Exhibit 2-6
Which graph depicts a technological breakthrough in the production of good Y only?
a. (1)
b. (2)
c. (3)
d. (4)
e. none of the above
If income elasticity of demand for food is 1.55 it follows that
a. a 10 percent rise in the price of food lowers the quantity demanded of food by 15.5
percent.
b. if income rises by 10 percent, consumption of food rises by 15.5 percent.
c. if income rises by 10 percent, consumption of food falls by 15.5 percent.
d. a 1 percent rise in the price of food decreases the quantity demanded of food by 1.55
percent.
e. none of the above
Social media, such as the online social networking portal Meetup, have increased the
likelihood of people forming social tribes by reducing the transaction costs associated
with forming such groups.
a. True
b. False
Which of the following goods is least likely to be rivalrous in consumption?
a. a car
b. a pair of shoes
c. a book
d. a computer
e. a sunset
Which of the following is not a method to internalize or adjust for externalities?
a. persuasion
b. assignment of property rights
c. unilateral transfers
d. voluntary agreements
It has been suggested by some economists that rent seeking activity often occurs within
families, particularly when an inheritance is involved.
a. True
b. False
If a price-discriminating monopoly charges a lower price to individuals in city X, it is
likely that the firm
a. believes that the demand of individuals in city X is relatively inelastic.
b. believes that the demand of individuals in city X is relatively elastic.
c. wants to shift the demand of individuals in city X.
d. cares about the well-being of the individuals in city X.
An option is a contract that always
a. gives the owner the right, but not the obligation, to buy shares of a stock at a
specified price within the time limits of the contract.
b. gives the owner the right, but not the obligation, to sell shares of a stock at a
specified price within the time limits of the contract.
c. states that the seller agrees to provide a particular good to the buyer on a specified
future date at an agreed-upon price.
d. gives the owner the right, but not the obligation, to buy or sell shares of a stock at a
specified price within the time limits of the contract.
The Lorenz curve and the line of perfect income equality will be one and the same in an
economy if 20% of all households receive 20% of all income.
a. True
b. False
Exhibit 28-7
For each quantity of labor hired (after the first worker), marginal factor cost (MFC) will
a. be less than column (2).
b. exceed column (2).
c. be less than column (3).
d. exceed column (3).
e. b and d
If a monopolist is a factor price taker, at the profit-maximizing factor quantity
a. VMP > MRP.
b. MRP = MFC.
c. MFC = factor price.
d. b and c
e. all of the above
Exhibit 27-2
What factor quantity should the firm purchase?
a. Q1
b. Q2
c. Q1 + Q2
d. Q3
e. Q3 – Q1
One of the roles of the monitor in a firm is to reduce shirking.
a. True
b. False
When a negative externality exists, the market is said to underproduce the good
connected with the negative externality.
a. True
b. False