Employers rely on a job applicant’s signals
a. because they are always an accurate indication of the applicant’s skills
b. because actual abilities are not observable prior to employment
c. because actual abilities are not observable after the applicant is hired
d. only when hiring someone for an entry-level position
e. only when hiring someone who has a college degree
Exhibit 9-12
The nondiscriminating monopolist, which maximizes profit in Exhibit 9-12, is
a. earning a profit of $db times 0f
b. earning a loss of $db times 0f
c. earning a normal profit
d. earning a loss of $0d times 0f
e. earning a loss of $ed times 0f
Exports amount to about 11 percent of U.S. GDP.
a. True
b. False
The group of countries more likely to have a high number of telephone lines per 1,000
people is
a. high-income countries
b. zero-income countries
c. infinite-income countries
d. low-income countries
e. middle-income countries
All types of capital
a. are forms of resources that can be used in future production
b. require a physical existence
c. earn an economic rent
d. yield profits for their owners
e. require obtaining more education and job skills
Which of the following is most likely to be an increasing-cost industry?
a. An industry whose firms experience diseconomies of scale
b. An industry whose firms experience economies of scale
c. An industry that is a major buyer in the markets for the inputs it uses
d. An industry that is a very small buyer in the markets for the inputs it uses
e. An industry that is a major seller in the markets for its outputs
Which of the following describes a situation in which demand must be inelastic?
a. Total revenue decreases by 10 percent when the price of spats rises by 10 percent.
b. Total revenue decreases by less than 10 percent when the price of spats rises by 10
percent.
c. Total revenue increases by more than 10 percent when the price of spats rises by 10
percent.
d. Total revenue decreases by $10 when the price of spats rises by $10.
e. Total revenue decreases by more than $10 when the price of spats rises by $10.
A player’s strategy is a game plan when decisions are interdependent
a. True
b. False
Renewable resources are those for which
a. additional units can be purchased in the market
b. additional units can be purchased in the market or provided by government
c. worn-out units can be repaired for further use
d. periodic use can be continued indefinitely
e. additional sources are constantly being discovered
If medical care is provided free of charge,
a. no one utilizes it
b. beneficiaries consume it up to the point at which the demand curve intersects the
vertical axis
c. beneficiaries derive no consumer surplus from medical care
d. beneficiaries consume the same amount they have always consumed
e. beneficiaries consume it up to the point at which the marginal benefit of the final unit
is zero
A graph is a
a. lengthy, inefficient, and inconvenient way to illustrate information
b. diagram illustrating a relationship between variables
c. method of proving causation
d. tool for incorporating all major and minor variables in one illustration
e. clear way to see how the fallacy of composition works
As concentration in an industry increases, the Herfindahl index falls.
a. True
b. False
Suppose you have a choice of working full-time during the summer or going full-time
to summer school. Summer tuition and books are $2,200. If you worked, you could
make $7,000. Your rent is $1,000 for the summer, regardless of your choice. The
opportunity cost of going to summer school is, therefore,
a. $2,200
b. $7,000
c. $8,000
d. $9,200
e. $10,200
An oligopoly model that describes formal collusion is the
a. kinked demand curve model
b. cartel model
c. cost-plus pricing model
d. game theory model
e. horizontal merger model
Economists have no concern that children on welfare might be more likely to end up on
welfare as adults.
a. True
b. False
Exhibit 6-15
Which area in Exhibit 6-15 represents the maximum amount that consumers are willing
to pay for 10 opera tickets?
a. area a
b. area b
c. area c
d. areas a + b + c
e. areas a + b
If supply increases and demand decreases, then equilibrium price will fall.
a. True
b. False
Another term for an investment good is
a. interest
b. savings
c. capital
d. rent
e. production
Most collective bargaining agreements in the United States are reached
a. only after binding arbitration
b. only after a strike
c. without a strike
d. only after a strike lasting at least three weeks
e. only after government intervention to avoid a strike
Economists generally assume that
a. firms act to maximize the dividends paid to stockholders
b. households act to maximize their wealth
c. households act to maximize utility
d. firms act to maximize revenue
e. both households and firms act to minimize expenditures
Exhibit 10-12
The profit-maximizing (or loss-minimizing) output for the firm in Exhibit 10-12 is
a. zero (i.e., a shut down case)
b. 700 units
c. 1,000 units
d. more than 700 and less than 1,000 units
e. more than 1,000 units
Which of the following would notbar entry into a market?
a. control by a single firm of an essential resource
b. the necessity of taking risks when starting a firm
c. patents
d. economies of scale
e. government regulations limiting the number of firms in an industry
It is harder to explain the behavior of firms in oligopoly than in other market structures
because in oligopoly
a. the firms act independently of each other
b. firms base their decisions on what their rivals do
c. only differentiated products are produced
d. only homogeneous products are produced
e. the demand curve can slope upward
Consumers must understand the law of diminishing marginal utility in order to
maximize their satisfaction.
a. True
b. False
The U.S. poverty rate is higher among households headed by black married couples
than those headed by white females.
a. True
b. False
Exhibit 11-10
In Exhibit 11-10, the marginal revenue product of the fourth unit of the variable
resource is
a. $14
b. $24
c. $168
d. $84
e. $756
Exhibit 2-2
According to Exhibit 2-2, Hans’ opportunity cost of typing one page is
a. 12 loads of laundry
b. 8 loads of laundry
c. 3/2 of a load of laundry
d. 2/3 of a load of laundry
e. impossible to compute
Which of the following is an example of division of labor?
a. an author writing a book one chapter at a time
b. a firm trying to get rid of a labor union
c. separating resources into four categories: land, labor, capital, and entrepreneurial
ability
d. allocating revenue among a firm’s resource suppliers
e. dividing an assembly process into separate steps
Adam Smith believed that people’s pursuit of their own self-interests
a. tended to promote the general welfare
b. required the government’s “invisible hand” to keep the economy running smoothly
c. might cause aggregate demand to be greater than aggregate supply
d. would increase the wealth of a nation, which was the quantity of gold and silver it
owned
e. would decrease the wealth of a nation, which was its ability to produce goods and
services
The main reason a monopolist can earn long-run economic profit, whereas a perfectly
competitive firm cannot, is that
a. monopolists operate under economies of scale
b. perfectly competitive firms have opportunity costs
c. demand for the monopolist’s output is inelastic
d. demand for the monopolist’s output is elastic
e. there are no barriers to entry in perfect competition
Production cannot occur without
a. saving
b. government
c. a market system
d. low interest rates
e. high interest rates
The interest rate compensates
a. bankers for their time spent on paperwork
b. borrowers for their increased consumption today
c. savers for consumption forgone today
d. consumers for more consumption today
e. the Fed for its efforts to control the money supply