Which of the following is the most efficient way to reduce pollution emissions?
a. Emission standards that cap allowable pollution.
b. Government pollution charges or taxes.
c. Legislated regulations limiting the quantity of emissions allowed by each firm.
d. Enforcement of property rights, when those rights are well-defined and transaction
costs are low.
Camila is a homemaker. Last week, she was busy with her normal household activities.
How would the Bureau of Labor Statistics classify her?
a. A member of the civilian labor force who is employed.
b. A member of the civilian labor force who is unemployed.
c. A member of the civilian labor force who is underemployed.
d. A discouraged worker who is not a member of the labor force.
e. Not a member of the labor force.
Use the figure to answer the following question(s).
Figure 8-8
In Figure 8-8, which output minimizes per-unit cost?
a. 4
b. 6
c. 7
d. 8
Use the figure to answer the following question(s).
Figure 10-2
What price should a competitive price-searcher firm with the cost and demand
conditions depicted in Figure 10-2 charge if it wants to maximize its profit?
a. $5
b. $7
c. $8
d. $10
The large budget deficits of 2001-2011 were
a. financed entirely through borrowing from domestic sources.
b. accompanied by a rapid increase in private investment, which will enhance the
welfare of future generations of Americans.
c. accompanied by an increase in consumption as a share of GDP, which indicates the
current generation of Americans is gaining at the expense of future generations.
d. accompanied by large trade surpluses, which will enhance the welfare of future
generations of Americans.
Karlos sells his product for $40 each in a competitive price-taker market. At his present
rate of output, his marginal cost is $39, average variable cost is $25, and average total
cost is $45. To improve his profit/loss situation, Karlos should
a. increase output
b. reduce output but not to zero
c. maintain the present rate of output
d. shut down
e. raise the price
Which of the following statements best reflects the production decision of a
profit-maximizing firm in a competitive price-taker market when price falls below the
minimum of average variable cost?
a. The firm will continue to produce to attempt to pay fixed costs.
b. The firm will stop production to minimize its losses.
c. The firm will stop production as soon as it is able to pay its sunk costs.
d. The firm will continue to produce in the short run but will likely exit the market in
the long run.
When the price of a resource is set below equilibrium,
a. excess demand for the resource will occur.
b. excess supply of the resource will result.
c. the supply of the resource will be inelastic.
d. the demand for the resource will be inelastic.
According to modern analysis, what is the link between the long-run growth rate of the
money supply and inflation?
a. there is little correlation between money growth and inflation
b. there is a positive link between money growth and inflation, contrary to the quantity
theory of money
c. there is a strong, positive link between rapid money growth and inflation
d. there is an inverse relationship between rapid money growth and inflation
Which of the following will most likely cause an increase in the long-run aggregate
supply curve?
a. a reduction in the general level of prices
b. an increase in the general level of prices
c. an improvement in technology that substantially reduces the cost of generating
energy
d. an increase in taxes that makes it more expensive for Americans to import crude oil
If U.S. net exports are negative,
a. U.S. consumers are spending less on foreign goods than foreign consumers are
spending on U.S. goods
b. U.S. consumers are spending more on foreign goods than foreign consumers are
spending on U.S. goods
c. the government must promote imports to balance international trade
d. U.S. consumers are spending more on foreign goods than they are spending on U.S.
goods
e. U.S. disposable income is low
Working conditions, prestige, variety, location, employee freedom, and employee
responsibilities are all examples of
a. the tools of employment discrimination.
b. sociological factors affecting employment.
c. pecuniary job characteristics.
d. non-pecuniary job characteristics.
Compared to the situation prior to 1980, the top marginal personal income tax rate
imposed on the rich is now substantially
a. lower and so is the share of the revenue collected from them.
b. higher and so is the share of the revenue collected from them.
c. lower, but the share of the revenue collected from them is now higher.
d. higher, but the share of the revenue collected from them is now lower.
Suppose that a tax is placed on a particular good. If the buyers end up bearing most of
the tax burden, this indicates that the
a. demand is more inelastic than the supply.
b. supply is more inelastic than the demand.
c. government has required that buyers remit the tax payments.
d. government has required that buyers remit the tax payments.
Which of the following is true with regard to value and exchange?
a. Exchange generally moves a good from a person who values it more to a person who
values it less.
b. Transaction costs reduce our ability to gain from potentially advantageous trades.
c. Middlemen increase transaction costs and, thereby, reduce the potential gains derived
from trade.
d. Physical goods have an objective value that is unrelated to time and the person of
ownership.
How are the economic forces that apply to renewable resources different than those that
apply to non-renewable resources?
a. Non-renewable resources must be protected by government policies to prevent
depletion.
b. Non-renewable resources do not have any substitutes so the economic forces are
different than those for renewable resources..
c. Both renewable and non-renewable resources may become scarcer over time so the
economic forces at work are similar.
d. Renewable resources are not subject to the laws of economics since the scarcity
condition no longer holds.
How do the high implicit marginal tax rates that often occur when transfer payments are
inversely linked to earnings affect the incentive of poor people to work and earn?
a. A poor person’s incentive to earn is increased.
b. A poor person’s incentive to earn is reduced.
c. The incentive of the poor to earn is unaffected.
d. The incentive of the poor to earn reported income is increased, but the incentive to
earn unreported income is reduced.
During the last several decades, the size of the trade sector (exports plus imports) of the
United States has been
a. increasing as a share of the economy.
b. relatively constant as a share of the economy.
c. declining as a share of the economy.
d. increasing during periods of recession, but declining during periods of strong
economic growth.
During the past 50 years, the production possibilities of the United States have
expanded, increasing both short-run and long-run aggregate supply. Other things
constant, this would lead to
a. an expansion in output and an increase in prices.
b. an expansion in output and a decrease in prices.
c. no change in either output or prices.
d. no change in output and a decrease in prices.
For the typical student, taking an introductory course in economics should
a. turn the student into an economist.
b. teach the student solutions to most social problems.
c. teach the student how to answer complex social questions.
d. help the student learn to rationally analyze social problems.
e. All of the above are correct.
In a competitive price-searcher market, the firms will
a. be able to choose their price, and the entry barriers into the market will be low.
b. be able to choose their price, and the entry barriers into the market will be high.
c. have to accept the market price for their product, and the entry barriers into the
market will be low.
d. have to accept the market price for their product, and the entry barriers into the
market will be high.
If price rises, what happens to the quantity demanded for a product?
a. It increases.
b. It decreases.
c. It does not change.
d. Uncertain–economic theory has no answer to this question.
Under a currency board regime, if domestic citizens are buying more (imports) from
foreigners than they are selling to them (exports),
a. the amount of the domestic currency exchanged for the foreign currency will
decrease and, thus, increase the domestic money supply.
b. the amount of the domestic currency exchanged for the foreign currency will
decrease and, thus, decrease the domestic money supply.
c. the amount of the domestic currency exchanged for the foreign currency will increase
and, thus, increase the domestic money supply.
d. the amount of the domestic currency exchanged for the foreign currency will increase
and, thus, decrease the domestic money supply.
Suppose the price of an airline ticket from Dallas to Boston costs $600. A bus ticket
costs $150. Traveling by plane takes 6 hours compared with 51 hours by bus. Other
things constant, an individual would gain by choosing air travel if, and only if, his time
were valued at more than
a. $6 per hour.
b. $8 per hour.
c. $10 per hour.
d. $15 per hour.
“The resources now going into the War on Terrorism and into improved airport security
would save more lives if they were invested in medical research.” This statement most
clearly reflects which of the following?
a. The best test of an economic theory is its ability to predict.
b. There is no such thing as a free lunch–the use of scarce resources always has an
opportunity cost.
c. selfishness; if people were not selfish, we could have more of everything.
d. The value of goods can be determined objectively.
Use the table of expected cost and revenue data for the Tuckers Tomato Farm below to
answer the following question(s). The Tuckers produce tomatoes in a greenhouse and
sell them wholesale in a competitive price-taker market.
Table 9-1
Refer to Table 9-1. If the Tuckers are profit maximizers, how many tomatoes should
they produce when the market price is $500 per ton?
a. 6
b. 7
c. 8
d. 9
For activities in which the benefits are concentrated and the costs widespread,
governments are likely to undertake
a. too little of these activities relative to what would be efficient.
b. too much of these activities relative to what would be efficient.
c. exactly the amount of these activities that would be efficient.
d. none of these activities.
If scarcity were eliminated,
a. all goods would be free.
b. no one would have to make any choices.
c. everyone could have all they want at no cost.
d. all of the above are true.
According to the modern expectational Phillips curve, unemployment will temporarily
rise above the natural rate of unemployment when
a. any inflation is present.
b. inflation turns out to be lower than what people expected.
c. inflation turns out to be higher than what people expected.
d. inflation turns out to be equal to what people expected.
Which of the following provides the best example of a public good?
a. elementary and secondary education
b. residential trash pickups provided by a local government
c. an unscrambled television signal
d. the medical services provided by a local hospital
Hutch Technology makes computer monitors, which sell for $500 each. What is the
opportunity cost of producing ten monitors?
a. $5,000
b. the other goods that could be produced with the resources that produce the ten
monitors
c. the profits that Hutch earns when it sells the ten monitors
d. the profits that Hutch loses if it does not produce the monitors
e. All of the above are correct.
In a constant cost industry,
a. a natural monopoly is likely to occur.
b. total cost is the same, no matter how much a firm produces.
c. the long-run supply curve will be perfectly elastic.
d. entry of new firms in the industry will lead to a reduction in the cost of inputs.