The concept of opportunity cost is more applicable to society as a whole than it is for an
individual household.
a. True
b. False
The system of grants from one level of government to another is an example of fiscal
federalism.
a. True
b. False
Where interdependence is especially pronounced, competition among oligopolists will
a. resemble military tactics and strategies.
b. disappear.
c. lead to large increases in product output.
d. entice more firms to enter the market.
In a properly functioning free market
a. the price of any good reflects its marginal utility to consumers.
b. price will equal marginal cost.
c. the invisible hand will assure that society’s resources are used efficiently.
d. All of the above are correct.
Which of the following is characteristic of indifference curves?
a. They are negatively sloped.
b. They never intersect.
c. They are convex toward the origin.
d. All of the above are correct.
Officially, the payroll tax is referred to as
a. the trust fund tax.
b. Social Security tax.
c. contributions for social insurance.
d. investment in Social Security.
Figure 5-16
In Figure 5-16, Adam is
a. better off at C than at D and able to afford either C or D.
b. better off at D than at C but only able to afford C.
c. equally well off at C and D and able to afford either C or D.
d. equally well off at C and D but only able to afford C.
When interest rates in the economy fall, the prices of previously issued bonds
a. must fall.
b. must change, but may either rise or fall.
c. must rise.
d. may remain unchanged.
What is the order in which an economy tries to solve the issue of resource allocation?
a. Production planning, distribution, and output selection.
b. Output selection, production planning, and distribution.
c. Production planning, output selection, and distribution.
d. Distribution, production planning, and output selection.
Briefly and concisely define the following terms.
a. voluntarism
b. direct controls
c. depletable resource
Figure 18-2
Figure 18-2 shows the widget market before and after an excise tax is imposed. The tax
per widget equals ____.
a. $5
b. $20
c. $25
d. $30
An oligopoly firm with a differentiated product will generally earn the largest profits
without advertising.
a. True
b. False
Which of the following can serve as an entry barrier?
a. legal restrictions
b. patents
c. control of scarce resources or inputs
d. All of the above are correct.
Sugar price supports primarily benefit consumers.
a. True
b. False
A corporation is an entity separate and distinct from its owners.
a. True
b. False
The theory of factor pricing uses supply-demand analysis.
a. True
b. False
The budget line and the indifference curve are geometric devices used to provide a
closer look at consumer choice.
a. True
b. False
Jason considers a crystal bowl, a silver dish, and a pewter figurine, each priced $45 at
the local gift shop. He chooses the silver dish because, according to economic theory
a. his marginal utility per dollar is greatest.
b. his total utility is minimized.
c. his marginal utility is equal to his total utility.
d. silver costs more per ounce than pewter.
Which of the following best describes a situation of moral hazard?
a. Sicker people are more likely to buy health insurance.
b. Prospective used-car buyers have less information about a particular car than its
seller does.
c. Drivers with collision insurance drive more recklessly.
d. Drivers with collision insurance wear seatbelts less often.
Economists and accountants have very different definitions of profit.
a. True
b. False
Perfect competition is an ideal market structure.
a. True
b. False
There are never any adverse consequences of government attempts to modify the laws
of supply and demand.
a. True
b. False