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The payroll tax receipts
a. are used to reduce the national debt.
b. are invested in private business for future payments.
c. pay off current recipients of Social Security payments.
d. go directly into a trust fund for investment in private businesses.
Trade occurs only when a country has an absolute advantage and not just a comparative
advantage over another country.
a. True
b. False
The theory of economic rent can be used to explain high incomes received by movie
stars and athletes.
a. True
b. False
Among the impediments to the international mobility of capital are
a. restrictions on foreign ownership.
b. fear of nationalization or political instability.
c. fluctuations in exchange rates.
d. All of the above are correct.
A recession is a period of time in which the total output of the economy falls.
a. True
b. False
Figure 11-7
For the firm in Figure 11-7, an unregulated monopolist, profit-maximizing output is
below the long-run competitive level by how much?
a. 100
b. 75
c. 50
d. 25
The antitrust laws are enforced by government agencies such as the Federal Trade
Commission and the Department of Justice.
a. True
b. False
One of the reasons that pollution problems are as large as they are is that
a. markets let individuals and firms deplete valuable resources without charging money
for doing so.
b. markets are incapable of incorporating valuable resources such as air and pure water.
c. governments use resources without paying for them the way that individuals and
firms must.
d. markets are not an efficient means to address scarcity.
It pays the firm to produce only if total variable costs exceed total revenue.
a. True
b. False
If two individuals have identical schooling, their incomes will be equal.
a. True
b. False
Firms that engage in price discrimination
a. will earn less profit than those that do not discriminate.
b. will earn more profit than those that do not discriminate.
c. are biased against certain buyers in the market.
d. will always produce less output than firms that do not discriminate.
Most firms have very little flexibility in their choice of input proportions.
a. True
b. False
In the long run, profit-maximizing monopolists facing a downward-sloping demand
curve
a. may earn profits greater than their opportunity costs of capital.
b. do not produce every possible unit of output for which marginal utility is greater than
or equal to marginal cost.
c. may or may not have lower costs than perfectly competitive firms in the same
industry.
d. All of the above are correct.
Price leadership is a form of
a. tacit collusion.
b. explicit collusion.
c. monopolistic competition.
d. a cartel policing mechanism.
Profit can be maximized only where marginal revenue equals
a. average cost.
b. total cost.
c. marginal cost.
d. average cost.
The laissez-faire free-market system is
a. an ideal of perfection.
b. one that leaves no room for improvement.
c. unmatched by any other system for allocative efficiency.
d. All of the above are correct.
Which of the following goods will have the most elastic demand at any time?
a. coffee
b. gasoline
c. restaurant meals
d. insulin
In a market economy, incomes would be very equal if there was no discrimination.
a. True
b. False
