Members of the European Union (EU), rely heavily on this form of indirect taxes.
a. Value-added tax
b. Excise tax
c. Property tax
d. Sales tax
Necessities such as food and shelter have inelastic demand.
a. True
b. False
In August 1988, the Los Angeles Kings hired Wayne Gretzky for $15 million in cash.
The hockey team’s decision must have been based on the expectation that
a. Gretzky’s opportunity cost will exceed $15 million.
b. Gretzky’s marginal revenue product will equal or exceed $15 million.
c. the team’s total revenue will equal $15 million.
d. Gretzky’s marginal revenue product will rise in the long run.
In the allocation of resources between present and future
a. the market works imperfectly.
b. the market works perfectly.
c. centrally planned economies are more efficient than market economies.
d. the invisible hand guarantees efficiency in market economies.
Cross-elasticity of demand could be used to measure the responsiveness of the quantity
demanded of swimming pools to a change in the price of picnic tables.
a. True
b. False
As wages for manufacturing workers rise, wages for service workers will stay the same.
a. True
b. False
Some college students think that because a college degree greatly increases their
earning potential there is no opportunity cost of attending college. How would an
economist look at the matter?
a. There is no opportunity cost, assuming that future earnings actually increase as
expected.
b. The opportunity cost is much less than it would appear, assuming that earnings
increase.
c. Opportunity cost is a meaningless concept in this situation.
d. The college students are completely correct in all respects.
e. There is still an opportunity cost, even if it is justified by higher future earnings.
In the long run, zero economic profit exists in monopolistic competition and perfect
competition.
a. True
b. False
If average cost is declining,
a. marginal cost must be below average cost.
b. firms would go bankrupt if all prices were set equal to marginal costs.
c. marginal cost may be declining or increasing.
d. All of the above are correct.
If a tax is regressive, the average tax rate
a. remains the same as income rises.
b. rises as income rises.
c. falls as income rises.
d. falls as income falls.
Define the following terms briefly and concisely.
a. stock
b. bond
c. portfolio diversification
d. speculation
e. random walk
Producers of computer software are plagued with the problem of “pirating”, that is,
many people copy software legally purchased by others. The industry estimates that for
each legal copy of a program, there are two pirated copies in use. The industry wants
strict laws for the enforcement of its “intellectual property rights,” but enforcement is
obviously very difficult. Economists call this problem
a. depletability.
b. externality.
c. durability.
d. nonexcludability.
Figure 5-4
In Figure 5-4, the rightward shift in budget lines from the one containing point A to the
one containing point B
a. resulted from equal price reductions in beer and wine.
b. resulted from an increase in the consumer’s income.
c. could have been caused by income or price changes.
d. All of the answers above are correct possibilities.
e. None of the above is correct.
Economics studies the logic of choices made from among available possibilities.
a. True
b. False
Economists use the term capital to describe that factor of production that includes
human-made resources such as factories, buildings, machinery and tools.
a. True
b. False
At equilibrium, quantity demanded equals quantity supplied.
a. True
b. False