One point on a market supply curve represents $4 and 100 units quantity supplied. If
there are three suppliers, and at a price of $4 one of the suppliers supplies 23 units, then
which of the following combinations of price and quantity supplied might hold for the
other two suppliers?
a. At $4, quantity supplied could be 40 units for one supplier and 27 for the other.
b. At $4, quantity supplied could be 33 units for one supplier and 27 for the other.
c. At $4, quantity supplied could be 40 units for one supplier and 37 for the other.
d. At $4, quantity supplied could be 77 units for one supplier and 10 for the other.
e. There is not enough information to answer this question.
The supply of seats for an economics class at 10 a.m. is the same as the supply of seats
for the same class at noon. Every student who wants to attend this class at noon can, but
not every student who wants to attend the 10 a.m. class can. Tuition does not vary by
time. It follows that the demand for the 10 a.m. class is __________ the demand for the
noon class.
a. lower than
b. the same as
c. greater than
d. either a or b
e. none of the above
Exhibit 34-2
The U.S. demand and supply for a good are shown. Under a policy of free trade, the
world price is PW. At this price, producers’ surplus equals the area of
a. PNBDPW.
b. DBC.
c. PWCBPN.
d. PWDE.
Exhibit 24-2
Total cost at the profit-maximizing quantity of output is the
a. area 0P2CQ0.
b. area 0P3FQ0.
c. area 0P1BQ0.
d. distance from Q0 to D.
e. none of the above
Macroeconomics deals with issues involving large corporations, while microeconomics
exclusively deals with issues involving small businesses.
a. True
b. False
Adrian reads about two theories, A and B.Theory A seems wrong to Adrian and theory
B seems correct to Adrian.It follows that
a. theory B is correct, and theory A is not.
b. both theories may be correct.
c. both theories may be incorrect.
d. theory A is trying to explain something completely different than theory B.
e. b and c
Exhibit 3-6
If D1 is the relevant demand curve, an increase in the price of good X may cause
a. demand to shift from D1 to D2.
b. demand to shift from D1 to D3.
c. a movement along D1 from point A to point B.
d. a movement along D1 from point A to point C.
Elite colleges and universities use standardized test scores (such as SAT and ACT
scores) and high school grades as
a. a means to raise student utility.
b. a means to turn a university education from a “good” to a “bad.”
c. rationing devices.
d. none of the above
The interest rate will be higher,
a. the longer the term of the loan.
b. the less risk associated with the loan.
c. the lower the processing costs of the loan.
d. the lower the administrative costs of the loan.
e. none of the above
Resource X is necessary to the production of good Y. If the price of resource X falls, the
equilibrium price of Y will ______________ and the equilibrium quantity of Y will
a. rise; rise.
b. fall; fall.
c. fall; rise.
d. rise; fall.
The 100th game of chess gives Jones more utility than the 32nd game of chess. It
follows that
a. neither the law or principle of diminishing marginal utility holds.
b. the law of diminishing marginal utility may hold since the 32nd game of chess might
have been a different “good” than the 100th game of chess (after all, it could have been
played with a different person).
c. there must be a law of increasing marginal utility.
d. total utility after the 32nd game had to be higher than total utility after the 100th
game.
e. none of the above
The nominal interest rate is determined in the loanable funds market.
a. True
b. False
The excess capacity theorem holds for a (n) __________, and states that in the long run
the firm produces an output __________.
a. perfectly competitive firm; that is resource-allocative efficient
b. monopoly firm; that is not resource-allocative efficient
c. monopolistic competitor; smaller than the one that would minimize its costs of
production
d. oligopoly firm; larger than the one that would minimize its costs of production
e. none of the above
A divisive society is a nonexcludable public _____________ because it comes with
____________.
a. good; utility
b. bad; disutility
c. bad; utility
d. good; disutility
A theory is an abstract representation of reality. This means a theory
a. is descriptive of the way the world is.
b. is an unrealistic representation of reality.
c. omits certain factors when trying to explain something.
d. is usually expressed in professional jargon.
e. none of the above
Between two wages, an individual’s supply curve of labor will be upward sloping if the
individual’s substitution effect outweighs the income effect between those two wages.
a. True
b. False
Consider the following data: equilibrium price = $10, quantity of output produced =
100 units, average total cost = $13, and average variable cost = $7. What will the firm
do and why?
a. Shut down in the short run, because it is taking a loss of $200.
b. Continue to produce in the short run, because price is greater than average variable
cost.
c. Shut down in the short run, because average variable cost is less than average total
cost.
d. Continue to produce in the short run, because firms are always stuck with having to
produce in the short run.
If total utility is a positive number, marginal utility must also be a positive number.
a. True
b. False
In the long run, only variable costs exist.
a. True
b. False