A good provides __________ and a bad provides __________.
a. utility; satisfaction
b. disutility; utility
c. dissatisfaction; satisfaction
d. utility; disutility
e. satisfaction; utility
The gap between the higher equilibrium tuition and lower student tuition is $4,000 at
university A and $10,000 at university B.It follows that
a. if the supply of openings at each university is the same, then the demand to attend
university B must be higher than the demand to attend university A.
b. the supply of openings is necessarily larger at university A than B.
c. instructors at university B are likely to be more punctual for their office hours than
instructors at university A.
d. instructors at university A are more likely to be punctual for their office hours than
instructors at university B.
e. none of the above
When you buy a corporate bond, you are
a. borrowing funds from the corporation.
b. lending funds to the corporation.
c. selling an ownership right in the corporation.
d. acquiring an ownership right in the corporation.
e. b and d
Exhibit 4-1
In a free market, ________ units of the good would be exchanged.With a price ceiling,
_______ units of the good would be exchanged.
a. 125; 75
b. 75; 125
c. 175; 125
d. 125; 175
If the purchase and sale of marijuana becomes legalized
a. the equilibrium price and quantity will both rise.
b. the equilibrium price will fall, but the change in equilibrium quantity depends upon
whether the demand curve shifts rightward more or the supply curve shifts rightward
more.
c. the equilibrium quantity will rise, but the change in equilibrium price depends upon
whether the demand curve shifts rightward more or the supply curve shifts rightward
more.
d. the equilibrium price and quantity will both fall.
Which of the following is characteristic of the monopoly firm?
a. It produces the quantity of output at which marginal revenue equals marginal cost,
MR = MC.
b. It charges a price per unit for its product that is equal to marginal cost.
c. It always earns a profit, because it is a single seller of a product.
d. a and b
e. a and c
What is the approximate present value of a future income stream of three $1,000
payments to be received one, two, and three years from today if the interest rate is 6.75
percent?
a. $2,814
b. $2,636
c. $2,882
d. $3,205
Exhibit 34-12
PW is the price that exists in a free world market. With the imposition of a quota that
limits imports to Q4 – Q3, consumers lose more than producers and importers gain. The
result of the quota is a (net) loss represented by the area(s)
a. LGK + JHI.
b. KGHJ.
c. GCH + JHI.
d. LGK.
e. none of the above
According to the contestable markets theory,
a. even if an industry is comprised of a small number of firms, this is not sufficient
evidence that the firms perform in a noncompetitive way.
b. profits cannot be zero in an industry if the number of sellers in the industry is small.
c. if a market is contestable, inefficient producers are more likely to survive than if the
market is not contestable.
d. b and c
e. a, b, and c
Ceteris paribus means
a. one variable too many.
b. the correct relationship specified.
c. assuming economic motives.
d. all other things held constant or nothing else changes.
Suppose one firm in a perfectly competitive industry experiences an increase in its costs
of production. Which of the following best describes the most likely long run
adjustment to this situation?
a. Eventually, all firms in the industry will also experience this same increase in costs.
b. Eventually, the price of the product will increase, and consumers will pay for the
increase in costs.
c. The firm in question may suffer losses and exit the industry.
d. none of the above
A tariff is a
a. tax imposed on domestic producers of export goods.
b. legal limit on the amount of a good that can be imported.
c. tax imposed on imported goods.
d. legal limit on the amount of a good that can be produced by foreign owners of a firm
located in a host country.
An “interlocking directorate” is
a. an arrangement whereby the leaders of a union are also in the top management of the
business with which the union is dealing.
b. selling to a retailer on the condition that the retailer not carry any rival products.
c. an arrangement whereby the sale of one product is dependent on the purchase of
some other product.
d. an arrangement whereby the directors of one company sit on the board of directors of
another company in the same industry.
Normative economics is concerned with
a. value judgments.
b. opinions.
c. cause-effect relationships.
d. observations that can be proved.
e. both a and b
In the case of a negative externality, in order to achieve efficiency the government must
set the _________________ equal to the marginal ____________________.
a. tax; external costs
b. tax; external benefits
c. subsidy; external costs
d. subsidy; external benefits
e. tax; private costs
One measure of the severity of poverty is the ratio of income to poverty which is
calculated by
a. dividing a family’s poverty income threshold by that family’s income.
b. dividing a family’s transfer payments received by that family’s income.
c. dividing a family’s income by the family’s poverty income threshold.
d. dividing a family’s income by that family’s transfer payments received.
e. none of the above
Network goods such as telephones, computer operating systems and the like, will tend
to become monopolies because consumers will naturally tend to buy from the largest
supplier of the good. who will eventually become a monopoly. This monopoly position
a. automatically violates the Sherman Antitrust Act
b. violates the Sherman Antitrust Act only if the company illegally acts to maintain their
position
c. is automatically subject to FTC or state regulation and does not fall under the
Sherman Antitrust Act
d. is not covered by the Sherman Antitrust Act
A product price searcher (monopolist, oligopolist, or monopolistic competitive firm)
will maximize its profits by hiring factors up to the point at which
a. MRP > MFC.
b. VMP > MFC.
c. MRP = MFC.
d. VMP = MFC.
e. c and d
When marginal private benefit is equal to marginal private cost,
a. the activity in question generates no negative externality.
b. all negative externalities have been internalized.
c. all positive externalities have been internalized.
d. all of the above
e. a or b