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Externalities are social costs that affect parties external to a particular economic
transaction.
a. True
b. False
Figure 4-16
Assume that Figure 4-16 shows the supply of soda. An increase in the price of syrup
used in the production of soda will shift supply from
a. S1 to S2.
b. S2 to S1.
c. S2 to S3.
d. S1 to S3.
The difference between the earnings of construction workers who work on bridges and
skyscrapers and those who work on highways is probably due to
a. differences in education requirements.
b. ability (mental) differences.
c. a compensating differential.
d. luck.
Refer to Table 4-1. At $4, what is the shortage?
a. 0
b. 1,500
c. 3,000
d. 4,500
e. 6,000
In a free market for depletable natural resources, any shortage where there is an excess
of quantity demanded over quantity supplied must be
a. expected as a matter of course.
b. due to a price floor.
c. the result of discovery of new deposits of the resources.
d. artificial.
If price goes up 20 percent and quantity demanded declines by 10 percent, total revenue
will rise.
a. True
b. False
A common misperception about consumer demand is that
a. demand depends on many other variables.
b. price is a major determinant of quantity.
c. it is a fixed amount.
d. quantity cannot be determined in advance.
e. All of the above are correct.
Figure 7-2
In Figure 7-2, average cost at 500 units of output equals
a. 4,000.
b. 200.
c. 8.
d. 6.
Strategic trade policy relies on threats of protectionism to protect free trade.
a. True
b. False
Some medical authorities announced in the late 1980s that an acne medicine named
Retin-A also had previously unknown wrinkle-reducing properties. An economist
would expect to find that, after this announcement, the price of Retin-A ____ and the
quantity sold ____.
a. rose; fell
b. rose; rose
c. fell; fell
d. fell; rose
The marginal cost of serving an additional user of a public good is zero.
a. True
b. False
Union leaders who focus on increasing the size of their union will generally accept a
wage just above the competitive level.
a. True
b. False
The national poverty rate in the United States reached a low in the
a. early 1960s.
b. early 1970s.
c. late 1970s.
d. early 1980s.
Most economists support the idea of peak-load pricing on the grounds of
a. fairness in income distribution.
b. efficiency in input usage.
c. equality of opportunity.
d. efficiency in output allocation.
The existence of differences between the average earnings of men and women
a. proves the existence of economic discrimination.
b. may be partially due to factors other than economic discrimination.
c. proves that men on average invest more in their human capital than women do.
d. indicates that men are on average smarter than women.
When we say most Americans are in the 15-percent tax bracket, we mean federal taxes
are about 15 percent of the income of most Americans.
a. True
b. False
It is urgent that the U.S. improve in certain economic arenas.
a. True
b. False
Price discrimination occurs only in monopolies.
a. True
b. False
Opportunity cost is the value of the next best alternative that is given up.
a. True
b. False
A government policy that prevents the price of a good or service from falling below a
specified level is called a price floor and usually results in
a. a shortage.
b. a surplus.
c. a black market.
d. fewer producers of the good or service.
e. a decrease in demand.
In 2013, plowback accounted for approximately ____ of corporate financing while new
stock sales accounted for approximately ____.
a. $2 trillion; $384 billion
b. $65 billion; $1 trillion
c. $1 trillion; negative $65 billion
d. negative $65 billion; $1 trillion
