Because there is a trade-off between inflation and unemployment in the short run,
a. lower unemployment will typically cause inflation to fall.
b. policies designed to reduce unemployment will typically set off a recession.
c. policies designed to reduce inflation will cause unemployment to fall as well.
d. higher inflation will generally be associated with higher unemployment.
e. lower inflation will generally be associated with higher unemployment.
Oligopoly occurs when
a. a few firms sell many different products.
b. a few firms sell to a few large buyers.
c. many firms dominate a single market.
d. a few firms dominate a single market.
Figure 5-2
In Figure 5-2, consumer surplus is measured by the area
a. ABC.
b. OBCD.
c. OACD.
d. DCE.
Economists object to monopoly because
a. monopoly profits go to the rich.
b. monopolies overproduce to maximize profits.
c. monopolies are usually polluters.
d. monopolists keep output below efficient levels.
The one feature of capital that makes it unlike most inputs is that it is
a. durable.
b. productive.
c. an economic good.
d. used to produce only consumer goods.
Which of the following is an example of an undesirable side effect of the operation of
the market mechanism?
a. negative externalities
b. comparative advantages
c. abstractions
d. productivity growth
Price ceilings lead to market surpluses.
a. True
b. False
Direct controls have traditionally been used heavily to control pollution in the U.S.
a. True
b. False
The excess burden of an excise tax is
a. greater the more inelastic the supply curve.
b. greater the more elastic the demand curve.
c. smaller the more elastic the supply curve.
d. greater the more inelastic the demand curve.
Many environmentalists have advocated a substantial increase in the gasoline tax to cut
down the federal deficit and to reduce pollution due to auto emissions. Such a tax
increase would be devastating to people who commute significant distances to work. In
fact, it would provide an incentive to relocate closer to work or change jobs.
Economists refer to such effects of taxes as the
a. burden of a tax.
b. regressive incidence of a tax.
c. incidence of a tax.
d. excess burden of a tax.
Payments to Social Security recipients would decline if the retirement age were
lowered.
a. True
b. False
Figure 19-1
Mr. Paque is a bear hunter for timber companies that want to diminish damage to trees
done by bears in the spring. Due to a reduction in the bear population between 1995 and
2005, Mr. Paque finds fewer bears each year and additional hours spent hunting
produce fewer additional bears. The change in Mr. Paque’s MPP curve between 1995
and 2005 is best illustrated by which panel in Figure 19-1?
a. 1
b. 2
c. 3
d. 4
Which of the following countries has the most equal income distribution?
a. Sweden
b. Japan
c. United States
d. Netherlands
Which of the following observations is true?
a. In the long run, more costs become variable.
b. Fixed costs can be completely varied if the time period is sufficient.
c. Fixed costs arise when some types of inputs can be bought only in big batches.
d. Variable costs arise when inputs have a large productive capacity.
Capital is defined as
a. a flow of money into a business to buy various inputs.
b. automated production processes which require little or no labor.
c. interest payments to owners of companies.
d. an inventory of plant, equipment and other productive resources held by a firm.
Perfectly competitive markets feature relatively high barriers to entry.
a. True
b. False
In a free-market economy, prices coordinate society’s decisions about
a. how and for whom to produce.
b. what, how, and for whom to produce.
c. how and for whom to produce but not how much to produce.
d. how much and for whom to produce but not how to produce.
The firm can calculate all points on its total cost curve if it knows
a. its production function.
b. the prices of inputs and of output.
c. its average cost at its optimal output level.
d. the prices of inputs and its production function.
Possible causes of an upward-sloping demand curve are:
a. consumers judge the quality of a product based on quality
b. consumers judge the quality of a product based on price
c. consumers purchase a product based on snob appeal
d. a and b are true
e. b and c are true
Any factor that shifts the demand curve to the left but does not affect the supply curve
will lower the equilibrium price and raise the equilibrium quantity.
a. True
b. False
Adam Smith believed that markets coordinated the self-interests of consumers.
a. True
b. False
The individual income tax, the inheritance tax, and the head tax are all examples of
direct taxes.
a. True
b. False
In some respects, the U.S. has fallen behind other nations.
a. True
b. False