Exhibit 27-5
Marginal physical product of the fourth unit of labor
a. equals 60.
b. equals 40.
c. equals 24.
d. equals 310.
e. cannot be determined.
One of the conditions necessary for price discrimination is that the seller be a price
searcher.
a. True
b. False
Unions generally call for __________ the barriers against foreign trade, as a way of
__________ the elasticity of demand for union labor.
a. lowering; increasing
b. lowering; decreasing
c. raising; increasing
d. raising; decreasing
Which of the following statements is false?
a. A price searcher must lower price to sell an additional unit of its product.
b. For a price searcher, price equals marginal revenue for all units except the first.
c. For a price searcher, price is greater than marginal revenue for all units except the
first.
d. A price searcher, like a price taker, produces that quantity of output for which
marginal revenue equals marginal cost.
Prior to attending college, Marvin is offered a lucrative four-year contract as an actor in
a daytime soap opera. Assuming that acting and attending college are Marvin’s
preferred alternatives and that he must choose between the two, his opportunity cost of
attending college after receiving the offer ________________, making him
____________ likely to attend college than before he received the offer.
a. increases; less
b. decreases; more
c. stays the same; equally likely
d. increases; more
e. decreases; less
Rational ignorance is
a. a result of our educational system.
b. the curtain, or wall, of knowledge between the persons that are educated and those
that are not.
c. the curtain behind which people choose to hide to avoid knowledge about poverty
and, in general, the unequal distribution of income.
d. the curtain separating educated voters from uneducated voters.
e. none of the above
The fundamental reason why most supply curves are upward sloping is that
a. consumers substitute lower-priced goods for higher-priced goods.
b. the quantity supplied increases as more firms enter the market.
c. a higher price never reduces quantity supplied by enough to lower total revenue and
so higher production is motivated.
d. higher production raises the opportunity costs of production and so price must rise to
induce more output.
A characteristic of a 45-degree line is that
a. any point on the line is equidistant from the two axes.
b. it bisects a right angle.
c. its slope is 1.
d. a and c
e. a, b, and c
Exhibit 5-5
If the airline charges price P1 for both aisle seats and middle seats, the result will be
a. a surplus of middle seats and the equilibrium quantity of aisle seats.
b. a surplus of aisle seats and the equilibrium quantity of middle seats.
c. a shortage of middle seats and the equilibrium quantity of aisle seats.
d. a shortage of aisle seats and the equilibrium quantity of middle seats.
Compared to a monopolistic competitor, a monopolist produces a good with
__________ substitutes and so has a __________ elastic demand curve.
a. fewer; more
b. fewer; less
c. more; more
d. more; less
It has been argued that as a result of not producing the quantity of output where unit
cost is minimized, the monopolistic competitive firm charges too __________ a price
and produces too __________ output.
a. high; little
b. low; little
c. high; much
d. low; much
A currency has depreciated in value if it takes more of a foreign currency to buy it.
a. True
b. False
China has intervened in the foreign exchange market to maintain the value of its
currency vis–vis other countries.
a. True
b. False
Exhibit 34-3
The world price is PW. At this price, Americans purchase Q1 from U.S. producers and
import the quantity __________ from foreign producers.
a. Q4 – Q1
b. Q2 – Q1
c. Q2 – Q4
d. Q2 – Q3
A toll of $1 per car is imposed on a road regardless of time of day. If the toll creates
equilibrium travel flows at the busiest time of day, it will create a __________ at all
other times.
a. surplus of space
b. shortage of space
c. zero money price for space
d. zero opportunity cost for space