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Marginal profit is the slope of the total profit curve.
a. True
b. False
The demand curve for a monopolistic competitor has a negative slope.
a. True
b. False
Since it is a centrally planned economy, China does not face opportunity costs when
economic decisions are made.
a. True
b. False
The rule of equating marginal benefit with marginal cost is proper for economics, but it
does not describe the way in which people make non-economic decisions.
a. True
b. False
Helga owns Viking, Inc., started with her $100,000 inheritance. Helga's accountant
informs her that her firm earned a profit of $100,000 last year, and that if she chooses to
invest the money she can expect a 10% return. If Helga did not run Viking, she would
not work. What were Helga's economic profits last year?
a. Zero
b. $100,000
c. $90,000
d. $95,000
The steepness of a curve is partially determined by the units of measurement.
a. True
b. False
Derivatives are securities that derive their values from the values of underlying
investments.
a. True
b. False
In a competitive labor market
a. wages would be determined by supply and demand.
b. the demand curve for labor is derived like the demand curve for any other input.
c. the demand curve for labor is the downward-sloping portion of the MRP curve.
d. All of the above answers are correct.
Economists assume that business firms attempt to maximize their profits.
a. True
b. False
In the long run, a monopolistically competitive firm produces at minimum average cost.
a. True
b. False
The optimal level of resource use comes when
a. MRP exceeds input price.
b. MRP is less than input price.
c. MRP equals input price.
d. use of the resource exhausts the producer's funds.
Which of the following would be most likely to cause an outward shift of the demand
curve for electricity?
a. a decrease in the price of electricity
b. an increase in the price of air conditioners
c. an increase in the price of heating oil
d. a decrease in the price of natural gas
In the short run, a firm has fixed costs but never any variable costs.
a. True
b. False
An example of peak pricing is charging
a. more for long-distance phone calls in the daytime.
b. less for electricity at night.
c. more for public transportation in rush hours.
d. All of the above are true.
Taxes on sales of liquor, tobacco, and tires are examples of
a. direct taxes.
b. excise taxes.
c. progressive taxation.
d. loopholes.
Figure 22-3
In Figure 22-3, the solid lines represent the respective production possibilities curves
for the United States and Mexico. Which graphs show the correct consumption
possibilities curves (dashed lines) after an agreement is reached to trade 1 unit of wheat
for 1 unit of petroleum?
a. (1) and (4)
b. (1) and (2)
c. (2) and (3)
d. (3) and (4)
In contrast to the need for legal enforcement under a system of direct controls, a taxes
approach
a. is subject to greater uncertainty of payment of fees.
b. makes taxes automatic and certain.
c. speeds the prosecution and conviction process.
d. does not actually reduce pollution, merely the cost of monitoring it.
How are the slope of a production possibilities frontier and the opportunity cost of the
goods related?
a. The slope is a graphical representation of the cost of expanding production of both
goods.
b. The slope is a graphical measure of the growth rate of the economy.
c. The slope is a graphical representation of the cost of decreasing unemployment.
d. The slope is a graphical representation of the rate of trade-off between the goods.
e. The slope is a graphical representation of the cost of economic growth in the
economy.
Under perfect competition, the market mechanism, without any government regulation,
is capable of
a. allocating resources efficiently.
b. solving equity problems.
c. making the average cost of labor equal to the average cost of all commodities.
d. making more income available to the poor.
With regard to the characteristics of production indifference curves, which of the
following statements is/are NOT true?
a. Higher curves correspond to larger outputs.
b. An indifference curve will generally have a negative slope.
c. An indifference curve is typically assumed to curve inward toward the origin near its
middle.
d. All of the above are true for production indifference curves, but not for isoquants.
e. b and c
A line that rises at a 45 degree angle has a slope of
a. 0,45
b. 1
c. 45
d. 1/45
Consumers should purchase a good up to the point where MU = P.
a. True
b. False
Which of the following observations is true?
a. TFC remains the same irrespective of units of output produced.
b. TVC remains the same irrespective of units of output produced.
c. TVC falls as the unit of output increases.
d. AFC increases as output increases further and further.
When new farmers enter the wheat industry, the equilibrium price of wheat
a. always falls.
b. falls only if existing firms gang up on the entrant.
c. falls only if existing firms are earning no economic profit.
d. falls only if the new firm is more efficient than existing firms.
If two persons trade, one must gain at the expense of the other.
a. True
b. False
