The __________ one’s income, the __________ one’s budget constraint.
a. smaller; further away from the origin
b. larger; closer to the origin
c. larger; further away from the origin
d. smaller; steeper the slope of
e. larger; steeper the slope of
In the short-run, if P < ATC, a perfectly competitive firm should
a. increase production to the output level at which P = ATC.
b. continue producing at a loss.
c. shut down.
d. continue producing at a profit.
e. There is not enough information to answer the question.
The purpose of the ceteris paribus assumption is to allow economists to
a. determine the relationship among several variables.
b. determine the impact of several variables on another variable.
c. isolate the impact of one variable on several variables.
d. isolate the relationship between two variables.
As the dollar price of the Mexican peso falls, the __________ Mexican goods will be
for Americans to purchase and the __________ Mexican goods Americans will buy;
thus __________ pesos will be demanded.
a. less expensive; more, more
b. more expensive; fewer, fewer
c. more expensive; more, fewer
d. less expensive; more, fewer
e. none of the above
If the absolute price of a new car is $40,000 and the relative price of a laptop computer
in terms of cars is 1/40 of a car, it follows that the absolute price of the laptop is
a. $10,000.
b. $1,000.
c. $4,000.
d. $2,000.
e. $1,500.
By looking at the different slices of a pie chart, and comparing one slice to another, it is
possible to quickly estimate
a. relative relationships.
b. absolute relationships.
c. the slope of a line.
d. the slope of a curve.
e. none of the above
Which of the following theories is not falsifiable or refutable?
a. Everything that has happened to Jane throughout her life happened to her specifically
because she was born on June 23, 1993.
b. People with blue eyes tend to be more sensitive to light than people with brown eyes.
c. Women who are electrical engineers tend to have fewer children than women who are
retail cashiers.
d. People who watch more than six hours of television per day tend to weigh more than
people who watch fewer hours of television daily.
e. all of the above
The type of merger that is most likely to change the degree of concentration, or
competition, in an industry is the __________ merger.
a. four-firm
b. vertical
c. four-firm
d. horizontal
e. none of the above
Which of the following is an assumption of the theory of monopoly?
a. There are extremely high barriers to entry.
b. There are many sellers.
c. The product has a number of close substitutes.
d. The product is of extremely high quality.
In the past, it was theorized that __________ firms were the most likely to innovate.In
recent years, new information has suggested that __________ firms are greater
innovators. If true, this makes antitrust intervention in the case of mergers __________
important.
a. small; large; more
b. small; large; less
c. large; small; more
d. large; small; less
In a perfectly competitive market, if a resource that one firm utilizes is superior to
resources used by other firms, and, as a result, lowers unit costs for the firm, that firm is
likely to earn __________ in the short run. In time, however, the firm’s __________
curve will rise to reflect the superior-quality of the resource it employs and the firm will
then earn __________.
a. normal profit; ATC; positive economic profit
b. positive economic profit; ATC; normal profit
c. positive economic profit; marginal revenue; zero profit
d. losses; ATC; positive economic profit
e. none of the above
Equilibrium price is $8 in a perfectly competitive market. For a perfectly competitive
firm, MR = MC at 150 units of output. At 150 units, ATC is $11, and AVC is $10. The
best policy for this firm is to __________ in the short run. Also, total fixed cost equals
__________ and total variable cost equals __________ for this firm.
a. continue to produce; $125; $1,375
b. shut down; $150; $1,500
c. shut down; $1,375; $1,250
d. continue to produce; $150; $1,500
e. There is not enough information to answer all parts of the question.
Economic rent is a payment received in excess of marginal cost.
a. True
b. False