When marginal private cost is less than marginal social cost,
a. a public good exists.
b. a negative externality exists.
c. a positive externality exists.
d. negative economic profits are made.
e. a and d
Which of the following statements about a tariff and a quota is true?
a. With a tariff the government collects revenues, but not with a quota.
b. With a quota the quantity of imports falls, but not with a tariff.
c. With a tariff the domestic price of the good increases, but not with a quota.
d. With a quota the domestic production of the good increases, but not with a tariff.
e. all of the above
In the long run, if inputs are increased by 10 percent and output increases by 10 percent,
then __________ are said to exist.
a. economies of scale
b. constant returns to scale
c. diseconomies of scale
d. diminishing marginal returns
A theory predicts that all swans are white.A thousand people go out into the field and
identify the color of the swans they see.Their results reveal that, of the 10,000 swans
they saw, all were white.It follows that
a. the swan theory is a falsifiable theory.
b. the swan theory is correct.
c. the evidence fails to reject the swan theory.
d. a and b
e. a and c
Labor unions generally favor
a. import restrictions.
b. strict immigration laws.
c. increasing the minimum wage.
d. a and c
e. a, b, and c
Labor supply is a reflection of the number of persons who can actually do a job.
a. True
b. False
The natural monopolist might have an incentive to go out of business under
a. price regulation.
b. profit regulation.
c. output regulation.
d. average-cost pricing.
e. b and d
Indifference curves are convex to the origin if
a. a person’s marginal rate of substitution declines as he or she consumes more of a
good.
b. a person’s marginal rate of substitution increases as he or she consumes more of a
good.
c. the law of diminishing marginal utility holds.
d. a and c
e. none of the above
Situation 4-1
During the winter of 1973-74, a general system of wage and price controls (including a
price ceiling on gasoline) was in force in the United States. At the beginning of 1974,
some oil-producing countries imposed an oil embargo (a legal prohibition on
commerce) on the West. In the spring of 1974, price controls were] abolished.
If no price controls had been in place, the effect of the oil embargo on the equilibrium
price and quantity of gasoline would have been
a. an increase in both price and quantity.
b. an increase in price and a decrease in quantity.
c. a decrease in price and an increase in quantity.
d. a decrease in both price and quantity.
The yield of a stock is the
a. dividend divided by the closing price per share.
b. dividend divided by the average daily price of the stock.
c. closing price divided by the 52-week low price.
d. dividend divided by the opening price per share.
Suppose an industry consists of five equal-sized firms. Two of the firms plan to merge.
The merger ______________ raise anti-trust concerns at the Justice Department given
that the Herfindahl index before the merger was _____________ and the merger would
cause the Herfindahl index to rise by __________.
a. would; between 1,000 and 1,800; more than 100
b. would; greater than 1,800; more than 100
c. would not; less than 1,000; less than 300
d. would not; between 1,000 and 1,800; less than 100
Exhibit 31-3
Suppose that Firms A, B, and C are the only polluters in the state and that each emits 4
tons of pollution into the atmosphere. To cut the level of pollution in half the
government issues two transferable pollution permits to each firm.What is the total cost
to society of decreasing pollution to half its present level if firm C buys one pollution
permit from firm A and one pollution permit from firm B?
a. $515
b. $1,300
c. $1,380
d. $965
e. $10,350
The point where the PPF intersects the horizontal axis is
a. unattainable.
b. attainable and productive efficient.
c. attainable but productive inefficient.
d. attainable and neither productive efficient nor productive inefficient.
Scarcity affects everyone, even billionaires.
a. True
b. False
Exhibit 23-6
A perfectly competitive firm operating in the market depicted in graph (1) is producing
311 units of output at the profit-maximizing level. What is the marginal revenue of the
312th unit?
a. $0.312
b. $1
c. $10
d. $312
e. This cannot be determined based on the information provided.
Exhibit 38-1
The coupon rate for bond C is
a. 0.25 percent.
b. 11 percent.
c. 3.6 percent.
d. 100 percent.