1) Technological advances have occurred throughout the history of agriculture,
resulting in higher productivity but lower incomes to farmers.
2) Among the principal exports of the United States are agricultural products.
3) Monopolistically competitive sellers produce efficiently because they obtain only
normal profits in the long run.
4) The U.S. Justice Department, the Federal Trade Commission, state attorneys general,
and injured private parties can independently file charges against firms under the
Sherman Act.
5) Production subsidies are a way of internalizing external costs among polluting firms.
6) The supply of tickets to a major sporting event held in an enclosed stadium, such as
the Super Bowl or a World Series game, is perfectly inelastic.
7) Unlike a monopoly, an oligopoly tends to achieve allocative efficiency due to the
rivalry among several firms.
8) A monopsonist faces an upsloping supply curve of labor, but it could face a
horizontal demand curve for its product in the output market.
9) Because in any period of time and in any region the quantity of pollutants that can be
absorbed by nature is fixed, the supply of “pollution rights” in a cap-and-trade system
will be perfectly elastic.
10) According to the circular flow model of the market system, firms get their ability to
pay for their costs of production from the revenues that they receive for their products.
11) TANF stands for Temporary Assistance for Needy Families.
12) Graphically, the consumer maximizes total utility where the budget line is tangent
to an indifference curve.
13) Which of the following statements describes how a price-change in a purely
competitive market would eliminate the surplus of an agricultural commodity?
A.As the price increases, the quantity demanded increases while the quantity supplied
decreases
B.As the price increases, the quantity demanded decreases while the quantity supplied
increases
C.As the price decreases, the quantity demanded increases while the quantity supplied
decreases
D.As the price decreases, the quantity demanded decreases while the quantity supplied
increases
14)
Assume a pure monopolist is charging price P and selling output Q as shown on the
diagram. On the basis of this information, we can say that:
A.if marginal costs were somehow zero, the firm would be maximizing its profits.
B.if marginal costs were positive, the firm would increase profits by reducing price and
selling more output.
C.the firm is producing where the price elasticity coefficient is less than one.
D.the firm is a “price taker.”
15) Which of the following distinguishes the short run from the long run in pure
competition?
A.Firms can enter and exit the market in the long run but not in the short run.
B.Firms attempt to maximize profits in the long run but not in the short run.
C.Firms use the MR = MC rule to maximize profits in the short run but not in the long
run.
D.The quantity of labor hired can vary in the long run but not in the short run.
16) The United States devotes about ______ percent of its gross domestic product to
health care.
A.5
B.8
C.15
D.18
17) A merger between McDonald’s and Burger King would be an example of a:
A.Conglomerate merger
B.Horizontal merger
C.Vertical merger
D.Parallel merger
18)
If the firm in the diagram lowers price from P1 to P2, it will:
A.lose P1P2ba in revenue from the price cut but increase revenue by Q1bcQ2 from the
increase in sales.
B.lose P1P2ca in revenue from the price cut but increase revenue by Q1acQ2 from the
increase in sales.
C.incur a decline in total revenue because it is operating on the elastic segment of the
demand curve.
D.incur an increase in total revenue because it is operating on the inelastic segment of
the demand curve.
19) What, according to economist Donald Boudreaux in the “Last Word” section of the
chapter, best explains why the market system is not a random, chaotic mess?
A.There is active cooperation among private property owners and government officials
to correct the excesses of a market economy
B.The roundabout methods of production allocate resources from consumers to
producers in an orderly fashion
C.Government planning limits the chaos, and the government regulates economic
activity to create stability in the market
D.Private property rights encourage mutual accommodation that leads to an
arrangement of resources that is productive
20) The marginal rate of substitution measures the:
A.magnitude of the substitution effect.
B.total utility received by a consumer when equilibrium is achieved.
C.extra utility that a consumer derives from successive units of a product.
D.consumer’s willingness to substitute one product for another so that total utility will
remain constant.
21) Which of the following is correct?
A.The federal government can delay any strike for 80 days.
B.About 3 percent of total work time is lost in the United States because of strikes.
C.Work time lost may overstate the cost of a strike if the work stoppage disrupts
production in related industries.
D.Work time lost may overstate the cost of a strike if nonstruck firms increase their
production.
22) In the U.S. Steel case of 1920, the courts held that:
A.the structure of an industry is more important than its behavior in determining
violations of the antitrust laws.
B.any firm that faces substantial import competition is exempt from the antitrust laws.
C.although U.S. Steel possessed monopoly power, it had not violated the Sherman Act
because it had not unreasonably used that power.
D.the fact that U.S. Steel possessed monopoly power was a violation of the Sherman
Act.
23)
Refer to the diagram. Curve B is a:
A.production possibilities curve indicating constant opportunity costs.
B.production possibilities curve indicating increasing opportunity costs.
C.demand curve indicating that the quantity of consumer goods demanded increases as
the price of capital falls.
D.technology frontier curve.
24) When high-school and college graduates apply for jobs in the labor markets,
A.Job applicants are the “buyers” while employers are the ‘sellers”.
B.Job applicants are the ‘sellers” while employers are the “buyers”.
C.Job applicants and employers are both ‘sellers”.
D.Job applicants and employers are both “buyers”.
25) If a technological advance expands output and requires a smaller investment in
capital goods, this technological advance:
A.is capital-using.
B.must involve nonfinancial investment.
C.is capital-saving.
D.must pertain to the infrastructure.
26) Was the Patient Protection and Affordable Care Act of 2010 a cost containment
program, a national insurance program, or some other type of program? Explain.
27) Use data in the table below to explain the economic effects of a price ceiling at $6,
at $5, and at $4.
28) Compare the problems in achieving growth in an advanced nation with those of a
developing nation. Do these problems differ in degree or in kind? Explain.
29) What are the arguments for and against limits on malpractice awards?
30)
31) What may be the complementary relationship, in terms of employment, between
illegal fruit pickers and domestic-born truck drivers?
32) What are the problems with government actions in DVCs?
33) Why would a low-wage nation oppose emigration?
34) In the first graph below, illustrate the cost curves and demand conditions for a
monopolistically competitive firm making short-run profits. In the second graph,
illustrate what those conditions are most likely to be in the long run. Explain the major
differences in the two graphs.