Direct taxes are levied directly on people or corporations.
a. True
b. False
Taxes on polluting firms have
a. been tried, but not successfully.
b. been successful in Germany in reducing water pollution.
c. resulted in bankruptcy of the affected firms.
d. never been tried to see if they work.
A horizontal line has a slope of
a. one.
b. zero.
c. infinity.
d. undefined.
If a firm increases inputs by 15 percent and output increases by 12,5 percent, the firm is
experiencing
a. increasing returns to scale.
b. decreasing returns to scale.
c. constant returns to scale.
d. increasing costs per unit of output.
The demand curve facing a monopolist is
a. horizontal at the market price.
b. identical to the market demand curve for the good.
c. exactly twice as steep as the market demand curve for the good.
d. vertical because there are no competitors.
A man may be preferred to a woman by an employer who will make a substantial
investment in the training of the employee because
a. most employers are sexist and think that women belong in the home caring for
children.
b. as a group women tend to have a weaker attachment to the labor force than men.
c. employers have observed that women are less productive than men on most jobs.
d. employers are afraid women will disrupt the workplace by distracting the male
employees.
Under laissez faire, the force that drives the economy toward an efficient outcome is
a. central planning.
b. majority voting.
c. the pursuit of self-interest.
d. altruism.
Rent controls and controls on other prices often aggravate the very problem they are
intended to solve.
a. True
b. False
Among the factors that might lead to a divergence from the path of prices for a
depletable resource predicted by the economic models are: (i) unexpected discoveries of
new reserves; (ii) new technologies which reduce extraction costs.
a. i and ii
b. i but not ii
c. ii but not i
d. neither i nor ii
Deviations from the perfectly competitive market can lead to
a. inefficiently high production costs.
b. higher prices and smaller outputs.
c. less efficient resource allocation.
d. All of the above are correct.
Retained earnings are the same thing as “plowback.”
a. True
b. False
Policies that redistribute income
a. reduce the rewards of high-income earners.
b. raise the rewards of low-income earners.
c. reduce the incentive to earn high income.
d. All of the above are correct.
If a nation has an absolute advantage in the production of some commodity, it
a. can gain only if it has a comparative advantage in the commodity.
b. may still gain from trade in the commodity.
c. cannot gain from trade in the commodity.
d. cannot gain unless it has an absolute advantage in every other commodity.
When using the terms “total utility” or “marginal utility” we assume:
a. the consumer will exchange one commodity for another
b. the consumer will part with money for the commodity
c. the consumer has declined to purchase the commodity
d. a and b are correct
The tendency of opportunity cost to increase as production increases
a. is an example of theory that has not been proven by facts.
b. is a general principle, but not a universal fact.
c. is a universal fact, with no known exceptions.
d. rarely holds in reality, but is a useful theory.
e. cannot be tested with standard economic tools.
According to the excess capacity theorem, if every firm under monopolistic competition
expanded its output,
a. cost per unit of output would rise.
b. social benefits would increase.
c. cost per unit of output would decrease.
d. MC and AC would remain unchanged.
Table 3-2
Combination Cotton Corn
A 12 16
B 17 15
C 21 13
D 23 9
E 24 5
From the data given in Table 3-2, the opportunity cost of increased cotton in moving
from A to B is
a. 16 units of corn.
b. 31 units of corn.
c. 15 units of corn.
d. 4 units of corn.
e. 1 unit of corn.
Figure 3-4
In Figure 3-4, for which of the following would this statement be true: “To get more
apples we have to give up wheat.” A movement from
a. A to E
b. C to D
c. D to C
d. D to E
e. B to C
Which of the following is a characteristic of a perfectly competitive market?
a. a few large firms
b. firms producing specialized products in order to attract consumers
c. each individual firm having some control over the market price
d. a large number of small firms
Which of the following serves only the best known and heavily traded securities?
a. NYSE
b. multiple regional exchanges
c. AMEX
d. NASAQ
If movement along a graph causes the value on the vertical axis to rise by 5 units and
the value on the horizontal axis to fall by 10 units, the slope of the function is
a. 5
b. −5
c. −2
d. −72
Economics is a social science rather than a “hard” science like physics because
a. economists abstract from reality when creating their theories.
b. economics is easier to study than physics.
c. economists must explain their theories to policy makers who lack formal
mathematical training.
d. economists study human behavior, which is affected by an unpredictable and vast
range of influences.
A vertical line always has a slope of one.
a. True
b. False