Table 8.3
Refer to Table 8.3. What is the total cost of producing zero units of output?
A) $0
B) $15
C) $30
D) indeterminate from the given information
Figure 9
Refer to Figure 6.9. The marginal utility of the third video game rental is
A) 0.
B) 4.
C) 8.
D) 22.
Which of the following statements is correct?
A) Economics is a natural science.
B) In large measure, economics is the study of how people make choices.
C) If poverty were eliminated, there would be no reason to study economics.
D) Economic analysis can be used to explain how societies, but not individuals, make
decisions.
Suppose the supply of labor schedule decreases in a perfectly competitive labor market
while the market demand schedule remains unchanged. A profit maximizing
representative firm will
A) hire more workers.
B) hire fewer workers.
C) hire the same number of workers.
D) substitute capital for labor.
The bottom 50% of families ranked by income control about ________ of the nation’s
net worth.
A) 1%
B) 6%
C) 4%
D) 2%
In economics, investment always refers to
A) the act of buying stocks or bonds.
B) the creation of capital.
C) increasing the quantity of labor.
D) an increase in per capita output.
The feature that distinguishes monopolistic competition from monopolies and
oligopolies is that monopolistically competitive firms
A) cannot influence market price by virtue of their size alone.
B) benefit from barriers to entry.
C) are price takers.
D) do not have price as a decision variable.
Figure 6.2
Refer to Figure 6.2. Assume Mr. Lingle’s budget is AC. Given his current monthly
income, he CANNOT purchase the quantities of the two goods at point
A) A.
B) B.
C) E.
D) D.
Profit is
A) TR –TC.
B) TR –TFC.
C) TR –TVC.
D) TVC –TFC.
The advantage in the production of a product enjoyed by one country over another
when it uses fewer resources to produce that product than the other country does is
A) an absolute advantage.
B) a comparative advantage.
C) a relative advantage.
D) a productive advantage.
Recall the Economics in Practice on page 370: According to a study discussed in the
Economics in Practice, when students were moved from a class taught by a
below-average teacher to one at the 75th percentile, the move
A) made no difference on the students’ future annual earnings.
B) increased the students’ future earnings by 3.5% per year.
C) increased the students’ future earnings by more than 50% per year.
D) actually decreased the students’ future annual earnings.
When the price of radios increases 15%, quantity demanded decreases 15%. The price
elasticity of demand for radios is ________, and total revenue from radio sales will
________.
A) elastic; decrease
B) elastic; increase
C) inelastic; decrease
D) unit elastic; not change
An efficient market is characterized by the fact that
A) output is steady or growing and there is low inflation.
B) profit opportunities are eliminated almost instantaneously.
C) there are no opportunity costs.
D) wealth is distributed fairly.
Factors of production that can be used in place of other factors are said to be
A) substitutable inputs.
B) complementary inputs.
C) duplicate inputs.
D) proportionate inputs.
Throughout the developing world, teacher absenteeism
A) has a much smaller impact on education than does student absenteeism.
B) is much lower than it is in developed nations.
C) is virtually unheard of.
D) is a problem that affects education.
Hi Phi Sound Unlimited has a monopoly over the installation of surround sound
systems. If Hi Phi Unlimited’s total revenue from installing 20 sound systems is
$30,000 and its total revenue from installing 21 sound systems is $33,800, what is the
marginal revenue of the twenty-first sound system?
A) -$2,000
B) -$1,000
C) $2,000
D) $3,800
Figure 3.12
Refer to Figure 3.12 The market is initially in equilibrium at Point B. If demand shifts
fromD2 to D1, the equilibrium price will change from ________ and the equilibrium
quantity will change from ________.
A) $4.00 to $3.00; 250 to 350
B) $4.00 to $3.00; 350 to 250
C) $3.00 to $4.00; 250 to 350
D) $3.00 to $4.00; 350 to 250
A person who chooses not to be in the labor force reveals that
A) his potential product in the market is zero.
B) either leisure or the value of nonpaid labor is worth more to him than the value that
society places on his potential product in the market.
C) either leisure or the value of nonpaid labor is worth less to him than the value that
society places on his potential product in the market.
D) either leisure or the value of nonpaid labor is worth zero to him.
Table 8.2
Refer to Table 8.2. If Sherry produces zero earrings, her total fixed costs are
A) $0.
B) $50.
C) $100.
D) indeterminate from this information.
Wealth or net worth is equal to
A) assets plus liabilities.
B) assets minus liabilities.
C) consumption plus changes in net worth.
D) income minus savings.
Table 3.1
Refer to Table 3.1. In this market there will be an excess supply of 300 pizzas at a price
of
A) $6.
B) $9.
C) $12.
D) $15.
If the government wishes to encourage firms to internalize externalities, they should
________ activities resulting in negative externalities and ________ activities resulting
in positive externalities
A) tax; subsidize
B) subsidize; tax
C) ban; generate
D) place an injunction against; tax
Which of the following statements is false?
A) Many planned economies have not fared very well in recent years; many of these
economies have almost completely collapsed.
B) Command economies operate the most efficiently because the government makes all
the production decisions.
C) In command economies, consumers still exercise choice.
D) In a command economy, the government answers the questions of what to produce,
how to produce it, and how to distribute it.
In long-run equilibrium for a monopolistically competitive industry,
A) all firms earn a profit.
B) all firms break even.
C) all firms suffer losses.
D) firms can earn a profit, suffer a loss, or break even.
Table 3
B’s Strategy
Refer to Table 14.3. The result of this game is known as a ________.
A) prisoner’s dilemma
B) collusive outcome
C) repeated strategy
D) tit-for-tat outcome
When the decrease in the price of one good causes the demand for another good to
decrease, the goods are
A) normal.
B) inferior.
C) substitutes.
D) complements.
Figure 8.6
Refer to Figure 8.6. Curve ________ is Outdoor Equipment’s marginal cost curve.
A) 1
B) 2
C) 3
D) None of the above is correct.
If the market for tires is unregulated and is presently characterized by excess supply,
you can accurately predict that price will
A) increase, the quantity demanded will fall, and the quantity supplied will rise.
B) increase, the quantity demanded will rise, and the quantity supplied will fall.
C) decrease, the quantity demanded will rise, and the quantity supplied will fall.
D) decrease, the quantity demanded will fall, and the quantity supplied will rise.
Figure 4.1
Refer to Figure 4.1. Assume that initially there is free trade. The price of apples in the
United States will increase to 40 cents per apple if a ________ per apple tax tax is
imposed.
A) 10 cents
B) 20 cents
C) 30 cents
D) 40 cents
The ________ tax is an example of a progressive tax in the United States.
A) retail sales
B) individual income
C) property
D) gasoline
Figure 1.4
Refer to Figure 1.4. Panel A shows a curve which has a slope that is
A) first positive, then zero, and then negative.
B) first negative, then zero, and then positive.
C) infinite throughout.
D) zero throughout.
What is a fair game or fair bet?
Draw two graphs: one showing how total variable cost varies with output and the other
showing how average variable cost varies with output.
The figure below shows the demand, average total, and average variable cost curve for
Pepe’s Pet Salon which produces pet haircuts in a perfectly competitive market:
Suppose that the firm’s manager decides to produce 15 units of
output. He asks your opinion of this decision. What would you tell him?
Define the terms of trade.
What is adverse selection? Give an example and explain why it is a problem.
The price elasticity of demand for gasoline is “0.8. What must occur to the price of
gasoline in order for quantity demanded to rise by 20 percent?
What is meant by the phrase, “There is no such thing as a free lunch”?
What is brain drain?
Suppose that the local hospital claims that the wages of nurses are too high. Yet, the
hospital has 10 nursing positions open and no applicants for the jobs. Is the hospital’s
claim legitimate? Why or why not?
Figure 16.2
Use Figure 16.2 above to answer the following question. Assume that MPC represents
the marginal private cost and MB is the marginal private benefit for a particular firm.
Assume however, that the MDC represents the marginal damage cost of this firm’s
activity and the MSC is the marginal social cost. How much output would the firm
produce if it didn’t have to concern itself with the negative externality that it is imposing
on the rest of society. Explain your answer.
What is a Lorenz curve?
Suppose that the widget industry contains only four firms. The table below shows the
market share of each firm in the market. Calculate the Herfindahl-Hirschman index for
the widget industry.
What are resources? Describe two different types of resources.
Why does marginal cost eventually rise as output increases?
XYZ Corporation operates in a perfectly competitive market and is currently
maximizing profit. To keep the firm’s costs low, XYZ’s managers have decided to dump
waste in a nearby river. Explain why the level of output currently produced by XYZ is
not efficient.
Describe the two major categories of public assistance.