List the three coordination decisions made by every economy.
a. Where? When? How?
b. How? What? To whom?
c. Why? Where? What?
d. When? To Whom? Where?
It is relatively easy for a firm to enter a perfectly competitive market.
a. True
b. False
The major incentive for cost minimization is the
a. power of shareholders in the company.
b. fear of top management by workers.
c. discipline imposed by the market system.
d. impact on U.S. corporations of taxing by the government.
Monopolies may be the only firms large enough to commercially produce a
significantly innovative new product.
a. True
b. False
Politicians always agree with economists about the most efficient way of doing things.
a. True
b. False
A ‘specialist” is a
a. stockholder who finds buyers and sellers for specific stocks, but also operates outside
of specific stock markets.
b. person who works on the floor of the New York Stock Exchange and specializes in
certain stocks.
c. stockbroker who operates only in a particular regional stock market.
d. stockbroker who specializes in the “third market.”
Education accounts for the largest share of state and local government spending.
a. True
b. False
The idea of opportunity cost is relevant
a. only in consumption decisions.
b. only in production decisions.
c. only in financial decisions.
d. in almost any kind of decision.
The elasticity of any demand curve is the same as its slope.
a. True
b. False
Figure 18-2
Figure 18-2 shows the widget market before and after an excise tax is imposed. What
percentage of the tax per widget is borne by consumers, considering the true economic
incidence of the tax?
a. 0 percent
b. 20 percent
c. 50 percent
d. 80 percent
When the price of a good is below its equilibrium level under perfect competition,
a. consumers would benefit from an expansion of output.
b. some consumers are earning larger consumer’s surpluses than they would in
equilibrium.
c. the market is not operating at maximum efficiency.
d. All of the above are correct.
A head tax is
a. always regressive.
b. an indirect tax on the value of property.
c. the primary tax used by U.S. municipalities to raise revenue.
d. All of the above are correct.
When Johanna cut prices in her jewelry store by 20 percent, the dollar value of her sales
fell by 20 percent. This indicates that
a. demand was elastic.
b. demand was inelastic.
c. demand was unit elastic.
d. the demand curve was vertical.
Since the Red Cross supplies 95 percent of the blood in the United States, it can be
considered a monopolist. Assume that it, in fact, operates like a monopolist. The Red
Cross currently charges hospitals and other users $21 for a pint of blood. In order to
increase the supply of blood, the government offers the Red Cross a $10 million,
lump-sum subsidy. How much more blood supply will the subsidy generate?
a. about 500,000 pints
b. somewhere between 100,000 and 500,000, depending on demand elasticity
c. somewhere between 100,000 and 500,000, depending on the elasticity of supply
d. zero
What is true of stock exchanges in the United States?
a. There are two major stock exchanges in New York, several smaller regional
exchanges across the nation, and over-the-counter trading via NASDAQ.
b. The New York Stock Exchange is the only stock exchange in the United States.
c. There are only two stock exchanges, NYSE and AMEX.
d. There are only three stock exchanges, NYSE, AMEX, and NASDAQ.
If, after careful analysis, an economist concludes that there has been a market failure,
which of the following possible corrective actions might the economist favor? Why?
a. prohibiting the activity
b. charging fees for continuing the activity
c. requiring that the public be informed of the activity
d. government purchase of the item for the public
A firm that does business all over the world is called a(n)
a. multinational corporation.
b. international conglomerate.
c. competitive corporation.
d. government-owned business.
An optimal purchase is one that maximizes total utility.
a. True
b. False
A decrease in the price of one good results in a parallel shift in the budget line.
a. True
b. False