Oil is an example of a renewable resource.
a. True
b. False
Suppose a firm is a price searcher in the product market and hires labor in a perfectly
competitive labor market. If the wage rate is $20, the marginal product of the last
worker hired is 5, and the firm is hiring the profit-maximizing amount of labor, then the
marginal revenue from the last unit of output must be
a. $1
b. $1.50
c. $4
d. $5
e. $20
The Justice Department generally challenges any merger that meets the following two
conditions: (1) the post-merger HHI exceeds 1,800 and (2) the merger increases the
index by more than 100 points.
a. True
b. False
The personal income tax is based on the benefits-received principle of taxation.
a. True
b. False
Suppose that a monopolistically competitive firm is in long-run equilibrium. The firm’s
demand curve is tangent to its average cost curve at Q = 25. Average cost is minimized
at Q = 35, where average cost is $50. Which of the following is true?
a. This firm maximizes profit at an output level of 25 units.
b. This firm maximizes profit at an output level of 35 units.
c. This firm maximizes profit at an output level less than 25 units.
d. This firm maximizes profit at an output level greater than 35 units.
e. There is not enough information to find the firm’s profit-maximizing level of output.
A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)
intercept of Ann’s budget line is 12, and the vertical (video game) intercept of Ann’s
budget line is 24. Which of the following best describes what would happen to the
budget line if Ann’s income increased?
a. It would shift rightward to a parallel position.
b. It would shift rightward to a nonparallel position.
c. It would shift leftward to a parallel position.
d. It would shift leftward to a nonparallel position.
e. Nothing.
Natural resources are
a. not considered scarce because no one pays for them
b. only desired for use in producing other goods
c. included in the category of resources called gifts of nature
d. available in unlimited quantities
e. not considered scarce because they are not produced by society
Exhibit 18-1
Exhibit 18-1 shows five different Lorenz curves. Curve c chows the most equal
distribution of income.
a. True
b. False
If the government is interested in generating a large revenue from placing a tax on the
consumption of a particular good, it should choose a good for which
a. the demand is price elastic
b. the demand is unit elastic with respect to price
c. the supply is perfectly elastic
d. the demand is price inelastic
e. there are many good substitutes
Exhibit 1-7
The slope of the straight line in Exhibit 1-7 is
a. greater at point a than at point b
b. the same at points a and b
c. zero because the line is straight
d. negative because an inverse relation is shown
e. positive because the line lies to the right of the y-axis
If a professional association restricts membership and firms cannot employ
nonassociation workers, the equilibrium wage will increase.
a. True
b. False
The United Auto Workers has fought for curbs on imports of foreign-made cars in order
to cause
a. a rightward shift in the supply of U.S. cars
b. a leftward shift in the supply of U.S. cars
c. movement to the left along the supply curve for U.S. cars
d. movement to the right along the supply curve for U.S. cars
e. a rightward shift of the demand curve for U.S. cars
Exhibit 5-14
Which of the following is true of the demand curve in Exhibit 5-14?
a. Its slope is 0, and the value of elasticity is negative infinity.
b. Its slope is infinite, and the value of elasticity is 0.
c. Both its slope and the value of elasticity are 0.
d. Both its slope and the value of elasticity are negative infinity.
e. Its slope is 0, and demand is perfectly inelastic.
Reliable information is
a. costly for consumers, but not for producers
b. costly for producers and consumers
c. freely available
d. costly for producers, but not for consumers
e. not relevant to economic decision making
Since 1970, the number of African-American professionals (e.g., doctors, lawyers and
the like) in the labor force has increased dramatically.
a. True
b. False
In the resource market, firms demand resources in order to
a. maximize profit
b. maximize total revenue
c. maximize marginal revenue
d. maximize utility
e. minimize cost
Under the gold standard, all except one of the following are true. Which is not true?
a. Paper currency was convertible into gold at a fixed rate.
b. A balance-of-payments deficit would result in a loss of gold.
c. A balance-of-payments surplus would result in an inflow in gold.
d. The money supply of any country was largely determined by flows of gold.
e. A surplus country experienced a rise in its money supply and a drop in its price level.
Patent laws promote technical progress in all of the following ways except one. Which
is the exception?
a. They allow other firms to copy successful products as soon as they are marketed.
b. They prevent duplication of inventions.
c. They provide a stimulus to innovation.
d. They provide the inventor with a temporary monopoly.
e. They increase a firm’s incentive to incur the up-front costs of developing new
products.
In the United States, what percentage of smog comes from manufacturing sites?
a. 5 percent
b. 15 percent
c. 25 percent
d. 40 percent
e. 80 percent
Other things equal, similar resources in alternative uses will be paid
a. different amounts based on their different uses
b. different amounts based on the alternative uses
c. different amounts if resources are mobile
d. similar amounts if resources are not mobile
e. similar amounts if resources are mobile
Manny Motors, Inc., can hire auto workers for $20 per hour, whereas robot arms cost
$12 per hour to operate. Giving up one hour of robot operation makes it possible for
Manny Motors to afford
a. 4 fewer labor hours
b. 3/5 of an additional labor hour
c. 4 more labor hours
d. 3 million more labor hours
e. 5 million more labor hours
Exhibit 13-6
In Exhibit 13-6, assume that sewing machines last indefinitely, operating expenses are
negligible and output is expected to be constant in the future. If sewing machines can be
purchased for $720 each and the market interest rate is 10%, how many sewing
machines should the firm purchase?
a. one
b. two
c. three
d. four
e. five
Exhibit 10-9
In order to maximize profit or minimize loss, the firm in Exhibit 10-9 should
a. produce 100 units of output and charge $15
b. produce 100 units of output and charge $8
c. produce more than 100 units of output and charge less than $8
d. produce slightly less than 100 units of output and charge more than $8
e. shut down
On which of the following goods would you expect the revenue generated from the
imposition of a tax to be the greatest?
a. A prescription drug ordered by your doctor
b. Bayer aspirin
c. An over-the-counter cough medicine
d. A specific brand of vitamin pills
e. Rubbing alcohol
Exhibit 11-5
In Exhibit 11-5, total resource earnings in equilibrium equal
a. $12
b. $10
c. $720
d. $1,000
e. $1,200
Which of the following is not considered as a unilateral transfer?
a. income earned from foreign investments
b. foreign aid
c. personal gifts to friends or family abroad
d. institutional charitable donations
e. government transfers to foreign residents
Which of the following is a service?
a. anything that is scarce and that satisfies unlimited human wants
b. a thing for which people pay money
c. an intangible activity that satisfies human wants
d. any output produced by a service-sector industry, such as fast food
e. something less desirable than a good
Strikes are expensive for
a. workers only because their income falls
b. employers only because their revenue falls
c. the public only because output falls
d. both the public and employers because workers are compensated by the union for lost
income
e. workers, employers, and the public
Monopolistically competitive firms ignore the effect of their decisions upon other firms
in the industry because
a. each firm is large relative to the market
b. each firm is small relative to the market
c. there are few sellers in the market
d. there is only one seller in the market
e. all firms follow the same known pricing rules
It has been suggested that if NHL hockey teams would lower ticket prices, they could
increase revenue from ticket sales. Which of the following assumptions forms the basis
for this suggestion?
a. Both d and e are correct.
b. All of the following are correct.
c. Demand for NHL hockey is income inelastic.
d. Demand for NHL hockey is price elastic.
e. There are many substitutes for NHL hockey.
If x causes y, then
a. x and y are inversely related
b. y is a dependent variable
c. other variables don’t matter
d. y must, in turn, cause x
e. x and y are always in a direct relation to each other