If total revenue rises as a result of a decrease in the price of a given good, it follows that
demand is
a. inelastic.
b. perfectly inelastic.
c. elastic.
d. unit elastic.
e. none of the above
Union training programs are meant to shift the __________ labor to the __________.
a. demand curve for; left
b. demand curve for; right
c. supply curve of; left
d. supply curve of; right
If the quantity demanded of good X is greater than the quantity supplied of good X,
then the market for good X is in disequilibrium.
a. True
b. False
Agricultural price supports refer to
a. minimum prices set by the government on certain farm products.
b. maximum prices set by the government on certain farm products.
c. supply-restricting policies imposed by the government on certain farm products.
d. b and c
e. none of the above
There are two societies, A and B, that are alike in every way but one. In society A,
people have a high rate of time preference, and in society B, people have a low rate of
time preference. It follows that
a. the demand for consumption loans will probably be lower in A than B.
b. interest rates will be lower in B than A.
c. there will be more saving in A than B.
d. b and c
e. none of the above
A market demand curve for labor shows the quantities of labor demanded by
a. a particular firm in a specific labor market.
b. all the firms in a specific labor market.
c. a particular firm in various labor markets.
d. all the firms in various labor markets.
Exhibit 22-2
What is the average variable cost of producing 120 units of output?
a. $0.67
b. $1.17
c. $1.00
d. $1.44
e. There is not enough information provided to answer the question.
Labor union A faces a greater cutback in labor for a given wage increase than does
labor union B. It follows that the
a. demand for workers in labor union A is greater than the demand for workers in labor
union B.
b. elasticity of demand for workers in labor union B is greater than the elasticity of
demand for workers in labor union A.
c. demand for workers in labor union B is greater than the demand for workers in labor
union A.
d. elasticity of demand for workers in labor union A is greater than the elasticity of
demand for workers in labor union B.
e. a and d
Employers use screening mechanisms, such as GPA, because they lack complete
information about job applicants.
a. True
b. False
“I’m not going to pay for the good if, once produced, the good cannot be denied to
anyone.” This statement is most relevant to
a. negative externalities.
b. positive externalities
c. private goods.
d. nonexcludable public goods.
e. the issue of rivalry versus nonrivalry in consumption.
Which antitrust legislation was passed in an attempt to decrease the failure rate of small
businesses by protecting them from competition from large and growing chain stores?
a. the Sherman Act.
b. the Clayton Act.
c. the Federal Trade Commission Act.
d. the Robinson-Patman Act.
e. none of the above
Assume that a constant-cost industry experiences an increase in demand. In the long
run, this will
a. exceed its original equilibrium level.
b. equal its original level.
c. be lower than its original level.
d. any of the above, depending on the elasticity of demand
A monopolistic competitive firm maximizes profits by producing at the point where
a. total revenue is at a maximum.
b. marginal revenue equals average cost.
c. marginal revenue equals marginal cost.
d. price equals marginal revenue.
e. b and d
Average total cost at the profit-maximizing level of output equals
a. $32.50.
b. $36.67.
c. $33.33.
d. $50.00.
e. There is not enough information given to answer this question.
If the demand curve for tickets to a taping of a television show intersects the supply
curve for tickets to that show at a negative price, then in order to put that market in
equilibrium the producers would need to pay people to view the show being taped.
a. True
b. False
An insurance company requires homeowners it insures to have smoke detectors in their
homes. The insurance company is trying to combat the
a. adverse selection problem.
b. the free-rider effect.
c. moral hazard problem.
d. “lemons” problem.
e. none of the above
There is a technological improvement in the production of good X.As a result, the
_____________ curve for good X will shift ____________ resulting in a(n)
_____________ in the equilibrium price of X and a(n) ____________ in the
equilibrium quantity of X.
a. supply; rightward; decrease; increase.
b. demand; leftward; decrease; decrease
c. demand; rightward; increase; increase
d. supply; leftward; increase; decrease
e. supply; leftward; increase; increase
It has often been remarked that Democratic candidates are more liberal in the
Democratic primaries and Republican candidates are more conservative in the
Republican primaries than either is in the general election. The explanation for this is
most probably that
a. they are facing politically different opponents in the two elections.
b. the median voter preferences are more to the left (right) in the primaries than in the
general election.
c. more people vote in the general election than in the primaries.
d. candidates are not as likely to locate the position of the median voter in the (earlier)
primaries as they are in the (later) general election.