Archives: Quiz

In discussing trade, it is ____ that matters rather than ____. a. absolute advantage: elastic advantage b. comparative advantage; absolute advantage c. entire advantage; comparative advantage d. elastic advantage; entire advantage e. declarative advantage; absolute advantage If the production possibilities […]

If the price elasticity of demand for radios is 2,5 (dropping the minus sign), then a 50 percent reduction in the price of radios will lead to a. the sale of 200 additional radios. b. the sale of 125 percent […]

When OPEC raises the price of petroleum, American expenditures on oil imports increase, suggesting that a. the United States’ elasticity of demand for imported oil is greater than one. b. the United States’ elasticity of demand for imported oil is […]

A line that is perfectly elastic has an elasticity of demand of zero. a. True b. False In a planned economy, a. prices are used to coordinate economic activity. b. central planners set production targets and tell producers how to […]

Since it spent over $3.6 trillion in 2010, opportunity cost was not an issue for the U.S. government. a. True b. False Table 22-4 Table 22-4 presents the demand and supply schedules for television sets in Japan and the United […]

The growth rate of productivity is the most important determinant of material well-being in the short run. a. True b. False The demand curve for funds is downward sloping because a. the value of the MRP in terms of today’s […]

Poverty is defined in two ways: the absolute concept of poverty and the relative concept of poverty. a. True b. False The assignment of inputs to specific industries by central planners is made difficult by a. the interdependency among industries. […]

Examples of indirect taxes are a. income taxes levied by some states. b. sales taxes and property taxes. c. poll taxes. d. corporate profits taxes. What is the present value of an infinite stream of annual payments of $10,000 per […]

The factor that leads to underpricing and overuse of an economic resource is a. human greed and selfishness. b. capital markets. c. the lack of an enforceable property right. d. the lack of understanding of pollution and its effects. Total […]

A line that slopes downward from left to right has a positive slope. a. True b. False A cartel is a. a group of oligopolists who try to behave like a single monopolist and split the benefits among themselves. b. […]

Individuals will have different value judgments about the appropriate rate of unemployment and the appropriate rate of inflation. a. True b. False Figure 6-2 From Figure 6-2, we can infer that demand is ____ between P = 12 and P […]

As the term “opportunity cost” is defined in the text, the opportunity cost of going to college includes a. both tuition and the value of the student’s time. b. tuition but not the value of the student’s time, which is […]

The demand for capital is a. directly related to the interest rate. b. inversely related to the interest rate. c. unrelated to the interest rate. d. first falls, and then rises, in relation to the interest rate. All large firms […]

At an equilibrium price for gasoline, a. everyone with the desire and the income to buy gasoline at that price can do so. b. surpluses are inevitable. c. inherent market forces will eventually change the quantities demanded and supplied. d. […]

Government gives subsidies to encourage production of products with beneficial externalities. a. True b. False Total profit is maximized if the slope of the total profit curve is a. positive. b. negative. c. increasing. d. zero. Answer: d In short-run […]

Figure 10-7 In Figure 10-7, output at which point represents short-run but not long-run equilibrium? a. A only b. B only c. both A and B d. both B and C On necessities, more of the incidence of tax is […]

Mr. Paque is a bear hunter for timber companies that want to diminish damage to trees done by bears in the spring. Due to a reduction in the bear population between 1995 and 2005, Mr. Paque finds fewer bears each […]

Society can produce at a point outside the production possibilities frontier, but only if it is using all of its resources efficiently. a. True b. False Which of the following statements is correct? a. Low prices may not always be […]

Economists can evaluate the desirability of the distribution of income. a. True b. False A concentration ratio provides a better assessment of market power than the Herfindahl-Hirschman index does. a. True b. False Answer: False In labor markets, risk taking […]

Which of the following could be called a virtue of raising prices of depletable resources? a. It would discourage consumption and waste. b. It would stimulate more efficient use of resources. c. It would encourage innovation and discovery of alternatives. […]

Which of the following observations concerning labor cost patterns over the last century is true? a. Average real wages started rising after 1973. b. Hourly compensation rates have fallen dramatically. c. Compensation growth slowed markedly. d. Average hours worked per […]

Which of the following observations concerning the absolute definition of poverty is true? a. It is based on average income. b. It is an optimistic definition. c. It is not arbitrary in nature. d. It is a cultural definition. Figure […]

Marginal utility is measured by the maximum amount of money a consumer is willing to pay for one more unit of a commodity. a. True b. False What type of cost is not relevant to the process of research and […]

Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist? a. MC = MR b. MC = P c. AR = P d. Q > 0 A rise in price will […]

As a rule, as a consumer acquires more and more of a good, the marginal utility declines. a. True b. False Productivity growth is the main cause of rising living standards. a. True b. False Answer: True If the demand […]

Figure 22-9 In Figure 22-9, at price OC total quantity demanded exceeds quantity supplied and price will rise to a. OJ in Pastaland. b. OA in Pestoland. c. OA in both countries. d. OJ in both countries. Increasing productivity in […]

Consumer income changes can shift market demand. a. True b. False Payroll taxes are used to collect revenue for the Social Security program. a. True b. False Answer: True Which of the following is an advantage to the pollution-rights approach […]

An unregulated market economy provides material wealth, but does not generate effective control of environmental damage. a. True b. False If marginal profit is zero, then average profit is at a maximum. a. True b. False Answer: False When beneficial […]

The demand for French Roast coffee is likely to be a. elastic. b. inelastic. c. unit elastic. d. perfectly inelastic. Government action can usually perfectly correct the market’s shortcomings. a. True b. False Answer: False “Rent seeking” describes the search […]

Figure 11-9 In Figure 11-9, which of the following is true? a. MC = P b. MC = MR c. MU > MR d. MU < MC Zero economic profits for a perfectly competitive firm in the long run means […]

Spending on R&D among a group of firms is equally likely to increase or to decrease. a. True b. False A Detroit business advertises, “The more we sell, the lower the price, and the lower the price, the more we […]

Since price tends to equal marginal utility, the price of water is low and the price of diamonds is high. a. True b. False Elasticity of demand equals the ratio of the percentage change in quantity demanded to the percentage […]

If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of a. both products to the right. b. both products to the left. c. grapefruit to the right. d. oranges to […]

Figure 7-7 In Figure 7-7 at 100 units, AVC equals a. 8. b. 800. c. 100. d. 1,000. The price of bonds is tied to the interest rate; when one goes up, the other must fall. a. True b. False […]

All of the following are associated with a mixed economy except a. some public influence over the workings of free markets. b. public ownership mixed in with private property. c. homogenization. d. different countries blending the state and market sectors […]

Price ceilings will likely a. result in the accumulation of surpluses. b. increase the volume of transactions as we move along the demand curve. c. increase production as producers respond to higher consumer demand at the low ceiling price. d. […]

The idea of horizontal equity in taxation implies that a. equally situated individuals should be taxed equally. b. unequally situated individuals should be taxed unequally. c. benefits should be given first to those individuals who need them most. d. the […]

Statistical studies in the United States have reached the conclusion that for low-income workers a. the substitution effect is greater than the income effect. b. the income effect is greater than the substitution effect. c. the income effect is about […]

The socialist countries of Eastern Europe have a. fewer environmental problems than capitalist countries. b. improved their environment more than the capitalist countries. c. worse environmental problems than capitalist countries. d. worsened since the collapse of communism there. Equilibrium in […]

Capitalism is an economic system in which there is public ownership of the means of production and resource allocation is determined through markets. a. True b. False Unrestrained monopolies are criticized because they restrict output and reduce innovation. a. True […]

Which of the following is not a source of inequality in incomes? a. redistribution of income b. differences in intensity of work c. differences in ability d. risk taking Marginal utility is a. the difference in price between one store […]

If demand is elastic, an increase in price will increase total revenue. a. True b. False Under a regressive tax, the fraction of income paid in taxes a. rises as income rises. b. is unchanged as income changes. c. falls […]

A graph conveys information about a cause-and-effect relationship. a. True b. False Affirmative action laws require employers to search for qualified minority applicants, but not to necessarily give them jobs. a. True b. False Answer: True An example of “cream […]

A sum of money to be received in the future is worth more than a sum of money today. a. True b. False The theory of the kinked demand curve is used to explain a. bizarre corporate behavior. b. sales […]

The U.S. Postal Service engages in price discrimination. a. True b. False The U.S. government banned cigarette advertising on radio and television after January, 1971. You would expect to find that after the ban took effect the price of magazine […]

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 […]

Price controls on resources generally lead to surpluses. a. True b. False As we move down a straight-line demand curve, the price elasticity becomes a. larger. b. smaller. c. larger, then smaller. d. smaller, then larger. Answer: b Figure 8-3 […]

“Assuming the long-run average cost curve is U-shaped, a firm will always seek to operate at the lowest point on the long-run average cost curve.” True or false? “A producer wanting to employ optimal quantity of inputs should choose the […]

Raymond is visitiog the dentist; he is haviog a wisdom tooth pulled. What type of consumer behavior activity is Raymond engaged io? a. Purchase activity b. Use/consumption activity c. Communication activity d. Disposal activity e. None of the above is […]

The last step in the traditional model of consumer decision making discussed in your readings is the purchase decision. a. True b. False Which of the following related to buzz marketing techniques and word-of-mouth are false? a. Buzz marketing techniques […]