As a rule, as a consumer acquires more and more of a good, the marginal utility
declines.
a. True
b. False
Productivity growth is the main cause of rising living standards.
a. True
b. False
If the demand curve for a product is vertical, then
a. consumers will refuse to bear any share of tax burden.
b. producers will bear the larger share of the tax burden.
c. consumers will bear the entire tax burden.
d. producers and consumers will equally share the tax burden.
In the past, when the United States enjoyed a continuing trade surplus, wages in the
United States
a. were much lower than wages in countries that imported U.S. products.
b. were much higher than wages in countries that imported U.S. products.
c. were roughly the same as wages in countries that imported U.S. products.
d. fell throughout that period, enabling the continuing trade surplus.
e. rose throughout that period, ending the trade surplus.
The percentage of work time lost due to strikes is greater than the percentage of work
time lost due to coffee breaks.
a. True
b. False
The demand curve for a monopolistic competitor slopes downward because
a. demand drops to zero after a slight price increase.
b. there are close but not perfect substitutes for the product.
c. customers have no loyalty to the product.
d. the product is undifferentiated.
Marginal revenue product is the extra revenue the firm receives by hiring one additional
unit of input.
a. True
b. False
Which of the following will shift the demand curve for milk?
a. change in the income of buyers of milk
b. change in the price of milk
c. change in input prices for milk
d. All of the above are correct.
The technique that addresses the problem of assigning inputs to specific industries is
a. known as laissez faire.
b. input-output analysis.
c. cost-benefit analysis.
d. a production possibilities frontier.
Sticky prices are a direct result of the kinked demand curve.
a. True
b. False
Monopolistic competition is common in
a. retail selling.
b. farming.
c. basic manufacturing.
d. electric power generation.
Unions have the power to
a. set all working rules.
b. increase the firm’s total taxes.
c. push wages above competitive levels at times.
d. make a firm nationalized.
Which of the following is a listing of the types or categories of resources?
a. land, labor, and capital
b. land, labor, and education
c. land, labor, and efficiency
d. land, labor, and markets
e. land, labor, and inputs
If the United States imposes a tariff on the import of Japanese cars instead of a quota,
the price
a. increase in Japanese cars goes into the revenue of U.S. automakers.
b. increase in Japanese cars goes into the revenue of Japanese automakers.
c. increase in Japanese cars goes into the revenue of the U.S. government.
d. decrease in Japanese cars comes out of the revenue of U.S. automakers.
e. decrease in Japanese cars comes out of the revenue of the U.S. government.
Environmental quality is
a. a public good.
b. best improved through government’s prohibiting externalities.
c. maximized when costs of pollution are external.
d. minimized when optimal levels of pollution are produced.
Explain the concept of ‘creative destruction’ by innovation. Does it ensure positive
economic profits in the long run?
What is a budget line? What does its slope indicate?
What are the reasons for preferring competition to monopoly?
Briefly explain Schumpeter’s model of innovation. Why does an innovator’s economic
profit eventually reduce to zero?
What are the advantages of a tax system for pollution control?
In perfect competition P = MR, but in monopoly P > MR. Why? Substantiate this
statement with an example.
The rule for efficient output selection is stated as MC = MU. Explain how the rule
results in economic efficiency.