The existence of a third party in the medical care market separates the buying of
medical care from the paying for medical care.
a. True
b. False
Exhibit 28-7
As the firm increases employment from 30 to 40 workers, its total labor cost
a. decreases by $190.
b. increases by $160.
c. increases by $60.
d. increases by $100.
A decrease in the expected rate of inflation will shift the demand for loanable funds
curve __________, while shifting the supply of loanable funds curve __________.
a. leftward; leftward
b. leftward; rightward
c. rightward; rightward
d. rightward; leftward
A monopsonist firm faces an upward sloping supply of labor curve and its marginal
factor cost curve lies below its labor supply curve.
a. True
b. False
Suppose that the government imposes a price ceiling at a price of $13._________ units
would be exchanged at the equilibrium price and ____________ units would be
exchanged with the price ceiling in effect.
a. 150; 220
b. 150; 150
c. 110; 180
d. 150; 90
Which of the following statements isfalse?
a. A perfectly competitive firm is resource-allocative efficient, but a monopolistic
competitive firm is not.
b. An oligopolistic firm is not resource-allocative efficient.
c. An oligopolist produces that quantity of output at which price is equal to marginal
cost.
d. A monopolistic competitive firm produces a quantity of output at which price is
greater than marginal cost.
The condition in an economy that makes a “rationing device” a necessity is:
a. the economy is organized around free markets.
b. the economy is centrally planned by the government.
c. scarcity exists.
d. there are fewer types of goods than there are people in the economy.
Equilibrium and disequilibrium
a. are real world states.
b. are mental constructs used by economists.
c. foreshadow what is about to happen in a market.
d. a and b
e. a, b and c
The term “derived demand” refers to the idea that a change in the
a. demand for one good, say, tennis racquets, will affect the demand for related goods,
say, tennis balls.
b. demand for a good is affected by the supply of that good.
c. demand for a good will affect the demand for the factors used to produce that good.
d. supply of a factor will affect the demand for that factor.
In order for a price ceiling to have an impact on a market it must be set above the
equilibrium price.
a. True
b. False
Exhibit 4-8
Suppose that wheat producerslobby the government for a price floor and receive
one.This price floor is set at PF.What has happened to the consumers’ surplus as a result
of the imposition of the price floor?
a. consumers’ surplus has gone down by (area 2 + 4)
b. consumers’ surplus has risen by (area 2 + 4)
c. consumers’ surplus has gone down by (area 3 – area 5)
d. consumers’ surplus has risen by (area 2 + 3)
Suppose 100 bushels of X are produced at a target price of $7 per bushel, but
consumers will only buy 100 bushels at $3 a bushel. What is the total deficiency
payment to farmers?
a. $400
b. $600
c. $300
d. $100
Situation 22-4
Joe is the owner-operator of Joe’s Haircuts Unlimited. Last year he earned $200,000 in
total revenues and paid $125,000 to his employees and suppliers. During the course of
the year, he received three offers to work for other barbers, with the highest offer being
$50,000 per year.
What are Joe’s explicit costs?
a. $125,000
b. $175,000
c. $35,000
d. $200,000
e. $50,000
By definition, monopolists sell a product for which there are absolutely no substitutes.
a. True
b. False
The need to make choices is most closely related to the economic concept of
a. opportunity cost.
b. efficiency.
c. inefficiency.
d. utility.
e. disutility.
Under a tradable pollution permits system (cap and trade), government _____________
the amount of pollution, ___________________ what the price to pollute will be.
a. knows; and polluters immediately know
b. doesn’t know; and polluters don’t immediately know
c. knows; but polluters don’t immediately know
d. doesn’t know; but polluters immediately know