Price ceilings will likely result in the growth of black markets.
a. True
b. False
Interest is the payment for the use of funds used to produce capital.
a. True
b. False
Input-output analysis is rarely used because
a. it requires tremendously complex calculations.
b. it requires large amounts of data.
c. market economies can instead rely on the price mechanism to organize production.
d. All of the above are correct.
An increase in price will decrease demand.
a. True
b. False
Which of the following is an example of detrimental externality?
a. A trailer’s entry onto an overcrowded road that delays the movement of other
vehicles.
b. Fall in demand for gasoline in the US softens the price of gasoline in the global
market.
c. Government investment in energy generation from non-conventional sources.
d. Society devotes huge quantity of its scarce resources for vital innovative activity.
The division of labor usually refers to splitting
a. the three coordination decisions among different sets of planners.
b. the parts of a complex task among different workers.
c. the production of consumption goods and capital goods among different workers.
d. political leaders into radical and conservative camps each year.
A perfectly competitive firm will always maximize profits by producing where
a. per-unit costs are lowest.
b. total costs and total revenue are equal.
c. P = MC.
d. P = AC.
The price for labor is the wage rate. What happens to the quantity of labor supplied if
wages increase?
a. It increases.
b. It decreases.
c. It does not change.
d. Uncertain-economic theory has no answer to this question.
The production possibilities frontier for a country is usually drawn
a. as a straight line, sloping downward.
b. as a straight line, sloping upward.
c. bowed outward from the origin.
d. bowed inward toward the origin.
e. as a dotted line when sloping downward and as a full line when sloping upward.
By providing free garbage removal, a community
a. discourages activities that produce detrimental externalities.
b. encourages citizens to recycle items rather than throw them out.
c. leads citizens to throw out more garbage than is socially optimal.
d. None of the above is correct.
Most prophecies of the imminent exhaustion of many natural resources have not come
true because
a. such resources are generally available in infinite quantities.
b. rising prices for resources have stimulated supply and encouraged innovation.
c. the demand for most natural resources has fallen as income levels have increased.
d. government price floors have prevented resource exhaustion.
A contour map illustrates a cause and effect relationship among three variables.
a. True
b. False
The invisible hand enforces the tendency toward
a. MR = MU.
b. MC = P = MU.
c. MC = MPP = P.
d. MRP = MPP = P.
Imposing fines on companies that contribute heavily to air and water pollution is an
attempt to bring marginal private costs in line with marginal social costs.
a. True
b. False
Business people often use “hunches” and intuition to make decisions regarding what to
produce.
a. True
b. False
If a good has ‘snob appeal,” consumers may purchases less when the price falls.
a. True
b. False
In a market economy, the decision regarding allocation of resources is made by
a. automatic forces of supply and demand.
b. authorities in Washington, D.C.
c. planners in state capitals.
d. committees from a variety of economic interest groups.
e. All of the above are correct.
If Argentina has a large amount of farmland and Great Britain has many factories,
a. the two nations have no reason to trade.
b. Argentina will be willing to trade but Great Britain will not.
c. Great Britain will be willing to trade but Argentina will not.
d. the two nations will probably engage in mutually advantageous trade.
In the case of the production of electronic calculators, introduced in the United States in
the 1960s,
a. a technological breakthrough reduced the input quantities needed to produce them.
b. quantity demanded increased significantly as prices fell.
c. production costs fell with advances in technology.
d. All of the above are correct.
The introduction of a subsidy in a perfectly competitive marketplace that is originally in
equilibrium will raise total surplus.
a. True
b. False
An upward spiral of protectionism is a possible outcome of strategic trade policy.
a. True
b. False
On balance, markets do some things very well, and some things poorly.
a. True
b. False
The concept of government as redistributor is
a. approved by many, but questioned by many as well.
b. generally rejected as against “the American way.”
c. largely approved by a vast majority of Americans.
d. unnecessary in the United States because income disparities are small.
e. a conservative idea that many liberals reject.
No tax can lead the economy to higher levels of efficiency.
a. True
b. False
Recycling in the United States in recent years
a. has decreased in spite of increased rates for common recycling materials.
b. has remained unchanged, and increased raes for recycling may help.
c. has increased with increased rates for recycling mterials.
d. has increased with no help from increased fees for recycling materials.