The marginal productivity theory states that
a. as variable inputs are added to a fixed quantity of other inputs eventually the
additional output produced by each additional variable input will decrease.
b. inputs will be used most efficiently when the additional output gained from each type
of input is exactly the same.
c. firms in perfectly competitive product and factor markets will pay factors their
marginal revenue products.
d. marginally productive inputs (that is, inputs that are not particularly productive) will
not be heavily utilized.
You turn to the bond market page of a newspaper and look under the column headed
“Bonds” and see that it says, “Gemco 5 3/4 13” this indicates that
a. the coupon rate on this bond is 5.75 percent.
b. this bond will mature 13 years from the date that it was first issued.
c. the current yield on this bond is 5.75 percent.
d. a and b
e. all of the above
Situation 22-1
Diane’s Donuts will begin selling donuts next week. Diane figures that the average
variable cost to make each donut will be constant at $0.30. She has already paid
$20,000 for the donut-making machinery and one year’s rent.
What will Diane’s total costs be if she sells 2,500 donuts in her first week and then goes
out of business?
a. $20,750
b. $10,950
c. $20,880
d. $30,500
If a monopsonist is hiring factors, it will choose to hire that quantity of labor at which
__________ and pay a wage rate that is __________.
a. MR = MC; equal to labor’s MRP
b. the supply curve of labor intersects the demand curve for labor; equal to labor’s MRP
c. MRP = MFC; equal to labor’s MRP
d. MRP = MFC; less than labor’s MRP
e. the supply curve of labor intersects the demand curve for labor; less than MFC
The law of demand states that price and quantity demanded are
a. directly related, ceteris paribus.
b. inversely related, ceteris paribus.
c. independent.
d. positively related, ceteris paribus.
If the Japanese yen trades at $1 = 98 yen, a Honda that sells for $29,000 in the U.S.
would be worth approximately how many yen?
a. 296 yen
b. 28,000 yen
c. 371,000 yen
d. 2,842,000 yen
A PPF can
a. shift outward but not inward.
b. shift inward but not outward.
c. shift inward or outward.
d. shift neither inward nor outward.
The people most likely to save are those with a
a. low rate of time preference since they only slightly prefer present consumption to
future consumption.
b. high rate of time preference since they greatly prefer present consumption to future
consumption.
c. low rate of time preference since they greatly prefer present consumption to future
consumption.
d. efficient rate of time preference since they do not prefer consuming luxury goods to
necessities.
e. roundabout rate of time preference since they don’t really care about consuming.
The antitrust act that says, “Every contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among the several states, or
with foreign nations, is hereby declared to be illegal” is the
a. Sherman Act.
b. Clayton Act.
c. Federal Trade Commission Act.
d. Robinson-Patman Act.
If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then
in producing that unit the firm
a. added more to total costs than it added to total revenue.
b. added more to total revenue than it added to total costs.
c. added an equal amount to both total revenue and total costs.
d. maximized profits or minimized losses.
When congestion occurs on the freeway (because of a shortage of freeway space), the
economist would most likely explain this by saying that it is because
a. the freeway has too few miles of roadway.
b. there are too many cars.
c. the price of driving on the freeway is below the equilibrium price.
d. a and c
An increase in the demand for a good will lead to a
a. rightward shift of the MRP of labor curve.
b. leftward shift of the MRP of labor curve.
c. movement up and along a given MRP of labor curve.
d. movement down and along a given MRP of labor curve.
Price serves as a
a. rationing device.
b. transmitter of information.
c. means of determining who gets what of the available limited resources and goods.
d. a and b
e. all of the above
The point where the PPF intersects the vertical axis is
a. unattainable.
b. attainable and productive efficient.
c. attainable but productive inefficient.
d. attainable and neither productive efficient nor productive inefficient.
The state of choosing not to acquire information because the costs of acquiring the
information are greater than the benefits is referred to as
a. logrolling.
b. rational ignorance.
c. market failure.
d. government failure.
How do countries know when they have a comparative advantage in the production of a
good?
a. Government accountants collect cost data from countries and analyze it to find out
which country has a comparative advantage in the production of which good.
b. They know as the result of individuals trying to earn profits and buying low and
selling high in the process.
c. The United Nations Economic Conference Group analyzes cost data from countries
and determines which country has a comparative advantage in the production of which
good.
d. There is not one major way that countries acquire this information.
In 1930, agriculture accounted for 10 percent of the U.S. GDP; in 2000, it accounted for
only 5 percent of the GDP.
a. True
b. False