When ________ substitutes exist, a monopolist has ________ power to raise price.
A) more; more
B) more; no
C) fewer; no
D) fewer; more
Speedy Flowers competes in the monopolistically competitive flower delivery industry
in a city. The firm raises its prices by 5% while all other florists keep their prices the
same. Which of the following is most likely to occur? Speedy Flowers will
A) be unable to sell any flowers because it was the only firm to raise price.
B) lose some of its customers.
C) increase its profits.
D) serve an increased number of customers.
Figure 6
Refer to Figure 2.6. Which of the following is most likely to shift the production
possibility frontier from ppf1 to ppf2?
A) a change in consumer tastes
B) the purchase of stocks on the New York Stock Exchange
C) moving resources from capital to consumer goods
D) an increase in the general educational level of the population
Which of the following is true?
A) Countries that are members of GATT are all considered free-trade zones.
B) The European Union can be considered a free-trade zone.
C) All English speaking nations are free-trade zones.
D) The industrialized OECD nations are all free-trade zones.
The Wax Works sells 400 candles at a price of $10 per candle. The Wax Works’ total
costs for producing 400 candles are $500. The Wax Works’ economic profit is
A) -$100.
B) $3,500.
C) $4,500.
D) indeterminate from this information.
Firms have ________ over their ________ costs in the short run.
A) control; fixed
B) no control; fixed
C) control; overhead
D) no control; variable
Figure 5.2
Refer to Figure 5.2. If the price of a hamburger is increased from $6 to $8, the price
elasticity of demand equals ________. Use the midpoint formula.
A) -0.24
B) -1.0
C) -1.4
D) -2.0
In the year 1976, the United States switched from running a trade ________ to running
a trade ________.
A) balance; surplus
B) deficit; surplus
C) surplus; deficit
D) deficit; balance
________ is the cost of using resources to produce another unit of a good.
A) Marginal revenue
B) Marginal cost
C) Price
D) Total cost
Relating to the Economics in Practice on page 338: Crying babies on an airplane
impose a negative externality on those sitting around them. Which of the following
policies would help to internalize the externality?
A) Provide discount tickets for babies and young children.
B) Evenly disperse the babies and young children throughout the plane so as to
minimize the impact of their crying on any one passenger.
C) Impose a minimum flying age of 5 years old.
D) Charge a higher ticket fee for babies and young children (under 5 years of age) than
for all other passengers.
If marginal cost is below average total cost, average total cost will
A) be maximized.
B) be decreasing.
C) be increasing.
D) remain constant.
In 2012 about 13% of personal income in the United States came from
A) wages and salaries.
B) property income.
C) transfer payments.
D) wage supplements.
The marginal private cost to a firm of producing the 10th unit of output is $100. The
marginal damage cost of the 10th unit of output is $40. The marginal social cost of the
tenth unit of output is
A) $40.
B) $60.
C) $140.
D) indeterminate from the given information.