Which of the following events create an outward shift of the production possibilities
curve?
a. The United States moves resources from the production of goods for domestic
production to the production of goods for export.
b. Tax reductions reduce the cost and increase the volume of investment in factories,
machinery, and research and development.
c. There is an exodus of young people to another country where there is more political
freedom.
d. The unemployment rate falls from 33 percent to 12 percent.
Serious concern for deregulation began to appear in Congress in the 1970s.
a. True
b. False
Ticket ‘scalping” is an example of
a. experimental economics.
b. the limitation of the volume of transactions.
c. the development of a black market.
d. favoritism.
Generally, if a nation imposes a tariff on imports,
a. part of the tax is paid by foreign exporters.
b. the entire tax is paid by foreign exporters.
c. none of the tax is paid by foreign exporters.
d. the tax has no impact on the profits of foreign exporters.
If you fall short of a certain minimum standard of living, you are poor; once you pass
this standard, you are no longer poor. This refers to the ____ definition of poverty.
a. average
b. absolute
c. relative
d. threshold
A regulatory agency concerned with “universal service” must
a. prevent high profits in all markets.
b. prevent entry in high-profit markets.
c. prevent cross-subsidization.
d. guarantee marginal cost pricing.
Figure 12-4
The above matrix (Figure 12-4) displays the possible profit results of two firms, A and
B, from following two different possible strategies: charging a high price and charging
a low price. In each cell, the first number is the profit of firm A, and the second number
is the profit of firm B.
a. Assume that collusion is not possible. Determine the optimal strategy for each firm.
Explain why it is the best strategy to follow.
b. Based on your answer to a., explain why firms collude. What are the pitfalls of
collusion?
As more of a good is produced, its opportunity cost tends to increase because resources
are not equally efficient at producing all goods.
a. True
b. False
Figure 4-16
Assume that Figure 4-16 shows the supply of steak. An increase in the price of pork
will change the supply from
a. S1 to S2.
b. S2 to S1.
c. S2 to S3.
d. S1 to S3.
Price discrimination allows a monopolist to make higher profits.
a. True
b. False
Free markets further all of society’s goals.
a. True
b. False
The demand curve for a factor is that part of the MRP where marginal product is
a. rising.
b. falling.
c. positive.
d. negative.
The initial stage of the procedure in which a union and an employer negotiate over a
contract is known as
a. featherbedding.
b. collective bargaining.
c. mediation.
d. arbitration.
The marginal productivity principle demonstrates that distribution under a capitalist
system is ethically valid.
a. True
b. False
During the second Bush administration, environmental fines and prosecutions
a. increased rapidly.
b. declined significantly.
c. grew with the rate of inflation.
d. declined slightly from earlier levels.
Economies of scope are present when a bank also sells insurance and provides
brokerage services for stocks and bonds.
a. True
b. False
Optimal decisions are made on the basis of
a. rate of growth in total profit.
b. average cost and average revenue figures.
c. impact on market share.
d. marginal cost and marginal revenue figures.
Poverty is a mainstream event experienced by a majority of Americans.
a. True
b. False
Everything else equal, the more rivals a firm has, the
a. less kinked is its demand curve.
b. closer is its equilibrium price to its average variable costs.
c. more differentiated is its product from rivals’ products.
d. more elastic is its demand curve.
Define the following terms briefly and concisely and indicate their importance to the
study of economics.
a. entrepreneurship
b. investment
c. capital
d. innovation
e. discounting