Which of the following statements is false?
a. For the monopsonist, marginal factor cost decreases as it buys additional units of a
factor.
b. For the monopsonist, the supply curve of the factor it buys is different from the
marginal factor cost curve.
c. The monopsonist buys that quantity of a factor at which marginal revenue product
equals marginal factor cost.
d. The monopsonist pays its factors a dollar amount less than its marginal factor cost.
Which of the following statements is false?
a. In the case of a negative externality, the market equilibrium is inefficient.
b. In the case of a negative externality, when a tax is set equal to the marginal external
costs (MEC) efficiency can be achieved.
c. In the case of a negative externality, when a tax is set that is greater than the marginal
external costs (MEC) inefficiency will result.
d. In the case of a positive externality, when a tax is set equal to the marginal external
benefits (MEB) efficiency can be achieved.
The physical and mental talents people bring to production processes comprise the
resource called
a. entrepreneurship.
b. natural resources.
c. capital.
d. labor.
Entrepreneurship is
a. the talent for organizing the use of land, labor and capital, among other things.
b. skill in influencing government regulators and legislators.
c. accumulated technical knowledge in using labor and capital.
d. knowledge of the particular natural resources to be found in a given area.
Situation 27-1 A company is trying to decide whether it should produce good X in the
U.S. or in Mexico.Suppose a U.S. worker earns $15 per hour and a worker in Mexico
earns $4 per hour.Also suppose that the marginal physical product (MPP) of the U.S.
worker is 12 units of good X and the MPP of the Mexican worker is 3 units of good X.
The output produced per $1 of cost in the U.S. is
a. 0.80 units of good X.
b. 1.25 units of good X.
c. 180 units of good X.
d. 3 units of good X.
In economics, a synonym for utility is
a. usefulness.
b. satisfaction.
c. sacrifice.
d. a service.
An American labor union worker has a picket sign that reads “Say No to Tokyo, Buy
American.” Most likely, the worker is trying to
a. increase the price of substitute factors.
b. decrease the price of substitute factors.
c. increase demand for the product he or she produces.
d. increase his marginal physical product.
e. increase the availability of substitutes for the product he or she produces.
Which of the following statements is false?
a. Average fixed cost continually declines as output increases.
b. Marginal cost is equal to the change in total cost divided by the change in quantity of
output.
c. The law of diminishing marginal returns states that, in the long run, as ever larger
amounts of a variable input are combined with fixed inputs, eventually the marginal
physical product of the variable input will decline.
d. The vertical distance between the AVC curve and the ATC curve declines as more
output is produced.
Rational ignorance exists because voters are apathetic.
a. True
b. False
What is the relationship between the average fixed cost (AFC) curve and the marginal
cost (MC) curve?
a. The MC curve intersects the AFC curve at its minimum point.
b. When the MC curve is above the AFC curve, AFC must be increasing.
c. Both a and b are true.
d. There is no relationship between the AFC curve and the MC curve..
Exhibit 20-6
Let S1 be the supply curve of a firm. If S2 represents the supply curve of the same firm
after the government imposes a per-unit tax, the tax is
a. $1 per unit.
b. $2 per unit.
c. $3 per unit.
d. -$1 per unit, i.e., a subsidy of $1.
Suppose that there are two cities that are alike in every way except that one city has
significantly better weather than the other city.Call the city with good weather
Good-Weather City (GWC) and the other Bad-Weather City (BWC).Assume that the
median price of a home in the two cities is originally the same.If the marginal utility of
living in GWC is 500 and the marginal utility of living in BWC is 300, to make
themselves better off economic theory tells us that
a. at least some people will move from BWC to GWC, which will make housing prices
rise in GWC and BWC.
b. at least some people will move from GWC to BWC, which make housing prices rise
in BWC and GWC.
c. at least some people will move from BWC to GWC, which will make housing prices
rise in GWC and fall in BWC.
d. at least some people will move from GWC to BWC, which will make housing prices
rise in BWC and fall in GWC.
Exhibit 3-16
Which of the graphs best represents the market for theater tickets that are already sold
out on the day of the performance?
a. (1)
b. (2)
c. (3)
d. (4)
Which of the following statements is false?
a. As the price paid for a bond rises, the yield declines.
b. If you purchase stock from an individual that currently owns the stock, you are
buying it in the secondary market.
c. The yield on a bond is another term for the coupon rate on a bond.
d. A rating of Aaa from Moody’s is the highest bond rating given by that rating agency.
The higher the labor cost to total cost ratio, the lower the elasticity of demand for labor.
a. True
b. False
A decrease in unemployment causes the PPF to shift outward (to the right).
a. True
b. False
Exhibit 20-3
When price decreases from $5.50 to $4.50, the price elasticity of supply is
a. 0.
b. 0.1.
c. 0.5.
d. 1.0.
e. 5.0.
Scarcity occurs in both wealthy societies and poor societies.
a. True
b. False