________ reflects household willingness to pay, and ________ reflects the opportunity
cost of the resources needed to produce a good.
A) Marginal utility; price
B) Price; marginal cost
C) Price; average total cost
D) Demand; price
Suppose that an international incident occurs that creates uncertainty in the market. It is
likely that this incident will ________ the level of private investment spending.
A) decrease
B) increase
C) neutralize
D) not affect
The branch of economics that examines the functioning of individual industries and the
behavior of individual decision-making units is
A) positive economics.
B) normative economics.
C) macroeconomics.
D) microeconomics.
A firm that shuts down when ________ are less than ________ minimizes its losses.
A) variable costs; fixed costs
B) fixed costs; variable costs
C) revenues; variable costs
D) operating profits; sunk costs
When supply is ________ or the product is ________, then price is demand determined.
A) fixed; unique
B) variable; standardized
C) fixed; standardized
D) variable; unique
Table 9.1
Refer to Table 9.1. If the market price is $34, then in the short run the firm will
A) operate and expand.
B) operate but not expand.
C) shut down, but not go out of business.
D) go out of business.
Figure 3.1
Refer to Figure 3.1. Which of the following would be most likely to cause the demand
for Dr. Pepper to shift from D0 to D1?
A) a decrease in income, assuming that Dr. Pepper is a normal good
B) an increase in the price of 7-UP, assuming 7-UP is a substitute for Dr. Pepper
C) a decrease in the price of Dr. Pepper
D) a reduction in the price of sugar used to make Dr. Pepper
At a price of $40, a store can sell 35 toasters a day. At a price of $37 the store can sell
38 toasters a day. Since total revenue ________ by the price decrease, demand must be
________.
A) is increased; elastic
B) is increased; inelastic
C) is increased; unit elastic
D) is decreased; elastic
When a demand curve is a downward sloping straight line, the slope of the demand
curve is ________ the marginal revenue curve.
A) always equal to the slope of
B) the same as the slope of
C) half as steep as
D) twice as steep as
Firms may react to a payroll tax by
A) substituting labor for capital.
B) reducing their output.
C) shifting to more capital intensive techniques.
D) Both B and C are correct.
Figure 1.4
Refer to Figure 1.4. Which of the curves or lines has a slope that is first positive and
then negative?
A) A
B) B
C) C
D) D
The Specialty Cake Store, a monopolistically competitive firm, is producing 200
decorated cakes per day and selling each cake for $12. At that production level ATC is
$20, AVC is $15, AFC is $5, and both MR and MC are $8. This firm should
A) continue to produce 200 cakes, as price is greater than AFC.
B) increase output to the point where price equals marginal cost.
C) decrease output to the point where marginal cost equals average cost.
D) produce zero cakes and just pay fixed costs.
The price of hard drives used in the manufacturing of laptop computers has risen. This
will lead to ________ laptop computers.
A) an increase in the supply of
B) a decrease in the supply of
C) an increase in the quantity supplied of
D) a decrease in the quantity supplied of
Figure 6.14
Refer to Figure 6.14. Assume Megan has two products available, pizza and hamburgers.
Megan must be compensated with more hamburgers as she gives up more pizzas. The
curve in Panel ________ represents her indifference curve.
A) A
B) B
C) C
D) D
Because the players are prevented from cooperating, each player in a prisoners’
dilemma game has a dominant strategy that leaves ________ than if they could
cooperate.
A) them both worse off
B) them both better off
C) the first player to confess better off and the other player worse off
D) the first player to confess worse off and the other player better off
Suppose that a town has two major bottling plants. One of these bottling plants is
unionized and the union has just negotiated a 7% wage increase each year for the next
two years. Which of the following is most likely to occur?
A) The price of labor in the unionized bottling plant will increase, but there will be no
changes in the price of labor in the nonunionized bottling plant.
B) The price of labor will change in both the unionized and nonunionized bottling
plants, but no other input markets will be affected.
C) The price of labor will change in both the unionized and nonunionized bottling
plants. Employment of labor and other inputs is also likely to change in both bottling
plants.
D) The only effect will be that the price charged by the unionized bottling plant will
increase to cover the additional costs of labor.
At the Larson Bakery the marginal products of the first, second, and third sales clerks
are 20, 17, and 11 customers served, respectively. The total product (number of
customers served) of the first two sales clerks is
A)
B)
C)
D)
The Coase theorem will apply ________ the number of people involved is ________.
A) only if; large
B) even if; large
C) only if; small
D) no matter if; large or small
Figure 8.4
Refer to Figure 8.4. Micro Oven minimizes average total costs at ________ microwave
ovens.
A) two
B) between three and five
C) six
D) greater than six
Figure 6.3
Refer to Figure 6.3. Molly’s budget constraint is AB. Molly can purchase
A) none of the points along AD.
B) none of the points along AC.
C) all of the points along AC.
D) none of the above.
Which of the following is a resource as the term is used by economists?
A) buildings
B) labor
C) land
D) all of the above
If a firm shuts down in the short run, then
A) its economic profits are zero.
B) its losses are equal to its fixed costs.
C) its fixed costs are greater than its variable costs.
D) it must be the case that its revenues from operating were less than its total costs.
Figure 6.3
Refer to Figure 6.3. Molly’s budget constraint is AC. It would swivel to AB if the price
of
A) DVDs increased.
B) DVDs decreased.
C) CDs increased.
D) CDs decreased.
Households acquire property through ________.
A) inheritance only
B) savings and inheritance
C) savings only
D) supplying labor in the labor market
Figure 2.1
Refer to Figure 2.1. The shape of Macroland’s production possibility frontier shows
A) increasing opportunity costs.
B) constant opportunity costs.
C) decreasing opportunity costs.
D) random opportunity costs.
The Sweet Success Bakery sells 500 cakes at a price of $10 per cake. Its total economic
costs for producing 500 cakes are $500. The Sweet Success Bakery’s economic profits
are
A) $100.
B) $3,500.
C) $4,500.
D) indeterminate from this information.
In 2006, the literacy rate of people over the age of 15 was 60.8% for people in countries
classified as
A) low-income.
B) lower middle-income.
C) upper middle-income.
D) high-income.
John Rawls developed
A) the idea of utilitarian justice.
B) the theory of distributional justice.
C) the labor theory of value.
D) the theory of comparative advantage.
In perfect competition, the marginal revenue curve
A) and the demand curve facing the firm are identical.
B) is always above the demand curve facing the firm.
C) is always below the demand curve facing the firm.
D) intersects the demand curve when marginal revenue is minimized.
A monopolist ________ when its marginal revenue is zero.
A) maximizes profit
B) maximizes total revenue
C) is efficient
D) shuts down