A progressive tax is one in which the fraction of income paid in taxes rises as a person’s
income increases.
a. True
b. False
Collective bargaining is a process used by unions and management to settle upon the
terms of a labor contract.
a. True
b. False
Given a fixed amount of time, a decision to supply labor or not is simultaneously a
decision to
a. demand goods and services or not.
b. demand leisure or not.
c. supply capital and land or not.
d. supply leisure or not.
If two families are identical with respect to size, income, general expenses, etc., and are
taxed equally, we say that there is
a. horizontal equity.
b. vertical equity.
c. observance of the ability-to-pay principle.
d. intergenerational equity.
Economists define “efficiency” as the absence of waste.
a. True
b. False
Along a straight-line demand curve (dropping all minus signs), the price elasticity of
demand
a. gets larger as quantity demanded gets larger.
b. gets smaller as quantity demanded gets larger.
c. always equals one.
d. is constant (though not necessarily equal to one).
Table 7-4
Table 7-4 shows a production relationship. Assuming the capital stock is fixed at three
units and the cost per day of labor is $65, what is the most labor that it is efficient to
hire if the product price is $1 per unit?
a. 2
b. 3
c. 4
d. 5
If firms meet together to decide on prices and outputs there is
a. overt collusion.
b. tacit collusion.
c. price leadership.
d. None of the above are correct.
Figure 7-1
Of the graphs in Figure 7-1, which best represents marginal physical product?
a. 1
b. 2
c. 3
d. 4
Which of the following is an example of an externality?
a. Drug abuse affecting David’s health.
b. Sara taking a break from work.
c. A transaction between two parties, affecting them alone.
d. Tom’s smoking affecting his roommate’s health.
Under perfect competition, regarding short-run profit, a firm may find itself losing
money. This is true because:
a. the firm was unable to pick the output that maximized profit
b. the market conditions make the highest possible profit a negative number
c. the demand for its product is weak or its costs are high
d. both b and c
Elasticity of demand is calculated using percentage changes in both price and quantity.
a. True
b. False
Which of the following goods will have the most inelastic demand at any time?
a. jewelry
b. Big Macs
c. electricity
d. pork chops
The demand curve for any input is the MP curve.
a. True
b. False
Table 3-1
Peanuts Corn
(Bushels) (Bushels)
0 55
10 50
20 42
30 28
40 0
Suppose a farmer produces 50 bushels of corn and 10 bushels of peanuts. According to
Table 3-1, the opportunity cost of 10 more bushels of peanuts is
a. 8 bushels of corn.
b. 42 bushels of corn.
c. 50 bushels of corn.
d. impossible to determine from the information given.
A supply schedule shows
a. the “market potential” for a product.
b. how much producers are willing and able to sell at different prices.
c. possible combinations of output under different conditions.
d. how much consumers would like to buy at different prices.
e. All of the above are correct.
If a nation imposes a tariff on imports, the portion of the tax paid by citizens depends
upon
a. elasticity of demand.
b. elasticity of supply.
c. how important the good is.
d. income elasticity.
e. cross elasticity of demand with domestic products.
Would a profit-maximizing firm sell where demand is inelastic?
a. No, this would not follow the rule of MC = MR.
b. No, the firm could not profitably raise price.
c. Yes, the firm could profitably lower price to attract sales.
d. Yes, in this case there are few substitutes for the good.
The least costly way to produce a given level of output is indicated by the point of
tangency between a budget line and the production indifference curve corresponding to
that level of output.
a. True
b. False
The coordination task of dividing products among consumers is a problem of
a. output selection.
b. production planning.
c. distribution.
d. market segmentation.
One major fault with factor pricing analysis is that marginal productivity theory merely
attempts to justify the income distribution that the capitalist system yields.
a. True
b. False