Figure 5-16
Figure 5-16 shows Adam’s purchases of bananas and apples when apples cost $5 each
and bananas $4 each. The information implies that Adam’s income
a. must be $9.
b. must be $20.
c. must be $40.
d. Adam’s income cannot be determined without further information.
Industries, where economies of scale dictate that only a few firms produce, will be
efficient if the markets in which they sell are
a. perfect.
b. contestable.
c. close to each other.
d. protected from entry.
Figure 5-17
In Figure 5-17, the consumer would prefer
a. D to C.
b. B to D.
c. C to B or A.
d. D to A but not B.
Input-output analysis is a technique used to solve complicated market equations.
a. True
b. False
Define the following terms and explain their importance to the study of economics:
a. antitrust policy
b. economies of scale
c. economies of scope
To avoid an increase in the local property tax, Sullivan County, New York, proposed a 2
percent hotel tax, which presumably would be passed on to tourists. The hotel industry
argued that the tax would hurt hotel business. They are really arguing that
a. tourist and convention demand is inelastic, so hotel bookings will decline.
b. tourist and convention demand is very elastic, so hotel bookings will decline.
c. they would prefer a property tax increase instead.
d. it is unfair to tax people who do not live in the area.
Pure monopoly markets are very common in the real world.
a. True
b. False
A change in the price of a good has no effect on the supply schedule.
a. True
b. False
A monopolist maximizes profits by producing where which of the following occur?
a. MC = P
b. AC = P
c. MC = MR
d. AC = AR
All other factors held constant, if the price of game consoles rise, the demand for
gaming titles will
a. shift to the left, because they are normally used together.
b. remain constant.
c. shift to the right, because they are normally used together.
d. shift to the right, because they are substitutes.
A home appliances supplier offers substantial discounts to customers if they buy several
of the firm’s products. When bought together, these items cost considerably less than the
sum of the prices of the items if they were bought separately. Which pricing
arrangement is being discussed here?
a. Price dealing
b. Tacit collusion
c. Bundling
d. Skimming
Economists generally agree that in reducing poverty, policies should be sought that do
the
a. greatest good for total production.
b. least harm to work incentives.
c. most good for the poor.
d. least harm to equality of income.
Which of the following is true about the United States?
a. There has only been one recession in U.S. history.
b. There have been recessions every couple of years throughout U.S. history.
c. Recessions have never occurred in the United States.
d. Recessions have occurred periodically in U.S. history.
e. Recessions in the United States have generally been worse than in other countries.
Concentration increases in an industry
a. if the larger firms gain control of important resources, squeezing out smaller firms.
b. if some firms become technologically superior over time.
c. if innovation increases plant size of some firms and lowers their cost.
d. All of the above are correct.
An increase in the interest rate causes the MRP of a resource to fall.
a. True
b. False
The deregulation of oil pricing will
a. increase our dependence on foreign oil.
b. make the United States energy-independent by the year 2000.
c. decrease domestic production.
d. decrease the extent of the nation’s dependence on foreign oil.
Cost curves in the long run differ from cost curves in the short run.
a. True
b. False
Division of iron ore between the production of bridge girders and tanker drums is an
example of
a. a distribution problem.
b. production planning.
c. input-output analysis.
d. both output selection and distribution
Which of the following is a symptom of a price floor?
a. scalping of Super Bowl tickets
b. surplus cheese
c. the New York city housing shortage
d. black markets
e. milk shortages