Marginal cost regulatory pricing turns out to be the same as output regulation (for a
natural monopoly firm) if the output level set by government is the
a. amount at which marginal cost equals average total cost.
b. resource-allocative efficient amount.
c. amount at which average total cost is at its highest level.
d. amount at which marginal revenue equals marginal cost.
e. none of the above
The space on the freeway is fixed at any instant of time. A supply curve that shows this
is
a. perfectly horizontal.
b. upward sloping.
c. downward sloping.
d. perfectly vertical.
If someone gives you a free ticket to the movies, then there is no opportunity cost
involved with going to the movies.
a. True
b. False
The present value of $100,000 two years in the future at a 3 percent interest rate is
approximately
a. $94,260.
b. $97,087.
c. $9,434.
d. $106,090.
Exhibit 20-9
What is the price elasticity of supply between $2 and $4?
a. 2.0
b. 0.75
c. 1.33
d. 0.50
Exhibit 4-1
The number of units exchanged at the price ceiling is
a. 75.
b. 125.
c. 175.
d. 100.
Is it possible for mandatory seatbelt laws to increase vehicle fatalities?
a. Yes, if the number of accidents increases by a greater percentage than the number of
deaths per accident decreases.
b. No, because wearing seatbelts decreases the number of deaths per accident.
c. No, because wearing seatbelts decreases the number of accidents.
d. There is not enough information to answer the question.
The Justice Department considers a Herfindahl index that is
____________________________ to be representative of a moderately concentrated
industry.
a. less than 1,000
b. between 1,000 and 1,800
c. greater than 1,800
d. greater than 2,000
A(n) _______________ good is one in which as income rises or falls, there is no
change in the demand for the good.
a. normal
b. inferior
c. neutral
d. substitute
e. complementary
If the monopoly firm’s marginal cost curve is either horizontal or upward sloping, it
follows that its marginal revenue curve will cut its marginal cost curve at a __________
level of output than where its demand curve cuts its marginal cost curve. It also follows
that if the firm were to produce the quantity of output consistent with where its demand
curve cut its marginal cost curve, the firm would be __________.
a. lower; earning profits
b. lower; resource-allocative efficient
c. higher; productive efficient
d. lower; minimizing costs
e. none of the above
The acronym NASDAQ (one of the stock exchanges) stands for
a. National Academy of Stock Dealers Automated Quotations
b. New American Securities Dealers Automated Quotations
c. National Association of Securities Dealers Automated Quotations
d. North American Stock Dealers Automated Quotations
Suppose you borrow $1,000 today with the promise to pay back $1,050 one year from
today. Then the interest rate is __________, and the interest is __________.
a. $50; 5 percent
b. 5 percent; $1,050
c. 5 percent; $50
d. $100; 10 percent
e. 10 percent; $100
The Wilshire 5000 stock index is made up of the stocks of 5,000 of the largest U.S.
companies.
a. True
b. False
Thomas Edison played a key role in putting together the Movie Trust which reportedly
tried to eliminate competition in the early days of the movie industry.
a. True
b. False
Which of the following is a normative macroeconomics statement?
a. The central bank should increase the nation’s money supply.
b. The increase in the nation’s money supply helped push the nation’s unemployment
rate down in the short run.
c. Ford Motor Company’s new advertising campaign ended up hurting General Motors’
sales.
d. The local government ought to spend more on recreational facilities.
Exhibit 38-4
If the closing price of Brown, Inc.’s stock on the previous day was $43.10, what value
goes in blank (A)?
a. -1.00
b. +1.00
c. -0.50
d. +0.50
e. There is not enough information given to answer this question.
Exhibit 26-4
The profits of an unregulated natural monopoly that becomes regulated on the basis of
marginal-cost pricing would
a. increase substantially.
b. decrease substantially, but remain positive.
c. be brought down to zero.
d. become negative.
According to information in the textbook, in the early West, many of the open lands
were overgrazed. This was largely because
a. landowners charged ranchers a fee to graze their cattle.
b. the lands were unowned.
c. a government policy in effect at the time subsidized cattle production.
d. none of the above