The instructors at College A are regularly late for their office hours.Based on a theory
presented in the textbook, we would predict that the gap between the
______________student tuition and ___________equilibrium tuition is ___________
at College A.
a. lower; higher; small
b. higher; lower; small
c. lower; higher; large
d. higher; lower; large
There is a direct relationship between the opportunity cost of bad behavior in a public
venue and the use of bad behavior in that venue.
a. True
b. False
Price elasticity of supply measures the responsiveness of __________ to changes in
__________.
a. quantity supplied; income
b. quantity supplied; price
c. quantity supplied; quantity demanded
d. income; quantity demanded
e. none of the above
Which of the following is a possible rationing device?
a. dollar price
b. first-come-first-served
c. brute force
d. a and b
e. a, b, and c
Given the choice between a sure-thing option and a gamble option with the same
expected payoff, a____________ person will choose the sure thing.
a. risk averse
b. risk loving
c. risk neutral
d. risk enjoying
e. none of the above
The act that set up a commission to deal with “unfair methods of competition” was the
a. Sherman Act.
b. Wheeler-Lea Act.
c. Celler-Kefauver Antimerger Act.
d. Clayton Act.
e. none of the above
Most economists believe that the market __________ produce nonexcludable public
goods because of the __________.
a. will;monetary incentive they have to produce them
b. will not; externality problem
c. will not; free rider problem
d. will;market shortage that often accompanies the production of public goods.
e. none of the above
It is possible through trade for a country to consume a combination of goods that lies
beyond its production possibilities frontier.
a. True
b. False
Which of the following is true of average fixed costs in the long run?
a. Average fixed costs start increasing.
b. Average fixed costs are above average variable costs.
c. There are no fixed costs in the long run, so there are also no average fixed costs in the
long run.
d. Average fixed costs intersect the marginal cost curve at its minimum point.
e. a and b.
Refer to Exhibit 25-9. There ___________ barriers to entry in a perfectly competitive
market.There ____________barriers to entry in monopolistic competition.There
____________barriers to entry in oligopoly. There ____________ barriers to entry in
monopoly.[Your answers should fill in blanks (H), (I), (J) and (K), respectively.]
Exhibit 25-9
a. are; are; are no; are no
b. are no; are; are; are no
c. are no; are no; are; are
d. are no; are; are; are
The higher the price of medical care in general, the lower the
____________________________ medical care and the
______________________specific items that make up medical care (such as, x-rays).
a. quantity demanded of; higher the demand for
b. demand for; higher the demand for
c. quantity demanded of; lower the demand for
d. demand for; higher the quantity demanded of
Refer to Exhibit 20-6. Let S1 be the supply curve of a firm. If S2 represents the supply
curve of the same firm after the government imposes a per-unit tax, the tax is
Exhibit 20-6
a. $1 per unit.
b. $2 per unit.
c. $3 per unit.
d. -$1 per unit, i.e., a subsidy of $1.
__________ scale exist when inputs are increased by some percentage and output
increases by a smaller percentage, whereas __________ scale exist when inputs are
increased by some percentage and output increases by the same percentage.
a. Economies of; diseconomies of
b. Constant returns to; economies of
c. Diseconomies of; constant returns to
d. Diseconomies of; economies of
The price of good X has a pattern such that P = $3 on Monday through Thursday of
every week, andP = $2 on Fridays.If speculators begin participating in the market for
good X, their actions will likely lead to a(n) ______________ in the price of good X on
Monday through Thursday and a(n) _______________ in the price of good X on
Friday.
a. increase; increase
b. increase; decrease
c. decrease; increase
d. decrease; decrease
The process whereby votes are exchanged to gain support for legislation is referred to
as
a. logrolling.
b. rational ignorance.
c. simple majority voting.
d. special interest voting.
e. a and d
It is impossible for a given good to be both elastic in demand and inelastic in supply.
a. True
b. False
Elasticity of demand for labor is affected by the
a. price elasticity of demand for the product that labor produces.
b. availability of substitute (nonlabor) factors.
c. ratio of labor cost to total cost.
d. all of the above
According to the Coase theorem, externalities
a. must usually be internalized by taxation or subsidy.
b. can be internalized by the market under certain conditions.
c. result when firms fail to maximize profits.
d. cannot be internalized if property rights are assigned.
e. are not relevant to the issue of market failure.
Refer to Exhibit 39-4. At the government-established support price of $5 per bushel, the
wheat surplus that government buys equals
Exhibit 39-4
a. 600 bushels.
b. 400 bushels.
c. 200 bushels.
d. 0 bushels.
In economics, a synonym for utility is
a. usefulness.
b. satisfaction.
c. sacrifice.
d. a service.
Explain the difference between total utility and marginal utility.Give a hypothetical
example to help support your answer.
List and describe the four conditions necessary for everyone to receive equal pay in the
long run.
Describe the type of international monetary system that is currently in use. What
advantages do proponents of this type of system cite in support of its use?What
disadvantages do its opponents cite?
Explain why the price of a good tends to rise when there is a shortage of the good.Give
a hypothetical numerical example to help support your answer.
Describe what cross elasticity of demand measures. Be specific in your response.
In making the case against government, discuss the two main points about special
interest groups.
Explain why the ceteris paribus assumption is essential when assessing an economic
theory.Give an example to help support your answer.
Explain why price is greater than marginal revenue for a single-price monopolist and
how this differs from perfect competition.