The observed change in the reserves of copper, lead, and zinc between 1960 and 1990
was most likely caused by
a. low prices discouraging exploration for new reserves.
b. a slowdown in demand growth.
c. high prices that stimulated exploration.
d. the discovery of substitutes.
To the corporation, bonds are more risky than stocks because
a. interest rates fluctuate.
b. bond interest is a fixed cost.
c. investors prefer stocks to bonds.
d. speculators manipulate bonds more than stocks.
The number of firms in a perfectly competitive industry is not fixed in the long run.
a. True
b. False
Perfectly competitive markets are not the most efficient type.
a. True
b. False
Rising prices for a natural resource stimulate
a. the development of complements for the resource.
b. the development of substitutes for the resource.
c. the development of externalities from the resource.
d. All of the above are correct.
As of 2013, annual imports to the U.S. were approximately ____ and annual exports
from the U.S. were approximately ____.
a. $0.6 trillion; $1.5 trillion
b. $2.2 trillion; $0.7 trillion
c. $2.7 trillion; $2.3 trillion
d. $1.5 trillion; $2.0 trillion
e. $2.0 trillion; $2.0 trillion
An article in a recent economics periodical asks the question: “Is low inflation worth
it?” By “it,” the article probably means
a. the loss of comparative advantage.
b. enduring externalities.
c. unemployment.
d. repealing the law of supply and demand.
e. the opportunity cost of higher interest rates.
The law of increasing relative costs, depicted by the concavity of the production
opportunities frontier, is most closely related to the
a. downward slope of the demand curve.
b. upward slope of the demand curve.
c. downward slope of the supply curve.
d. upward slope of the supply curve.
Supply can shift due to changes in price.
a. True
b. False
Firms in a perfectly contestable market will earn higher profits than firms in markets
that are not perfectly contestable.
a. True
b. False
A theory is an untested assertion of alleged fact.
a. True
b. False
A dominant strategy is one that gives a player in a game a bigger payoff than the other
player receives.
a. True
b. False
Selling at a price that is only slightly above the firm’s cost of production is called
predatory pricing.
a. True
b. False
In international trade, one country’s gain is another country’s loss.
a. True
b. False
All of the following observations concerning the elasticity formula are true except
a. the changes with which it deals is measured as a percentage change.
b. each of the percentage changes is calculated in terms of the average values.
c. the calculation considers both positive and negative signs.
d. each percentage change is taken as an “absolute value.”
Marginal, average, and total figures are unrelated.
a. True
b. False
Those who view education as a sorting mechanism emphasize that employers value
a. the skills that people who attend college have already acquired before they enter
college.
b. the docility and deference to authority learned in the classroom.
c. the analytic ability of the highly educated worker.
d. the work habits picked up in the home and school.
Many of the new pollutants to which the world has been subjected are
a. less visible.
b. less malodorous.
c. far more dangerous.
d. All of the above are correct.
Government is unnecessary in a free enterprise economy such as the United States.
a. True
b. False
In assessing the difference between monopoly performance and that of perfect
competition, the best approach is to
a. measure the output of the monopolist and the output of the perfectly competitive
firm.
b. measure the output of the monopolist and the output of the perfectly competitive
industry.
c. measure the output purchased by consumers from the monopolist and from the
perfectly competitive firm.
d. calculate the marginal cost of the monopolist and of the perfectly competitive firm.
If marginal cost is less than average cost, average cost must fall when more units are
produced.
a. True
b. False
Table 7-6
Table 7-6 shows a baker’s daily production relationship for bread. Diminishing returns
to labor begin when the baker goes from
a. one hour of labor to two hours of labor.
b. three hours of labor to four hours of labor.
c. six hours of labor to seven hours of labor.
d. seven hours of labor to eight hours of labor.
A principle that economists emphasize is that the ____ of decision makers are always
limited.
a. ideas
b. goals
c. resources
d. opportunities
e. offices
Once a firm has selected a price for its product, quantity is decided by consumers and
their demand curves.
a. True
b. False