It is impossible for a given good to be both elastic in demand and inelastic in supply.
a. True
b. False
Exhibit 2-6
Which graph depicts the result of an increase in the number of illegal immigrants
entering the country?
a. (1)
b. (2)
c. (3)
d. (4)
e. none of the above
Exhibit 34-8
Assume that the current price of sugar in the United States is $300 per ton (which
includes a $100 per ton tariff on sugar imports). Americans purchase __________
million tons of sugar from U.S. producers and import __________ million tons of sugar
from abroad.
a. 15; 10
b. 15; 20
c. 10; 5
d. 10; 15
e. 10; 20
Special interest groups often engage in rent seeking, which is a socially wasteful
activity.
a. True
b. False
A person buys X in one market and combines it with Y purchased in another market.
The combination of X and Y gives Z, which the person sells in a third market for a
higher price than the sum of the prices of X and Y. Which theory of profit is most
consistent with this example?
a. Profit is the return to being alert to an arbitrage (broadly defined) opportunity.
b. Uncertainty is the source of profit.
c. Profit is the return to the entrepreneur as innovator.
d. none of the above
The law of increasing opportunity cost results from the varying ability of resources to
adapt to the production of different goods and it helps to explain why production
possibilities curves are typically bowed outward.
a. True
b. False
In the prisoner’s dilemma, each prisoner would be best off if
a. both confess.
b. one confesses but the other does not.
c. one confesses, regardless of what the other does.
d. neither confesses.
A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers
fatalities per accident from 0.11 to 0.08 while raising the number of accidents per
period from 100,000 to any more than
a. 108,000.
b. 111,111.
c. 137,500.
d. 110,000.
The Justice Department considers a Herfindahl index less than __________ to be
representative of an unconcentrated (competitive) industry.
a. 1,000
b. 2,000
c. 1,500
d. 1,800
Exhibit 2-5
The opportunity cost of moving from point D to point C is
a. 5,000 televisions.
b. 5,000 fax machines.
c. 10,000 televisions.
d. 10,000 fax machines.