Archives: Quiz

Fixed costs exist only in the: A. long run when some inputs are fixed. B. long run when all inputs are fixed. C. short run when some inputs are fixed. D. short run when all inputs are fixed. Answer: The […]

A developing country can be expected to rely more on: A. tariffs than quotas since tariffs are an easy way to raise tax revenue. B. tariffs than quotas because tariffs are more effective means of reducing imports. C. quotas than […]

“Letting the data speak” in economics refers to: A. using a layperson’s terms in publications to explain your findings. B. collecting and analyzing data with econometric tools. C. focusing only on the heuristic model. D. using only deductive reasoning. Answer: […]

Barriers to entry: A. do not affect the number of firms in an industry. B. exist only in perfectly competitive markets. C. restrict the number of firms in an industry. D. limit output in an industry. Answer: A labor supply […]

The basis of the argument favoring government intervention to correct informational and rationality problems is that: A. if information is not perfect or if one trader is not rational, a trade can result in one party benefiting and the other […]

The text calls the type of comparative advantage that is not easily changed, such as climate: A. stable comparative advantage. B. inherent comparative advantage. C. equilibrium comparative advantage. D. permanent comparative advantage. Answer: Compute the approximate elasticity of demand from […]

Globalization has made economies of scope: A. more important to firms because global corporations can segment the production process. B. more important to firms because global corporations do not have to segment the production process. C. less important to firms […]

If firms have to spend money on creating and protecting their monopoly power, they’re going to buy: A. more monopoly power than if it were free. B. the same monopoly power as if it were free. C. less monopoly power […]

Alan is sitting in a bar drinking beers that cost $1 each. According to the economic decision rule, Alan will quit drinking when the marginal: A. benefit to him of an additional beer is less than $1. B. cost to […]

Alex is playing his music at full volume in his dorm room. The other people living on his floor are enjoying his music, but Alex does not know or care. Alex’s music playing is an example of a: A. negative […]

Labor demand is less elastic when: A. there are many substitutes for labor in the production process. B. the inputs that could be substituted for labor are relatively inexpensive. C. a large amount of labor is essential to the production […]

Refer to the graph shown. If this monopolist produces 700 units of output per day, it: A. can increase profit by producing more. B. can increase profit by producing less. C. will be maximizing profit. D. will incur economic losses. […]

If MR < MC, a monopolist should: A. decrease production. B. increase production. C. maintain the same level of production. D. stop producing. Answer: Refer to the following graph. The perfectly competitive firm depicted is currently: A. earning positive economic […]

Joseph Gallo poured two glasses of wine from the same bottle but put a more expensive price tag on one glass than on the other. He let people test both and asked them which they wanted, and most wanted the […]

Andy is offered the following two income scenarios: (1) earn $10,000 the first year, $12,000 the second year, and $15,000 the third year or (2) earn $15,000 the first year, $12,000 the second year, and $10,000 the third year. Which […]

Say that Janie is exhibiting the endowment effect as she makes a decision. She is: A. deciding on the basis of sunk costs. B. valuing what she already has more. C. consuming on the basis of endorsements by celebrities. D. […]

A life insurance company is likely to require a health examination of a person applying for insurance. This helps reduce the informational problem through the process of: A. signaling. B. screening. C. creating an externality. D. government regulation. Answer: Strategic […]

The price of food relative to other goods has: A. fallen, making it easier to live on less income. B. fallen, making it harder to live on less income because other goods cost so much. C. increased, making it harder […]

Suppose a lazy monopolist’s fixed costs are lower than the fixed costs of an inefficient monopolist. In all other respects, the monopolists are the same. Which of the following statements about this monopolist is true? A. It charges a higher […]

The infant industry argument for protection is: A. rejected by many economists because they oppose any government intervention. B. accepted by most economists because historical experience supports it. C. rejected by most economists because many infant industries become reliant on […]

Compared with a normal monopolist, an effective price-discriminating monopolist produces a: A. smaller output at a lower profit. B. smaller output but at a larger profit. C. larger output at a larger profit. D. larger output but at a lower […]

Economists agree that: A. sometimes incentives facing a decision -maker will not achieve the desired result. B. incentives are likely to be inconsequential unless prices are involved. C. social and moral pressures cannot be modeled. D. markets are always the […]

The higher the concentration ratio in a given industry, the: A. closer the industry is to a perfectly competitive market structure. B. larger the market shares of the smallest four firms in the industry. C. closer the industry is to […]

Refer to the graph shown. If hamburger dinners are produced by a perfectly competitive industry with a market demand D: A. output will be the same as it would be under monopoly. B. price will equal marginal cost. C. price […]

Refer to the graph shown. Areas C and D represent: A. the loss of surplus by consumers resulting from a monopoly. B. the cost to society of increasing output from Qm to Qc. C. consumer surplus redistributed to the monopolist. […]

A policy in which the marginal costs of undertaking the policy equal the marginal benefits of that policy is best called an: A. equality policy. B. incentive policy. C. optimal policy. D. opportunity policy. Answer: Refer to the table shown […]

If the average cost of producing 9 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.75, the average cost of producing 10 sweaters will: A. be $6.50. B. be more than $6.50. C. be less […]

Flu vaccinations of school children have the unintended effect of protecting the vulnerable elderly from contracting the virus. This is an example of a: A. free rider problem. B. social force. C. goods distribution. D. positive externality. Answer: If the […]

Refer to the graphs shown. Assume the graph reflects demand in the egg market. Which arrow best captures the impact of increased consumer concern about cholesterol on the egg market? A. A B. B C. C D. D Answer: If […]

In the early 2000s car sales in China had slowed in part caused by the government’s actions to limit businesses from lending funds to consumers. Assuming the car market in China can be analyzed with demand and supply curves, what […]

Refer to the table shown. The average variable cost of producing five bicycles per week is: A. less than or equal to $116. B. $116. C. $140. D. greater than or equal to $140. Answer: The price mechanism that guides […]

If federal, state, and local governments were unable to raise any revenue, then government’s role as: A. only a referee would be unaffected. B. only an actor would be unaffected. C. both an actor and a referee would be eliminated. […]

Refer to the graph below. Laura’s production possibility curve for math and economics problems in one night is shown in the graph. Her opportunity cost of finishing six math problems instead of four math problems is: A. one economics problem. […]

Refer to the graph shown, which depicts a perfectly competitive firm. To maximize profit, the firm represented will produce: A. 40 units of output. B. 90 units of output. C. 110 units of output. D. 130 units of output. Answer: […]

Which of the following is an example of a nudge? A. Income is redistributed through tax and spending programs. B. A farmer’s market raises prices because a storm destroyed crops. C. Government taxes cigarettes. D. An employee must check a […]

A tariff is: A. a tax that government places on imported goods. B. a quantity limitation placed on imports C. an all-out restriction on imports. D. a government-imposed procedural rule limiting imports. Answer: The Mexican demand for American goods leads […]

At one time, sea lions were depleting the stock of steelhead trout. One idea to scare sea lions away from the Washington coast was to launch fake killer whales, which are predators of sea lions. The cost of making the […]

Behavioral economists have found that people are more willing to save if saving is the default option, as in the case in which they have to opt out of an automatic payroll deduction savings plan. Economists call this: A. a […]

Refer to the graph shown. If the monopoly firm maximizes profit, consumers will pay: A. $2.00 per unit and consumer surplus will be 45. B. $2.50 per unit and consumer surplus will be 18.75. C. $3.50 per unit and consumer […]

In the graph shown, the country has a trade: A. deficit. B. surplus. C. balance. D. appreciation. Answer: Don and Dana have both been accused of insider trading. Don knows that if he confesses while Dana keeps silent, he will […]

Because income differs so much by type of job, some economists argue that a new class distinction has emerged between: A. union and nonunion workers. B. workers and capitalists. C. professionals and nonprofessionals. D. salaried workers and the self-employed. Answer: […]

Public choice economists focus on: A. how the invisible hand achieves harmony and equilibrium through the market. B. the tensions among social classes. C. economic incentives faced by politicians. D. cultural and historical aspects of the market. Answer: Investment in […]

Economics is an art because it: A. is not scientific. B. relies entirely on value judgments. C. blends objective and subjective analyses. D. blends positive and objective analyses. Answer: If a nation has a comparative advantage in the production of […]

Dynamic pricing allows a website to use the personal information collected on a customer, such as income or location, to individualize the price of a product for each customer. Economists consider this type of pricing an example of: A. consumer […]

Refer to the graph shown. If consumers had to pay $7.50 per unit for this product instead of $5.00 per unit (because of a price floor or a shift in supply), consumer surplus would fall from: A. 2,000 to 500. […]

The graph shown exhibits diseconomies of scale: A. in region a. B. in region b. C. in region c. D. over the entire range of output. Answer: The supply of euros on the foreign exchange market slopes: A. upward because […]

If 1 Canadian dollar costs 0.60 U.S. dollar, 1 U.S. dollar costs: A. 0.40 Canadian dollar. B. 0.60 Canadian dollar. C. 1.40 Canadian dollars. D. 1.67 Canadian dollars. Answer: Judgment by performance means that the competitiveness of a market is […]

An inverse relationship occurs between two variables when as one goes: A. up the other goes up. B. up the other goes down. C. up the other does not change. D. down the other goes down. Answer: Refer to the […]

The rule for making optimal decisions is that an activity should be increased until: A. average costs are minimized. B. total costs are minimized. C. total benefits are maximized. D. marginal benefits equal marginal costs. Answer: Along a straight-line demand […]

Assume that in Canada the opportunity cost of producing one television set is two bushels of wheat. Assume that in the United States the opportunity cost of producing one bushel of wheat is two television sets. If these two countries […]