If corporations have their choice, they will prefer to invest using
a. revenue from the sale of stocks.
b. revenue from the sale of bonds.
c. plowback.
d. money borrowed from the bank.
A relatively large increase in the cost of electricity would likely
a. result in a large increase in the use of gas for home use immediately.
b. cause an immediate large decline in the use of electricity.
c. increase the use of gas and decrease the use of electricity after a time lapse.
d. cause an equal reduction in the use of electricity immediately.
The demand curve can be derived from indifference curves by varying the price of the
commodity in question.
a. True
b. False
A pollution tax penalizes inefficient firms.
a. True
b. False
Concentration ratios have not been studied much in the last century.
a. True
b. False
If the credit market is close to being a competitive market, an interest rate ceiling
imposed by usury laws will bring misallocations of resources.
a. True
b. False
The basic disadvantage of a proprietorship is unlimited liability.
a. True
b. False
The main reason that finished goods are scarce is that
a. raw material resources are scarce.
b. factories are not operated efficiently.
c. distribution systems are clogged.
d. taxes are destroying work incentives.
e. All of the above are correct.
Revenue sharing is usually a means of
a. making states transfer money to the federal government.
b. equalizing expenditures per pupil made by school districts.
c. splitting the revenue earned from excise taxes between states and the federal
government.
d. making grants to state and local governments.
The wages of professional athletes
a. are related to demand for their services.
b. include substantial economic rents.
c. are high because of scarcity.
d. All of the above are true.
In the case study in the text involving calculator production, the fact that each calculator
produced added $10.30 to cost and $12 to revenue made clear the value of ____ in
determining whether or not to suspend production.
a. average fixed cost
b. cost saving
c. marginal analysis
d. the level of fixed cost
In terms of efficiency, any point on a production possibilities frontier is as good another.
a. True
b. False
An individual’s supply curve is backward bending.
a. True
b. False
Plots of land differ in
a. quality of soil.
b. topography.
c. proximity to marketplaces.
d. All of the above are correct.
When the price of penicillin tablets increases by $5 per dozen, the drug company’s
revenue increases by $6 million. Its elasticity of demand (in absolute terms) must be
a. zero.
b. greater than one.
c. less than one.
d. infinitely large.
The U.S. economy is relatively closed in terms of economic activity related to exports
and imports.
a. True
b. False
“Dumping” means destroying goods to prevent driving down the price.
a. True
b. False
The average total cost curve of a firm is U-shaped.
a. True
b. False
When taxes alter individual behavior as people attempt to avoid the tax, efficiency
a. losses are probable.
b. gains are possible.
c. gains are impossible.
d. losses are impossible.
A government currently uses price controls to hold down the price of zinc, an
exhaustible resource. If price controls are removed,
a. production of zinc will probably fall.
b. zinc mines with high marginal cost of production will probably stop producing.
c. consumers of zinc will probably want substitutes for zinc.
d. income will probably be redistributed from zinc producers to zinc consumers.
The effect of an import quota is to
a. raise the price and reduce the quantity of imports.
b. raise the price and the quantity of imports.
c. lower the price and the quantity of imports.
d. raise the quantity and reduce the price of imports.
Increasing environmental awareness in the United States has occurred with increasing
GDP, which has reduced concerns about basic needs.
a. True
b. False