The national defense argumenthas been used in the past to justify trade restrictions by
firms in the peanut industry and the pottery industry.
a. True
b. False
There are two universities, A and B, in a city. Tuition rises at University A and, as a
result, the demand for attending University B rises. It follows that educational services
at the two universities are
a. complements.
b. normal goods.
c. inferior goods.
d. substitutes.
e. none of the above
Making a decision at the margin is __________ an all-or-nothing decision.
a. consistent with
b. inconsistent with
c. the same as making
d. conditioned upon making
Special interest group K receives a 1/100th slice of the economic pie.Its net benefit from
either an economic growth policy or a transfer policy is $200,000.In order for group K
to be indifferent between the two policies, the economic growth policy would have to
make the size of the economic pie (Real GDP) grow by_________________.This type
of analysis is used to show that special interest groups tend to press government for
______________ instead of ________________.
a. $20,000,000; economic growth; transfers
b. $2,000,000; transfers; economic growth
c. $20,000,000; transfers; economic growth
d. $20,000,000; transfers; economic growth
e. none of the above
If total revenue rises as a result of a decrease in the price of a given good, it follows that
demand is
a. inelastic.
b. perfectly inelastic.
c. elastic.
d. unit elastic.
e. none of the above
Refer to Exhibit 3-16. Which of the graphs best represents the market for theater tickets
that are already sold out on the day of the performance?
Exhibit 3-16
a. (1)
b. (2)
c. (3)
d. (4)
Refer to Exhibit 22-4. Curve D is a(n) __________ cost curve.
Exhibit 22-4
a. marginal
b. average variable
c. average total
d. average fixed
Refer to Exhibit 23-10.Is the firm depicted here a perfectly competitive firm?
Exhibit 23-10
a. Yes, because marginal revenue is constant.
b. Yes, because total revenue increases as output increases.
c. No, because marginal cost is not constant.
d. No, because marginal cost falls for some levels of output and rises for other levels of
output.
A firm that earns zero accounting profit is earning a normal profit.
a. True
b. False
Which of the following statements uses the term ceteris paribus correctly?
a. In economics, there are numerous theories, ceteris paribus.
b. New York City is a major American city, ceteris paribus.
c. The price of pineapples is low in Hawaii, ceteris paribus.
d. The more ice cream you eat, the more weight you will gain, ceteris paribus.
e. none of the above
Which of the following statements is false?
a. The monopolist has the ability to control to some degree the price of the product it
sells.
b. The monopolist faces a downward-sloping demand curve.
c. The monopolist is a price taker.
d. The monopoly firm is the industry.
The cigarette industry is a good example of the oligopoly market structure.
a. True
b. False
Refer to Exhibit 5-1, which shows supply and demand for freeway space at both 8 a.m.
and 11 p.m. At P = $0, there is a ________ of freeway space at 8 a.m. and ________ at
11 p.m.
Exhibit 5-1
a. shortage; a surplus
b. surplus; a shortage
c. surplus; equilibrium
d. shortage; equilibrium
The __________ the opportunity cost of doing something, the __________ likely a
person will do that something.
a. lower; less
b. lower; more
c. higher; more
d. higher; less
e. b and d
Value marginal product (VMP) equals
a. P x MPP.
b. P/MPP.
c. P x MFC.
d. b and c
e. none of the above
Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive
firm, MR = MC at 233 units of output. At 233 units, ATC is $12, and AVC is $9. The
best policy for this firm is to __________ in the short run. Also, total fixed cost equals
__________ for this firm.
a. continue to produce; $3
b. shut down; $699
c. continue to produce; $699
d. shut down; $2,796
e. continue to produce; $2,796
Refer to Exhibit 3-13.Fill in blanks (A) and (B) respectively with the market quantity
demanded at each given price.
Exhibit 3-13
—————————–Quantity Demanded————————————-
Assume that Jose, Kaitlyn, Leah, and Maria are the only buyers in this market.
a. 96; 86
b. 24; 21.5
c. 75; 64
d. 82; 72
e. none of the above
If the government legalizes the purchase and sale of marijuana, the equilibrium quantity
would then _________ and the price would then ________ if the supply of marijuana
increased by _______ than the demand for marijuana increased.
a. fall; fall; more
b. fall; rise; more
c. rise; fall; more
d. rise; fall; less
e. fall; fall; less
In 2014, the federal government disbanded the practices of fixed direct payments and
countercyclical payments to farmers.
a. True
b. False
Which of the following is true about the relationship between price and quantity
supplied?
a. There is always a direct relationship between price and quantity supplied.
b. There is always an inverse relationship between price and quantity supplied.
c. There is usually a direct relationship between price and quantity supplied.
d. There is usually an inverse relationship between price and quantity supplied.
The fewer substitutes for a good,
a. the lower its income elasticity of demand.
b. the higher its income elasticity of demand.
c. the lower its price elasticity of demand.
d. the higher its price elasticity of demand.
If someone gives you a free ticket to the movies, then there is no opportunity cost
involved with going to the movies.
a. True
b. False
If income elasticity of demand for a good is negative, the good is a(n) __________
good.
a. normal
b. positive
c. complementary
d. substitute
e. inferior