Since it spent over $3.6 trillion in 2010, opportunity cost was not an issue for the U.S.
government.
a. True
b. False
Table 22-4
Table 22-4 presents the demand and supply schedules for television sets in Japan and
the United States. If Japan and the United States trade with each other, what will be the
equilibrium price in the world market for television sets?
a. $100
b. $200
c. $300
d. $400
“Satisficing” rather than “maximizing” primarily emerges under conditions where
a. information is costly.
b. management lacks ambition.
c. profit maximization is rejected on moral grounds.
d. risk is minimal.
What is the appropriate degree of abstraction?
a. The more detail there is, the better.
b. The detail should be minimized in order to avoid all complexity.
c. Abstraction is unnecessary, and should be avoided.
d. Abstraction is the essence of analysis, and is pursued for its own sake.
e. It depends on the objective of the analysis.
Free markets can:
a. prouduce goods and services with maximum efficiency
b. solve unemployment
c. protect the environment
d. all of these
Under monopoly, resources are allocated as efficiently as in perfect competition.
a. True
b. False
Because the consumer’s budget is limited, purchase decisions among available goods
must of necessity be interdependent.
a. True
b. False
Figure 11-5
In Figure 11-5 are the cost and revenue curves of a monopolist in the theater market,
Crown Theater, which is the only movie theater in the city. At its profit-maximizing
quantity of tickets sold, movie goers will buy ____ tickets.
a. 60
b. 100
c. 120
d. 140
A minimum wage law might increase wages without reducing employment if the hiring
firm is
a. in perfect competition.
b. a monopolist.
c. a monopolistic competitor.
d. a monopsonist.
If a firm’s activities generate detrimental externalities, the marginal social cost will be
less than the marginal private cost.
a. True
b. False
The cost-revenue diagrams for a monopolist and a monopolistic competitor are similar
except that the demand curve for the monopolistic competitor is flatter.
a. True
b. False
The cost disease of services explains the problems surrounding the health care crisis.
a. True
b. False
In terms of the competing claims of equality and efficiency, in the United States we
have
a. chosen greater wage inequality for lower unemployment.
b. chosen higher unemployment for less wage inequality.
c. both greater wage inequality and higher unemployment.
d. not faced a trade-off between wage inequality and unemployment.
e. been able to choose both less wage inequality and lower unemployment.
One economically valid approach to regulation is simply to break all large firms into
many smaller ones.
a. True
b. False
____ completely deplete the most vital resources.
a. We are not going to
b. In the near future we will
c. We are eventually going to
d. We have already begun to
Consumer’s surplus can be written as
a. total expenditure − total utility.
b. total utility − total expenditure.
c. marginal utility − marginal expenditure.
d. marginal expenditure − marginal utility.
Exhibit 10-1
A perfectly competitive producer has the following short-run average cost curve and
marginal cost curve:
SR AC = 2Q + 3
MC = 4Q + 3
where costs are measured in dollars and Q represents the firm’s output in units.
If the market price of wangdoodles is $15 each, the profit-maximizing producer whose
short-run cost curves are given in Exhibit 10-1 should produce ____ wangdoodles.
a. 0
b. 3
c. 6
d. 15
Asymmetric information will lead to
a. higher prices for some used cars, lower prices for others.
b. “lemon” prices for good used cars.
c. new cars selling for prices lower than good used cars.
d. old cars selling for more than new cars.
Environmental damage
a. cannot be reduced to zero.
b. is inevitable where humans exist.
c. tends to increase as long as benefits outweigh the costs to the damagers.
d. All of the above are correct.
Which of the following statements is correct?
a. Theory and hypothesis are interchangeable terms for the same thing.
b. A hypothesis may result from a tested and confirmed theory.
c. A theory may result from a tested and confirmed hypothesis.
d. A hypothesis is a theory whose formulation relies on mathematics.
If the government charged a tax on monopolists equal to, say, 75 percent of their
economic profits, what would happen to the level of output the firm would produce?
What about the price? Explain.
What are the properties of indifference curves?
Discuss the controversy surrounding affirmative action. How does this controversy
illustrate the trade-off between equality and efficiency?
Figure 5-24
Given the demand curve in Figure 5-24, explain how consumer’s surplus is calculated.
Assume that a firm has measured demand carefully and thinks that the following table
accurately displays this. The total cost has been measured and can be given as TC = 20
+ Q + Q2 where Q is the level of output. Complete the table and determine the
profit-maximizing level of output.
If you leave your money in the bank at a fixed interest rate and allow for compounding
of interest, show what will happen to your savings over time. Indicate with a graph
whether there is a negative or positive slope between savings and time and what
happens to the slope over time.
Is an efficient market allocation fair? Explain.