Accounting profit equals economic profit if __________ equals __________.
a. explicit costs; implicit costs
b. total revenue; marginal cost
c. implicit costs; zero
d. explicit costs; zero
e. unit cost; marginal cost
Which of the following statements is true?
a. Productive inefficiency implies that it is possible to produce more of one good and no
less of another, but only if additional resources are made available.
b. Productive efficiency implies that it is possible to produce more of one good and no
less of another, even without additional resources.
c. Productive inefficiency implies that it is impossible to produce more of one good and
no less of another.
d. Productive inefficiency implies that it is possible to produce more of one good and no
less of another, even without additional resources.
During an election, a candidate who is not doing as well in the polls as his or her
opponent will
a. modify his or her position so that it is more like that of his or her opponent.
b. modify his or her position so that it is less like that of his or her opponent.
c. become more specific in discussing the issues.
d. label his or her opponent as a middle-of-the-roader.
Suppose that the price of butter is $3 per pound and the price of margarine is $2 per
pound.If the price of butter rises to $3.90 and the price of margarine rises to $2.20, then
the absolute price of butter has _______________ and the relative price of butter has
_______________.
a. risen; fallen
b. fallen; risen
c. risen; risen
d. fallen; fallen
The MPP of labor divided by its (labor’s) price is greater than the MPP of capital
divided by its (capital’s) price. Costs can be minimized by
a. buying more capital and less labor.
b. buying more labor and less capital.
c. maintaining the current MPP/P ratios.
d. buying twice as much labor as capital.
e. none of the above
The longer the term of a loan, the __________ the interest rate charged for the loan; the
more risk associated with a loan (from the lender’s point of view), the __________ the
interest rate charged for the loan.
a. higher; lower
b. lower; higher
c. higher; higher
d. lower; lower
Supply curves are usually upward sloping.
a. True
b. False
If the price of good X is $50 and the price of good Y is $25, it follows that the relative
price of one unit of good X is _____________ unit(s) of good Y.
a. 1.00
b. 2.00
c. 0.75
d. 1.33
e. 0.50
Given that frozen yogurt and ice cream are substitutes, a shift in preferences in favor of
yogurt would be predicted to do all of the following EXCEPT
a. raise the equilibrium price of frozen yogurt.
b. increase the quantity supplied of frozen yogurt.
c. increase the supply of ice cream.
d. increase the demand for frozen yogurt.
Dumping occurs when a firm sells goods abroad at a price below their cost and below
the price charged in their domestic market.
a. True
b. False
Scarcity means
a. wants are greater than the limited resources available to satisfy these wants.
b. wants are less than the limited resources available to satisfy these wants.
c. resources are infinite.
d. wants are limited.
e. both c and d
Marginal utility is always a positive number.
a. True
b. False
The essence of a prisoner’s dilemma setting is that if both person A and person B do
what is best for each of them,
a. they end up in a position that is “the best” for each of them.
b. they end up in a position that is “the worst” for each of them.
c. one ends up in a position that is “the best” for him and the other ends in a position
that is “the worst” for him.
d. they end up in a position from which each would prefer to move away.
e. none of the above
A monopolist can sell 8,000 units at a price of $15. Lowering price by $2 raises the
quantity demanded by 2,000 units. What is the change in total revenue that results from
this price change?
a. $10,000
b. $4,000
c. $130,000
d. $90,000
The marginal rate of substitution is illustrated by the
a. slope of the indifference curve.
b. slope of the budget line.
c. ratio of the marginal utility of the good on the vertical axis to the marginal utility of
the good on the horizontal axis.
d. distance between the indifference curves.
e. distance between the budget line and the indifference curve.
Suppose that for Alicia the marginal benefit (MB) of producing is $75 and that the
marginal cost (MC) of producing is $5.Suppose also that her marginal benefit of
stealing is $85 and the marginal cost of stealing is $5.Is Alicia currently maximizing
utility in terms of producing and stealing?If not, should she produce more and steal less,
or produce less and steal more to move toward utility maximization?
a. Yes, Alicia is maximizing utility.
b. No, Alicia is not maximizing utility.Since the MB/MC ratio for producing is less than
the MB/MC ratio for stealing, Alicia should produce more and steal less.
c. No,Alicia is not maximizing utility.Since the MB/MC ratio for producing is greater
than the MB/MC ratio for stealing, Alicia should produce more and steal less.
d. No,Alicia is not maximizing utility.Since the MB/MC ratio for producing is less than
the MB/MC ratio for stealing, Alicia should steal more and produce less.