Archives: Quiz

1) diseconomies of scale: a.pertain to the long run. b.pertain to the short run. c.are synonymous with diminishing returns. d.are synonymous with increasing returns. 2) which of the following would not shift the demand curve for beef? a.a widely publicized […]

1) The United States produces more than twice as much output per million BTUs of energy consumed than it did in 1950. 2) Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended). Answer: TRUE 3) Refer to […]

1) economists treat economic immigration as a human capital investment decision. 2) central planning is plagued with a coordination problem and an incentive problem. Answer: true 3) price and marginal revenue are identical for an individual purely competitive seller. Answer: […]

1) refer to the above diagram for a nondiscriminating monopolist. at output r economic profits will be zero. 2) the primary purpose of the “play or pay” reform proposal is to reduce aggregate health care costs. Answer: false 3) The […]

1) Tariffs create larger gains to domestic producers than losses to domestic consumers. 2) Permanent tax reductions are more likely to be expansionary than temporary tax reductions. Answer: TRUE 3) The real-business cycle theorists see aggregate supply as the “active” […]

1) The moral hazard problem is the tendency of some parties to a contract to alter their behavior as a result of the contract in ways which are costly to the other party. 2) changes in the average age of […]

1) because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces an efficient allocation of economic resources. 2) U.S. exports of farm products have generally declined as a percentage of U.S. […]

1) immigration of workers is an example of a goods and services flow: 2) Advocates of the minimum wage argue that its effects should be analyzed within the context of a dynamic and imperfectly competitive labor market. Answer: TRUE 3) […]

1) unanticipated inflation benefits some groups in the economy. 2) the smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it. Answer: false 3) about two-thirds of all federal spending […]

1) A $20 billion decrease in investment in a private closed economy that has an MPS of .5 will reduce saving by $10 billion once the multiplier process has ended. 2) illegal immigration helps improve the standard of living for […]

1) the united states, japan, and the western european nations are the major international traders in terms of overall volume. 2) if the demand for labor in a country receiving immigrants is inelastic, the immigration will increase the total wages […]

1) Horizontal mergers may be anticompetitive because nonmerged firms are foreclosed from selling their products to the buying firm. 2) The basic function of profits and losses is to allocate society’s scarce resources to their highest valued uses. Answer: TRUE […]

1) economic research consistently finds that immigration negatively impacts the average american wage. 2) An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources. Answer: TRUE 3) Modernizing economies that […]

1) money functions as a medium of exchange by eliminating the need for a coincidence of wants. 2) A recessionary expenditure gap in a mixed open economy can be measured as the extent to which aggregate expenditures (Ca + Ig […]

1) after all long-run adjustments have been completed, a firm in a competitive industry will produce that level of output where average total cost is at a minimum. 2) The optimal (economically-efficient) level of air pollution is zero emissions. Answer: […]

1) A decrease in per unit production costs will shift the aggregate supply curve leftward. 2) The supply of loanable funds is perfectly elastic. Answer: FALSE 3) The United States has experienced both budget surpluses and deficits over the past […]

1) variable costs are costs that vary directly with output. 2) Most of the DVCs of the world are located in Western Europe. Answer: FALSE 3) if market demand increases and market supply decreases, the change in equilibrium price is […]

1) Demand is the active and supply the passive determinant of land rent. 2) Thomas Malthus argued that increases in living standards tend to reduce birthrates. Answer: FALSE 3) the existence of “beaten paths” tends to discourage immigration because of […]

1) as it relates to public goods, nonexcludability means that nonpayers cannot be barred from obtaining the benefits. 2) modern economic growth since the 1820s has widened wealth and income disparities between richer and poorer nations. Answer: true 3) The […]

1) Determine whether the following statement is true or false and provide an explanation for your answer: An economy would adjust through changes in output if there are demand shocks and prices are flexible. 2) in the long run a […]

1) because of the recent productivity acceleration, the business cycle is dead. 2) Right-to-work laws prohibit the formation of labor unions. Answer: FALSE 3) choices entail marginal costs because resources are scarce. Answer: true 4) a vertically integrated firm is […]

1) marginal utility is total utility divided by the number of units consumed. 2) refer to the above diagram. at output c production will result in an economic profit. Answer: true 3) A lump-sum tax causes the after-tax consumption schedule […]

1) the expenditures and income approaches to gdp are expected to yield identical results because goods that are not sold in one year will be sold in some following year. 2) If the real outputs per capita of a rich […]

1) pure monopolists always earn economic profits. 2) The short-run aggregate supply curve shifts to the left when nominal wages rise in response to price level increases. Answer: TRUE 3) monopolistic competition is more like monopoly than pure competition because […]

1) along a supply curve, product price and producer surplus are inversely related. 2) an economy will always operate at some point on its production possibilities curve. Answer: false 3) A firm’s optimal amount of R&D occurs where the marginal […]

1) leader countries tend to have higher growth rates than follower countries. 2) The aggregate expenditures schedule in the mixed open economy has a negative slope. Answer: FALSE 3) If the demand for agricultural products is inelastic, a relatively small […]

1) the optimal level of immigration occurs where marginal benefit is at its greatest. 2) an increase in quantity supplied might be caused by an increase in production costs. Answer: false 3) economic models of illegal immigration suggest that domestic-born […]

1) extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone else is using. 2) increasing taxes and reducing government expenditures might be helpful in constraining inflation. Answer: true […]

1) illegal immigrants displace domestic-born workers on a one-for-one basis. 2) when the dollar price of yen rises, the dollar appreciates in value relative to the yen. Answer: false 3) Mainstream macroeconomists see two main sources of macroeconomic instability: changes […]

1) Marginal resource (labor) cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market. 2) if you pay a $2000 tax on $10,000 of taxable income and a $4000 tax on […]

1) Technological advance includes new and improved products, new and improved production techniques, and new and improved distribution methods. 2) The Federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996. Answer: […]

1) The benefits-received principle of taxation supports the case for highly progressive taxation. 2) refer to the above diagram for a nondiscriminating monopolist. at output m total cost will be 0chm. Answer: false 3) Barriers to free trade impair efficiency […]

1) because of health insurance, resources are underallocated to the health care industry. 2) noncash gift giving involves value loss when the marginal utility of the gift to the receiver is less than the product price. Answer: true 3) labor […]

1) Assuming that interest rates are positive, the present value of an $80 barrel of oil in 2 years is less than an $80 barrel today. 2) The principle that private negotiation can resolve potential externalities without resort to government […]

1) The interest-rate cost-of-funds curve is perfectly elastic because firms can borrow as much or as little as they want at market interest rates. 2) The interest rate is the price paid for the use of money. Answer: TRUE 3) […]

1) Hiring the least-costly combination of resources ensures that profits will be maximized. 2) public goods are characterized by nonrivalry and nonexcludability. Answer: true 3) The higher the interest rate, the larger will be the amount of money demanded for […]

1) specialized production and international trade increase a nation’s productivity and increase the availability of goods and services. 2) A nation’s export supply curve is downsloping and its import demand curve is upsloping. Answer: FALSE 3) proponents of economic growth […]

1) to fully realize economic growth through the efficiency factor, an economy must increase its stock of capital goods and improve its technology. 2) The following information. Assume that by devoting all its resources to the production of X, nation […]

1) output-per worker in the united states declined between 1995 and 2007. 2) Successful new products enable consumers to increase the total utility they obtain from a specific amount of their total spending. Answer: TRUE 3) toothpaste and toothbrushes are […]

1) Elasticity of resource demand is measured by dividing “percentage change in resource price” by “percentage change in resource quantity.” 2) if the marginal cost curve lies below the average variable cost curve, the average-variable-cost curve must be falling. Answer: […]

1) normative statements are expressions of facts. 2) insurance companies use deductibles and copayments to control increases in the amount of health care demanded. Answer: true 3) Unlike most demand curves, the demand curve for loanable funds is upsloping. Answer: […]

1) the misallocation of resources resulting from large positive externalities can best be corrected by levying a specific tax on the production of that good or service. 2) Energy demand is relatively stable over the course of a day. Answer: […]

1) ITQs generate the most efficient use of resources when everyone keeps and fills their own quotas. 2) U.S. exports increase and U.S. imports decrease the supplies of foreign monies owned by U.S. banks. Answer: TRUE 3) consumer sovereignty means […]

1) the rule of 70 is used to find how long it will take an economy to grow by 70 percent. 2) The Laffer Curve shows the tradeoff between the price level and tax rates. Answer: FALSE 3) The use […]

1) A fishery is a stock of fish or other marine animal thought of as a logically distinct group, and usually identified by its location and species. 2) a market that achieves productive efficiency is producing the quantity of goods […]

1) A system of fixed exchange rates is more likely to result in exchange controls than is a system of flexible (floating) exchange rates. 2) growth of real gdp in the united states has averaged slightly more than 5 percent […]

1) about three-fourths of all health care costs are paid out-of-pocket by patients. 2) The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve. Answer: TRUE […]

1) welfare reform in 1996 reversed the trend of growing welfare payments to immigrants. 2) In percentage terms, many of the 10 most rapidly declining U.S. occupations include jobs for which capital is readily substitutable for labor. Answer: TRUE 3) […]

1) The legal cartel theory indicates that, in any industry where market demand and the long-run average total cost curve intersect close to the latter’s minimum, government regulation is mandatory and desirable. 2) Property rights over fish in the open […]

1) Present law forbids all trades or sales of pollution rights. 2) water has greater marginal utility than diamonds, yet diamonds have greater total utility than water. Answer: false 3) If you pay a $1,000 tax on $10,000 of taxable […]