The marginal revenue product of an input is the marginal physical product times the
price per unit of output under perfect competition.
a. True
b. False
Taxing pollution will encourage firms to reduce pollutants dumped in the atmosphere or
in streams.
a. True
b. False
Corporations account for a ____ proportion of U.S. firms and a ____ proportion of sales
by U.S. firms.
a. small; small
b. small; large
c. large; small
d. large; large
The consumer maximizes his total utility (measured in money terms) when, at his
chosen quantity of every good he buys, marginal utility
a. equals zero.
b. divided by price equals zero.
c. equals price.
d. equals total utility.
Inheritance taxes tend to increase income inequality in the long run.
a. True
b. False
When economies of scale are present,
a. costs per unit decline as output expands.
b. the government feels responsible for breaking up the firm.
c. firms always make handsome profits.
d. costs fall as the size of the product is increased.
In 2013, corporate profits in the U.S. economy were about 14 percent of national
income.
a. True
b. False
Cities and towns mainly rely for revenue on
a. property taxes.
b. income taxes.
c. excise taxes.
d. payroll taxes.
A market is not a pure monopoly if firms
a. can enter it freely.
b. sell unique products.
c. can exit the market freely.
d. require government permission to sell in the market.
Table 7-2
Table 7-2 contains information on widget production. The marginal physical product of
the sixth pound of plastic is ____.
a. (19/7) − (17/6)
b. 1/3
c. 2
d. 3
The shortened work week coupled with rising hourly wages in the U.S. economy shows
that
a. the income effect has been dominant.
b. the substitution effect does not exist at all.
c. the U.S. worker is no longer productive.
d. workers have become increasingly lazy.
The “law” of diminishing returns is also referred to as
a. the “law” of diminishing returns to scale.
b. the “law” of variable input proportions.
c. diminishing average physical product.
d. the “law” of decreasing cost.
If price rises, what happens to quantity supplied for a product?
a. It increases.
b. It decreases.
c. It does not change.
d. Quantity supplied is constant, but supply increases.
Economic efficiency and income equality are often conflicting goals in an economy.
a. True
b. False
A college education is a(n)
a. investment in human capital.
b. form of innovation.
c. public good.
d. mediated settlement.
Rational production decisions require an understanding of
a. trade-offs.
b. opportunity costs.
c. scarcity of resources.
d. All of the above are correct.
Marginal land is on the borderline of being used in production.
a. True
b. False
Consumer’s surplus is a measure of how much
a. less than his income a consumer spends on goods.
b. more utility a consumer receives from his purchases than he has to pay for them.
c. a consumer’s marginal utility differs from his total utility.
d. a change in price induces a consumer to substitute other goods.
Regarding taxation and efficiency, which of the following statements is not true?
a. Many inefficiencies arise from taxation.
b. Many burdens arise from taxation.
c. Some taxes lead to greater efficiency.
d. All of the above statements are true.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required
these to be traded in established, regular markets:
a. equities
b. derivatives
c. credit default swaps
d. both b and c.