When the marginal revenue product of an input is less than its price, the
a. producer should expand the use of that input.
b. price of the input will automatically rise in a free market.
c. producer should reduce the use of that input.
d. marginal physical product of that input must be below its average physical product.
All players have dominant strategies.
a. True
b. False
Elasticity of demand is likely to be higher for less-expensive goods, other things being
equal.
a. True
b. False
The money cost of a particular good will approximate its opportunity cost if
a. there are serious distortions in the market.
b. the market functions well.
c. there is much specialization in the market.
d. nations are exploiting the law of comparative advantage.
Double taxation of corporate earnings
a. tends to restrict the activities of corporate firms.
b. causes stockholders to earn a lower return than they would on other securities of
comparable risk.
c. results in more investment in research and development.
d. All of the above are correct.
A firm that is seeking to minimize costs to produce a certain output:
a. has a fixed budget
b. has a large budget
c. wants to use the smallest possible budget possible
d. wants to use the same budget as that used last year
The substitution effect of a wage increase
a. probably leads most workers to want to work more.
b. certainly leads all workers to want to work more.
c. probably leads most workers to want to work less.
d. certainly leads most firms to want to employ more workers.
The United States typically experiences a large surplus of milk annually. This is caused
by
a. a price ceiling in the market.
b. not enough demand for milk.
c. a price floor in the market.
d. overproduction of milk by the cows.
A bottle of wine costs $8 and a quiche costs $5. At Robert’s present levels of
consumption, he spends all his income and receives marginal utility of $10 from the last
bottle of wine and marginal utility of $4 from the last quiche. To maximize his total
utility, Robert should
a. buy less wine and more quiche.
b. buy more wine and less quiche.
c. spend all of his money on wine.
d. change his spending pattern until he buys 8/5ths as much wine as quiche.
A theory is a deliberate simplification or abstraction of factual relationships.
a. True
b. False
Figure 11-2
In Figure 11-2, at what quantity would the monopolist maximize profit?
a. A
b. B
c. C
d. D
Figure 22-4
In Figure 22-4, the opportunity cost of a unit of wheat in terms of cotton is
a. 1 for the United States; 5 for Egypt.
b. 20 for the United States; 2 for Egypt.
c. 1 for the United States; 2 for Egypt.
d. 20 for the United States; 10 for Egypt.
A union wants to increase its members’ wages without reducing employment. Which of
the following strategies might achieve that goal?
a. setting a high minimum wage rate for its members
b. increasing the number of members in the union
c. pushing employers not to allow featherbedding of workers
d. training its members to work more productively
Cartels usually succumb to divisive forces caused by
a. limited information.
b. members cheating by giving secret discounts.
c. entry by new rivals seeking profits.
d. insufficient profits compared to independent operations.
Briefly and concisely define the following terms and explain their relevance to the
study of economics.
a. industrial and craft unions
b. closed shop
c. union shop
d. bilateral monopoly
e. collective-bargaining agreement