One effect of market intervention is resource misallocation.
a. True
b. False
A progressive income tax system can be defined as one in which
a. the government uses taxes paid by the wealthy to fund programs for the poor.
b. an individual pays more dollars in taxes when his income rises.
c. the marginal tax rate rises over time.
d. the average tax rate is higher for individuals with higher incomes.
Any restriction of international trade that is accomplished by a quota can also be
accomplished by a tariff.
a. True
b. False
Labor unions in the United States
a. tend to be more outspoken politically than those in Europe.
b. have experienced steady declines in membership since the 1950s.
c. tend to be more powerful in deregulated industries (for example, airlines) than in
regulated industries.
d. universally support socialist principles.
An employer who refuses to hire women because of the chance they may quit for
childbearing purposes is engaging in statistical discrimination.
a. True
b. False
A demand curve with an elasticity of 1.0 is a unit-elastic demand curve.
a. True
b. False
The “universal service” argument often requires that some products be sold at a loss
while other products be sold at profits higher than normal.
a. True
b. False
The most heavily traded American stocks are traded on the
a. New York Stock Exchange.
b. American Stock Exchange.
c. regional stock markets.
d. “third market.”
The demand curve for a monopolistic competitor is likely to be flatter than that of a
monopolist.
a. True
b. False
If a voluntary trade takes place,
a. both parties will benefit from the transaction.
b. only one party will benefit from the transaction.
c. neither party will benefit from the transaction.
d. both parties will benefit only if the government regulates the transaction.
If the output of a firm is increased by one unit, the revenue addition is called
a. total revenue.
b. average revenue.
c. marginal revenue.
d. economic profit.
A firm now produces its sales-maximizing level of output. If the firm increased its
output by one unit, its marginal revenue would become
a. negative.
b. smaller but still positive.
c. larger but still negative.
d. larger but still positive.
An unexpected discovery of a new mineral deposit will cause the
a. demand curve to shift outward.
b. demand curve to shift inward.
c. supply curve to shift outward.
d. supply curve to shift inward.
The addition to total revenue resulting from one more unit of output is called marginal
revenue.
a. True
b. False
The principle of marginal productivity
a. is the same as the principle of marginal cost.
b. helps explain the demand for each input.
c. differs from industry to industry.
d. allows the world’s food to be grown in a flower pot.
AC is lower in the long run than in the short run because
a. prices often fall, allowing savings on purchases.
b. inputs can be combined more efficiently in the long run.
c. over time the prices of all inputs tend to decrease.
d. AFC falls with output over all ranges of output.
The concept of vertical equity is that
a. income should be taxed instead of property.
b. property should be taxed instead of income.
c. there should be little movement up or down the social scale.
d. persons who are unequal should be treated unequally.
As the demand for a product falls, it is not uncommon for the industry to become a
monopoly. This is most likely due to
a. an increase in the number of barriers.
b. legal restrictions being imposed.
c. the surviving firm operating on the declining part of its average cost curve.
d. patent protection causing high prices.
Multinational businesses produce and sell goods around the world.
a. True
b. False
The United States has chosen to balance the competing claims of efficiency versus
equality by emphasizing greater efficiency over greater equality.
a. True
b. False
A demand curve is described as perfectly inelastic if
a. the same quantity is purchased regardless of price.
b. the same price is charged regardless of quantity sold.
c. neither price nor quantity demanded ever change.
d. only quantity demanded can change.
Life expectancy in the U.S.:
a. is the highest in the world
b. is the lowest in the world
c. ranks about 100th in the world
d. ranks about 40th in the world
The money for Social Security payments to current retirees comes from
a. payroll taxes collected from those retirees when they were working.
b. income taxes collected from the current working population.
c. payroll taxes collected from the current working population.
d. only the interest earned now by the government on the invested Social Security trust
fund.