Figure 1-2
Identify the slope of the two curves A and B in Figure 1-2.
a. A – zero, B – one.
b. A – one, B – zero.
c. A – one, B – different at different points.
d. A – different at different points, B – zero.
The tangent at point A on a curve has a positive slope. Therefore, the curve has a
a. positive slope at all points.
b. positive slope at point A.
c. negative slope at all points.
d. negative slope at point A.
If the interest rate on borrowing falls,
a. the demand curve for loans will shift out.
b. the discounted value now of money to be received in the future will fall.
c. some previously unprofitable prospective investments will become profitable.
d. All of the above are correct.
Speculation serves the market in which of the following ways?
a. It helps smooth out price fluctuations.
b. It raises the price of certain goods.
c. It manufactures a demand for goods that would not ordinarily be found.
d. It allows risk takers the ability to make large amounts of economic rent.
The firm whose short-run cost curves are given in Exhibit 10-1 has a long-run fixed
cost of
a. $0
b. $2
c. $3
d. $4
Which of the following is true?
a. A stockholder owns part of the corporation.
b. A stockholder has loaned money to the corporation.
c. A stockholder is owed money by the corporation.
d. A stockholder must be consulted on all major decisions.
Which of the following is correct?
a. AC = AFC/Q
b. AC = AFC + AVC
c. AC = MFC + MVC
d. TFC + TMC = MFC + MVC
A stock market
a. guarantees that a seller of a stock will get the price at which the stock was purchased.
b. is used only to sell new stock issues from corporations and not to transfer existing
stocks.
c. is used only to sell stocks, not to buy stocks.
d. gives an individual a chance to invest in stocks without committing funds for long
periods of time.
A proportional tax is one in which the fraction of income paid in taxes rises as a
person’s income increases.
a. True
b. False
Assume that the government provides a cash transfer to each family regardless of their
market earnings. Given this transfer, which of the following hypotheses about labor
supply is correct?
a. Labor supply will increase because the income effect outweighs the substitution
effect.
b. Labor supply will increase because leisure is an inferior good.
c. The income effect will reduce labor supply; there is no substitution effect.
d. Labor supply will be constant since wages are unaffected.
A monopsony is a market situation in which there is only one buyer.
a. True
b. False
The statement “Resources employed in producing X are better suited to making Y” is
another way of saying resources
a. are specialized.
b. are scarce.
c. are used inefficiently.
d. are unproductive.
e. have no opportunity cost.
Figure 3-6
In Figure 3-6 assume this economy is currently operating at point D. What is the
opportunity cost of moving to B?
a. about 200 bushels of wheat
b. 200 bushels of soybeans
c. Infinite, B cannot be produced at any cost.
d. 0
The local symphony recently raised its price for tickets to their summer concerts in the
park. At the end of the summer season, the symphony was surprised to see that total
revenue had actually decreased. The reason was that the elasticity of demand for tickets
was
a. unit elastic.
b. inelastic.
c. elastic.
d. Not enough information is given.
Free markets produce allocatively efficient outcomes and have no flaws.
a. True
b. False
Figure 7-17
Which of the following statements must be true when a firm makes choices that put it at
point A in Figure 7-17?
a. The firm is minimizing its cost of producing 100 units of output.
b. The ratio of the marginal physical products of labor and of land equals the ratio of the
prices of labor and of land.
c. The firm first decided how much output to produce and then decided how to produce
it.
d. All of the above are true.
Which central coordination task has claimed the most attention of central planners?
a. Output selection
b. Production planning
c. Distribution
d. Rationing
Both tariffs and quotas will restrict supplies coming into the country from abroad.
a. True
b. False
One effect of having access to cheap foreign goods can be to raise workers’ real wages.
a. True
b. False
International trade can be correctly considered as an example of a zero-sum game.
a. True
b. False
The simplest economic definition of discrimination is
a. prejudice.
b. unequal pay for equal work.
c. a dislike by one group of associating with another group.
d. unequal pay for unequal work.
Under the theory of perfect competition, firms and buyers know the availability and
prices associated with all products in the market.
a. True
b. False