The Superfund for toxic waste was established for all of the following reasons except
one. Which is the exception.
a. sites get a lot of media attention
b. Superfund sites are more hazardous than other sources of pollution, e.g., fertilizer
residues
c. the costs of cleanup are concentrated
d. political pressure
e. none of the above
Monopolistically competitive firms use product differentiation to increase the price
elasticity of demand.
a. True
b. False
Which law was passed to outlaw certain practices not prohibited by the Sherman
Antitrust Act?
a. the Clayton Act
b. the Smoot-Hawley Act
c. the Celler-Kefauver Anti-Merger Act
d. the Wheeler-Lea Act
e. the Federal Trade Commission Act
Why might two presidential candidates appear to have very similar opinions during an
election year even if they come from different parties?
a. They aim to please special-interest groups.
b. They are logrolling.
c. They try to appeal to the median voter.
d. Republicans and Democrats usually agree on most issues.
e. They don’t wish to appear rationally ignorant.
Economics is best described as the
a. study of choice when scarcity exists
b. study of the production of goods and services
c. theory of consumer behavior
d. science of money
e. art of spending money wisely
The country of Excludania can discourage foreign investment by
a. requiring foreign investors to find a local partner who must be granted controlling
interest
b. setting different exchange rates for different categories of transactions
c. heavily restricting private international borrowing and lending
d. All the answers are correct
e. None of the answers is correct
Which of the following is true of an increase in quantity supplied of a given good?
a. It is represented by a rightward shift in the supply curve.
b. It could result from a technological improvement.
c. The price of a key resource used to produce the good may have decreased.
d. It is caused by an increase in the price of the good.
e. The price of an alternative good has increased.
An author who writes newspaper columns for $75 each is deciding whether to purchase
a personal computer with a laser printer. She figures she’d be able to write two more
columns per month than she could on her typewriter. She should
a. buy the computer if the monthly payment is less than $300
b. buy the computer regardless of its price
c. not buy the computer if the monthly payment is greater than $75
d. not buy the computer regardless of the price
e. buy the computer if the monthly payment is less than $150
The hiring of a brilliant tax lawyer by a firm that wants to find tax loopholes
a. encourages economic efficiency by moving resources away from the government into
the private sector
b. encourages economic efficiency only if the firm’s profit increases
c. is an example of economic inefficiency caused by devoting resources to wealth
redistribution rather than to production
d. involves the firm in a zero-sum game against other firms
e. involves the firm in a zero-sum game against the government
Monopolistic competitors are protected by barriers to entry.
a. True
b. False
Exhibit 12-7
The situation represented in Exhibit 12-7 reflects all of the following employment
conditions except one. Which is the exception?
a. collective bargaining by an industrial union for higher wages and benefits
b. high union membership fees
c. imposition of qualifying exams for prospective workers
d. imposition of long apprenticeship periods
e. restriction of employment to union members
One reason why a consumer might buy from a high-priced local hardware store instead
of going to a big discount store several miles away in another community is that
a. the local store will still have lower money prices
b. the time cost of going to the local store is equal to going to the discount store
c. comparing the sum of money prices and time cost, the local hardware store is a
bargain for people who value time highly
d. comparing the sum of money prices and time cost, the local hardware store is a
bargain for people who earn low hourly wages
e. the time cost of going to the discount store is less than going to the local hardware
store
If the demand for ptyalin is unit elastic, then
a. total revenue decreases as quantity demanded increases
b. total revenue increases as quantity demanded increases
c. total revenue increases as price increases
d. total revenue remains constant as price increases
e. total revenue decreases as price increases
The largest value the Herfindahl index can have is
a. 100, which would indicate a monopoly
b. 100 for firms equal in size
c. 100,000
d. 10,000, which would indicate a pure monopoly
e. infinity
If variable cost at each output level doubles,
a. ATC doubles
b. AFC doubles
c. MC remains unchanged
d. MC doubles
e. MC less than doubles
Foreign exchange means
a. changing dollars into foreign currency
b. domestic currency held to finance international trade
c. foreign currency
d. trade between governments
e. trade between individuals in different countries
The production possibilities frontier represents all desirable combinations of two goods
a. True
b. False
The difference between the average earnings of eye surgeons and those of janitors is an
example of
a. a temporary differential
b. a permanent differential
c. a resource price difference that will cause a reallocation of resources to different uses
d. a temporary difference that will be eliminated through the reallocation of resources to
different uses
e. a differential caused by a lack of resource mobility
Exhibit 2-7
In Exhibit 2-7, if society moves from point c to point d, society
a. gains 100 socks
b. loses 30 mufflers
c. is worse off after the change in production
d. is not operating efficiently
e. experiences some unemployment of resources
Exhibit 20-8
Exhibit 20-8 shows the market for euros in the US. Initially the demand for euros is
represented by D1 and the supply of euros is represented by S1. Equilibrium in the
market for euros is at point A. In response to a decrease in the income of US consumers
the equilibrium moves to point H and the dollar ________.
a. appreciates in value
b. depreciates in value
c. is devalued
d. is revalued
e. accommodates
Under a floating rate system, exchange rates are determined by supply and demand in
the foreign exchange market without government intervention.
a. True
b. False
Exhibit 7-2
Given the information in Exhibit 7-2, what is the average product of the fourth unit of
labor?
a. 5 pairs of shoes
b. 10 pairs of shoes
c. 20 pairs of shoes
d. 50 pairs of shoes
e. 80 pairs of shoes
A rise in demand for restaurant meals is likely to cause which of the following in the
short run?
a. economic losses for each restaurant
b. a lower price for each restaurant meal
c. fewer restaurants in the industry
d. more restaurants in the industry
e. economic profit for restaurants
Monopolistically competitive firms
a. are guaranteed to earn short-run economic profit
b. may earn short-run economic profits, although long-run economic profit is typically
zero
c. may earn economic profit both in the short run and in the long run
d. earn zero economic profit both in the short run and in the long run
e. can only earn an economic profit in the inelastic portion of their demand curves
Suppose you have spent your entire budget and, for all the goods you purchase, the
marginal utilities per dollar spent are identical. Which of the following is true?
a. You are being irrational.
b. You can increase your utility by reallocating your income.
c. You will reduce your utility if you allocate income in any other way.
d. You are minimizing your marginal utility.
e. You can avoid diminishing marginal utility.
Exhibit 10-3
At the profit-maximizing output, the firm in Exhibit 10-3 is earning
a. an economic profit of $38
b. an economic profit, but the amount cannot be determined
c. zero economic profit
d. an economic profit of $32
e. an economic loss
Which of the following would not be considered a negative externality?
a. loud rap music at 2 a.m. in the apartment next door to you
b. traffic congestion
c. an Alaskan oil spill
d. measles vaccinations
e. air pollution
If the wage is below the marginal revenue product, then a profit-maximizing firm will
a. employ more workers
b. employ fewer workers
c. see an increase in its demand for labor
d. see an increase in its supply of labor
e. see a fall in its demand for labor
To escape poverty, a country needs
a. Western banks to report deposits by corrupt officials
b. to develop laws and regulations to ensure the transparent management of natural
resources
c. special trade advantages
d. ten years of domestic peace
e. All of the answers are correct
Market shares of all eight firms in an industry are 50 percent, 20 percent, 14 percent, 6
percent, 4 percent, 3 percent, 2 percent, and 1 percent. What is the Herfindahl index?
a. 90
b. 902
c. 502 + 202 + 142 + 62
d. 502 + 202 + 142 + 62 + 42 + 32 + 22 + 12
e. the sum of the market shares of the four largest firms