People generally purchase less of a commodity as its price increases. This implies that
the relationship between quantity purchased and the price of the commodity must have
a
a. slope always equal to one.
b. positive slope.
c. zero slope.
d. negative slope.
Once a firm’s marginal revenue curve is known, the output level can be determined.
a. True
b. False
The derived demand curve for loans slopes downward because as interest rates
a. fall, future income becomes less valuable.
b. fall, investors develop pessimistic expectations.
c. fall, future income becomes more valuable.
d. rise, investors become pessimistic.
In the past, the Department of Transportation allowed airline mergers that gave the
merged airlines market shares of 79 and 82 percent, respectively, in their hub cities. The
concept the DOT used to allow mergers where there was obvious concentration was
most likely
a. the good trust principle.
b. contestability.
c. the efficient market principle.
d. the monopolistic competition principle.
An excise tax
a. is a sales tax on the purchase of a particular good or service.
b. is a tax on the profits earned from the sale of an asset.
c. represents a surcharge on corporate profits beyond the normal corporate tax rate.
d. is a tax on income-earning rental property.
Figure 12-3
Oligopolist A cuts price in an attempt to enlarge his share of the market. His
competitors fail to retaliate with price cuts. In this case, in Figure 12-3, oligopolist A
will move from point A to which point?
a. B
b. C
c. D
d. E
Figure 5-3
Assume the market consists of three consumers with the demand curves in Figure 5-3.
At a price of 1, the total market demand is
a. 40.
b. 80.
c. 140.
d. 150.
The law of demand holds that as prices of goods decrease, people are willing to buy
more.
a. True
b. False
When a firm’s fixed costs increase it should raise its prices in order to maximize profits.
a. True
b. False
In the context of stock markets, “the tail wags the dog” means that the failure of the
stock market can drag down the entire economy.
a. True
b. False
The largest share of the typical American family budget goes to:
a. goods
b. health care
c. housing
d. transportation
Externalities are created when parties not involved in an economic transaction are
affected by it.
a. True
b. False
Efficient allocation of resources makes everyone better off.
a. True
b. False
The basic problem with the government setting an absolute poverty line is that it is
a. completely objective.
b. somewhat arbitrary.
c. unconstitutional.
d. based on average income.
The behavior of historical cost curves says nothing about the cost advantages or
disadvantages of a single large firm.
a. True
b. False