Most of the world’s economies are mixed economies because _________.
a. a cartel of powerful transnational firms demands it.
b. the market system of allocation is always best.
c. the command system of allocation is always best.
d. government intervention in an overall market system exists because markets fail
when there is market power, a great deal of inequality, pollution externalities, or public
goods.
Consumer equilibrium exists when:
a. the marginal utility of each good and service consumed is equal.
b. the total utility of each good and service consumed is equal.
c. the marginal utility of each good and service consumed equals its price.
d. ratio of marginal utility to price for all goods and services is equal.
Other things being equal, the effect of a decrease in the price of Coca-Cola would cause
which of the following?
a. A rightward shift in the demand curve for Coca-Cola.
b. A downward movement along the demand curve for Coca-Cola.
c. A leftward shift in the demand curve for Coca-Cola.
d. An upward movement along the demand curve for Coca-Cola.
Suppose product price is fixed at $24; MR = MC at Q = 200; AFC = $6; AVC = $25.
What do you advise this firm to do?
a. Increase output.
b. Decrease output.
c. Shut down operations.
d. Stay at the current output; the firm is earning a profit of $1,400.
e. Stay at the current output; the firm is losing $1,400.
Which of the following is a characteristic of capitalism?
a. Government ownership of all capital.
b. Government decision-making is preferred to decentralized decision-making.
c. Market determination of prices and quantity.
d. Equality of income.
Exhibit 1A-7 Straight line relationship
Which of the following would cause a shift in the relationship shown in Exhibit 1A-7?
a. A rise in people’s annual income.
b. A rise in people’s expenditure on air travel.
c. A rise in the price of air travel.
d. All of these would shift the line in the graph.
During the first phase of regulation in the United States (from 1887 to the Great
Depression), the primary target of regulation was the:
a. labor unions. c. food and drug industries.
b. communication industry. d. railroads.
Exhibit 4-9 Data on supply and demand
In Exhibit 4-9, if a price ceiling is set at $1.50 the market result after adjustment is:
a. a shortage of 150 units. c. shortage of 100 units.
b. a surplus of 100 units. d. equilibrium at 200 units.
In the perfectly competitive market, individual firms exert no effect on the market price.
Therefore, the firm’s marginal revenue curve is:
a. indeterminate. c. a downward-sloping curve.
b. an upward-sloping curve. d. the same as the firm’s demand curve.
Exhibit 8-12 Marginal revenue and cost per unit curves
As shown in Exhibit 8-12, the firm will shut down in the short-run at a price below:
a. OA. c. OC.
b. OB. d. OD.
An economist has conducted extensive research and has found that Jones Cola is a
substitute for Tucker Cola. Ceteris paribus, the price of Jones Cola increases. The
impact on the demand curve for Tucker Cola is a(n):
a. increase in demand. c. increase in quantity demanded.
b. decrease in demand. d. decrease in quantity demanded.
Which of the following statements is true?
a. Total utility is the extra satisfaction from the consumption of a good or service.
b. Marginal utility is the amount of satisfaction received from all the units of a good or
service consumed.
c. The law of diminishing marginal utility states that as more of a good or service is
consumed total utility decreases.
d. Consumer equilibrium is a combination of goods and services consumed which
maximizes total utility from a given budget.
Exhibit 1A-5 Straight line
In Exhibit 1A-5, the slope for straight line CD is:
a. 5. c. 1.
b. 1. d. 5.
Exhibit 12-2 Lorenz curve
As shown in Exhibit 12-2, the perfect equality line is drawn between points:
a. A and B.
b. B and D.
c. A and C along the straight line.
d. A and C along the curve.
“An increase in the federal minimum wage causes an increase in unemployment among
teenagers” is a:
a. statement of positive economics. c. testable value judgment.
b. statement of normative economics. d. fallacy of composition.
Which of the following determines equilibrium wages in perfectly competitive labor
markets?
a. The government.
b. Monopoly employers.
c. Where the supply and demand of labor are equal.
d. The requirements of a living wage.
Exhibit 6-5 Marginal utility data for desserts
Refer to Exhibit 6-5. Each dessert is priced at $1. If you had $10 to spend on desserts,
which of the following combinations of goods would you buy?
a. 5 units of brownies, 4 units of ice cream, and 1 unit of pie.
b. 4 units of brownies, 5 units of ice cream, and 1 unit of pie.
c. 4 units of brownies, 4 units of ice cream, and 2 units of pie.
d. 4 units of brownies, 3 units of ice cream, and 3 units of pie.
e. 3 units of brownies, 4 units of ice cream, and 3 units of pie.
For a monopsonist:
a. wage > TWC.
b. wage > MFC.
c. wage = MFC.
d. wage = MRP.
e. wage < MFC
Economists look at which of the following to get a quick visual expression of income
distribution?
a. Gini coefficient.
b. IRS records of how much income each household earned.
c. supply and demand curves for resources.
d. Lorenz curve.
e. surveys of business estimates for MRPs.
Of the following demographic groups, which has the lowest poverty rate in the U.S.?
a. Families headed by a female with no adult male present.
b. Families in which the ‘head of the household’ has not attained a high-school
education.
c. Families headed by a male with no adult female present.
d. Families in which the ‘head of the household’ has attained at least a bachelor’s degree
from a college or university.