The marginal revenue of a monopolistically competitive firm
A) cannot be negative because the price the firm charges will always be greater than
zero.
B) can be negative if the firm charges a high price.
C) can be negative if the firm charges a low price.
D) will equal average revenue.
What is an indifference curve?
A) It is a curve that shows the total utility and the marginal utility derived from
consuming a bundle of goods.
B) It is a curve that shows the combinations of consumption bundles that gives the
consumer the same utility.
C) It is a curve that shows ranks a consumer’s preference for various consumption
bundles.
D) It is a curve that shows the tradeoff a consumer faces among different combinations
of consumption bundles.
If the quantity supplied of walkie-talkies increases by 5 percent when prices increase by
12 percent, then
A) the supply of walkie-talkies is inelastic.
B) the supply of walkie-talkies is elastic.
C) the walkie-talkie supply curve will shift to the right.
D) the walkie-talkie supply curve will shift to the left.
Gasoline taxes that are typically used for highway construction and maintenance are
consistent with which of the following principles of taxation?
A) the ability-to-pay principle
B) the horizontal-equity principle
C) the vertical-equity principle
D) the benefits-received principle
An example of a supplier that used its bargaining power to charge high prices to its
customers is
A) Wal-Mart, which required many of its suppliers to alter their distribution systems to
accommodate Wal-Mart’s need to control the flow of goods to its stores.
B) the firms that supply paper napkins to McDonald’s restaurants.
C) the Technicolor Company, the sole producer of cameras and film that movie studios
needed to produce color movies in the 1930s and 1940s.
D) the publishers of the Encyclopedia Britannica.
The U.S. government has frequently used a “command-and-control” approach in
dealing with pollution. Which of the following describes this approach?
A) The government uses taxes in order to internalize the externalities caused by
pollution.
B) The government uses subsidies to encourage firms to use new technology that
reduces pollution.
C) The government imposes quantitative limits on the amount of pollution firms are
allowed to generate.
D) The government distributes information to consumers and producers on how to
reduce pollution.
Proponents of the real business cycle model argue that the short-run aggregate supply
curve is
A) flat.
B) positively sloped.
C) vertical.
D) negatively sloped.
In the short run, a firm that is operating at a loss has two options. These options are
A) to reduce output or reduce its variable costs.
B) to go out of business or declare bankruptcy.
C) to shut down temporarily or continue to produce.
D) to adopt new technology or change the size of its physical plant.
Traditionally, Wall Street investment banks had been organized as partnerships, but by
2000 they had converted to being publicly traded corporations. As partnerships, the
principle-agent problem is ________, but as publicly traded corporations, the
principal-agent problem is often ________.
A) increased; more severe
B) increased; less severe
C) reduced; more severe
D) reduced; less severe
The area above the market supply curve and below the market price
A) is equal to the total amount of producer surplus in a market.
B) is equal to the marginal cost of the last unit produced.
C) is equal to the total amount of economic surplus in a market.
D) is equal to the total cost of production.
Figure 30-7
If the Indian government pegs its currency to the dollar at a value below $.02/rupee, we
would say the currency is
A) undervalued.
B) overvalued.
C) parity valued.
D) equilibrium valued.
During the twentieth century, the largest budget deficits as a percentage of GDP
occurred
A) during the 1990s.
B) during the 1980s.
C) during the Vietnam war.
D) during World Wars I and II.
Last year, Anthony Millanti earned exactly $30,000 of taxable income. Assume that the
income tax system used to determine Anthony’s tax liability is progressive. The table
below lists the tax brackets and the marginal tax rates that apply to each bracket. a.
Draw a new table that lists the amounts of income tax that Anthony is obligated to pay
for each tax bracket, and the total tax he owes the government. (Assume that there are
no allowable tax deductions, tax credits, personal exemptions or any other deductions
that Anthony can use to reduce his tax liability).
b. Determine Anthony’s average tax rate.
The prisoner’s dilemma illustrates
A) how oligopolists engage in implicit collusion under strategic situations.
B) why firms will not cooperate if they behave strategically.
C) why firms have an incentive to cheat on agreements.
D) how cooperation in strategic situations lead to the economically efficient market
outcome.
The Federal Reserve can directly affect its monetary policy ________, which then
affect its monetary policy ________.
A) goals; targets
B) goals; tools
C) targets; goals
D) targets; tools