Among the stated objectives of the National Collegiate Athletic Association (NCAA)
regulations is to
a. maintain the amateur standing of college athletes.
b. prevent schools with more money from getting all of the good players.
c. enhance the competitiveness of college sports.
d. all of the above
In which of the following situations would a positive externality most likely be
involved?
a. Shawn is sitting at home one day when she gets a telephone call, informing her that
she has won $10,000 in a contest she entered three months ago.
b. There are eight houses in the neighborhood where Rodney lives. Rodney likes
nice-looking yards, and last week his neighbors began to beautify their yards.
c. Willy needs eight hours of sleep each night to feel good. Last night he got eight hours
of sleep.
d. Patrick received an A on a biology exam. He is feeling better about his chances of
getting admitted to medical school.
If for a firm MRP > MFC, then the firm
a. is maximizing profits and should continue producing its current output.
b. is minimizing factor costs and therefore is maximizing profits.
c. should produce more output by increasing the quantity of factors employed.
d. should produce less output by decreasing the quantity of factors employed.
Refer to Exhibit 28-7. As the firm increases employment from 30 to 40 workers, its
total labor cost
a. decreases by $190.
b. increases by $160.
c. increases by $60.
d. increases by $100.
Refer to Exhibit 4-9.Suppose that the government imposes a price ceiling at a price of
$15.The number of units that would be exchanged in this market would be
a. 150, since that is the equilibrium quantity and the price ceiling is above the
equilibrium price.
b. 80, since that is the number of units demanded at the price ceiling.
c. 260, since that is the number of units supplied at the price ceiling.
d. 170, since that is the average of the quantity demanded and the quantity supplied at
the price ceiling.
Refer to Exhibit 2-8. For Maria, the opportunity cost of producing one unit of good X is
___________ unit(s) of good Y.
Exhibit 2-8
a. 2.00
b. 1.00
c. 10.00
d. 0.50
Assume a constant-cost industry that is initially in long-run competitive equilibrium. An
increase in demand will cause a(n) __________ in prices and profits, and as a result,
firms will __________ the industry, causing the market supply curve to shift
__________, which, in turn, will eventually cause the equilibrium price to be
__________ before.
a. decrease; exit; leftward; lower than
b. increase; enter; rightward; higher than
c. decrease; exit; rightward; higher than
d. increase; enter; rightward; the same as
e. increase; exit; leftward; lower than
Which of the following is not one of the four broad categories of resources?
a. labor
b. money
c. capital
d. entrepreneurship
e. land
Refer to Exhibit 34-10.Danielle’s opportunity cost of cleaning the house is
a. 0.50 mowed lawns.
b. 1.00 mowed lawns.
c. 2.00 mowed lawns.
d. 0.60 mowed lawns.
Refer to Exhibit 38-2.If the closing price of Prancer’s stock on the previous day was
$55.50, what value goes in blank (C)?
Exhibit 38-2
a. +0.75
b. -0.50
c. +0.50
d. +0.25
e. There is not enough information given to answer this question.
Which of the following is an example of market coordination?
a. Bad weather wipes out half the pineapple crop in Hawaii, the price of pineapples
rises, and consumers cut back on their purchases of pineapples.
b. The manager of a grocery store notices that his customers are buying tomato soup
about as quickly as he puts it on the shelves, so he orders more tomato soup from the
wholesaler.
c. The manager of a grocery store tells her employees to put the sugar-free cereals on
the top shelf where adults can find them more easily.
d. a and b
e. a, b, and c
As a firm buys more capital and less labor, the marginal physical product of capital
__________ and the marginal physical product of labor __________, assuming the law
of diminishing marginal returns has set in for each factor.
a. decreases; increases
b. increases; increases
c. decreases; decreases
d. increases; remains constant
e. remains constant; decreases
On a supply-and-demand diagram, equilibrium is found
a. where the supply curve intercepts the vertical axis.
b. where the demand curve intercepts the horizontal axis.
c. where the demand and supply curves intersect.
d. at every point on either curve
Carol says the following to an economist: “I hate playing the guitar, but I have taken
lessons for 10 years, so I might as well continue. There is a chance I will become a
professional guitarist one day.” An economist would probably make which of the
following statements?
a. In a world of scarcity and unhappy alternatives, guitar playing may be your best bet.
b. You’re right; it is better not to let all that time, energy, and money on guitar lessons
go to waste. That would be uneconomical and irrational.
c. The music made by a guitar is nice; maybe you should stay with it, you may come to
like it.
d. The cost you have incurred for guitar lessons is sunk. You should not allow
something that can’t be undone to influence a current decision.
Refer to Exhibit 25-7. A monopolistic competitive firm that seeks to maximize profits
will sell __________ units and charge a price of __________ .
a. 10; $10
b. 40; $7
c. 20; $9
d. 60; $5
e. 70; $7
Define the term rationing device and give an example of each of three possible
rationing devices.Explain how scarcity implies the need for a rationing device.
Describe the diamond-water paradox and its solution.
List and describe the three defining assumptions of the theory of monopolistic
competition.
Describe how profit serves as both an incentive for individuals to produce and as a
signal.
List and describe four factors that are relevant to the determination of price elasticity of
demand.