The total physical product of an input is the same thing as its
a. total revenue product.
b. marginal physical product times output.
c. output.
d. total consumer’s surplus.
A natural monopoly is one that deliberately erects entry barriers.
a. True
b. False
The “law” of diminishing returns
a. is deduced from the basic biochemical relationship of agricultural theory.
b. was constructed as the basis of observation during experiments on the impact of
fertilizer on output in the 1930s.
c. is based on regular observations of input-output relationships over the last two
centuries.
d. is borrowed from physical laws related to conversion of matter and energy.
Figure 11-7
For the firm in Figure 11-7, an unregulated monopolist, output falls below the efficient
level in the short run by how much?
a. 50
b. 75
c. 35
d. 100
A monopolist’s total profit is shown by the difference between price and average cost
per unit times the number of units sold.
a. True
b. False
A.B. Denson Company had been employing 6 workers and 8 tons of raw materials,
using 2,000 square feet of plant space. The firm increased its work force to 12 workers
utilizing 16 tons of raw materials in a plant space increased to 4,000 square feet. Total
number of units of output increased from 78 to 160 What kind of returns to scale is the
firm experiencing? Defend your answer.
To determine whether a market is perfectly competitive, economists examine the
a. number of firms in the market.
b. similarities among the products of the different firms in the market.
c. ease of entry and exit by firms in the market.
d. All of the above are correct.
Part of the pollution problem is due to
a. the absence of markets for goods like clean air and clean water.
b. the lack of well-defined property rights to clean air and clean water.
c. the unreliability of voluntary programs to cut pollution.
d. All of the above are correct.
The reason that some corporations grow so big is:
a. double taxation
b. that they are a separate entity from their owners
c. that they have limited liability
d. none of these
The goal of all regulation is the creation of perfectly competitive markets.
a. True
b. False
A monopsony is a market situation in which there is only one seller.
a. True
b. False
Although it is possible to determine the present value of a payment to be received in
one year, it is not possible to determine the present value of a stream of payments over
several years.
a. True
b. False
The American Bar Association administers the bar examinations that prospective
lawyers must pass before being allowed to practice law. The exam system thus allows
the ABA to act like a
a. monopsony.
b. union that can restrict the supply of lawyers.
c. union that can increase the number of lawyers.
d. None of the above is correct.
Why does unemployment tend to change when the level of output changes?
a. Persons wish to buy things, and if output falls, people need to work less to earn the
income to buy the smaller output.
b. Labor is an input, and if output falls, employers need fewer workers to make it, so the
employment falls.
c. When output rises, persons are more interested in buying, and will work more to earn
the income to buy things.
d. Persons face the option of buying or working, so that when they do more of one, the
other necessarily falls.
e. When companies replace workers with machines, output rises, and people take time
off from work to buy before returning to employment.
In England the Thatcher government substituted a “poll tax” for the local property tax.
People took strong exception to the tax, which is basically a head or “lump sum” tax.
The principle of taxation such a tax violates is called
a. the benefits principle.
b. the excess burden principle.
c. the ability-to-pay principle.
d. the constitutional principle.
Nothing raises the standard of living more than a greater
a. abundance of goods.
b. effort of production.
c. population.
d. number of import tariffs.
e. All of the above are true.
Water quality in the United States has ____ in the past 25 years.
a. improved
b. worsened
c. remained unchanged
d. improved slightly before a recent deterioration
Microsoft has been accused of violating an antitrust law pertaining to bundling.
a. True
b. False