As the price paid to a resource increases,
a. the supply of that resource will increase in the resource market
b. the supply of that resource will decrease in the resource market
c. resources will shift from other resource markets to this one
d. resources will shift from this resource market to others
e. resource usage will be unaffected
Exhibit 12-10
In Exhibit 12-10, which of the following is true between points c and d?
a. The income effect dominates the substitution effect.
b. The substitution effect dominates the income effect.
c. The income effect exactly offsets the substitution effect.
d. No labor is supplied.
e. There is no substitution effect.
Which of the following is the best example of a natural monopoly?
a. gold mining in the Colorado Rocky Mountains
b. filmmaking in Hollywood
c. electrical service to homes in Seattle
d. production of film by Kodak
e. production of computers by IBM
If an insurance company hires a resource in a perfectly competitive resource market and
it wants to maximize profit, it will hire where marginal revenue product equals
a. the price of the resource, which equals its marginal resource cost
b. the price of the resource, which is greater than its marginal resource cost
c. the price of the resource, which is less than its marginal resource cost
d. marginal product
e. the price of the product
Exhibit 10-16
In Exhibit 10-16, the monopolistic competitor’s profit-maximizing price is
a. $10
b. $15
c. $20
d. $25
e. $30
Exhibit 8-10
In Exhibit 8-10, total revenue at the profit-maximizing output level equals
a. $8,000
b. $3,600
c. $12,000
d. $4,800
e. $18,000
Exhibit 1-6
Along the curve in Exhibit 1-6,
a. if P = $6, then Q = 8
b. if Q = 10, then P = $4
c. the slope is equal to -1
d. Q increases as P increases
e. there is a positive relationship between Q and P
Exhibit 4-1
Consider Exhibit 4-1. Which of the following best represents a decrease in quantity
demanded?
a. the movement from A to D
b. the movement from C to E
c. the movement from A to B
d. the movement from F to E
e. the movement from B to D
Roxanne and Eileen live in an apartment building with a laundry room in the basement.
Roxanne does her laundry at home, spending $4 and 5 hours per week. Eileen sends her
laundry out, spending $20 and 15 minutes per week transporting the laundry. On the
basis of the information given, which one of the following must be true?
a. Roxanne earns more labor income than Eileen.
b. Eileen earns more total income than Roxanne.
c. Roxanne enjoys doing laundry; Eileen does not.
d. Eileen has less laundry than Roxanne.
e. Eileen and Roxanne attach different utilities to time spent doing laundry.
Exhibit 13-7
In Exhibit 13-7, if the interest rate is 5 percent, investment will equal approximately
a. $1,500,000
b. $700,000
c. $1,000,000
d. $950,000
e. $1,250,000
A surplus of shoes will cause
a. a decrease in the supply of shoes
b. a decrease in the demand for shoes
c. both a decrease in the supply of shoes and an increase in the demand for shoes
d. a decrease in the price of shoes, through a shift of either the supply curve or the
demand curve
e. a decrease in the price of shoes
If there are no trade restrictions, a country will import a particular good if
a. domestic quantity supplied equals domestic quantity demanded at the world price
b. there is excess domestic quantity demanded at the world price
c. world quantity supplied is less than world quantity demanded
d. world quantity supplied is greater than world quantity demanded
e. domestic quantity supplied is greater than domestic quantity demanded at the world
price
Income assistance programs
a. require that the recipient work and contribute to the program
b. are designed to replace lost income
c. include unemployment compensation and Medicare
d. are funded exclusively by the federal government
e. include both cash and in-kind transfer programs
Exhibit 10-12
At the profit-maximizing (or loss-minimizing) output and price, the firm in Exhibit
10-12 would
a. be earning zero economic profit (i.e., breaking even)
b. be earning an economic profit
c. be earning an economic loss
d. be better off to shut down since total revenue does not cover fixed costs
e. have to expand to stay in business in the long run
Which of the following has not contributed to the high rate of tropical deforestation?
a. a lack of property rights to forests and trees
b. a shortage of farmland
c. banks’ forgiveness of the debts of less-developed economies
d. high demand for lumber
e. high demand for beef and other ranch products
Exhibit 19-2
In Exhibit 19-2, the opportunity cost of 1 t-shirt in Costa Rica is
a. 0
b. 1/40 ton of rice
c. 3/4 ton of rice
d. 1 ton of rice
e. 2 tons of rice
Which of the following will cause the demand curve for a normal good to shift to the
right?
a. a decrease in income
b. an increase in the price of a complementary good
c. a decrease in the price of the good
d. an increase in the price of a substitute good
e. an expectation of a future price decline
Under the rule of reason, a U.S. firm with an 80 percent market share
a. will always be found in violation of the Sherman Antitrust Act
b. will never be found in violation of the Sherman Antitrust Act
c. may be found in violation of the Sherman Antitrust Act, depending on the firm’s
conduct
d. will always be found in violation of the Sherman Antitrust Act if there is only one
other firm in the industry
e. will be found in violation of the Sherman Antitrust Act only if there is only one other
firm in the industry
Exhibit 5-27
Consider Exhibit 5-27. Which graph depicts a unitary elastic demand?
a. Graph A
b. Graph B
c. Graph C
d. Graph D
e. none of the graphs depicts a unitary elastic demand
Exhibit 16-3
At the price floor shown in Exhibit 16-3, which of the following represents the quantity
demanded?
a. i
b. j
c. k
d. l
e. m
To maximize worldwide gains from trade, the country that should produce a good is the
country that
a. has the lowest opportunity cost of producing it
b. can produce that good using the fewest resources
c. will produce that good using the most expensive resources
d. has the most desire for that good
e. has produced that good in the past
In which market structure(s) might firms produce an undifferentiated product?
a. perfect competition only
b. perfect competition and oligopoly
c. monopolistic competition only
d. perfect competition and monopolistic competition
e. monopoly only
A production possibilities frontier can shift outward for all of the following reasons
except one. Which is the exception?
a. a decrease in the unemployment rate
b. an improvement in labor skills
c. an improvement in technology
d. a larger work force
e. a larger capital stock
Household production is more likely to occur when
a. it requires few specialized resources
b. technology makes it more costly than market production
c. tax avoidance is undesirable
d. less control over the final product is desirable
e. the opportunity cost of household production is high
Exhibit 2-5
In Exhibit 2-5, what is the opportunity cost of moving from point c to point b?
a. 3 units of food
b. 22 units of education
c. 1 unit of food
d. 12 units of education
e. 62 units of education
Any supply curve that is a straight line passing through the graph’s origin is unit elastic.
a. True
b. False
A resource’s marginal product is
a. the revenue produced by one additional unit of that resource, other things constant
b. the total output produced by one unit of that resource, other things constant
c. the additional output produced by one additional unit of that resource, other things
constant
d. the total output divided by the number of units of that resource employed
e. the total output times the number of units of that resource employed
The basic purpose of economic models is to
a. construct simplifying assumptions about the real world
b. explain reality in all its complexity
c. collect empirical data to support the facts
d. construct situations where controlled experiments can be carried out
e. provide explanations for, and predictions of, economic events
Average revenue minus average total cost equals
a. total economic profit
b. total accounting profit
c. a normal profit
d. economic profit per unit of output
e. marginal cost
By paying a higher-than-market wage, a firm can avoid the problem of
a. reputation as hostage
b. moral hazard
c. the winner’s curse
d. adverse selection
e. symmetrical information
Compared to the present value of a high school education, the present value of at least a
college education is
a. 100 times as great
b. nearly double
c. the same
d. about half
e. Present value cannot be used to analyze education
A good economic theory
a. has realistic assumptions
b. contains as much detail as possible
c. cannot be proven false
d. predicts well
e. can only be presented in mathematical terms