Consumer spending accounts for what share of GDP?
a. 20%
b. 40%
c. 70%
d. 90%
Taxes on polluting firms for pollution are intended to
a. raise enough revenue to cut the deficit in half.
b. encourage firms to reduce charges by polluting less.
c. be efficient, i.e., result in no excess burden.
d. raise revenue for general spending needs.
The drug maker Pfizer enjoyed a monopoly of the antibiotic Lipitor because of patent
rights.
a. True
b. False
Figure 7-5
Which of the graphs in Figure 7-5 could be a firm’s total fixed cost curve?
a. (a)
b. (b)
c. (c)
d. (d)
Scarcity raises both price and marginal utility but generally reduces total utility.
a. True
b. False
Input-output analysis is commonly used in production decisions.
a. True
b. False
Why is it that only a small percentage of American firms are incorporated?
a. Corporate debt as stockholder’s liability.
b. Small size of firms.
c. Unlimited liability.
d. Inability to outlast associated individuals.
Which of the following is one source of disagreement between economists?
a. Some facts about the economy are unknown.
b. Economists differ in their political persuasions.
c. Economic theory may not always give an unambiguous answer to a question.
d. Solving one problem may make another problem worse.
e. All of the above are correct.
Symmetric information generally leads to efficient allocations of resources.
a. True
b. False
A shift of the demand curve for a good occurs whenever new technologies make inputs
used in producing that good available at lower prices.
a. True
b. False
Recent data and analysis confirms that minimum wage laws have significantly
increased teenage unemployment.
a. True
b. False
A firm facing a horizontal demand curve
a. cannot affect the price it receives for its output.
b. always produces at an output at which P = MR.
c. faces perfectly elastic demand for its product.
d. All of the above are correct.
Which of the following is a valid reason to consider government regulation?
a. Seeking some social objective that markets do not achieve.
b. Fear that capitalism will prove too productive.
c. Desire on the part of government to be useful.
d. Requests for protection from an industry.
e. All of the above.
Income effect of lower wages implies
a. workers prefer leisure to work.
b. an increase in the productivity of labor.
c. a fall in the demand for labor.
d. workers would want to work more.
The term “fiscal federalism” refers to
a. deficit financing of government programs.
b. the power of Congress to tax and to determine how tax revenues are spent.
c. transferring money between levels of government (for example, from a state
government to a local government).
d. the system under which governments ask citizens to vote on major revenue-raising
measures (for example, on issues of municipal bonds).
Which of the following is not a loan of funds?
a. home mortgage
b. government bond
c. corporate stock
d. corporate bond
A landlord will supply her land for rental only if in equilibrium
a. she receives economic rent on the land.
b. she is paid at least the opportunity cost of using the land herself.
c. her land is marginal.
d. her rate of return on her investment in the land is zero.
The unit-elastic demand curve bends in the middle toward the origin of the graph and at
either end moves closer to the axes.
a. True
b. False
In a free market for rental housing, effective rent control would have which effect?
a. It would cause a reduction in the number of apartments.
b. It would cause an increase in the number of apartments, since landlords would try to
increase their profits through larger scale.
c. It would have no effect on the number of apartments offered in the market.
d. The results are impossible to predict.
If the price of one input changes, generally the firm will change its use of both inputs.
a. True
b. False
Economists believe it is feasible and desirable to reduce environmental damage to zero.
a. True
b. False
Figure 4-9
“Moonshine” is illegal home brew made by adding sugar to accelerate corn
fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. In the
mid-1970s, the price of sugar tripled and the price of moonshine skyrocketed from $6 to
$15 a gallon. Which graph in Figure 4-9 best illustrates this?
a. 1
b. 2
c. 3
d. 4
Why do economists measure responsiveness of demand to price in percentage changes
rather than in absolute changes?
Explain why marginal revenue is less than price for a monopolist.
Explain the reasoning behind the shutdown rules. When is it appropriate to operate with
a loss?
Explain what is meant by “derived demand” as it relates to factors of production.
According to Professor Robert Gordon of Northwestern University, what are the four
“headwinds” facing the U.S. economy, and how do they interact with innovation?
What are the advantages and disadvantages of resource allocation under monopolistic
competition compared to perfect competition?
An economy consists of two goods: beef and lamb. Of all the points on this economy’s
production possibilities frontier, which one is best in terms of efficiency?