A good’s marginal social cost is defined as its
a. marginal private cost minus the value of any detrimental externality.
b. incidental cost.
c. marginal private cost plus the value of any taxes paid on its production.
d. marginal private cost plus its incidental cost.
A usury rate is like a price ceiling.
a. True
b. False
To determine total cost, the businessperson must know
a. input quantity and output price.
b. output quantity and output price.
c. output quantity and input price.
d. input quantity and input price.
Inefficiency in an economy can be caused by
a. misallocating resources.
b. underemploying resources.
c. discrimination.
d. All of the above are correct.
The benefits principle states that those who
a. pay the taxes should reap the benefits.
b. reap the benefits from government should pay the taxes.
c. are best able to pay should pay for what they receive.
d. pay taxes get the benefits they deserve.
A monopolist in the radio industry has two radio-making plants. The marginal cost of
radio production by Plant A is $4Q (where Q is the number of radios produced) and the
marginal cost of radio production by Plant B is always $16. If the demand curve for
radios is downward sloping, the monopolist will
a. never produce radios at Plant A.
b. always produce four times as many radios at Plant B as at A.
c. never produce more than four radios at Plant A.
d. produce radios at Plant A only as a last resort.
The growth rates of capital, workforce skills and technology are higher in rich
countries.
a. True
b. False
Capital is the
a. flow of new equipment that a firm acquires over the course of a year.
b. amount of increase in a firm’s equipment over a year.
c. amount of money that a firm has on hand at a given time.
d. stock of plant, equipment, and other productive resources held by a firm.
A minimum wage law may cause unemployment among low-skill workers.
a. True
b. False
Doctors demand large salaries in part because
a. they are forbidden by U.S. law from receiving economic rent.
b. most doctors have backward-bending labor supply curves.
c. they participate in the secondary labor market.
d. they have made significant investments in human capital.
In long-run equilibrium, a firm in perfect competition has no economic profit.
a. True
b. False
It is possible to charge a price for a pure public good.
a. True
b. False
In the last three decades, air quality in American cities has improved.
a. True
b. False
A firm’s optimal input proportions may change if
a. input prices change.
b. the relative marginal productivities of the inputs change.
c. the firm’s optimal output level changes.
d. All of the above are correct.
Economics is generally concerned with
a. the operation of banks and the stock market.
b. business management.
c. how resources are allocated among alternative goals.
d. the right time to start a business.
Figure 4-4
Assume that Figure 4-4 shows demand for orange juice. An increase in the price of soda
will change demand from
a. D1 to D2.
b. D2 to D1.
c. D3 to D2.
d. D3 to D1.
By 2012, the poverty line for a typical family of four stood at about $23,250.
a. True
b. False
Along a straight-line demand curve the
a. slope is constant.
b. ratio P/Q constantly changes.
c. elasticity grows much smaller toward the right-hand end.
d. All of the above are correct.
A demand curve with an elasticity of 1.0 is said to be an elastic demand curve.
a. True
b. False
Both conservatives and liberals tend to approve of markets because
a. markets are effective in solving many of society’s problems.
b. markets work well in all cases, and can be relied upon to solve problems.
c. their goals are similar enough that they can rely on the same means.
d. production is the most important goal, and market systems are very productive.
e. of all of the above.
Cleaning an environment may lead to
a. less production.
b. higher prices.
c. lower incomes.
d. all of the above.
There has been a downward trend in the United States since 1980 in the ambient
concentrations of
a. sulfur dioxide.
b. carbon monoxide.
c. lead.
d. all of the above.
Explain the three growth-creating properties of innovation.
Is the image of the typical American worker as a blue-collar worker true? Substantiate
your answer with facts.
Explain how the short-run industry supply curve for a perfectly competitive market is
derived.
Some would cite the purchase of defective products and the rising cost of health care as
market failures. Argue that these are not true market failures.
Graphically show why one electric company can operate more cheaply than two.
Why is gold very expensive, even though it is not essential to life, while water, which is
essential to life, is inexpensive?
Price floors are typically accompanied by a standard series of symptoms. What are
they?
Why is it inefficient for an economy to be inside the production possibilities frontier?
There are currently 1,000 firms in a competitive industry. Minimum long-run average
cost is $80 and price $100. Explain what will happen to price, profit, and the number of
firms in this industry over time.