An investment in yourself is an investment in what economists call human capital.
a. True
b. False
The definition of efficiency implies that production is carried out on the production
possibilities frontier.
a. True
b. False
Discounting is the process of
a. cutting prices to get rid of surplus stocks.
b. finding the present value of future dollars.
c. finding the future value of present dollars.
d. giving special concessions to special customers.
A cost curve drawn with years on the horizontal axis and costs per unit on the vertical
axis would be a(n)
a. analytical cost curve.
b. long-run cost curve.
c. historical cost curve.
d. theoretical cost curve.
Who would receive payments from the government under a negative income tax
system?
a. everyone
b. only people with no earnings
c. only people with incomes below a certain level
d. only people with incomes above a certain level
As a general rule, consumers have
a. limited income.
b. unlimited desires for goods.
c. many choices of goods facing them.
d. All of the above are correct.
e. None of the above are correct.
A 10 percent increase in the cost of restaurant meals, which are a luxury, will most
likely
a. increase the purchase of meals by 10 percent.
b. increase the purchase of meals by less than 10 percent.
c. decrease the purchase of meals by more than 10 percent.
d. decrease the purchase of meals by less than 10 percent.
Carefully define the following terms, and explain their importance in economics.
a. opportunity cost
b. abstraction
c. theory
d. model
e. marginal analysis
Economists and others use economic theory
a. only to analyze situations in which money changes hands.
b. as a partial basis for public policy recommendations.
c. to confuse their enemies.
d. to replace value judgments about important policy issues.
In her calculation of the cost of going to college, an economist would include the
amount of forgone earnings over the years spent at college.
a. True
b. False
Which of the following situations is the most common? Men and women
a. doing the same job and getting equal pay.
b. doing the same job and getting unequal pay.
c. doing very different kinds of work and consequently having different earnings.
d. randomly distributed across occupations with average earnings about equal.
Figure 4-4
Assume that Figure 4-4 shows demand for soda. A decrease in the price of apple juice
will change demand from
a. D1 to D2.
b. D2 to D1.
c. D2 to D3.
d. D1 to D3.
When a firm’s fixed cost rises, its total profit curve shifts
a. up at every output level.
b. down at every output level.
c. left at every profit level.
d. right at every profit level.
If a government enacts a price floor on agricultural products to protect wheat farmers,
the result is likely going to be
a. an increase in price with a surplus of wheat.
b. an increase in price with a shortage of wheat.
c. a decrease in price with a surplus of wheat.
d. a decrease in price with a shortage of wheat.
An airline industry study recently reported, “Evidence is abundant that larger firms are
not more efficient or less costly simply because they are larger. In fact, other things
equal, the largest carriers tend to have a higher level of unit costs, possibly caused by
the difficulties of managing an airline of large size.” This means that
a. there are increasing returns to scale in the airline industry.
b. the airline industry has constant returns to scale.
c. the larger airlines are not profitable.
d. airlines are experiencing decreasing returns to scale.
Centrally planned economies like China produce relatively little pollution.
a. True
b. False
A public good is
a. always depletable and excludable.
b. always depletable and often excludable.
c. never depletable and always excludable.
d. never depletable and always nonexcludable.
Which of the following is the correct statement of the marginal rule for optimal input
proportions? The input proportion is optimal when
a. PA = PB.
b. MPPA = MPPB.
c. PA × MPPA = PB × MPPB.
d. PA/PB = MPPA/MPPB.