If equilibrium is achieved in a competitive market
A) there is no deadweight loss.
B) the deadweight loss will be maximized.
C) the deadweight loss will equal the sum of consumer surplus and producer surplus.
D) the deadweight loss will be the same as the opportunity cost of the last unit of output
sold.
Figure 6-10
Refer to Figure 6-10. The supply curve on which price elasticity changes at every point
is shown in
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
A partnership is ________ type of business.
A) the most common
B) the least common
C) the least risky
D) the most profitable
A market supply curve reflects the
A) external costs of producing a good or service.
B) external benefits of producing a good or service.
C) social costs of producing a good or service.
D) private costs of producing a good or service.
Which of the following is an example of a Pigovian tax?
A) payments by utilities to obtain tradable emission allowances
B) a payroll tax
C) payments for licenses to pollute
D) a tax imposed on a utility that internalizes the cost of externalities caused by the
utility
An item has utility for a consumer if it
A) is scarce.
B) has a high price.
C) is something everyone else wants.
D) generates enjoyment or satisfaction.
When the marginal product of labor rises
A) the marginal cost of production will exceed the average total cost.
B) the marginal cost of production also rises.
C) the marginal cost of production falls.
D) the average total cost of production also rises.
Figure 2-7
Apple recently announced that the company is exploring the electric vehicle market,
and is looking to produce vehicles as early as 2020. Assume Apple chooses to produce
both traditional electric-engine vehicles and self-driving electric-engine vehicles. Figure
2-7 shows changes to its production possibilities frontier in response to new
developments and different strategic production decisions.
Refer to Figure 2-7. Assume that in 2022, Apple temporarily shuts down one of its
factories for an extensive remodelling, and this reduces the amount of production
capacity available for both types of vehicles. This is best represented by the
A) movement from E to F in Graph A.
B) movement from H to J in Graph B.
C) movement from K to L in Graph C.
D) movement from J to G in Graph B.
Which of the following is held constant along an indifference curve?
A) the prices of the goods in question
B) the marginal rate of substitution between the two goods in question
C) the marginal utility derived from consuming any bundle of goods on the indifference
curve
D) the total utility derived from consuming any bundle of goods on the indifference
curve
Which of the following will not cause the labor demand curve to shift to the right?
A) an increase in the price of the firm’s product
B) a technological improvement that increases labor productivity
C) an increase in human capital in the labor force
D) an increase in the market wage rate
Over the past twenty years, the number of small family farms has fallen significantly
and in their place there are fewer, but larger, farms owned by corporations. Which of
the following best explains this trend?
A) diseconomies of scale in farming
B) economies of scale in farming
C) diminishing returns to labor in farming
D) declining productivity
Which is the least common type of business?
A) corporation
B) partnership
C) sole proprietorship
D) impossible to determine without further information
Table 2-11
Table 2-11 shows the number of labor hours required to produce a motorcycle and a
guitar in Ireland and Scotland.
Refer to Table 2-11. If the two countries specialize and trade, who should export
motorcycles?
A) There is no basis for trade between the two countries.
B) Ireland
C) Scotland
D) They should both be importing motorcycles.
The sales tax
A) is consistent with the benefits-received principle because low-income individuals
spend less on goods and services than do high-income people.
B) is not consistent with the ability-to-pay principle because low-income individuals
tend to spend a larger fraction of their income than do high-income individuals.
C) is not consistent with the ability-to-pay principle because low-income individuals
tend to purchase a smaller bundle of goods and services compared to high-income
individuals.
D) is not consistent with the benefits-received principle because low-income individuals
spend less on goods and services than do high-income individuals, yet pay the same
sales tax rate.
The United States Post Office
A) faces no competition for its mail services.
B) has a monopoly in the provision of first-class mail service.
C) can safely ignore the prices for mail services charged by its rivals such as FedEx and
UPS.
D) is an example of a monopoly that results from the ownership of a key resource: first
class mail service.
The bargaining power of suppliers increases if
A) the cost of switching suppliers is relatively low.
B) there are only a few competitors to the supplier.
C) the input in question is not a critical component of production.
D) the input supplied is relatively standardized.
In economics, the term “equity” means
A) everyone has an equal standard of living.
B) the hardest working individuals consume all they want.
C) only elected officials have high standards of living.
D) economic benefits are distributed fairly.
When the federal government orders firms to use particular methods to reduce
pollution, it is said to be using
A) command-and-control policies.
B) strong-arm tactics.
C) global initiatives.
D) market-based policies.
Table 12-1
Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces
plastic camera cases. Assume that output can only be increased in batches of 100 units.
Refer to Table 12-1. If the market price of each camera case is $8 and the firm
maximizes profit, what is the amount of the firm’s profit or loss?
A) $0 (it breaks even)
B) loss of $1,000
C) profit of $440
D) loss of $440
Which of the following is an example of an implicit cost a firm might incur?
A) the out-of-pocket expense to hire resources
B) taxes owed to the state and Federal governments
C) the rental value of the office space the company owns and uses for itself
D) the revenue a firm generates in using its resources
Daniel Hammermesh and Stephen Donald studied the determinants of the earnings of
college graduates years after they graduated. Which of the following is one result of
their study?
A) The earnings of identical twins were about 9 percent higher than the earnings of all
other students.
B) Students who had taken 15 credits of upper-division science and mathematics
courses and earned high grades in these courses earned about 10 percent more than
students who took no upper-division classes in these subjects.
C) Students who took more Advanced Placement (AP) courses while still in high school
earned significantly more income for each AP course they passed with a grade of 4 or 5.
D) Students who took at least three economics courses earned about 9 percent more
income than students who took no college economics courses.
________ is the ability of an individual, a firm, or a country to produce a good or
service at a lower opportunity cost than competitors.
A) Absolute advantage
B) Specialization
C) Autarky
D) Comparative advantage
In a competitive market the demand curve shows the ________ received by consumers
and the supply curve shows the ________.
A) utility; average cost.
B) marginal benefit; marginal cost
C) economic surplus; opportunity cost
D) net benefit; net cost
Total revenue equals
A) price per unit times quantity sold.
B) price per unit times quantity supplied.
C) price per unit times change in quantity sold.
D) change in price per unit times quantity sold.
A movement along the demand curve for toothpaste would be caused by
A) a change in the price of toothbrushes.
B) a change in consumer income.
C) a change in the price of toothpaste.
D) a change in population.
If a graph has a line that shows the amount of outsourcing in the last ten years, it is
known as
A) a pie chart.
B) a time-series graph.
C) a demand curve for outsourcing.
D) a supply curve of outsourcing.
At the profit-maximizing level of output for a perfectly competitive firm, price equals
marginal cost. Which of the following is also true?
A) The difference between total revenue and total cost is the greatest.
B) Total revenue equals total cost.
C) Average revenue equals average total cost.
D) Marginal profit equals marginal cost.
A firm’s cost of production is determined by all of the following except
A) the technology used to produce its output.
B) the productivity of its workers.
C) the cost of raw material used in production.
D) the amount of corporate taxes it must pay on its profit.
Toot Sweets Bakery sells freshly baked muffins from 6.30 am at $1.20 per muffin. By 4
pm, the remaining muffins are marked down to $0.60 each. Which of the following
statements is true?
A) Toot Sweets engages in price discrimination; a higher price for those who cannot
wait and a lower price for those willing to wait until 4 pm.
B) Toot Sweets is trying to prevent the opportunity to make arbitrage profit.
C) Toot Sweets is trying to minimize its loss.
D) Toot Sweets has underestimated the demand for its muffins.
What is the present value of $575 in a one year if the current rate of interest is 4
percent?
A) $410.71
B) $552.88
C) $598
D) $805
Which of the following is an implicit cost of production?
A) the loss in the value of capital equipment due to wear and tear
B) the salary you pay yourself for running your business
C) the utility bill paid to water, electricity, and natural gas companies
D) the interest you pay your mother for the money she loaned you to start your business