Opening an industry to international competition tends to:
A. increase X-inefficiency.
B. force lazy monopolists to increase efficiency.
C. increase the incidence of lazy monopolists.
D. raise a monopolist’s profit as the price is driven up.
Answer:
If the law of diminishing marginal product holds true and workers emigrate from Haiti,
the marginal product of the workers remaining in Haiti will:
A. rise because more workers are working with the same amount of capital.
B. rise because fewer workers are working with the same amount of capital.
C. fall because more workers are working with the same amount of capital.
D. fall because fewer workers are working with the same amount of capital.
Answer:
Duties imposed by the U.S. government on imported Chinese frozen and canned shrimp
are an example of:
A. tariffs.
B. quotas.
C. voluntary restrictions.
D. regulatory trade restrictions.
Answer:
A simultaneous game is one in which:
A. players act together to achieve a common goal.
B. players take turns making moves and/or decisions.
C. players make their moves and/or decisions at the same time.
D. there is never a winner if players act rationally.
Answer:
The long-run average cost of producing 19 units of output is $56, and the long-run
average cost of producing 20 units is also $56. These numbers imply that:
A. decreasing marginal productivity is present.
B. constant returns to scale are present.
C. economies of scale are present.
D. diseconomies of scale are present.
Answer:
If markets are perfectly competitive and production of a good results in water pollution,
the imposition of a tax on that good will:
A. increase the price of that good and increase pollution.
B. reduce the price of that good and increase pollution.
C. reduce the price of that good and decrease pollution.
D. increase the price of that good and reduce pollution.
Answer:
Economists who identify a goal and then design a mechanism to achieve that goal are
engaging in:
A. setting money prices.
B. laissez-faire policies.
C. choice architecture.
D. mechanism design.
Answer:
Which of the following is not a way in which monopolies fight real-world competition?
A. Lobbying
B. Advertising
C. Producing products that are difficult to copy
D. Charging a very high price for their products
Answer:
Capitalism and socialism have not existed forever. Capitalism came into existence in
the:
A. mid-1800s and socialism came into existence in the early 1900s.
B. early 1900s and socialism came into existence in the mid-1800s.
C. mid-1700s and socialism came into existence in the early 1900s.
D. early 1900s and socialism came into existence in the mid-1700s.
Answer:
Suppose a scientific report states that fish contain dangerously high levels of mercury
(toxic to humans). At the same time, the price of diesel fuel, used by fishermen to fuel
their boats, falls. What is the effect on the market for fish?
A. A decrease in demand and a fall in price and quantity sold
B. A decrease in demand and supply; price and quantity sold falls
C. A decrease in demand and an increase in supply; price falls but the change in
quantity is ambiguous
D. A decrease in demand and supply; price and quantity sold rises
Answer:
The text mentions 10 sources of U.S. comparative advantage. Which of the following is
not one of them?
A. A large military
B. Skills of the labor force
C. A stable government
D. An extensive physical and technological infrastructure
Answer:
According to Newton’s law, a body in motion remains in motion. A body in equilibrium
according to this law:
A. does not exist.
B. bounces.
C. is in motion.
D. is in rest.
Answer:
Refer to the table shown. Marginal cost is minimized when how many units of output
are produced?
A. 3
B. 4
C. 5
D. 6
Answer:
Refer to the table shown, which shows the demand schedule for a firm that has a
monopoly on the sale of personal computers in the country of Oz. If the marginal cost
of producing computers is $1,000 no matter how many are produced and the
monopolist seeks to maximize profit, it should set the price of computers at:
A. $1,000.
B. $2,000.
C. $3,000.
D. $4,000.
Answer:
Marginal revenue is not equal to price for a monopolist because:
A. the monopolist’s demand curve is below its marginal revenue curve.
B. total revenue increases as output increases.
C. the monopolist sets price equal to marginal cost.
D. the monopolist must lower the price of all units in order to sell more.
Answer:
A defining difference in what makes a firm a sole proprietorship, partnerships, or a
corporation is the:
A. size of each type of business.
B. number of each type of business.
C. nature of ownership and accountability for each type of business.
D. profitability of each type of business.
Answer:
Honey and jam are substitute products. If the price of honey increases, the demand for:
A. honey will increase.
B. honey will decrease, causing its price to fall.
C. jam will increase, causing the price of jam to increase as well.
D. jam will decrease, causing the price of jam to fall.
Answer:
An economist is most likely to support all of the following methods to address the
negative externalities created by the waste from newspapers except:
A. requiring publishers to cut the volume of newspapers generated but allowing them to
sell certificates so that others can meet those requirements for them.
B. taxing the suppliers of newspaper by the pound.
C. having the cost of the externality be paid by the government.
D. ensuring that the social cost of buying a newspaper is reflected in its price.
Answer:
Given the production possibility tables for the First and Second Bakeries shown, we
know that the opportunity cost of producing cookies:
A. is higher at First Bakery.
B. is higher at Second Bakery.
C. is the same at both bakeries.
D. cannot be computed without further information.
Answer:
Suppose that a critic of market economies proposes three major criticisms: (1) the
market leads people to want the wrong things, (2) the gap between the rich and the poor
that the market generates is obscenely large, and (3) free rider problems are
everywhere, and their presence seriously distorts market production and consumption.
Of these three criticisms, how many can be classified as failures of market outcome
rather than as market failures?
A. Zero
B. One
C. Two
D. Three
Answer:
Suppose Mary finds it easier to conserve than Jim does. The difference between a tax
incentive program and a marketable certificate plan in this case is that:
A. Mary undertakes most of the conservation in the case of a tax incentive program and
least in the marketable certificate program.
B. Mary undertakes least of the conservation in the case of a tax incentive program and
most in the marketable certificate program.
C. Mary takes on most of the conservation in both cases but is paid by Jim in the
marketable certificate program.
D. Jim takes on most of the conservation in both cases but is paid by Mary in the
marketable certificate program.
Answer:
In 1990, the Clean Air Act was amended to place a national cap on sulfur dioxide
emissions, giving electric utilities an allowance of a set amount of emissions and
allowing the utilities to trade their allowances. This type of plan is:
A. more efficient than direct regulation because utilities that receive a high marginal
benefit from emissions can gain additional allowances through trade.
B. more efficient than direct regulation because it forces each utility company to reduce
sulfur dioxide emissions by the same amount.
C. less efficient than direct regulation because utilities that receive a high marginal
benefit from emissions can gain additional allowances through trade.
D. less efficient than direct regulation because it forces each utility company to reduce
sulfur dioxide emissions by the same amount.
Answer:
Refer to the graph shown. The output range in region c is associated with:
A. diminishing marginal productivity.
B. constant returns to scale.
C. economies of scale.
D. diseconomies of scale.
Answer:
Economists have been interested in the following interaction: A person is allowed to
split a sum of money between himself and another person. The other person can then
accept the split or reject it, in which case neither person gets anything. Economists call
this interaction the:
A. ultimatum game.
B. prisoner’s dilemma.
C. game of chicken.
D. sucker’s payoff.
Answer:
In discussing government policy regarding foreign trade, an economist stresses the
power that big U.S. corporations have over people in poor countries, a power that they
can use to exploit the poor. This way of seeing the world is most compatible with:
A. mainstream economics.
B. Marxian economics.
C. public choice economics.
D. right-wing economics.
Answer:
The idea that a person wants to have a bigger house in order to outdo his or her
neighbors is referred to as:
A. enlightened self-interest.
B. the incentive compatibility problem.
C. luxury fever.
D. purposeful behavior.
Answer:
Refer to the graph below.
Which of the shifts explains what would happen to the production possibility curve if a
cyclone destroys five major garment factories in the Philippines?
A. I
B. II
C. III
D. IV
Answer:
Which of the following is the best example of a demerit good?
A. cigarettes
B. whole-wheat bread
C. bicycles
D. education
Answer:
Tuition and fees for four year colleges in the United States have risen over five percent
per year in the recent past. One cause for the increase in price has been an increase in
demand for college education. In the standard model, what could be a possible
explanation for the increase in the demand for college education?
A. More colleges have been established
B. The cost of two-year colleges has declined over the same period
C. Income in the United States has risen
D. The price of all other goods in the economy has risen 3 percent over the same period
Answer:
Socialism in theory is based on the principle that individuals should:
A. look out for their own interests and let the government look out for the public
interest.
B. rely on the government to meet their needs.
C. cooperate with one another to meet their needs.
D. compete with one another to meet their needs.
Answer: