Suppose you are eating buffalo wings at a local happy hour. The total utils from doing
so after the fourth, fifth, sixth, and seventh wings are 30, 50, 65, 72, respectively. In this
situation we have __________ marginal utility, which is generally __________ in the
analysis of consumer choice.
a. increasing; assumed
b. increasing; not assumed
c. diminishing; assumed
d. diminishing; not assumed
The theory of monopoly assumes that the monopoly firm
a. faces a downward-sloping supply curve that is the same as its marginal revenue
curve.
b. faces a downward-sloping demand curve.
c. produces more than the perfectly competitive firm under identical demand and cost
conditions.
d. produces a product for which there are many close substitutes.
e. none of the above
Third-degree price discrimination is sometimes called discrimination among buyers.
a. True
b. False
If the price for loanable funds is less than the return on capital, then firms will
a. borrow in the loanable funds market and invest in capital goods, and as this happens,
the quantity of capital decreases and its return rises.
b. borrow in the loanable funds market and invest in capital goods, and as this happens,
the quantity of capital increases and its return falls.
c. not borrow in the loanable funds market, and over time the capital stock will decrease
and the return on capital will fall.
d. not borrow in the loanable funds market, and over time the capital stock will decrease
and the return on capital will rise.
For a given labor market, an increase in the MPP of labor will shift the demand curve
for labor rightward.
a. True
b. False
It seems quite possible that cigarette companies concealed information about the effects
of smoking on health, causing cigarette prices to be __________ and cigarette sales to
be __________ than would have been the case under symmetric information.
a. higher; higher
b. higher; lower
c. lower; higher
d. lower; lower
A change in price will lead to a change in __________ and to a change in __________,
while a change in government subsidies will lead to a change in __________ and a
change in the number of buyers will lead to a change in __________.
a. quantity demanded; quantity supplied; supply; demand
b. demand; quantity supplied; supply; quantity demanded
c. quantity demanded; supply; quantity supplied; demand
d. quantity supplied; quantity demanded; demand; supply
e. quantity demanded; demand; quantity supplied; supply
In collective bargaining, a labor union
a. discusses the job description of each member with the firm the member is employed
by.
b. bargains with management on behalf of all its members.
c. usually tries to get each of its members to join a training program that can increase
his or her productivity.
d. b and c
e. a, b, and c
Competition for votes between two political parties will cause those parties to
a. produce quite different policy proposals.
b. have very similar policy proposals.
c. find ways to clearly distinguish themselves in order to give voters a clear choice.
d. a and c
e. none of the above
Bill Brown commands $2 million a year as either a professional basketball player or a
professional baseball player. His next best alternative is a coaching job at a high school
that pays $60,000 a year. If Bill chooses to play professional basketball, then his
economic rent from working at that job rather than working as a professional baseball
player is
a. $0.
b. $60,000.
c. $1 million.
d. $1,930,000.
e. $2 million.
A person tends to be ______________ likely to lose her temper with a boss than with a
friend because the opportunity cost of losing her temper with her boss tends to be
_____________ than the opportunity cost of losing her temper with her friend.
a. less; higher
b. more; higher
c. less; lower
d. more; lower
If a demand curve is a straight downward sloping line, demand is
a. unit elastic.
b. elastic.
c. inelastic.
d. perfectly inelastic.
e. There is not enough information to answer the question.
Exhibit 34-8
Assume that the current price of sugar in the United States is $300 per ton (which
includes a $100 per ton tariff on sugar imports). The removal of the $100 per ton tariff
would increase consumers’ surplus by an amount equal to area
a. C.
b. C + G.
c. D + E + F.
d. C + D + E + F + G + H.
e. none of the above
Public choice theory assumes that those involved in the public sector are generally
motivated by
a. public spirit.
b. altruism.
c. the desire to achieve allocative efficiency.
d. the same factors involved in the private sector.
e. a and b
Exhibit 39-3
If P3 is a price support, the amount sold on private markets is
a. Q1.
b. Q2.
c. Q3.
d. Q2 – Q3.
e. Q1 – Q3.
According to economists, money is a resource.
a. True
b. False