Archives: Quiz

Sponsors invest $250,000 in a new deli on the promise that they will earn a return of 10% per year on their investment. The deli sells 52,000 sandwiches per year. The deli’s fixed costs include the return to investors and […]

A person who chooses ________ the labor force reveals that either leisure or the value of nonpaid labor is worth ________ to him or her than the value that society places on his or her potential product in the market. […]

The table shows the relationship between income and utility for Sue. Table 17.2 Refer to Table 17.2. Sue earns $40,000 annually. She has the opportunity to bet her entire salary on the upcoming super bowl. If Sue takes the bet, […]

Tacit collusion is ________ to be successful in increasing industry profits when there are ________ similar firms in the industry. A) more likely; many B) less likely; a few C) more likely; a few D) always; no If the interest […]

A firm can invest in one of two projects: the purchase of new delivery vans or the training of its sales staff in the use of new sales techniques. Both projects cost the same amount of money. The purchase of […]

If the Herfindahl-Hirschman Index of an industry is less than 1,000, then the Antitrust Division of the Justice Department A) will challenge any merger that would increase the index by over 100 points. B) considers the industry unconcentrated. C) considers […]

Figure 2.6 Refer to Figure 2.6. Which of the following will NOT cause the production possibility frontier to shift from ppf1 to ppf2? A) a decrease in the unemployment rate, assuming a constant labor force. B) an increase in the […]

When the increase in the price of one good causes the demand for another good to decrease, the goods are A) normal. B) inferior. C) substitutes. D) complements. Table 16.5 Refer to Table 16.5. A point on the market demand […]

Table 20.1 Refer to Table 20.1. Germany has A) a comparative advantage in beer production. B) an absolute advantage in wine production. C) an absolute advantage in beer production. D) all of the above An economy that is producing on […]

Figure 13 The market is initially in equilibrium at Point A. If supply shifts from S1 to S2 and the price of cheeseburgers remains constant at $5.00, there will be A) an excess supply of 6 cheeseburgers. B) an excess […]

As a result, of adverse selection problems in the fire insurance market, it is likely that over time ________. A) fewer low-risk people will be insured B) fewer high-risk people will be insured C) fewer low-risk and high-risk people will […]

If the product derived from the last dollar spent on labor is greater than the product derived from the last dollar spent on capital, then the firm A) is minimizing costs. B) should use more labor and less capital to […]

An improvement in technology will cause the A) production possibility frontier to shift outward. B) production possibility frontier to shift inward. C) economy to move down the production possibility frontier. D) economy to move closer to its production possibility frontier. […]

XYZ Computer Company has a monopoly on the sale of a specialized color printer. If it sells two of these printers, its total revenue is $1,000, and if it sells three, its total revenue is $1,300. The marginal revenue of […]

In output markets, the elasticity of supply tends to be A) negative. B) zero. C) positive. D) decreasing at an increasing rate. Table 11.1 Refer to Table 11.1. If the interest rate is 9%, Nashbar Bicycle’s total investment would be […]

An example of a(n) ________ comparative advantage is that some U.S. consumers prefer German beer over American beer because German beer has a reputation for tasting better. A) unwarranted B) acquired C) natural D) subsidized Table 8.3 Refer to Table […]

Organizations that transform resources into products are known as A) firms. B) entrepreneurs. C) households. D) factors. A non-discriminating monopolist’s price equals its marginal revenue only when A) output is zero. B) total revenue is a maximum. C) marginal revenue […]

In 2009, the lowest incidence of poverty was for A) women living in households with no husband present. B) individuals over 65. C) white (non-Hispanic) people. D) children under 18. As output decreases, average fixed costs A) decrease. B) initially […]

If the slope of a straight line is 4 and if Y (the variable on the vertical axis) decreases by 20, then X (the variable on the horizontal axis) A) increases by 5. B) decreases by 5. C) increases by […]

In an oligopolistic industry where the oligopolists collude, the price firms charge would be ________, and the quantity they produce would be ________, if the industry were a monopoly. A) higher than; higher than B) lower than; lower than C) […]

Figure 13.2 Use Figure 13.2 which depicts a monopolist firm to help with the following question. Define the area of total revenue that this firm will collect if it is maximizing profit. Use the letters that appear on the graph […]

Table 10.2 Refer to Table 10.2. Marginal revenue product of the ________ worker is $1,000. A) second B) third C) fourth D) fifth Figure 5.6 Refer to Figure 5.6. The market is initially in equilibrium at Point A and supply […]

The common way of expressing the efficient market concept is A) “the only true market is a profitable market.” B) “there’s no such thing as a free lunch.” C) “only without government interference can a market survive.” D) “once an […]

When ________ for a monopolistically competitive firm, the firm is in long-run equilibrium. A) MR = MC and P > ATC B) MR > MC and P > ATC C) MR = MC and P = ATC D) MR < […]

Consider the following game. You roll a six-sided die and each time you roll a 1, you get $50. For all other outcomes you pay $10. The expected value of the game is ________. A) -$10 B) $0 C) $10 […]

Consider two countries, Estonia and Ukraine. Estonia devotes a larger portion of its production to capital. All other things equal which of the following statements is most likely true? A) Estonia is a poorer country than Ukraine. B) Estonia will […]

A firm will begin to experience diminishing returns at the output where marginal A) cost increases. B) cost decreases. C) product increases. D) both B and C If the price floor is set above the equilibrium price, A) quantity demanded […]

Figure 5.1 Refer to Figure 6.1. Assume Tom is on budget constraint AC and the price of a hamburger is $5.00. Tom’s monthly income is A) $4. B) $60. C) $80. D) $100. Answer: D Figure 3.19 Refer to Figure […]

Suppose there is a permanent shift of consumer preferences toward frozen yogurt and away from ice cream. The most likely result would be in the A) short run, economic losses in the frozen yogurt market. B) long run, a fall […]

Table 14.1 B’s Strategy Refer to Table 14.1. If both firms follow a maximin strategy, the equilibrium in the game is ________. A) (Raise Price, Don’t Raise Price) B) (Raise Price, Raise Price) C) (Don’t Raise Price, Raise Price) D) […]

Related to the Economics in Practice on page 179: In higher education A) the average total cost of educating students equals the marginal cost of educating an additional student. B) the average total cost of educating students exceeds the marginal […]

When an economy is producing inside its production possibility frontier A) production inefficiency occurs. B) only technological advances will allow it to increase production. C) it is efficient so long as it is producing what people want. D) it must […]

According to utilitarian justice, the redistribution of income from the rich to the poor causes A) the rich to sacrifice a lot and the poor to gain a little. B) the marginal utility of both the rich and the poor […]

Figure 2.4 Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by A) a reduction in unemployment. B) an improvement in technology. C) an increase in economic growth. D) a change in […]

If the cost of the Department of Agriculture’s minimum food budget for two people is $2,000 per year, the official poverty line for a family of two would be A) $667. B) $2,000. C) $6,000. D) $12,000. The ________ automatically […]

Imperfect information on the part of buyers and sellers A) will not stop the economy from achieving market efficiency, assuming the other conditions for market efficiency hold. B) is no longer a problem because the “truth-in-advertising” regulations have been instituted. […]

Both Amy and Tom are trained as nurses. Amy makes $35,000 a year working as a nurse in an emergency room in a New York City hospital. Tom makes $20,000 working as a community health nurse in New York City. […]

A monopolistically competitive firm produces where A) MR > MC. B) MC > MR. C) MR = MC. D) P = MC. Studying how the management of Hewlett Packard decides how many computers to produce and the price to charge […]

Figure 1 Refer to Figure 18.1. At Point A the distribution of goods is A) equitable. B) efficient. C) equal. D) just. Figure 13.3 Refer to Figure 13.3. This firm’s marginal revenue will be positive at Answer: B A) prices […]

A price floor is A) a minimum price set by government that sellers must charge for a good. B) a maximum price set by government that sellers may charge for a good. C) the difference between the initial equilibrium price […]

Figure 6.2 Refer to Figure 6.2. Assume Mr. Lingle’s budget constraint is AC. He will have leftover income if he purchases the bundle represented by point A) A. B) B. C) E. D) D. You and two friends are going […]

A firm hires labor, capital, and land to produce tomatoes. Currently the marginal product of the last unit of labor input is 20, the marginal product of the last unit of capital input is 30, and the marginal product of […]

Figure 6.15 Refer to Figure 6.15. If the price of an ice cream cone is $3, the price of ice cream sandwiches is A) $3. B) $4.50. C) $33.33. D) $150. A ________ industry has a relatively small number of […]

The number of seats available in a stadium is fixed at 80,000. The equilibrium price for a ticket to a football game at the stadium is $30. The equilibrium price for a ticket to a soccer match at the stadium […]

The process by which resources are transformed into useful forms is A) capitalization. B) consumption. C) production. D) allocation. Figure 3.17 Refer to Figure 3.17. The market for sunglasses is in equilibrium at a price of ________ and a quantity […]

If a tax is imposed on externality-producing activities by perfectly competitive firms so that the market is producing the efficient level of output, then price equals ________ and marginal damage cost is ________. A) marginal social cost; equal to zero […]

Some economists advocate government intervention in a market economy A) to produce collective goods and services. B) when resource costs for a private producer do not reflect the full cost to society. C) to stabilize the economy. D) all of […]

Figure 6.1 Refer to Figure 6.1. Tom’s budget constraint is AC. His choice set includes all points A) to the right of budget constraint AC. B) bounded by the area OAC. C) along budget constraint AC. D) along the vertical […]

At a price of $11, quantity demanded is 90; and at a price of $9, quantity demanded is 110. Since total revenue ________ by the price decrease, demand must be ________. A) is increased; elastic B) is decreased; inelastic C) […]

Because they produce where P > MC, we know that monopolistically competitive firms A) always make a profit in the short run. B) prevent the efficient use of resources. C) always make a profit in the long run. D) produce […]