If a person’s income and the prices of both goods all rise by the same percentage, then
her budget constraint
a. moves inward toward the origin, and its slope remains the same.
b. moves outward away from the origin, and its slope changes.
c. moves outward away from the origin, and its slope remains the same.
d. does not change in any way.
An industry is composed of 20 firms, all with equal sales. The eight-firm concentration
ratio in this industry is
a. 0.40.
b. 0.32.
c. 2.00.
d. This cannot be determined from the information given.
Produced goods used as inputs for the production of other goods comprise the resource
known as
a. natural resources.
b. services.
c. capital.
d. entrepreneurship.
According to information in the textbook, during the last year that Michael Jordan
played basketball with the Chicago Bulls he earned ___________________ times the
salary of the lowest paid player on the team.
a. 12
b. 121
c. 1,210
d. 12,121
If variable X goes up as result of variable Y going down, then X and Y are
a. directly related.
b. inversely related.
c. independent.
d. positively related.
Exhibit 22-3
What is the average total cost of producing 60 units of output?
a. $21.67
b. $1.33
c. $24.17
d. $12.50
Rational (political) ignorance refers to
a. some voters choosing not to vote in elections.
b. the fact that some voters are not smart enough to be informed on political issues.
c. the state of not acquiring information about politics and government because the
costs of acquiring the information are greater than the benefits.
d. political candidates deliberately saying “dumb” things during their campaign.
e. none of the above
Suppose a person with automobile collision insurance is more likely to try to drive on
an icy road in the middle of winter than that person would be if he or she didn’t have
automobile collision. This is an example of
a. adverse selection.
b. moral hazard.
c. the free-rider effect.
d. asymmetric information before exchange.
e. none of the above
Exhibit 1-1
If the student whose study habits are illustrated here is currently studying for the 8th
hour, she should
a. cut back on the number of hours she is studying because the marginal benefit of
studying for the 8th hour is less than the marginal cost of doing so.
b. cut back on the number of hours she is studying because the marginal benefit of
studying for the 8th is greater than the marginal cost of doing so.
c. increase the number of hours she is studying because the marginal benefit of studying
for the 8th hour is less than the marginal cost of doing so.
d. increase the number of hours she is studying because the marginal benefit of studying
for the 8th hour is greater than the marginal cost of doing so.
Exhibit 3-9
The production of X is more profitable than it used to be. A number of producers enter
the business of producing X. An economist would expect a movement in the market for
X from
a. S2 to S1.
b. D2 to D1.
c. D1 to D2.
d. S1 to S2.
Exhibit 39-4
If the government sets a target price at $5 per bushel, consumers will end up paying
__________ for the quantity of wheat they purchase.
a. $1,000
b. $2,000
c. $3,000
d. $4,000
e. $5,000
Exhibit 32-4
Suppose that producers of this good engage in rent seeking which results in the
government imposing a price floor of P2.The loss of consumers€ surplus that occurs
due to the price floor is
a. B + C
b. A + B + C + D + E
c. A + B + C
d. C + E
e. A
Market failure is a situation in which
a. the market does not provide the ideal or optimal amount of a particular good.
b. there are too many buyers but not enough sellers.
c. prices are too high for “average” people to buy necessities.
d. there is a question over the quality of a product for sale.
If people want more cars than there are cars available, then it is necessarily true that
a. cars are scarce.
b. there is a surplus of cars.
c. there is a decreased supply of cars.
d. none of the above
Marginal utility is defined as the
a. change in marginal utility a person derives from the consumption of a good.
b. change in total utility a person derives from the consumption of a good divided by
the price of that good.
c. change in total utility a person derives from the consumption of a good divided by the
change in the quantity of the good consumed.
d. sum of the amounts of satisfaction a person receives from consuming a good.
e. change in total utility a person derives from the consumption of a good divided by the
value in use of that good.
Exhibit 39-3
If P3 is a target price, the deficiency payment per unit is
a. P1.
b. P2.
c. P3.
d. P3 – P1.
e. P3 – P2.
The U.S. dollar currently serves as the €unit of account€ of major global products.
a. True
b. False
A perfectly competitive firm should shut down production in the short run if price is
less than average fixed cost at the loss-minimizing level of output.
a. True
b. False