Exhibit 19-1
Exhibit 19-1 shows the production possibilities frontiers for the countries of Lambda
and Beta for fish and coconuts. What is the opportunity cost of a coconut in Lambda?
a. 1/2 fish
b. 1 fish
c. 2 fish
d. 21/2 fish
e. cannot tell from the information provided
The demand curve for the output of a perfectly competitive firm is
a. perfectly inelastic
b. perfectly elastic
c. unit elastic
d. downward sloping
e. nonlinear
Which of the following would contribute, directly or indirectly, to a deficit in the capital
account of the U.S. balance of payments?
a. A British citizen buys stock in Ford.
b. A British citizen buys a bond from Ford.
c. Interest rates fall in the United States relative to their level in the rest of the world.
d. Australian publisher Rupert Murdoch buys The New York Times.
e. Developing countries become more stable and so borrow less from U.S. banks.
To calculate the Herfindahl index,
a. add the market shares of all firms in an industry
b. add the market shares of any four firms in an industry and then square them
c. add the market shares of the four largest firms in an industry
d. square the market shares of all firms in an industry and then add them
e. square the market shares of the four largest firms in an industry and then add them
Three firms that are successful in colluding to raise their prices must
a. lose profits
b. announce any price changes to the government
c. restrict output
d. increase advertising to earn a profit
e. expand production
A model that sometimes makes incorrect predictions may be used by economic decision
makers
a. under no circumstances
b. only if its assumptions are detailed and realistic
c. if it is mathematical and computerized
d. if it is simple enough for a child to understand
e. until a better model is developed
By current U.S. law, anyone generating, storing, or transporting hazardous waste must
pay to clean it up if it leaks or is otherwise discharged into the environment. This law
has been in effect
a. since World War II
b. since 1960
c. since 1970
d. since 1980
e. only since 1990
The effect of an increase in consumer income on equilibrium price and quantity of
Florida orange juice (a normal good) is
a. to increase equilibrium price and quantity
b. to decrease equilibrium price and quantity
c. to increase equilibrium price and decrease equilibrium quantity
d. to increase equilibrium quantity and decrease equilibrium price
e. that equilibrium price and quantity remain constant
When a firm is no longer able to reduce its long-run average cost by expanding, it has
achieved its minimum efficient scale of production.
a. True
b. False
The Clayton Act of 1914
a. was too vaguely worded to reduce anticompetitive behavior significantly
b. prohibited conspiracies in restraint of trade
c. prohibited price discrimination that reduces competition and cannot be justified based
on cost differences
d. created the Federal Trade Commission
e. prohibited firms from reducing prices too far
Of the following, which group has the fastest-growing population in the United States?
a. female heads of households
b. male heads of households
c. white heads of households
d. black heads of households
e. single people
Low wages may be traceable to all of the following except one. Which is the exception?
a. low productivity
b. too much saving
c. unstable business climate
d. poor education and training
e. lack of adequate physical capital supplied to labor
For which of the following would the income effect of a price change be greatest?
a. ballpoint pens
b. air travel to Australia
c. chewing gum
d. haircuts
e. college textbooks
Net unilateral transfers in the United States in 2011 averaged about ______ per US
resident.
a. $1250
b. $850
c. $520
d. $440
e. $210
Exhibit 9-21
In Exhibit 9-21, D = AR represents the market demand curve for bicycles, MRm
represents the marginal revenue curve for a monopolist producer of bicycles and Sc =
MC = AC represents the marginal cost curve for a monopolist producer of bicycles and
the market supply curve when the market is perfectly competitive. The market price in a
competitive market would be
a. $10
b. $15
c. $20
d. $25
e. $30
Marginal revenue is the change in total revenue from using one more unit of an input in
the short run.
a. True
b. False
For the average homeowner, which of the following tasks is most likely to be contracted
for?
a. fixing a shelf
b. hanging a painting
c. moving furniture
d. rewiring the kitchen lighting
e. repainting a bedroom
A drop in dollar price of British pounds means that
a. fewer dollars are needed to buy British pounds
b. more dollars are needed to buy British pounds
c. the mark has appreciated
d. the dollar has depreciated
e. British goods are now more expensive to Americans
Luxury goods are
a. price inelastic
b. income inelastic
c. income elastic
d. goods with negative income elasticity
e. goods with positive price elasticity
For a monopolist, if marginal revenue is $40, total revenue is
a. increasing
b. decreasing
c. zero
d. positive
e. negative
If the U.S. dollar appreciates in the foreign exchange market,
a. American goods will become more expensive for foreign buyers and foreign goods
will be cheaper for Americans
b. American goods will become less expensive for foreign buyers and foreign goods
will be more expensive for Americans
c. American goods will become more expensive for foreign buyers and foreign goods
will be more expensive for Americans
d. American goods will become cheaper for foreign buyers and foreign goods will be
cheaper for Americans
e. neither the price of U.S. exports nor the price of U.S. imports will change
If an industrial union is able to negotiate a wage above the market-clearing wage, the
non-union wage in other industries will
a. increase
b. decrease
c. increase, if the union can restrict the supply of labor
d. increase, if the union can increase the supply of labor
e. decrease due to the strike-breaking activity of the firm
Exhibit 7-2
Given the information in Exhibit 7-2, what is the marginal product of the fourth unit of
labor?
a. 5 pairs of shoes
b. 10 pairs of shoes
c. 20 pairs of shoes
d. 50 pairs of shoes
e. 80 pairs of shoes
Exhibit 9-9
Assuming the firm should not shut down, the profit-maximizing price and quantity for
the monopolist in Exhibit 9-9, which does not price discriminate, are
a. P = $4 and Q = 7
b. P = $3.50 and Q = 10
c. P = $2 and Q = 7
d. P = $1 and Q = 7
e. P = $1 and Q = 10
Exhibit 16-5
Exhibit 16-5 represents the market for leaf tobacco. In the absence of any government
intervention how much will buyers spend on tobacco?
a. $1,000
b. $2,000
c. $3,000
d. $4,000
e. $5000
Market exchange usually benefits
a. both consumers and buyers, but not sellers
b. both consumers and producers
c. only consumers
d. only employees
e. only producers
If production is characterized by variable technology, the optimal level of air quality
occurs where
a. the marginal private cost of air quality equals the marginal social benefit
b. the marginal social cost of air quality equals the marginal social benefit
c. the marginal social cost of air quality equals the marginal private cost of air quality
d. government regulators set it
e. all costs are absorbed by the polluter
A curved line may have a positive slope or a negative slope, but it cannot have both
positive and negative areas of slope.
a. True
b. False
Exhibit 7-13 The Total Product of Labor
Given the information in Exhibit 7-13, what is the marginal product of the third unit of
labor?
a. slightly less than 2 units of output but more than 1.5 units of output
b. less than the marginal product of the second unit of labor
c. more than the marginal product of the second unit of labor
d. more than the marginal product of the fourth unit of labor
e. cannot be determined from the graph of total product
As the interest rate increases, the opportunity cost of
a. both c and e are correct
b. past consumption decreases
c. saving increases
d. current consumption increases
e. borrowing decreases