The law of diminishing marginal returns
a. is a short run concept.
b. is a long run concept.
c. is both a short run and a long run concept.
d. does not hold in the real world.
If government regulators want a natural monopolist to earn only zero economic profits,
then they will set a price
a. equal to average total cost (ATC).
b. equal to marginal cost.
c. such that marginal revenue equals marginal cost.
d. none of the above
Under an acreage allotment program,
a. the government sets a limit on the quantity of a product that a farmer is allowed to
bring to market, which is intended to cause farmers to cut back on the number of acres
they cultivate.
b. farmers are paid to take part of their land out of cultivation.
c. farmers are given limits as to the number of acres that can be farmed.
d. farmers are paid the difference between the market price of their product and a
governmentally determined price that would maintain an established price parity.
e. the government establishes a minimum price that farmers will be paid for their
product, which causes the farmers to cut back on the number of acres planted.
A share of stock is
a. a claim on the assets of the corporation that gives the purchaser an ownership right in
the corporation.
b. the share of profits distributed to stockholders.
c. a promise to pay for the use of someone else’s money.
d. a promise to loan money to someone.
e. a and b
If, under a fixed exchange rate system, the dollar price of Mexican pesos is below its
equilibrium level, then the
a. dollar is undervalued.
b. peso is undervalued.
c. dollar has depreciated.
d. peso has appreciated.
e. a and c
The higher the opportunity cost of making a new friend, the more likely one is to make
a new friend,€ceteris paribus€.
a. True
b. False
The answer is: “It allows the inhabitants of a country to consume at a level beyond its
production possibilities frontier.” What is the question?
a. What do newly discovered resources do?
b. What does technology do?
c. What does specialization and international trade do?
d. What does specialization do?
e. a and b
Which of the following issues is most unlikely to be addressed by an economist
practicing positive economics?
a. the relationship between the minimum wage and the number of unemployed
unskilled workers
b. the effect of a minimum wage increase on inner-city crime rates
c. the desirability of a minimum wage increase
d. the consequences of implementing a minimum wage law in China
Price ceilings sometimes result in some buyers and sellers purchasing the good at
prohibited prices.
a. True
b. False
The Clayton Act of 1914
a. made interlocking directorates illegal.
b. set up the Federal Trade Commission (FTC) to deal with “unfair methods of
competition.”
c. made monopolization of trade a misdemeanor.
d. prohibited suppliers from offering special discounts to large chain stores without
offering them to everyone else.
e. empowered the FTC to deal with false and deceptive acts or practices.
Demand takes into account goods, but not services.
a. True
b. False
Some economists contend that the National Collegiate Athletic Association (NCAA)
imposes its rules and regulations to keep college sports nonprofessional and in
relatively high demand.
a. True
b. False
Exhibit 22-1
The numbers that go in blanks (A) and (B) are, respectively,
a. 20 and 30.
b. 0 and 21.
c. 20 and 25
d. 1 and 2.
e. 20 and 21.
Perfectly competitive industries are
a. difficult to enter because there are already so many producers in the industry.
b. not particularly appealing or attractive to enter because there tend to be so many
buyers that it is difficult to deal with them.
c. relatively easy to enter but not so easy to exit from.
d. a and b
e. none of the above