Dan is currently consuming 10 Cokes and 5 slices of pizza per week such that the
marginal utility of the tenth Coke is 12 utils and that of the fifth slice of pizza is also 12
utils. How should Dan redirect his purchases so as to attain consumer equilibrium?
a. He should buy more pizza slices and less Coke.
b. He should buy fewer pizza slices and more Coke.
c. He is currently attaining consumer equilibrium and should not redirect his purchases.
d. He could gain more satisfaction by buying less of both and more of something else.
e. There is not enough information to answer the question.
Jose has one evening in which to prepare for two exams and can employ one of two
possible strategies:
The opportunity cost of receiving a 94 on the economics examis __________ points on
the statistics exam.
a. 79
b. 17
c. 11
d. 90
Applied to any investment, the phrase €there€s no such thing as a free lunch€ means
that higher returns come with lower risks, and lower returns come with higher risks.
a. True
b. False
Externalities can be internalized through voluntary agreements as long as
a. transaction costs are low relative to expected benefits.
b. transaction costs are high relative to expected benefits.
c. the agreement is a short-run agreement.
d. the agreement is a long-run agreement.
Which of the following is a prediction of the median voter model for a two person
political race?
a. Candidates will try to present themselves as extremists.
b. Candidates who are behind in the polls will try to move closer to the position of their
opponents.
c. Candidates will try to label their opponents as “too middle-of-the-road.”
d. Candidates will try to be specific and clear about their own programs and the means
of achieving them.
Suppose that for a given good demand decreases and supply increases at the same time.
If demand decreases by a greater amount than supply increases, then equilibrium price
__________ and equilibrium quantity __________ for that good.
a. rises; rises
b. rises; falls
c. falls; rises
d. falls; falls
A monopolistic competitor faces a __________ demand curve and its price is
__________ marginal revenue.
a. horizontal; equal to
b. downward-sloping; equal to
c. horizontal; greater than
d. downward-sloping; greater than
Which of the following is true?
a. The price elasticity of demand for Royal Crown Cola is higher than the price
elasticity of demand for soft drinks in general.
b. The price elasticity of demand for Royal Crown Cola is lower than the price elasticity
of demand for soft drinks in general.
c. The price elasticity of demand for Royal Crown Cola is equal to the price elasticity of
demand for soft drinks in general.
d. It is invalid to make interproduct elasticity comparisons.
The higher the U.S. dollar price per Mexican peso, the __________ Mexican goods are
for Americans and the __________ Mexican goods Americans will buy; thus
__________ pesos will be demanded.
a. more expensive; fewer, more
b. less expensive; more, fewer
c. more expensive; fewer, fewer
d. less expensive; fewer, more
e. none of the above
The PPF between goods X and Y will be a downward-sloping
a. straight line if increasing opportunity costs exist.
b. straight line if decreasing opportunity costs exist.
c. curve that is bowed outward if increasing opportunity costs exist.
d. curve that is bowed outward if constant opportunity costs exist.
Exhibit 34-6
Which of the following terms of trade would both countries agree on?
a. 1 unit of wine = 2.5 units of cheese
b. 1 unit of wine = 1.5 units of cheese
c. 2.5 units of wine = 1 unit of cheese
d. 1.5 units of wine = 1 unit of cheese
e. none of the above
In economics, scarcity implies
a. disutility.
b. utility.
c. choice.
d. inefficiency.
e. a, c, and d
Exhibit 25-7
A monopolistic competitive firm earns a total profit of __________ when it produces
and sells 20 units of its good.
a. $40.
b. $10.
c. $200.
d. $80.
e. $50.