Ideally, a free trade policy should be accompanied by
a. a public education program to make the benefits known.
b. open borders and amnesty for all undocumented workers.
c. programs to ensure no one loses a job as a result of foreign competition.
d. programs to assist workers who lose their jobs to foreign competition.
In order for the price system to have satisfied the exacting requirements for efficiency,
a. MU must equal MC for each and every commodity.
b. the average cost of producing each good must be equal to its MU.
c. the maximum possible of total economic profit must be produced.
d. every consumer’s MU will be equal to marginal physical product
The payments to owners of capital include
a. interest and profits.
b. debt and taxes.
c. wages and salaries.
d. expenses and bonuses.
e. All of the above are correct.
The Social Security system in the United States today is
a. actuarially sound.
b. composed of a private pension fund into which workers have paid and who will
withdraw their invested funds upon retirement.
c. currently in no danger of running out of money in the long run.
d. no longer a “pay as you go” system.
Quantity demanded is not only affected by price but by variables such as income and
the prices of other goods.
a. True
b. False
Innovative firms face competition much more quickly than they did one hundred years
ago.
a. True
b. False
The issue of inequality has become prominent because of:
a. an increased sense of justice
b. a decrease in the strength of capitalism
c. the widening wage disparity
d. none of these
The British economist A. C. Pigou
a. wrote The Economics of Welfare in 1911.
b. offered an explanation of the market economy’s poor environmental performance.
c. outlined an approach to environmental policy still in favor with economists today.
d. All of the above are correct.
Table 21-1
If income is distributed equally in a society, the poorest fifth of the population receives
a. 5 percent of the total income.
b. one-fifth as much as the richest fifth of the population.
c. 20 percent of society’s total income.
d. 50 percent of society’s total income.
Since a monopolist firm will lose some customers when the price is increased, it will
make every effort to keep the price as low as possible.
a. True
b. False
Figure 10-2
Figure 10-2 shows demand and short-run cost curves for a perfectly competitive firm.
At its profit-maximizing output, the firm’s total ____ is represented by area ____.
a. loss; GBHC
b. profit; ADGHC
c. loss; ADEC
d. profit; EGH
The relative concept of poverty means that poverty will never be eliminated.
a. True
b. False
Price decreases always increase economic efficiency.
a. True
b. False
At optimal output, the firm described in Table 8-1 sells its output at a price of
a. $5,40
b. $6,25
c. $7
d. $8
Prices are useful in coordinating society’s economic planning because
a. they convey information about which goods are scarce and which are plentiful.
b. economies based on price systems are more flexible than centrally planned
economies.
c. economies based on price systems are more likely than centrally planned economies
to minimize the cost of producing society’s output.
d. All of the above are correct.
Figure 6-3
In Figure 6-3(a), at any price above $6, quantity demanded
a. falls to zero.
b. becomes infinitely large.
c. is equal to price.
d. is equal to the elasticity of demand.
Distribution is a major question to be answered by any economic system.
a. True
b. False