Archives: Quiz

The Wheeler-Lea Act of 1938 was designed to close the merger loophole that remained in the Clayton Act. a. True b. False Which of the following is not a prediction of the theory on baseball caps and cheating? a. More […]

The perfectly competitive firm’s short-run supply curve is the a. upward-sloping portion of its average total cost curve. b. horizontal portion of its marginal revenue curve. c. portion of its average variable cost curve that lies above the average fixed […]

A decrease in the wage rate a. shifts the supply curve of labor rightward. b. increases the quantity supplied of labor. c. shifts the supply curve of labor leftward. d. decreases the quantity supplied of labor. If medical research were […]

Why is bad weather sometimes good news for farmers? a. Bad weather shifts the supply curve of agricultural products leftward, driving up price and total revenue (assuming demand is inelastic). b. Bad weather shifts the supply curve of agricultural products […]

A rising marginal cost curve is a reflection of a a. rising marginal physical product curve. b. falling marginal physical product curve. c. falling average fixed cost curve. d. rising average variable cost curve. Exhibit 2-4 The opportunity cost of […]

If the bid value of a Treasury bond is listed as €112:16€, it means that the buyer is willing to pay $1,125 for the bond. a. True b. False When productivity increases in the production of agricultural products, the supply […]

If the student whose marginal benefits and costs of good health are noted in this table, how many units of good health should the student obtain in order to maximize her net benefits of good health? a. 2 units b. […]

The situation where a country can produce a good at a lower opportunity cost than another country is called a(n) __________ advantage. a. permanent b. transitory c. absolute d. comparative e. natural A simultaneous decrease in the demand and the […]

The profit-maximizing monopolistic competitive firm produces a level of output at which marginal revenue equals marginal cost. a. True b. False Based on the data provided in this table,if these data were plotted in a two-variable diagram the result would […]

A firm will maximize its profits by hiring factors up to the point at which a. MR = MC, if the firm is a monopolist, monopolistic competitor, or oligopolist. b. P = MC, if the firm is a perfect competitor. […]

If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity? a. The price will increase, but the quantity […]

Suppose an industry is made up of 16 firms. Three firms each sell 12 percent of the industry’s total output; another three firms each sell 8 percent; another five firms each sell 5 percent; and the last five firms each […]

Which of the following issues is most unlikely to be addressed by an economist practicing positive economics? a. the relationship between the minimum wage and the number of unemployed unskilled workers b. the effect of a minimum wage increase on […]

Exhibit 2-1 A movement from point B to point D a. could only happen through economic growth. b. is necessarily a movement from a productive efficient point to a productive inefficient point. c. isa movement from a productive efficient point […]

Exhibit 38-3 Which of the two stocks has a bigger gap between its close price and net earnings per share? a. Stock ABC b. Stock XYZ c. Both stocks have the same gap between its close price and net earnings […]

If you have a low rate of time preference, then you a. buy goods right now because “you just can’t wait.” b. are willing to save a larger percentage of your income than a person who has a high rate […]

Exhibit 34-4 The opportunity cost of one unit of good B is __________ for country 1 and __________ for country 2. a. 20A; 15A b. 2A; 1A c. 40A; 15A d. 1/2A; 1A e. 1/40A; 1/15B If the current market […]

When marginal private cost is less than marginal social cost, a. a public good exists. b. a negative externality exists. c. a positive externality exists. d. negative economic profits are made. e. a and d Which of the following statements […]

A rationing device is a method used to resolve who gets what of available goods and resources. a. True b. False A theory is an abstract representation of reality. This means a theory a. is descriptive of the way the […]

The Mexican demand for American goods leads to a. the demand for Mexican pesos and the supply of U.S. dollars on the foreign exchange market. b. the demand for U.S. dollars and the demand for Mexican pesos on the foreign […]

Exhibit 22-2 The dollar amounts that go in blanks (C) and (D), respectively, are a. $10.00 and $1.00. b. $30.00 and $34.00. c. $3.00 and $4.00. d. $6.67 and $10.00. e. $1.00 and $1.50. “Pure economic rent” is a payment […]

If the relative price of one unit of good Y is 0.25 units of good Z, then it follows that the absolute price of good Z can be __________ and the absolute price of good Y can be __________. a. […]

Exhibit 23-7 The perfectly competitive, profit-maximizing firm will produce __________ units of output. a. 10 b. 30 c. 50 d. 60 e. 70 Which of the following can cause an increase in real wages? a. a technological advance that increases […]

Value marginal product (VMP) is a. a measure of additional revenue minus additional cost as a result of additional output. b. the price of the product multiplied by the additional output resulting from an additional factor unit employed. c. the […]

Michelle can work at job A earning $50,000 a year, job B earning $83,000 a year, or job C earning $85,000 a year. If Michelle chooses job C, then her economic rent for working at job C rather than job […]

If a person’s income and the prices of both goods all rise by the same percentage, then her budget constraint a. moves inward toward the origin, and its slope remains the same. b. moves outward away from the origin, and […]

Consumers will pay the full tax that is placed on the sellers of a good if demand is __________ or supply is __________. a. perfectly inelastic; perfectly inelastic b. elastic; inelastic c. perfectly inelastic; unit elastic d. perfectly elastic; perfectly […]

Minimum efficient scale refers to the a. minimum size plant in any given industry. b. minimum point on the short-run average total cost curve. c. output level when economies of scale first set in. d. output level when diseconomies of […]

A fixed input, X, and a variable input, Y, are used to produce good A. If the marginal physical product (MPP) of Y is constant, it follows that the a. marginal cost curve is upward sloping. b. total fixed cost […]

When it comes to voting in a presidential election, we would expect, ceteris paribus, a. a lower percentage of eligible voters will vote if the weather is bad and this makes it harder to get to the polls on election […]

A monopolistic competitive firm is a price taker, while an oligopolist is a price searcher. a. True b. False Involuntary transfers are the type of transfers used in the case against government. a. True b. False Answer: True The law […]

Some economic studies have shown that mandatory seat belt laws do not lead to a reduction in traffic fatalities. a. True b. False If a positive externality exists, __________ for the socially optimal output to be reached. a. supply needs […]

Exhibit 29-2 This graph depicts the Lorenz curve for two countries, country 1 (Lorenz curve 1) and country 2 (Lorenz curve 2).The Gini coefficient associated with Lorenz curve 1 appears to be ____________ than the Gini coefficient associated with Lorenz […]

Economists believe that people’s wants are a. finite. b. infinite. c. irrational. d. unimportant because needs are more important than wants. Which of the following is an example of a positive economic statement? a. The U.S. public should devote more […]

What value goes in blank (A)? a. 47.5 b. 100 c. 80 d. 95 e. There is not enough information to answer this question. Answer: d A change in the expected rate of inflation from 3 percent to 5 percent […]

Jake is an excellent barber. However, all customers who come to him for a haircut must buy a bottle of shampoo. This type of arrangement is known as a. a tie-in sale. b. a sweetheart deal. c. an exclusive contract. […]

In a perfectly competitive industry, there is a motive for __________ to advertise in order to induce a rightward shift of the demand curve. a. the typical firm b. the industry as a whole c. both the typical firm and […]

Exhibit 34-1 The opportunity cost of one unit of Y in country A is a. 1 unit of X. b. 0.75 units of X. c. 2 units of X. d. 10 units of X. Which of the following statements is […]

The disagreement between A. C. Pigou and Ronald Coase arose because a. Pigou argued that the government should ban all externality-generating activities, while Coase thought that taxes and subsidies should be used instead. b. Coase argued that the government should […]

Which of the following is an example of government regulation of a natural monopoly distorting incentives? a. A natural monopoly is held to average-cost pricing; therefore, it has little incentive to hold costs down. b. A natural monopoly is protected […]

Economists predict that the __________ the cost of shirking to an individual, the __________ shirking that individual will undertake, ceteris paribus. a. lower; less b. higher; less c. lower; more d. higher; more e. b and c Which of the […]

Exhibit 26-4 What is the productive-efficient level of output? a. Q1. b. Q2. c. Q3. d. Q4. e. Q5. A good will tend to have a low price elasticity of demand if a. the good has few substitutes. b. a […]

As a determinant of a person’s income, luck is more important in the __________ run, as continuous reoccurrences of one kind of luck are __________. a. short; likely b. short; unlikely c. long; likely d. long; unlikely A Broadway play […]

One of the key characteristics of oligopoly is that a. firms are independent of each other. b. firms face different cost conditions. c. each firm is aware that its actions will influence other firms and that the actions of the […]

In which market structure can the good being produced be either homogeneous or differentiated? a. monopolistic competition b. oligopoly c. monopoly d. perfect competition e. none of the above If the four-firm concentration ratio in an industry is 80 percent, […]

Exhibit 2-6 Which graph depicts a technological breakthrough in the production of good Y only? a. (1) b. (2) c. (3) d. (4) e. none of the above If income elasticity of demand for food is 1.55 it follows that […]

Economists often assert that a person who receives an in-kind transfer payment (from government) has a higher income as a result. But an in-kind transfer is not money income, so what are economists thinking? a. They are thinking that an […]

The law of diminishing marginal returns a. is a short run concept. b. is a long run concept. c. is both a short run and a long run concept. d. does not hold in the real world. If government regulators […]

Which of the following statements is false? a. For the monopsonist, marginal factor cost decreases as it buys additional units of a factor. b. For the monopsonist, the supply curve of the factor it buys is different from the marginal […]

Tiffany gives $50 to Jeremy for his birthday.This is an example of a(n) a. involuntary transfer. b. involuntary-voluntary transfer. c. voluntary transfer. d. gift. e. c and d If the marginal productivity of labor is falling, it follows that a. […]