If the demand for a good is elastic, then total revenue
a. increases as price increases
b. remains constant as quantity demanded increases
c. increases as price decreases
d. decreases as quantity demanded increases
e. decreases as price decreases
Exhibit 9-18
The firm in Exhibit 9-18, the monopolist who charges the same price to all customers,
will charge what price?
a. $5
b. $10
c. $15
d. $20
e. $25
Income elasticity of demand is greater than zero for all of the following except
a. restaurant meals
b. beer
c. owner-occupied housing
d. food
e. rental housing
Studies show that the demand curve for peas has shifted. Which of the following
explanations would you reject first?
a. The price of string beans has changed.
b. The demand for corn has changed.
c. The demand for string beans has changed.
d. The income of consumers has changed.
e. The price of peas has changed.
A trend in developing countries is that
a. the birth rate during a typical woman’s lifetime has increased from three to six
children
b. attitudes toward family size are changing
c. when women have employment opportunities outside the home, fertility rates
increase
d. as women become better educated, they earn less
e. as women become less educated, they tend to have fewer children
If Evan has an absolute advantage in cleaning and bookkeeping when compared to
Gloria, then
a. Evan must also have a comparative advantage in cleaning and bookkeeping
b. Evan must have a comparative advantage in cleaning
c. Evan must have a comparative advantage in bookkeeping
d. Gloria has a comparative advantage in neither activity
e. we can conclude nothing about comparative advantage
Which of the following is not an argument in favor of restricting trade?
a. to preserve national security
b. to prevent dumping
c. to increase consumer surplus
d. to protect infant industries
e. to protect declining industries
Economies of scale yield
a. declining average cost as output increases
b. declining marginal cost as output increases
c. declining total cost as output increases
d. diminishing average returns as output increases
e. increasing marginal revenue as output increases
A curve that shows the cost to the firm of hiring an additional unit of a resource is
known as a
a. marginal product curve
b. marginal revenue product curve
c. total revenue product curve
d. marginal revenue curve
e. marginal resource cost curve
Which of the following is not a developing country classified as a high-income
economy because of possessing huge oil reserves?
a. United Arab Emirates
b. Chad
c. Qatar
d. Kuwait
e. Bahrain
The efficient level of public good provision is determined
a. where the market demand curve intersects the marginal cost curve
b. where the sum of individual valuations equals the sum of marginal costs
c. without regard to economic factors
d. where marginal revenue product equals marginal factor cost
e. at the minimum point of the average total cost curve
If on Monday $1 = 146 Japanese yen and on Friday $1 = 147 yen, the dollar appreciated
and the yen depreciated.
a. True
b. False
Exhibit 10-17
In Exhibit 10-17, the monopolistic competitor will
a. lose $10
b. lose $15
c. break even
d. earn $25 profit
e. earn $30 profit
One of the difficulties with an economic policy such as rent control is that
a. politicians do not consider its secondary effects
b. economists disagree about the impacts of the policy
c. it is difficult to enforce antidiscrimination laws in the rental housing market
d. it makes landlords wealthy at the expense of renters
e. pressure from landlords resulted in its repeal in many cities
A tariff is a tax on either imports or exports.
a. True
b. False
The merchandise trade balance does not include
a. exports of refrigerators
b. imports of automobiles
c. exports of agricultural products
d. shipping and insurance costs
e. imports of food items with heavy tariffs
Marginal revenue is
a. total revenue minus total cost
b. total revenue divided by quantity of output
c. the change in total revenue divided by the change in output
d. the change in total revenue divided by the change in the quantity of an input used
e. economic profit
Exhibit 19-2
In Exhibit 19-2, Costa Rica has a comparative advantage in the production of rice.
a. True
b. False
Exhibit 10-3
The profit-maximizing output for the firm in Exhibit 10-3 is
a. 0 units
b. 1 unit
c. 3 units
d. 5 units
e. impossible to determine because MC and MR are not known
The international treaty established to negotiate lower trade restrictions is known as the
a. World Bank Act
b. General Agreement on Tariffs and Trade (GATT)
c. International Association for Free Trade (IAFT)
d. Countries United for Free Trade (CUFT)
e. International Development Fund
Exhibit 11-1
Condider Exibit 11-1. Each of the panels depict the supply and demand conditions in a
resource market. In panel (b) how much economic rent do the resources earn?
a. $0
b. $250
c. $500
d. $750
e. $1000
The difference between a good and a service is that
a. a good helps satisfy unlimited wants; a service does not
b. a service helps satisfy unlimited wants; a good does not
c. a services is available in unlimited quantities; a good is not
d. a good is available in unlimited quantities; a service is not
e. a good is tangible; a service is not
Levying a tax on a good when demand is very inelastic will generate a large amount of
tax revenue for the government.
a. True
b. False
Exhibit 19-10
In Exhibit 19-10 the domestic demand for sugar is represented by D and the domestic
supply is represented by S and the world price of sugar is $.13 per pound with a
domestic tariff of $.02 per pound of sugar. This tariff will reduce the consumer surplus
enjoyed by domestic consumers by
a. $100,000
b. $220,000
c. $370,000
d. $520,000
e. $610,000
The Sherman Antitrust Act makes it unlawful for firms to collude to restrain trade.
a. True
b. False
The concave shape of a production possibilities frontier showing possible output levels
of good A and good B indicates that if the economy produces more and more of good B,
a. larger and larger amounts of good A must be sacrificed
b. smaller and smaller amounts of good A must be sacrificed
c. more of good A will be produced
d. the amount of resources available in the economy must be increased
e. there must be an improvement in technology
When a citizens’ group opposes expansion of the prison located in town, the basis of the
opposition is that the larger prison will produce
a. a negative externality for the community
b. a positive externality for the community
c. more jobs in the community
d. tax revenue for the community
e. improved criminal justice options
Exhibit 9-5
The nondiscriminating monopolist at its profit-maximizing quantity in Exhibit 9-5 is
making a profit of
a. $6,200
b. $13,320
c. $11,000
d. $15,200
e. $0
The fact that the washroom usually has paper towels left (free to the consumer)
suggests that the marginal utility of paper towels quickly diminishes to 0 for each
consumer.
a. True
b. False
An example of competing-interest legislation is
a. a quota that limits imports of steel to the United States
b. a subsidy to cigarette producers
c. tax breaks for auto manufacturers
d. a new bridge in Arizona funded by general tax revenues
e. public education subsidies
If the minimum efficient scale in toaster production is 500,000 units per year,
a. the average cost of producing 300,000 toasters is greater than the average cost of
producing 500,000
b. the average cost of producing 300,000 toasters is equal to the average cost of
producing 500,000
c. the total cost of producing 300,000 toasters is greater than the total cost of producing
500,000
d. the firm should not produce more than 500,000 toasters
e. MC exceeds AC at 500,000 toasters
Which of the following is true?
a. Patents reduce a firm’s incentive to develop new products.
b. Patents are given for new works of art or literature.
c. Patents give a permanent exclusive right to produce a new good.
d. Patents give a temporary exclusive right to produce a new good.
e. Patents guarantee economic profits.
The Great Homebody Nationwide Sweepstakes promises its winners a choice between
$200,000 now or $120,000 now and $100,000 next year. The winners should take the
$200,000 now
a. no matter what the interest rate is
b. no matter what the interest rate is, if their rate of time preference is high
c. no matter what the interest rate is, if their rate of time preference is low
d. only if the interest rate is above 25 percent
e. only if the interest rate is below 25 percent