1) Public policy has been ineffective in alleviating the resource misallocation problem
in American agriculture.
2) Over a longer time period after a price-change, the price elasticity of supply tends to
decrease.
3) The basic source of state government’s revenue is the property tax.
4) Price elasticity of demand tends to be low for goods with few close substitutes.
5)
Current U.S. immigration law is heavily weighted toward family reunification.
6) Collusion among firms always involves formal agreements.
7) The movement to eliminate agricultural subsidies in the U.S. and make farmers rely
more on market forces, starting with the Farm Act of 1996, continues to this day.
8) “3-D printers” are capable of producing real output like chairs or machine parts using
a computer-controlled special printer at low cost even if you produce only one unit of
output.
9) Renewable energy sources account for about 50 percent of U.S. electricity
generation.
10) Rising health care costs have prompted workers to change jobs with greater
frequency.
11) According to behavioral economics, temptation to make harmful decisions can be
overcome by presenting decision makers with better information and more options.
12) Government assumes some responsibility for providing a minimum standard of
living for all citizens to compensate for the increase in income inequality caused by
government tax revenues and expenditures.
13) Behavioral economics hopes to eventually fully replace the neoclassical economic
model.
14) The following table applies to a purely competitive industry composed of 100
identical firms.
Refer to the table. If each of the 100 firms in the industry is maximizing its profit, each
must have a marginal cost of:
A.$5
B.$4
C.$3
D.$2
15) The reasons why health care costs in countries with public health insurance, like the
United Kingdom and Canada, have not risen as much as the costs in the U.S. include
the following, except:
A.Setting a cap on costs to ration health care
B.Waiting or queuing to ration health care
C.Fixed government budgets for health care, leading to rationing
D.Expanded coverage as a way to ration health care
16) If a good that generates negative externalities were priced to take these negative
externalities into account, then its:
A.Price would decrease and its output would increase
B.Output would increase but its price would remain constant
C.Price would increase and its output would decrease
D.Price would increase but its output would remain constant
17) A nation’s production possibilities curve might shift to the left (inward) as a result
of:
A.technological advance.
B.increases in the size of the labor force.
C.the depletion of its soil fertility due to overplanting and overgrazing.
D.investing in more capital goods.
18) If a firm buys a new computer system that costs $12,000 a year it can reduce the
firm’s cost by $900 a year. The firm should borrow funds and purchase this machine if it
can negotiate an annual interest rate on the loan between:
A.6 and 7 percent
B.8 and 9 percent
C.10 and 12 percent
D.13 and 14 percent
19) A positive effect of advertising for society is that it:
A.Increases market share for the dominant firm in the industry
B.Provides useful information to reduce search cost for consumers
C.Raises barriers to entry into the industry and protects existing firms
D.Creates price leadership and gives firms guidance in dealing with rivals
20)
Refer to the data. At $100 million of R&D expenditures, the:
A.marginal cost of R&D exceeds the marginal benefit.
B.marginal benefit of R&D exceeds the marginal cost.
C.expected rate of return from R&D is negative.
D.firm has exceeded its affordable level of R&D.
21)
Refer to the above table. The total variable cost of producing 5 units is:
A.$10
B.$14.60
C.$63
D.$73
22) The price paid for the use of money is called:
A.Commission
B.Royalty
C.Interest
D.Rent
23)
Refer to the above graph. Which point in the graph would allow a simultaneous
increase in the production of both investment and consumer goods?
A.A
B.B
C.C
D.D
24) What are the nonroutine decisions of entrepreneurs that involve substantial financial
risk?
25) Is the problem of coordination common to all economies? Explain how the problem
is met in a market economy and how coordination was dealt with in a command
economy.
26) What three assumptions are used in the chapter to keep the analysis relatively
simple?
27) Assume that the current generation or first generation consists of 20 million people,
half of whom are women. If the total fertility rate is 1.2 and the only way people die is
of old age, how big will the second generation be? In percentage terms, how much
smaller is second generation than the previous generation?
28) Describe two historic legal cases to contrast the two different views of antitrust
laws. One case would support the behavioralist view of antitrust laws. The other case
would support the structuralist views of the antitrust laws.
29) What is human capital? How is it related to labor markets?
30) Is demand more important than supply in determining equilibrium price and
quantity in a competitive market? Explain.
31) How can diseconomies of scale occur at larger capacities?
32) Discrimination based on gender may cause a regrettable redistribution of income in
favor of males and at the expense of females, but it entails no loss to society as a whole.
Evaluate.