Smith’s basic economic philosophy stated in The Wealth of Nations can be stated
as:
a. laissez faire. c. the least government is best.
b. allow to act. d. all of these.
Which of the following would cause the U.S. demand curve for Japanese yen to shift to
the right?
a. An increase in the U.S. inflation rate compared to the rate in Japan.
b. A higher real rate of interest on investments in Japan than on investments in the
United States.
c. The popularity of Japanese products increases in the United States.
d. All of these.
Nonsmoking sections in restaurants are designed to remove ____ from a market ____.
a. smoke; with food service
b. third parties; for food service
c. externalities; with public goods
d. third parties; externality
e. nonsmokers; for food service
A horizontal line has an infinite slope.
A profit maximizing monopolist sets price and output so that it always operates on the
elastic portion of its straight-line demand curve when in equilibrium.
If a perfectly competitive firm charges more than the market price, then it loses all of its
customers.
Suppose the market price of a good X is below the equilibrium price. The result is a
shortage and sellers can be expected to decrease the quantity of that good X supplied.
The Coase Theorem states that there is a single unique way to assign property rights if
the private sector is to achieve environmental efficiency.
In a traditional economy, innovation is encouraged.
There is a concern that carbon emissions that are a byproduct of the burning of coal and
other fuels contributes to global warming. One proposed solution is to tax the use of
these fuels based on their carbon content. The following table gives information on the
demand and supply of coal:
What will be the free-market price and quantity, and what will be the price and quantity
if the government requires suppliers to pay a $100 tax for each ton of coal produced?
The substitution effect is the concept that changes in consumption of a good result from
changes in the relative price of a jointly consumed good.
An example of in-kind assistance to the poor is TANF.
Microeconomics is the branch of economics in which you study inflation and
unemployment in the economy.