Marginal utility is measured by the maximum amount of money a consumer is willing
to pay for one more unit of a commodity.
a. True
b. False
What type of cost is not relevant to the process of research and development or
invention in general?
a. fixed cost
b. marginal cost
c. variable cost
d. social cost
Union membership in the United States has fallen compared to what it was in the
1950s.
a. True
b. False
Input proportions are usually fixed by technological conditions alone.
a. True
b. False
Since a monopoly faces a downward-sloping demand curve,
a. then, as Adam Smith wrote, “the price of monopoly is upon every occasion the
highest which can be got.”
b. price always exceeds average revenue.
c. marginal revenue increases as output increases.
d. the monopolist is a price maker.
Demand is said to be elastic when percentage changes in quantity demanded are
a. less than the percentage changes in price.
b. higher than the percentage changes in price.
c. equal to the percentage changes in price.
d. zero when price changes.
If the economy of Gwondanaland is growing more rapidly than the economy of Japan,
most likely
a. Japan has more current investment than Gwondanaland.
b. Japan has more government spending than Gwondanaland.
c. Japan spends more on capital goods than Gwondanaland.
d. Gwondanaland has lower current consumption than Japan.
e. Gwondanaland has lower current investment than Japan.
In an idealized laissez-faire world, the distribution of products is
a. the most efficient.
b. the most fair.
c. purely random.
d. unpredictable.
In terms of the production possibilities diagram, the principle of increasing cost simply
asserts that the frontier is
a. downward sloping.
b. upward sloping.
c. bowed inward.
d. bowed outward.
e. undefined, because no market will exist in this case.
Oligopolistic firms that practice sales revenue maximization will produce
a. more and charge less than a profit maximizer.
b. less and charge more than a profit maximizer.
c. more and charge more than a profit maximizer.
d. less and charge less than a profit maximizer.
An increase in the number of nursing homes and community health centers and the
expansion of home care has led to an increase in the demand for nurses. At the same
time, improving opportunities for women in business have reduced the supply of
nurses. Hospitals, the major employers of nurses, have resisted wage increases. The
resulting situation could be described as
a. the cost disease of the service sector.
b. a shortage of nurses.
c. the problem of auxiliary restrictions.
d. the wage floor problem.
If marginal profit is zero, then total profit is at a maximum.
a. True
b. False
The largest single portion of state and local budgets is devoted to
a. State and local defense.
b. Health and public welfare programs.
c. State and local unemployment compensation.
d. Education.
e. Interest payments on state and local debt.
Discrimination exists when a man and a woman with the same levels of education earn
different incomes.
a. True
b. False
If a firm decides to ignore the reactions of its rivals to its policies, the appropriate
model to analyze its behavior is
a. game theory.
b. perfect competition.
c. monopoly.
d. cartels.
A shift in the demand curve occurs when
a. suppliers place more goods on the market.
b. the price of a good rises.
c. consumers want to buy more or less than before at a given price.
d. the price of the good falls.
A corporation’s income is taxed
a. immediately after it is deposited in the bank.
b. only before it is distributed to its owners.
c. only after it is distributed to owners.
d. both before and after it is distributed to owners.
Real GDP per capita in the U.S. grows over time.
a. True
b. False
How do markets respond to price ceilings and price floors? Do attempts to repeal the
laws of supply and demand meet their objectives?
Explain how “herd behavior” affects the stock market, and contributes to recession.
What is an optimal decision?
Draw a graph showing the typical competitive firm losing money but continuing to
operate. Explain why the firm continues to operate rather than shut down.
Discuss the historic increases and decreases in unionism in the United States and how it
affects current labor relations today.
Would a corporation seeking to raise capital sell its new shares on the stock market? If
not, why not?
What are the alternative views to the human capital theory with respect to the role of
education?
The airline dominating Charlotte, North Carolina, once contended that it could not
overcharge for fear of potential competition, if not at Charlotte, then at Raleigh, a
two-hour drive away. Do you find this argument compelling, given the theory of
contestable markets?
Provide two circumstances where monopoly may offer efficiency advantages over
competition.