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Table 7-5
Table 7-5 shows short-run total cost figures for a stereo manufacturer. At what output
level does short-run average total cost reach a minimum?
a. 2
b. 3
c. 4
d. 5
Command economies are able to achieve greater allocative efficiency than market
economies.
a. True
b. False
The sole owner of a unincorporated business unable to pay its debts:
a. may be sued by the people to whom the business owes money
b. may be forced to pay them out of his own bank account
c. may be forced to sell his personal property to pay those debts
d. all of these are correct
Tax loopholes
a. reduce the progressivity of the federal income tax.
b. encourage particular patterns of behavior.
c. include exemption of interest earned on municipal bonds.
d. All of the above are correct.
Figure 22-2
In Figure 22-2,
a. the opportunity cost of 1 unit of wheat in the United States is a 2/3 unit of petroleum.
b. the opportunity cost of 1 unit of wheat in Mexico is a 2/3 unit of petroleum.
c. the opportunity cost of wheat is higher in the United States than it is in Mexico.
d. the United States has a comparative advantage over Mexico in the production of
petroleum.
Do all valuable items have price tags?
a. No, because some valuable items have no opportunity cost.
b. Yes, because everything has its price.
c. Yes, because price is the measure of opportunity cost.
d. No, some have no explicit price on them.
e. Yes, because only items that can be sold in markets have value.
Scarcity is a concept that applies to all of the following except
a. time.
b. natural resources.
c. human wants.
d. machinery.
High profits in some risky industries attract additional entrepreneurs to those industries.
a. True
b. False
Unionism is much more prevalent in the United States than in other industrialized
countries.
a. True
b. False
There exist only two causes of monopoly: barriers to entry and government restrictions.
a. True
b. False
Which of the following will occur if a natural monopoly is broken into two smaller
firms?
a. The price will drop.
b. Industry output will increase.
c. Production costs will increase.
d. Industry output will decrease.
Direct controls are considered inefficient because all firms are forced to pay the same
costs.
a. True
b. False
In perfect competition, marginal revenue always equals
a. total revenue.
b. price.
c. average cost.
d. marginal fixed cost.
If an individual possesses an ability that others cannot acquire, payment to that
individual is
a. partly economic rent.
b. a return called the real wage.
c. a return from investment in human capital.
d. comparable to the return to well-trained nurses.
Monopolistically competitive markets feature high barriers to entry.
a. True
b. False
Brokerage houses may differ in the
a. fees they charge.
b. services they provide.
c. stock exchanges on which they hold seats.
d. All of the above are correct.
College graduates now earn nearly twice as much as their high school-educated peers
and that gap is increasing.
a. True
b. False
A perfectly elastic demand curve for a firm
a. is represented by a vertical line.
b. means that with every unit price increase there will be a unit decrease in demand.
c. is formulated by P × Q = a constant, for all prices and quantities.
d. indicates that any increase in price will eliminate all purchases of its product.
An airline can profit by offering standby customers an unsold seat at a substantial
discount just before takeoff because
a. additional passengers are needed to balance the load.
b. the marginal cost of additional passengers is very small.
c. additional passengers add little to fixed costs.
d. such passengers add more to profits than do those with reserved seats.
The economic problem of scarcity
a. is unique to a capitalist economy.
b. requires that choices be made among alternatives.
c. disappears as technology advances.
d. affects only less-developed countries.
The elasticity of a demand curve at any point can be ascertained by its steepness.
a. True
b. False
Economists define efficiency as
a. output maximization.
b. the absence of waste.
c. input maximization.
d. the presence of surplus.
If the marginal utility of a product exceeds its MC, we would want, on efficiency
grounds, to
a. increase production.
b. decrease production.
c. leave production constant.
d. One cannot tell without knowing the price.
