The Wheeler-Lea Act of 1938 was designed to close the merger loophole that remained
in the Clayton Act.
a. True
b. False
Which of the following is not a prediction of the theory on baseball caps and cheating?
a. More people will wear baseball caps on test days than on lecture days.
b. More people will wear baseball caps for multiple choice tests than for essay tests.
c. More people will wear baseball caps when students sit close to each other in class
and are taking a test than when students sit far apart from each other and are taking a
test.
d. Baseball caps are more likely to be worn on backwards (than frontwards) on test days
than on lecture days.
e. none of the above
It is possible through trade for a country to consume a combination of goods that lies
beyond its production possibilities frontier.
a. True
b. False
The antitrust legislation that empowers the Federal Trade Commission to deal with false
and deceptive acts or practices (such as false and deceptive advertising) is
a. the Clayton Act.
b. the Wheeler-Lea Act.
c. the Celler-Kefauver Antimerger Act.
d. the Robinson-Patman Act.
e. none of the above
A monopoly may exist because
a. government has refused to grant a public franchise.
b. one firm has the exclusive ownership of a necessary resource.
c. the firm is so large and is currently experiencing such vast diseconomies of scale that
it can out-compete all newcomers.
d. a and b
e. a, b, and c
Exhibit 26-1
What price is charged if marginal-cost price regulation is imposed on the natural
monopoly firm?
a. P1
b. P2
c. P3
d. a price below P2 and above P1
If labor is immobile between two countries, changes in relative demand for goods and
services may pose major economic problems
a. whether exchange rates are flexible or fixed.
b. but the problems will not be as significant as they would be if labor were mobile.
c. when exchange rates are flexible, but not when they are fixed.
d. when exchange rates are fixed, but not when they are flexible.
An increase in the anticipated (or expected) rate of inflation will cause the nominal
interest rate to
a. increase by less than the change in the anticipated inflation rate.
b. increase by the same amount as the change in the anticipated inflation rate.
c. decrease by more than the change in the anticipated inflation rate.
d. decrease by the same amount as the change in the anticipated inflation rate.
e. stay the same.
Which of the following is not a theory of the source of profit as discussed in the
textbook?
a. Uncertainty is a source of profits.
b. Profit is the reward for alertness to arbitrage opportunities.
c. Profit is the return to the entrepreneur as innovator.
d. Profit is the return to those who are fortunate enough to own resources.
As the marginal physical product of labor rises in the U.S., the marginal cost of goods
produced in the U.S. rises which makes it harder for U.S. producers to compete in the
global marketplace.
a. True
b. False
At one time, monopolies were granted to people who were in the favor of kings and
queens.
a. True
b. False
If the demand for foodstuffs is inelastic, which of the following positions would be
most beneficial to Farmer Jones?
a. Bad weather for Jones and good weather for all other farmers.
b. Bad weather for all farmers except Jones (who witnesses good weather).
c. Bad weather for all farmers.
d. Good weather for all farmers.
e. There is not enough information to answer the question.
Suppose that on Monday, a Big Mac cost $3.00 in the United States and 320 Japanese
yen in Japan. On Monday, the exchange rate was $1 = 90 yen. According to the
purchasing power parity theory, the yen was __________ by approximately
__________ percent.
a. overvalued; 22
b. undervalued; 40
c. overvalued; 29
d. undervalued; 19
e. overvalued; 19
In the early 19th century, the main lobbyists behind passage of the Factory Acts were
the women and children who were being exploited.
a. True
b. False
Jane has an old car that she expects will last for only two more years. She says she
derives $900 worth of services from the car each year. She expects the scrap value of
the car to be so low that it is not worth considering. If the interest rate is 6 percent, it is
not likely that she will sell the car unless she is paid more than
a. $1,650.
b. $1,800.
c. $1,562.
d. $1,723.
e. $1,697.
An American computer is priced at $1,200. If the exchange rate between the U.S. dollar
and the Japanese yen is $0.01 per yen, the equivalent price of the computer in yen is
approximately __________ yen.
a. 12,000
b. 12
c. 1,200,000
d. 120,000
A closed shop is an organization
a. that is closed on holidays.
b. in which an employee must belong to the union before he or she can work.
c. that does not require workers to be union members in order to be hired, but does
require them to join the union within a certain period of time after becoming employed.
d. set up by the federal government to train ex-convicts to become productive workers.
e. none of the above
The __________ problem in the market for used cars is capable of collapsing the
market for __________.
a. adverse selection; good used cars
b. adverse selection; lemons
c. moral hazard; good used cars
d. moral hazard; lemons
Exhibit 34-7
The world price of good X is $15.Under a policy of free trade, U.S. consumers will
import ___________ units of X from abroad.
a. 50
b. 45
c. 40
d. 30
Exhibit 3-2
Which of the following would result in a movement from point B on D2 to point A on
D1?
a. There was an increase in income (assuming that good X is an inferior good) and
technology remained constant.
b. There was an increase in income (assuming that good X is a normal good) and
technology remained constant
c. There was an increase in income (assuming that good X is an inferior good) and
technology improved.
d. There was an increase in income (assuming that good X is a normal good) and
technology declined.