Statistical studies suggest that the cost of direct controls for any target level of pollution
is
a. much higher than the cost of taxes on emissions.
b. about the same as the cost of taxes on emissions.
c. lower than the cost of taxes on emissions.
d. impossible to compare to the cost of taxes on emissions.
The supply curve of a depletable natural resource is usually
a. downward sloping because the resource runs out over time.
b. upward sloping because more of the resource can be profitably extracted at higher
prices.
c. upward sloping because the price of the resource rises over time.
d. vertical because the supply of the resource is fixed.
Large income differences will be eradicated if the market mechanism is working well.
a. True
b. False
The expansion path of product indifference curves shows the cost-minimizing
combination of inputs.
a. True
b. False
The public assistance program that economists believe can promote economic equality
at the least cost in economic efficiency is
a. Aid to Families with Dependent Children (AFDC).
b. a negative income tax (NIT).
c. food stamps.
d. Medicaid.
A portfolio’s performance is its yield to the holder.
a. True
b. False
Change in the price of a good causes the demand schedule for that good to shift.
a. True
b. False
Figure 12-2
In Figure 12-2, which of the graphs represents a monopolistic competitor in long-run
equilibrium?
a. 1
b. 2
c. 3
d. 4
Which of the following is exempt from taxation (a tax exemption)?
a. interest on a home mortgage
b. interest from municipal bonds
c. rent
d. property taxes
Prices that maximize the public interest will always allow reasonable profits for firms.
a. True
b. False
Economic theory would lead us to suspect that deep sea oil reserves would be accessed
before those located in the Middle East or on the U.S. mainland.
a. True
b. False
An industry supply curve is the horizontal summation of the supply curves of all of the
individual firms.
a. True
b. False
Economists are often required to make unrealistic assumptions concerning the problems
they are investigating.
a. True
b. False
A good is most likely to be inefficiently priced if
a. some of the resources used in its production are scarce.
b. the good is private property.
c. some of the resources used in its production are free.
d. a corporation produces the good.
By the year 2100, global warming may lead to
a. shifts in world rain patterns.
b. disruption of agriculture.
c. expanded deserts.
d. coastal inundation.
e. all of the above
Why study perfect competition, if it rarely exists?
All industrialized countries have become ‘service economies” in recent decades.
Explain the reasons behind this shift.
What is the rule for efficient output selection and how does the competitive market
achieve it?
How does a laissez-faire economy decide which consumer gets each of the goods that
has been produced?
“One of the failings of a market system is the damage to the environment. Pollution
would not exist with a centrally planned economy.” Evaluate this statement.
Explain how the short-run supply curve of the competitive firm is derived.
If stocks are more risky than bonds, why would a rational investor ever buy stocks?
From the viewpoint of the individual investor, are stocks or bonds riskier? Explain.
Explain why some argue that income tax loopholes primarily benefit the rich.