Refer to Exhibit 3-5. In the market shown, if equilibrium was originally at point Z and
the new equilibrium is now at point V, this change may have been caused by
Exhibit 3-5
a. a decrease in consumers’ income (assuming that this is an inferior good) and a
simultaneous decline in technology in the production of this good.
b. an increase in consumers’ income (assuming that this is an inferior good) and a
simultaneous improvement in technology in the production of this good.
c. a decrease in consumers’ income (assuming that this is an inferior good) and no
change in supply.
d. an increase in consumers’ income (assuming that this is an inferior good) and no
change in supply.
Refer to Exhibit 22-13.What dollar amounts go in blanks (E) and (F), respectively?
Exhibit 22-13 Quantity of Output (Q) Total Fixed Cost (TFC) Average Fixed Cost
(AFC) Total Variable Cost
a. $200; $30
b. $40; $80
c. $200; $15
d. $3; $40
e. There is not enough information to answer this question.
The higher the cost of talking on a cell phone in public (in terms of being perceived by
others as rude) the less likely one is to do so.
a. True
b. False
If total utility of a good is high while the price of the good is low, it is likely that the
good
a. is plentiful.
b. is inferior.
c. is rare.
d. has high marginal utility.
Some economic studies have shown that mandatory seat belt laws do not lead to a
reduction in traffic fatalities.
a. True
b. False
Refer to Exhibit 23-7. What is the profit at 60 units of output?
Exhibit 23-7
a. $360
b. $90
c. $75
d. $60
In relative terms, poverty will always exist
a. regardless of how high the average absolute standard of living is.
b. given an unequal income distribution.
c. unless there is absolute income equality.
d. b and c
e. all of the above
Increased productivity in the agricultural sector is not always a benefit to farmers
because it is accompanied by
a. lower prices and if demand is inelastic, lower prices mean lower revenues.
b. higher prices and if demand is elastic, higher prices mean lower revenues.
c. lower prices and if demand is elastic, lower prices mean lower revenues.
d. higher prices and if demand is inelastic, higher prices mean lower revenues.
The study of an economy’s price level is explicitly a part of
a. macroeconomics.
b. microeconomics.
c. positive economics.
d. normative economics.
A consequence of a negative externality is that social costs __________ private costs,
and the efficient level of output __________.
a. equal; does not require any type of government intervention
b. are less than; requires the government to create a subsidy
c. are greater than; requires the government to impose a tax
d. are greater than; requires the government to create a subsidy
e. are less than; requires the government to impose a tax
As the interest rate falls,
a. the quantity demanded of loanable funds rises.
b. the quantity demanded of loanable funds falls.
c. the demand for loanable funds rises.
d. the supply of loanable funds falls.
If the perfectly competitive firm is producing an output level at which price equals
marginal cost, it is
a. earning profits.
b. taking losses.
c. earning normal profit.
d. There is not enough information to answer the question.
Rent seeking is more likely to occur in a family when the parents make their inheritance
plans clear by telling the children ahead of time that their estate will be divided equally
among the children (and that under no circumstances will the parents change their
minds) than when there is more uncertainty with regards to the parents’ inheritance
plans.
a. True
b. False
According to public choice theory, low voter turnouts may be the result of cost-benefit
calculations on the part of voters.
a. True
b. False
The right-to-work law specifies that
a. everyone in the country has a right to work at a decent wage.
b. every worker has a right to a two-week paid vacation.
c. everyone in the country has a right to work, although it does not specify at any
particular wage.
d. every worker has a right to require his employer to give him 30 days notice before
terminating employment.
e. it is illegal to require union membership for purposes of employment.
It has often been remarked that Democratic candidates are more liberal in the
Democratic primaries and Republican candidates are more conservative in the
Republican primaries than either is in the general election. The explanation for this is
most probably that
a. they are facing politically different opponents in the two elections.
b. the median voter preferences are more to the left (right) in the primaries than in the
general election.
c. more people vote in the general election than in the primaries.
d. candidates are not as likely to locate the position of the median voter in the (earlier)
primaries as they are in the (later) general election.
At a price for which quantity demanded exceeds quantity supplied, a __________ is
experienced, which pushes the price __________ toward its equilibrium value.
a. surplus; downward
b. surplus; upward
c. shortage; downward
d. shortage; upward
The exchange rate is $1 = 110 yen. If the price of a Japanese good is 37,500 yen, what
is the approximate price of the good in dollars?
a. $29.45
b. $4,125,000
c. $294.49
d. $340.91
e. none of the above
Suppose people are in consumer equilibrium buying 10,000 units of good X at a given
price. Then the price of good X falls to $0. It follows that people will buy more of good
X and that the marginal utility of the last additional unit they buy will be __________
the __________ of the 10,000th unit.
a. lower than; marginal utility
b. greater than; average utility
c. the same as; marginal utility
d. greater than; marginal utility
e. none of the above