Archives: Quiz

The United States is a fairly good example of a. a mixed economy. b. a pure market system. c. a government-dominated economy. d. a manufacturing economy. e. a transitioning economy. The three major sources of economic profit are a. risk-bearing, […]

Piketty’s analysis concludes that unequal ownership of capital, rather than unequal pay, is responsible for notably high levels of inequality in the decades since the 1980s. a. True b. False A firm will tend to select the least costly input […]

Table 7-5 Table 7-5 shows short-run total cost figures for a stereo manufacturer. At what output level does short-run average total cost reach a minimum? a. 2 b. 3 c. 4 d. 5 Command economies are able to achieve greater […]

One possible solution to improve performance of regulated firms is which of the following? a. Allow the firm to set its own rate of return. b. Allow higher rates of return to cover higher cost of better performance. c. Allow […]

The corporate income tax is the single largest source of revenue for the federal government. a. True b. False A monopolistic competitor can expect to earn an economic profit in the long run. a. True b. False Answer: False Recently, […]

Figure 6-5 If the demand curve in Figure 6-5 is unit elastic, then total expenditure at A is ____ total expenditure at B. a. greater than b. less than c. equal to d. less elastic than Education is subsidized because […]

Which of the following best expresses the attitude toward competition of a firm engaged in tacit collusion with its rivals? a. A rolling stone gathers no moss. b. Waste not, want not. c. Do unto others as you would have […]

It can be shown that average revenue and price are always equal. a. True b. False The Organization of Petroleum Exporting Countries is a a. professional trade association for oil companies. b. cartel. c. consortium for joint ventures in oil […]

In early 1996, Congress proposed an agriculture bill that would gradually reduce price supports for many agricultural products. If the bill were to be approved, what would most likely happen to the number of families employed in agriculture? a. It […]

The total amount of consumption of a society can be increased if a. firms allow each worker to perform multiple tasks. b. resources are allocated by a central planning group. c. individuals engage in specialization and voluntary trade. d. barter […]

Profits will be maximized when the slope of the total revenue curve and the slope of the total cost curve equal zero. a. True b. False Figure 7-6 Which of the lines in Figure 7-6 represents a typical average fixed […]

In the long run the prices charged by a firm in monopolistic competition will be a. high enough to provide profits to the firm. b. so low that many firms will drop out of the industry. c. equal to marginal […]

An efficient allocation of resources exists if a. one group of people can get more of the things they want without someone else having to give up anything. b. no one can get more of the things he wants without […]

If marginal utility is a positive number: a. the more you purchase, the more total utility you get b. the more you purchase, the less total utility you get c. utility is not affected by more purchases d. none of […]

Population density varies little between the fifty states. a. True b. False Which of the following quotations best captures the idea of opportunity cost? a. “Opportunity knocks but once.” b. “Every choice involves a sacrifice.” c. “Let’s not ask for […]

If the U.S. government decides to increase military spending, one opportunity cost will be lower spending on education. a. True b. False If the equilibrium rate of interest would be 10 percent, but the usury law sets 8 percent, a. […]

The price system rations goods among consumers in such a way that a. all are treated equally. b. all needs are satisfied. c. the rich are favored. d. important needs are satisfied first. A production possibilities curve has a downward […]

Takeovers and takeover attempts waste valuable capital. a. True b. False Debt grew faster than GDP during and after the recent Great Recession, when the government had to spend more (as for unemployment benefits), while its tax revenue shrank. a. […]

A market society will always protect the natural environment. a. True b. False Table 5-1 Table 5-1 gives information on George’s total utility from consuming milkshakes and sandwiches. If George’s income this week is $15, milkshakes are $3 each, and […]

The terms “correlation” and “causation” are synonymous. a. True b. False The subject of borrowing by the U.S. from its citizens and from other countries, has resulted in one of the fiercest policy debates in recent years. a. True b. […]

One effect of market intervention is resource misallocation. a. True b. False A progressive income tax system can be defined as one in which a. the government uses taxes paid by the wealthy to fund programs for the poor. b. […]

The observed change in the reserves of copper, lead, and zinc between 1960 and 1990 was most likely caused by a. low prices discouraging exploration for new reserves. b. a slowdown in demand growth. c. high prices that stimulated exploration. […]

Which of the following would cause an increase in demand for Toyota automobiles? a. an increase in the price of Toyota automobiles b. a decrease in the price of Toyota automobiles c. a decrease in the price of Honda automobiles […]

Unemployment rates in the U.S. are generally: a. higher than in Europe b. lower than in Europe c. about the same asin Europe d. there are no unemployed in Europe Under a tying contract, a. the price a buyer must […]

An investment in yourself is an investment in what economists call human capital. a. True b. False The definition of efficiency implies that production is carried out on the production possibilities frontier. a. True b. False Answer: True Discounting is […]

The slope of the budget line is determined only by the prices of the commodities purchased. a. True b. False Sales maximization may be a goal of a firm if a. firms are managed by irrational persons. b. the firm […]

One major problem with Social Security is that it is a “pay as you go” system. a. True b. False Increasing GDP generally causes increases in problems of waste disposal. a. True b. False Answer: True Suppose that Joan, the […]

What are the major problems that will tend to arise if there are legal limits on the movement of prices? a. favoritism and corruption of officials and market participants b. unenforceability of laws and higher costs of transactions c. increasing […]

Marginal profit is the slope of the total profit curve. a. True b. False The demand curve for a monopolistic competitor has a negative slope. a. True b. False Answer: True Since it is a centrally planned economy, China does […]

Many experts on the nursing shortage insist that, in addition to higher money wages, other ways will have to be found to make the nursing profession more attractive, including, for example, more respect from physicians and administrators, more flexible schedules, […]

When the marginal revenue product of an input is less than its price, the a. producer should expand the use of that input. b. price of the input will automatically rise in a free market. c. producer should reduce the […]

In 2013 ____ of national factor income consisted of employee compensation. a. 90 percent b. 50 percent c. 60 percent d. 70 percent What is a key criterion involved in deciding a natural monopoly? a. Size of the firm relative […]

Two goods are substitutes if a decrease in the price of one raises the quantity demanded of the other. a. True b. False The concept of poverty is culturally determined, and hence people are defined as “poor” in relation to […]

Government in the United States spends more as a percentage of GDP than in most other industrialized nations. a. True b. False Payroll tax is a proportional tax. a. True b. False Answer: False During a war, a government will […]

Price discrimination leads to higher prices for all consumers. a. True b. False Many large universities rent out parts of their campuses to conference groups during the summer because such groups cause little damage, require little staff attention, and bring […]

If the production possibilities curves of two countries have the same slope, a. neither has a comparative advantage, and there are no gains from trade. b. although there is no comparative advantage, there are potential gains if there are differences […]

A theory is an abstraction used often by economists to a. describe a problem. b. keep all assumptions in their proper places. c. explain why things work the way they do. d. describe a hierarchical ordering of facts. e. arrange […]

Both parties gain in a voluntary exchange. a. True b. False TANF compels welfare recipients to go to work after a period of two years. a. True b. False Answer: True For any combination or outputs, there is an efficient […]

For a rational consumer, the consumer’s surplus will never be a negative number. a. True b. False Table 22-4 Table 22-4 presents the demand and supply schedules for television sets in Japan and the United States. If there is no […]

Statistical studies suggest that the cost of direct controls for any target level of pollution is a. much higher than the cost of taxes on emissions. b. about the same as the cost of taxes on emissions. c. lower than […]

State and local governments typically spend most of their budgets on providing a. education. b. public goods. c. public welfare programs. d. police protection and administrative services. A market a. may be an organized exchange. b. refers to a set […]

Table 11-2 In Table 11-2, the price at the profit-maximizing output is how much? a. $15 b. $7 c. $10 d. $11 The income of Lebron James, for example, is determined by a. the position of the demand curve. b. […]

The presence of large sunk costs often serves as a naturally imposed barrier to entry. a. True b. False How the price of a depletable resource changes over time depends on a. how the technology of resource extraction changes. b. […]

A good’s marginal social cost is defined as its a. marginal private cost minus the value of any detrimental externality. b. incidental cost. c. marginal private cost plus the value of any taxes paid on its production. d. marginal private […]

Dividend refers to a. a corporation’s regular payments to lenders. b. part of the revenue given to stockholders of a corporation. c. a lender’s legal claim on the assets of a bankrupt corporation. d. a prepayment of a corporation’s legal […]

Economic theory is a necessity, not a luxury. This statement is true because theory a. always leads to practical and useful policy. b. can prevent depressions in the economy. c. substitutes for vast amounts of data. d. provides a structure […]

High interest rates make a firm’s long-term investment in new capital a. riskless. b. less attractive. c. more attractive. d. no more attractive than short-term investment. Any change in a firm’s fixed costs will change its profit-maximizing level of output. […]

Corporate taxes are a direct tax. a. True b. False A firm’s total revenue is simply the price of its product multiplied by the quantity sold. a. True b. False Answer: True An upward-sloping supply curve shows that a. buyers […]

An empirical study determines that price exceeds marginal cost at the levels of output of firms in long-run equilibrium in the widget industry. The widget industry may therefore a. be monopolistically competitive. b. have firms whose goal is sales maximization. […]

A $10 fee to obtain a driver’s license is a a. regressive tax. b. degressive tax. c. proportional tax. d. progressive tax. The federal government receives most of its revenue from three sources: personal income tax, corporate income tax, and […]