Usury laws carry the potential of hurting
a. borrowers.
b. lenders.
c. borrowers and lenders.
d. government.
Firms often seek to borrow money to expand their capital stock, and the price they pay
for that money is the interest rate. What happens to quantity of money demanded if the
interest rate increases?
a. It increases.
b. It decreases.
c. It does not change.
d. Uncertain-the law of demand does not apply to money.
Externalities can be either detrimental or beneficial to others.
a. True
b. False
Figure 11-5
In Figure 11-5, Crown Theater, a monopolist movie theater, will make a profit of ____
at its profit-maximizing price and quantity of theater tickets.
a. $450
b. $150
c. $300
d. $750
Price elasticity of demand is defined as
a. slope divided by price.
b. percentage change in price divided by percentage change in quantity demanded.
c. percentage change in quantity demanded divided by percentage change in price.
d. the inverse of the price elasticity of supply.
Long-run average cost of the perfectly competitive firm includes the
a. cost of raw materials per unit of output.
b. opportunity cost of labor per unit of output.
c. opportunity cost of capital per unit of output.
d. All of the above are correct.
The cost disease of personal services causes
a. the cost of health care to rise faster than the economy’s rate of inflation.
b. legislators to blame declining standards of quality at public hospitals on greedy
doctors or administrators.
c. legislators to propose price controls on insurance.
d. All of the above are correct.
An optimal allocation of resources is one which is:
a. unfair.
b. fair.
c. efficient.
d. inefficient.
A price-discriminating firm will always maximize profit by following the condition that
a. MR > MC.
b. MR > P.
c. MRa = MRb = MC.
d. MR = ATC.
The principal determinants of total and average cost curves are the firm’s technology
and the prices of its inputs.
a. True
b. False
A total product curve shows the
a. aggregate output of many firms in an industry.
b. amount of product consumers will take off the market.
c. maximum amount of product that it is technically possible to produce.
d. relationship between units of inputs and total output.
Which of the following best describes compensating wage differentials?
a. Some jobs are more difficult than others, and the pay for them reflects this.
b. Some jobs require more training than others, and the pay for them reflects this.
c. Some jobs require more experience than others, and the pay for them reflects this.
d. Some jobs require unique abilities, and the pay for them reflects this.
A perfectly competitive firm’s short-run supply is infinite at the market price.
a. True
b. False
If a firm goes bankrupt, the bondholders will get paid back before the stockholders get
any money.
a. True
b. False
A vertical demand curve has an elasticity of demand equal to zero.
a. True
b. False
In the United States, the distribution of income after the income tax is ____ the
distribution of income before the income tax.
a. slightly less equal than
b. about as equal as
c. slightly more equal than
d. a great deal more equal than
Firms often seek to borrow money to expand their capital stock, and the price they pay
for the money is the interest rate. What happens to the quantity of money supplied if the
interest rate increases?
a. It increases.
b. It decreases.
c. It does not change.
d. It depends entirely on the interest rate.
The branch of economic theory that analyzes decisions about education and training is
a. welfare economics.
b. equilibrium analysis.
c. human capital theory.
d. consumption theory.
A monopolist maximizes profit by producing the quantity at which MC = MR, just like
a perfect competitor.
a. True
b. False