Which of the following would cause an increase in demand for Toyota automobiles?
a. an increase in the price of Toyota automobiles
b. a decrease in the price of Toyota automobiles
c. a decrease in the price of Honda automobiles
d. an increase in the price of Honda automobiles
To find a firm’s total revenue at every quantity, all you need to know is
a. the demand curve for its product.
b. the demand curve for its product and its total cost.
c. its profit-maximizing price and quantity.
d. its total profit curve.
In most industries, deregulation has led to lower prices.
a. True
b. False
Total utility can be objectively measured in numbers that indicate usefulness or benefit
to the consumer.
a. True
b. False
Gwen’s decision to buy a new television instead of a bicycle for the same price
a. means that opportunity cost is zero since both cost the same amount.
b. would not have involved trade-off and opportunity cost if Gwen had decided to put
the money in a bank CD instead.
c. would not imply a trade-off because of scarcity if Gwen were a multimillionaire.
d. means that the opportunity cost to Gwen is the bicycle that she has given up.
According to a recent survey, in 2012, the number of U.S. households that owned
equitites was about:
a. 3 %
b. 27 %
c. 45 %
d. 55 %
Many persons object to the results of the competitive market system because
a. it takes too much energy to coordinate activities.
b. efficient outcomes may not be compatible with their ideas of a fair distribution.
c. a few people can control all economic activity.
d. it fosters high rents and low beef prices.
Usury laws tend to hurt whom?
a. suppliers of loans
b. consumers who cannot get credit
c. bank stockholders
d. All of the above are correct.
Figure 5-13
In Figure 5-13, the line AB is
a. an indifference curve.
b. a budget line.
c. a marginal utility curve.
d. a demand curve.
Voluntarism includes methods for dealing with pollution that
a. carry no legal authority.
b. call the problems of pollution to the public’s attention.
c. involve trying to persuade polluters to reduce or eliminate pollution voluntarily.
d. include all of the above.
In the last decade, health care spending in the U.S. nearly doubled.
a. True
b. False
To be a natural monopoly, a firm must
a. control an essential natural resource input.
b. be very large.
c. have a continuously falling average cost curve as output rises.
d. have falling average costs over a substantial range of total market demand.
SouthState Chemical Co. produces pine oil cleaners in a process that produces
emissions that discolor the paint on nearby houses, although the emissions have been
declared nontoxic to humans.
a. Is the price for the cleaner likely to be allocatively efficient? Use a graphic
illustration in your answer.
b. If your answer to (a) is no, what is an appropriate government policy to correct the
problem?
Probably the most important source of efficiency in production is
a. investing in more capital goods.
b. consuming rationally.
c. expanding the production possibilities frontier.
d. increasing inputs of energy and raw materials.
e. the specialization of labor.
In John Rawls’ A Theory of Justice, people choose the rules for distributing income
from behind a veil of ignorance. People understand that ability determines income, but
they do not know their abilities or the abilities of others. Rawls argues that people are
risk averse and will choose the distribution rule that maximizes their income in the
worst case scenario (they have relatively little ability). An economist would call this
strategy
a. minimax.
b. maximin.
c. irrational.
d. tacit collusion.
Following deregulation in the airline industry
a. small carriers have gone out of business but large carriers have not.
b. large carriers have gone out of business but small carriers have not.
c. both large carriers and small carriers have gone out of business.
d. neither large carriers nor small carriers have gone out of business.
In the United States, the fact that the gap between the rich and the poor has been
increasing is often justified by economists on the grounds that greater
a. efficiency can never be achieved without greater inequality.
b. inequality does not create any problems.
c. inequality is a desirable end in itself.
d. inequality is an undesirable consequence of greater efficiency.
e. efficiency should be achieved at any cost.
In 1862, the Homestead Act made land available to farmers at zero cost. Yet many
farmers preferred to purchase land along the rail line from the railroad. The farmers
a. were duped by the railroads.
b. knew the soil was better near the railroads.
c. realized that crops would be less costly to grow and transport on land near the
railroads.
d. were exploited by the railroads.
The principle of “comparable worth” asserts that people with comparable, if not
identical, skills and responsibilities should receive the same pay. If this principle were
to become law, it would tend to
a. reduce the problem of the “cost disease of services.”
b. exacerbate the problem of the “cost disease” of the service sector.
c. be irrelevant to the “cost disease” problem.
d. eliminate the problem of externalities.
Price ceilings are designed to protect sellers, while price floors are designed to protect
buyers.
a. True
b. False
The United States is the largest national economy in the world.
a. True
b. False
The marginal revenue product is the extra revenue the firm receives by selling one more
unit of output.
a. True
b. False