Two goods are considered substitutes only if a(n)
a. decrease in the demand for one leads to a decrease in the supply of the other
b. increase in the demand for one leads to a decrease in the supply of the other
c. increase in the price of one leads to an increase in the demand for the other
d. decrease in the price of one leads to an increase in the demand for the other
e. decrease in the supply of one leads producers to switch to production of the other
Exhibit 8-5
Consider Exhibit 8-5. Assume the firm is perfectly competitive and the market price is
$15. To maximize profit or minimize loss, the firm will
a. shut down
b. produce 7 units
c. produce 3 units
d. produce 4 units
e. produce 5 units
If the price elasticity of supply in the kiwi fruit industry equals 1, supply is
a. perfectly elastic
b. relatively elastic
c. unit elastic
d. relatively inelastic
e. perfectly inelastic
Because of the accounting techniques used, the balance of payments shows that debits
equal credits only if exports equal imports.
a. True
b. False
Union membership rates in the U.S. are
a. highest among government employees
b. highest among industrial sector employees
c. highest among service sector employees
d. increasing at a faster rate than the labor force
e. highest among women
Studies show that the supply curve for oranges has shifted. Which of the following
could not explain the shift of the supply curve?
a. Weather conditions have changed.
b. The price of fertilizer has changed.
c. The wage paid to orange pickers has changed.
d. The price of oranges has changed.
e. The demand for grapefruit has changed.
Exhibit 11-10
In Exhibit 11-10, how low would the wage rate have to fall in order for the firm to hire
five workers?
a. $100
b. $74
c. $54
d. $34
e. $24
Exhibit 9-15
Why might the true deadweight loss from a nondiscriminating monopolist be less than
the loss indicated in Exhibit 9-15?
a. The monopolist might have diseconomies of scale
b. The monopolist might charge lower prices to discourage competition
c. The monopolist might engage in rent seeking
d. The monopolist might advertise more to maintain its position
e. The monopolist may face diminishing marginal returns
The first federal antitrust law enacted in the United States was:
a. The Clayton Act
b. Thr Sherman Antitrust Act
c. The Robinson Patman Act
d. The Federal Trade Commission Act
e. The Herfindahl-Hirschman Act
Even if something has a price of zero, every good or service has a cost. Which of the
following statements best describes this idea?
a. Que Sera, Sera.
b. He who laughs last laughs best.
c. The early bird catches the worm.
d. A penny saved is a penny earned.
e. There is no such thing as a free lunch.
For a firm in a perfectly competitive product market, the marginal resource cost curve is
horizontal if the resource market is also competitive.
a. True
b. False
A craft union is a union of workers in
a. the same firm
b. the same industry
c. the same skilled profession
d. different skilled professions
e. different trades
Exhibit 15-2
In Exhibit 15-2, the consumer surplus that results from an unregulated monopoly, is
shown by area
a. abc
b. adf
c. cef
d. dfeg
e. bcfd
A decrease in the price of peanut butter will cause a leftward shift of the supply curve of
peanut butter.
a. True
b. False
Exhibit 19-5
In Exhibit 19-5, with a tariff of $0.50 per unit and a world price of $1.00,
a. 25 units will be exported
b. 25 units will be imported
c. 50 units will be exported
d. 50 units will be imported
e. 10 units will be exported
Most economists assume that the goal of elected officials is to promote the public
interest.
a. True
b. False
Which of the following would not shift the production possibilities frontier?
a. an increase in worker training
b. a war that destroyed many buildings
c. a technological improvement that improved fuel efficiency in cars
d. a decrease in the size of the labor force
e. a change to a more inefficient production process
Which of the following is not true of isoquants?
a. They slope down and to the right.
b. They are convex to the origin.
c. Their slope equals the marginal rate of technical substitution.
d. Output rises as you move along a specific isoquant.
e. Isoquants closer to the origin represent lower output levels.
Marginal product is defined as
a. the increase in revenue that occurs when an additional unit of a resource is added
b. the increase in output that occurs when all resources are increased by the same
proportion
c. the increase in output that occurs when an additional unit of a resource is added,
holding all other resources constant
d. the amount of additional resources needed to increase output by one unit when all
resources are increased by the same amount
e. the amount of additional money needed to increase output by one unit when all
resources are held constant
Exhibit 7-22
In Exhibit 7-22, which input combination shows the minimum cost of producing output
Q1?
a. A
b. B
c. C
d. either B or C
e. cannot tell from information presented
Two graphs that represent alternative ways of portraying costs in the long run, given
resources and technology, are
a. the expansion path and the total fixed cost curve
b. marginal cost and the long-run average cost curve
c. the expansion path and the long-run average cost curve
d. average variable cost and marginal cost
e. the expansion path and marginal product
If there is a great deal of violence and uncertainty in the country of Crazico, people will
be less willing to invest in their own future or in the future of Crazico.
a. True
b. False
When several resources are combined in the production of a good,
a. it is easy to determine the marginal products of the various resources
b. the marginal contribution of each input often cannot be observed
c. allocating revenue among the various resources is easy
d. there is more competition for each of the resources used
e. there is less competition for each of the resources used
If a tariff increases, everybody loses except the government imposing the tariff.
a. True
b. False
An example of traditional public-goods legislation is
a. price supports for dairy products
b. a system of justice
c. a tattoo removal program in San Luis Obispo, California
d. tort-reform
e. a labor union issue
Exhibit 8-17
For the perfectly competitive firm represented in Exhibit 8-17, the short-run supply
curve is
a. abcde
b. bcde
c. cde
d. de
e. abcd
Exhibit 7-14 Total Cost Curve
In Exhibit 7-14, at what point does the firm begin to experience increasing marginal
cost?
a. after the 1st unit of output
b. after the 3rd unit of output
c. after the 5th unit of output
d. after the 7th unit of output
e. cannot be determined from the total cost curve
It is sometimes claimed that garbage collectors are paid more than elementary school
teachers. If this is true, one reason might be
a. the difference in working conditions
b. that school teachers are usually women
c. that the supply of teachers is small
d. that the demand for teachers is small
e. that the market does not value teachers
All combinations of inputs along an isoquant line represent the same total output.
A monopolist maximizes profit at the quantity where the slope of its total revenue curve
equals the slope of its total cost curve.
a. True
b. False
Which of the following lists the three types of firms in the United States from smallest
to largest in terms of volume of sales?
a. partnerships, sole proprietorships, corporations
b. sole proprietorships, partnerships, corporations
c. sole proprietorships, corporations, partnerships
d. corporations, partnerships, sole proprietorships
e. partnerships, corporations, sole proprietorships
If consumption of education creates a positive externality, then in order to increase
efficiency relative to the outcome determined by private decisions,
a. more education must be produced
b. the same amount of education must be produced, and the price should be lower
c. less education must be produced, and the price should be higher
d. less education must be produced, and the price should be lower
e. less education must be produced at the same price
Suppose a market is in equilibrium and then a price ceiling is established below the
equilibrium price. Which of the following will happen?
a. quantity demanded will decrease
b. a surplus will develop
c. a shortage will develop
d. the quantity sold will rise
e. the market will remain in equilibrium
Average revenue, demand, and price are all depicted by the same curve for a monopoly.
a. True
b. False
Under a flexible exchange rate system, which one of the following would not directly
affect the exchange rate?
a. a change in income
b. the relative inflation rates in two countries
c. the salary of the president of the United States
d. a change in capital flows
e. a change in the level of exports or imports