A lump-sum tax per unit on imports is known as
a. a specific tariff
b. an effective tariff
c. a specific quota
d. an effective quota
e. anad valorem quota
Two reasons why a few individuals earn very high pay in the sports and entertainment
fields are that their
a. marginal productivity is high and entry into those industries is restricted
b. marginal productivity is high and the cross-elasticity of demand between their
services and the services of other employees is also high
c. marginal productivity is high and there is open competition for their talents
d. wage elasticity of supply is high and there is open competition for their talents
e. marginal productivity is high and they are prohibited from changing employers
If an industrial union is able to negotiate a wage above the competitive market-clearing
wage, employment in the industry will increase.
a. True
b. False
If the marginal social benefit of consuming a product exceeds the marginal social cost
of producing it, social welfare is
a. increased by reducing output
b. decreased by expanding output
c. unchanged by expanding or reducing output
d. increased by expanding output
e. maximized
The United States is a net importer of capital. This means
a. that U.S. citizens own more foreign assets than foreigners own U.S. assets
b. that citizens of other countries are buying more U.S. assets than U.S. citizens are
buying foreign assets
c. only that U.S. citizens own foreign assets
d. only that foreign citizens own U.S. assets
e. either that U.S. citizens own foreign assets or that foreign citizens own U.S. assets
A monopolist’s supply curve is the portion of its marginal cost curve above average
variable cost.
a. True
b. False
Which of the following would notbe considered price discrimination?
a. charging higher rates on long distance calls during normal business hours
b. giving lower air fares to those who buy tickets a month before departure
c. charging lower prices for senior citizens at museums
d. getting separate prices for residential and commercial users of natural gas
e. charging more for BMWs than for Chevrolets
An individual who drives a car without a muffler in an attempt to increase fuel
economy is creating
a. a positive externality
b. a public good
c. a negative externality
d. a winner’s curse
e. vertical inequity
Exhibit 1-16
Refer to Exhibit 1-16. Which graph illustrates a negative relationship between variable
X and variable Y initially but then a positive relationship?
a. a
b. b
c. c
d. d
e. e
If the purchasing power parity theory were literally true
a. we should see some nations devaluing their currencies relative to the U.S. dollar
while other nations revalue their currencies
b. the price of a traded good should be the same everywhere in the world
c. the price of a Big Mac should be the same everywhere in the world
d. the exchange rate should be the same everywhere in the world
e. prices should tend toward equality with exchange rates
An entrepreneur
a. always makes a profit
b. generally avoids risky situations
c. claims the residual (i.e., whatever is left over) after other resource suppliers are
compensated
d. is a parasite that benefits by not paying other resources for their services
e. is the manager who runs an enterprise and keeps the customers happy
Which of the following would be the best example of a partnership?
a. The legal office of Alias, Smith and Jones
b. A local mom and pop restaurant
c. Microsoft
d. A local hospital
e. A State University
Time has a positive value for most people, but their opportunity costs of time differ.
a. True
b. False
Which of the following is most likely produced in a monopolistically competitive
market?
a. restaurant meals
b. computer chips
c. firewood
d. motorcycles
e. soft drink
Suppose a firm that sells a variety of athletic shoes is trying to start a pattern of price
leadership in its market. Which of the following is not a problem this firm might have
to face?
a. Rivals recognize the intent of its actions.
b. Other firms may not necessarily follow the leader.
c. Other firms may not follow the leader but offer better service instead.
d. Differentiation among products allows for more variation in price.
e. The price leader must keep costs lower than other firms’.
Exhibit 5-21
What is the price elasticity of supply between $10 and $20 on supply curve S in Exhibit
5-21?
a. 0
b. infinity
c. 1
d. 2
e. 10
Of the following resources used to supply sidewalk food in New York City, which is the
most expensive?
a. capital
b. land
c. entrepreneurial ability
d. labor
e. food
Exhibit 8-7
At which price and quantity is profit maximized for the perfectly competitive firm
represented in Exhibit 8-7?
a. $40 and 80
b. $8 and 70
c. $4 and 40
d. $40 and 70
e. $8 and zero output
Exhibit 12-9
In Exhibit 12-9, the labor supply and labor demand in a unionized labor market is
represented by the demand curve D0 and Supply curve S0. Which of the market
equilibria is the most likely outcome of the union practice of featherbedding?
a. a
b. b
c. c
d. d
e. either a or d
Exhibit 1-3
In Exhibit 1-3, for any value of x, the
a. value of y is larger on curve A than on curve B
b. value of y is smaller on curve A than on curve B
c. value of y is the same on curve A as on curve B
d. slope of line A is increasing
e. slope of line B is negative
To achieve the socially optimal level of pollution, the biggest polluters should be
targetted for the greates reduction in pollution.
a. True
b. False
Adverse selection refers to a situation in which
a. employers have more information about a job’s salary than the job candidate does
b. a job candidate has more information about the job’s salary than the employer does
c. employers have more information about a job candidate’s abilities than the candidate
does
d. a job candidate has more information about her abilities than the employer does
e. only below-average job candidates apply for a job
Demand for a necessity, such as food, is
a. both income and price inelastic
b. income inelastic and price elastic
c. income elastic and price inelastic
d. both income and price elastic
e. income elastic and perfectly price inelastic
Suppose the only professional hockey team within 500 miles is the Salt Lake City
Slappers team. If the State of Utah imposes a profits tax on sports teams, the Slappers
will
a. raise ticket prices
b. lower ticket prices to boost sales
c. maintain ticket prices and suffer a loss in profits
d. expand the number of home hockey games
e. reduce the number of home hockey games
At consumer equilibrium between goods F and C, all of the following statements is true
except one. Which is the exception?
a. MUF/MUC = PF/PC
b. MRS = -PF/PC
c. MRS = the absolute value of the slope of the budget line
d. utility is maximized subject to the budget constraint
e. PF/PC = TUF/TUC
Exhibit 8-10
At the profit-maximizing output level, the firm represented in Exhibit 8-10 experiences
a. a loss of $3,200
b. a profit of $6,000
c. a profit of $3,200
d. zero profit or loss
e. a loss of $6,000
Which of the following is not a characteristic of isoquants?
a. They slope downward.
b. They do not intersect.
c. Their slope represents the ratio of the input prices.
d. They represent efficient combinations of two resources.
e. Isoquants further from the origin represent higher output levels.
Price wars occur more often in monopolistic competition than in other market
structures.
a. True
b. False
Oligopolists are more sensitive to the pricing and output policies of their rivals when
a. all firms produce identical products
b. their products are highly differentiated
c. there is freedom of entry and exit
d. there are barriers to entry
e. there are many firms in the industry
Peyton Lopez will exploit the aquifer under his ranch as long as his personal marginal
__________ is __________ __________ his personal marginal __________.
a. cost, greater than, benefit
b. benefit, greater than, cost
c. cost, equal to, benefit
d. benefit, less than, cost
e. benefit, equal to, cost
In the long run, economic profit for a monopolistically competitive firm
a. is zero, due to the lack of barriers to entry
b. is zero, due to product differentiation
c. may be positive, due to strong barriers to entry
d. may be positive, due to product differentiation
e. may be positive, due to advertising and product promotion
A rational individual would make charitable contributions only if such contributions
receive favorable tax treatment.
a. True
b. False
One impediment to the convergence of world economies is the vast differences in
human capital.
a. True
b. False
Compared to the United States, the income distribution in other major industrial nations
tends to be
a. more concentrated
b. less concentrated
c. similar
d. impossible to calculate
e. not comparable because tax structures differ among countries