A labor union is a group of
a. employees who join together to improve their working conditions
b. firms that join together to hire workers
c. firms that work together to negotiate better prices in the market
d. farmers who work together to receive better prices for their agricultural products
e. workers and firm owners who join together to improve working conditions
Anything that prevents new firms from competing on an equal basis with existing firms
in an industry is called a barrier to entry.
a. True
b. False
Which of the following resources is necessary in order to combine efficiently the other
resources to produce goods and services?
a. natural resources
b. capital
c. labor
d. entrepreneurial ability
e. financial institutions
An employer-employee relationship is
a. a nonmarket relation
b. a principal-agent relation
c. a comparable worth relation
d. a substitution relation
e. a winner’s curse
The practice of charging different prices to different consumers of the same product is
called
a. monopolistic pricing
b. unit pricing
c. price discrimination
d. elasticity pricing
e. marginal cost pricing
In terms of total sales, the dominant form of business firm in the U.S. economy is the
a. corporation
b. sole proprietorship
c. partnership
d. nonprofit organization
e. limited partnership corporation
Substitutes are pairs of goods that have a positive cross-price elasticity of demand.
a. True
b. False
As a consumer buys more of a good, total utility eventually becomes negative.
a. True
b. False
Exhibit 6-24
Which point in Exhibit 6-24 yields the greatest amount of total satisfaction?
a. point a
b. point b
c. point c
d. point d
e. point e
Which of the following can be thought of as the consumer’s consumption possibilities
frontier?
a. the consumer’s marginal utility
b. the consumer’s total utility
c. the consumer’s budget line
d. the consumer’s indifference curve
e. the consumer’s demand curve
Under the gold standard, each country had little control over its own monetary policies.
a. True
b. False
When price decreases, consumer surplus
a. increases
b. remains constant
c. decreases
d. becomes negative
e. may increase or decrease
Which of the following is a fixed cost of preparing meals?
a. dishwasher detergent
b. chicken
c. salad
d. a microwave oven
e. electricity
Which of the following groups is a craft union?
a. auto workers
b. steel workers
c. writers
d. government employees
e. construction workers
The long run is a period of time
a. during which at least one resource is fixed
b. during which all resources are variable
c. during which all resources are fixed
d. less than one year
e. greater than one year
The division of labor
a. allows more people to be employed
b. allows tasks to be performed more efficiently
c. makes people happier on the job
d. means that less management is required
e. means that less equipment will be used
The distribution of income in a market economy is primarily determined by differences
in
a. effort and sacrifice and intelligence with the most important factor being intelligence
since human capital is a resource
b. the level of needs of the average or median income individual when selling her labor
c. resource ownership and the value that resources buyers place on the resources that
are sold in the marketplace
d. the level of government intervention in the economy as it relates to job openings
e. the amount of time that an individual spends working and the intensity of this effort
A monopolistic competitor’s demand curve is
a. perfectly elastic
b. less elastic than a monopolist’s or oligopolist’s but more elastic than a perfect
competitor’s
c. as elastic as an oligopolist’s
d. more elastic than a monopolist’s or oligopolist’s but less elastic than a perfect
competitor’s
e. perfectly inelastic
The government of your state wants Gigantic Software Corp., which is a natural
monopoly, to stay in business yet still produce where price equals marginal cost. The
government might choose to
a. set a price ceiling 10 percent lower than its previous level
b. impose a tax on the company for each dollar of sales
c. establish regulations that raise the company’s cost of doing business
d. provide a subsidy to the company to cover the loss and ensure a normal profit
e. replace the company’s top management
A profit-maximizing monopolist produces an output level that is allocatively inefficient
because
a. price is greater than marginal cost
b. price is less than marginal cost
c. marginal revenue is greater than marginal cost
d. marginal revenue is less than marginal cost
e. consumers wish to purchase all that is produced
The Clean Air Act of 1970 has
a. been ineffective in reducing lead emissions in automobiles
b. actually caused an increase in auto emissions
c. been fairly successful in reducing auto emissions, especially lead
d. been unsuccessful in reducing auto emissions, especially sulfur oxides
e. been ineffective in reducing carbon monoxide emissions from autos
If demand is price inelastic, a tax will largely be paid by consumers.
a. True
b. False
If the minimum efficient scale in aluminum production exceeds the quantity of
aluminum any individual aluminum siding producer buys,
a. siding producers should integrate backward into aluminum production
b. there will be a monopoly in aluminum production
c. siding producers should not integrate backward into aluminum production
d. siding producers will be charged prices above what the cost of producing aluminum
themselves would be
e. siding companies will switch to vinyl
Labor productivity depends on the
a. the effectiveness of government
b. the availability of technology
c. the proportion of the labor force that is unionized
d. the size of the economy
e. All of the answers are correct
Suppose there is only one producer of frames, a necessary component in manufacturing
computer monitors. Because of the threat of entry, this firm charges its customers a
price equal to average cost. One reason that a producer of computer monitors may make
rather than buy frames is
a. the frame supplier may be unreliable
b. the total cost of the components of frames is the same as the price of frames
purchased in the market
c. the frame manufacturer has no incentive to make high-quality frames
d. managers at the computer monitor firm place a high value on their time
e. the frame manufacturer will soon go out of business because firms do not produce
goods for the market that can be made in-house
The largest securities exchange in the United States is the
a. American Stock Exchange
b. Chicago Board of Trade
c. Securities and Exchange Commission
d. New York Stock Exchange
e. Federal Trade Commission
The breakdown of the Bretton Woods system occurred because
a. the world economy was basically unhealthy
b. the collapse of world gold production undermined the operation of the system
c. the dollar was undervalued
d. the dollar was overvalued
e. the ten richest countries in the world refused to cooperate any longer
When the government increases taxes to provide traditional public goods, such as
national security, there tends to be
a. widespread benefits and costs
b. widespread costs and concentrated benefits
c. concentrated benefits and costs
d. widespread benefits and concentrated costs
e. widespread costs and either widespread or concentrated benefits
For a firm that is a price taker in the product market, all of the following are true
exceptone. Which one is the exception?
a. Marginal revenue product can be found by multiplying price by marginal product.
b. Marginal revenue product is the change in total revenue that results from increasing
the use of a resource by one unit, other things constant.
c. Marginal revenue product is constant at the prevailing price.
d. Increased output by the firm has no impact on the price of the product.
e. The marginal revenue product curve declines because of diminishing marginal
returns.
When consuming a good creates positive externalities,
a. private demand increases
b. private demand decreases
c. the private demand curve overstates the marginal social benefit of the good
d. the private demand curve understates the marginal social benefit of the good
e. the equilibrium quantity increases without government intervention
Collusion occurs when
a. a firm chooses a level of output to maximize its own profit
b. firms get together to maximize joint profits
c. firms refuse to follow their price leaders
d. firms petition their U.S. senators for favors
e. two firms’ price and output decisions come into conflict
Exhibit 19-2
In Exhibit 19-2, trade between the United States and Costa Rica will benefit Costa Rica
but not the United States.
a. True
b. False
Robert Tadmur exports processed turkey and has an upward sloping supply curve. The
supply curve indicates that Robert faces a marginal cost of $0.25 or less per pound for
supplying the first few pounds. But every producer in this market sells turkey at the
market clearing price of $0.50 per pound. The difference between the actual amount
that Robert receives and what he would accept to supply the market clearing quantity is
called
a. consumer surplus
b. importer surplus
c. producer surplus
d. trade deficit
e. average variable cost
A fixed exchange rate is enforced by
a. national governments, who establish appropriate trade barriers for each country with
whom they trade
b. national governments, who manipulate gold reserves appropriately
c. central banks, who buy and sell appropriate currencies
d. the International Monetary Fund, which offers loans to appropriate countries
e. local governments, who manipulate capital reserves appropriately
The value of price elasticity of demand for a good with no close substitutes
a. will tend to be greater than -1 (e.g., -0.03)
b. will tend to be less than -1 (e.g., -4)
c. will tend to be equal to -1
d. will tend to be equal to 0
e. cannot be determined without more information