What are the major problems that will tend to arise if there are legal limits on the
movement of prices?
a. favoritism and corruption of officials and market participants
b. unenforceability of laws and higher costs of transactions
c. increasing restrictions to enforce the laws
d. misallocation of resources as prices no longer correspond to costs
e. All of the above are correct.
Any point on or outside the PPF is attainable.
a. True
b. False
Bonds differ from stocks in all of these ways except:
a. a purchase of corporate stock becomes a part owner of the corporation, while a
bondholder does not
b. a bondholder loans money to the corporation, which has priority for repayment,
while a stockholder may lose her investment
c. stockholders know with a high degree of certainty how much money they will get,
while bondholders do not
d. all of these are correct
A quota sets the maximum amount of a good that is permitted into a country.
a. True
b. False
Two studies published in the New England Journal of Medicine link the risk of breast
cancer to alcohol consumption. Young women who have nine drinks per week were
reportedly 150 percent more likely to develop breast cancer. Considering the market for
alcohol, an economist would predict a movement
a. up the demand curve as quantity demanded falls.
b. up the supply curve as the demand curve shifts.
c. down the supply curve as the demand curve shifts.
d. down the demand curve as quantity falls.
Marginal utility has a negative slope. This is because of the
a. optimal purchase rule.
b. law of increasing costs.
c. law of diminishing marginal utility.
d. marginal rate of substitution.
Rent-seeking activity by firms
a. often wastes economic resources.
b. increases economic efficiency.
c. continues even when an industry is in long-run competitive equilibrium.
d. increases the total amount of economic rent available.
The entry of firms into a perfectly competitive industry causes the supply curve to
a. increase its slope.
b. decrease its slope.
c. move toward the right.
d. move toward the left.
The U.S. switched from being a creditor nation to a debtor nation in:
a. the 1970s
b. the 1980s
c. the 1990s
d. 2008-2009
In 1962, Michael Harrington argued in The Other America that there was chronic,
severe poverty in America.
a. True
b. False
Accounting profit is usually larger than economic profit.
a. True
b. False
Figure 3-2
In Figure 3-2, at point B
a. it is impossible to increase production of consumer goods.
b. it is impossible to increase production of capital goods.
c. it is possible to increase production of both capital goods and consumer goods
simultaneously.
d. it is impossible to increase production of both capital goods and consumer goods
simultaneously.
An increase in fixed cost will, in the long run, alter the industry output of
a. both a monopolist and a competitive industry.
b. only a monopolist.
c. only a competitive industry.
d. neither a monopolist nor a competitive industry.
Figure 11-4
Physicians have two types of patients: private patients who pay directly or with
insurance, and Medicaid patients whose care is paid for by the state. Physicians must
lower prices to attract more private patients, but they can add unlimited Medicaid
patients at a constant price. The situation facing Dr. Casey is depicted in Figure 11-4.
Units of medical service (say, number of patients × number of visits) are measured on
the horizontal axis. How many units of medical service will Dr. Casey deliver?
a. OA
b. OB
c. OC
d. OD
Both demand and supply curves usually have positive slopes.
a. True
b. False