Archives: Quiz

A nation has an unfavorable balance of trade when a. it has a surplus in its balance of payments b. it has a deficit in its balance of payments c. the value of its imports of goods is greater than […]

Firms that emit toxins into the air tend to a. underproduce because the private cost of production exceeds the social cost b. overproduce because the social cost of production exceeds the private cost c. produce the same as nonpolluting firms […]

Exhibit 16-1 Consider Exhibit 16-1. Considering government expenditures on surplus milk but ignoring storage costs, how much do consumers pay per gallon for the quantity purchased at the support price? a. $3.00 b. $4.00 c. $5.00 d. $1.00 e. $2.00 […]

Which of the following is not a credit item (+) in the U.S. balance of payments? a. imports of cars from Japan b. any transaction that results in an inflow of dollars c. a capital outflow d. a U.S. firm’s […]

If income were distributed solely according to marginal productivity, a. every family would be above the poverty level b. it would be distributed evenly c. it would be distributed normally d. workers in capital-intensive industries would earn less than workers […]

College students often spend summers in internships that pay little or no income because internships provide benefits in the form of higher future incomes. a. True b. False In the collective bargaining process, once the United Auto Workers and General […]

In autarky, a. each country’s consumption possibilities are the same as its production possibilities b. equilibrium is attained with the maximum gains from specialization and trade c. equilibrium is attained with the maximum amount of international trade d. a nation […]

Fred Ramirez is a farmer who charts the relationship between number of acres planted in corn and number of bushels of corn harvested. Which marginal concept can Fred measure with this data? a. marginal utility b. marginal product c. marginal […]

The market price of output affects a. the supply of the resources used to produce it b. the demand for the resources used to produce it c. the marginal product of the resources used to produce it d. the marginal […]

Universities sometimes hire professors who are poor teachers but have good research skills because a. research ability is more important in education than teaching ability b. students don’t listen to professors anyway c. teaching can be learned; research ability cannot […]

Exhibit 9-6 What is the maximum profit the monopolist in Exhibit 9-6 can earn? a. -$5 b. $40.80 c. $43.60 d. $44.20 e. $42.60 Which of the following is not a reason for international specialization? a. some countries have educated, […]

Exhibit 9-17 In Exhibit 9-17, which area represents the amount of consumer surplus received by consumers under perfect price discrimination? a. area a b. area b c. area a + b + c d. area b + e e. there […]

The Superfund for toxic waste was established for all of the following reasons except one. Which is the exception. a. sites get a lot of media attention b. Superfund sites are more hazardous than other sources of pollution, e.g., fertilizer […]

One reason investors may prefer bonds over stocks is a. potential profits are larger b. bond prices never vary c. bondholders get paid before stockholders d. owning bonds implies owning a part of the company e. interest rates do not […]

Exhibit 12-9 In Exhibit 12-9, the labor supply and labor demand in a unionized labor market is represented by the demand curve D0 and Supply curve S0. Which of the market equilibria is the most likely outcome of a successful […]

Game theory focuses on a. strategic behavior among interdependent firms b. professional athletic events c. competition between the players in board games d. competition between those in the political arena and those in the market place e. the interaction between […]

The minimum efficient scale for a firm is the a. lowest rate of output at which long-run average cost is at a minimum b. lowest rate of output at which short-run average total cost is at a minimum c. lowest […]

Exhibit 9-3 The total cost for the firm in Exhibit 9-3, a monopolist that maximizes profit while charging all customers the same price, is a. $3,300 b. $3,400 c. $2,808 d. $2,340 e. $1,638 Necessities and luxuries are both types […]

Exhibit 12-1 Along which part of the labor supply curve in Exhibit 12-1 does the income effect of a wage change just equal the substitution effect? a. between points a and b b. between points a and c c. between […]

You are more likely to do-it-yourself than hire a plumber to repair a leaky drain pipe a. as the tax rate on your earned income dramatically decreases b. if the opportunity cost of your time decreases c. the less knowledge […]

A perfectly competitive firm is allocatively efficient because price is identical to marginal cost at every quantity a. True b. False One important source of challenge to De Beers’ control of the diamond market is a. the additional market supply […]

Exhibit 6-21 Refer to Exhibit 6-21. In equilibrium the consumer surplus in this market is area A + B. a. True b. False Foreign aid can take the form of a. only money, capital goods, or technical assistance b. only […]

One way to reduce pressure for Mexicans to cross the U.S. border illegally is to create job opportunities in Mexico. a. True b. False The “rules of the game,” the set of conditions that shape individual incentives and constraints, are […]

What would happen to the budget line if the price of orange juice increased and orange juice is measured on the vertical axis? a. It would shift to the right. b. It would rotate outward along the horizontal axis. c. […]

The Sultan of Brunei, one of the world’s richest people, does not face the problem of scarcity. a. True b. False Exhibit 8-16 Which of the following statements about the perfectly competitive firm represented in Exhibit 8-16 is false? a. […]

If the United States has an absolute advantage in producing computer components, it should export them worldwide. a. True b. False According to the law of diminishing marginal rate of substitution, a. as consumption of good A increases, other things […]

One of the ways that a perfectly competitive firm and a nondiscriminating monopolist are different is that a. the marginal cost curve is U-shaped for a perfectly competitive firm but not for a monopolist b. P = AR for a […]

Which of the following markets best approximates the perfectly competitive market structure? a. automobile manufacturing b. insurance c. world commodity markets d. airlines e. manufacture of stereo equipment In a natural monopoly, throughout the range of market demand, a. marginal […]

As the price paid to a resource increases, a. the supply of that resource will increase in the resource market b. the supply of that resource will decrease in the resource market c. resources will shift from other resource markets […]

As the price of milk increases, producers are normally willing to supply greater quantities. This response is known as the law of a. supply b. demand c. averages d. variable proportions e. increasing costs The current account reflects a. trade […]

If a candy bar sells for 50 cents and video games are 25 cents each, the horizontal (candy) intercept of Ann’s budget line is 12 and the vertical (video game) intercept of Ann’s budget line is 24. Giving up one […]

Exhibit 19-1 Exhibit 19-1 shows the production possibilities frontiers for the countries of Lambda and Beta for fish and coconuts. What is the opportunity cost of a coconut in Lambda? a. 1/2 fish b. 1 fish c. 2 fish d. […]

Exhibit 17-5 In Exhibit 17-5, if the government sells the right to pollute a river, a. firms will emit Q1 units of pollutant at a price of P0 each b. firms will emit Q2 units of pollutant at a price […]

In economics, marginal means a. incremental or decremental b. unimportant c. level or size d. a border-line situation e. a bad alternative Resource price differentials that trigger the reallocation of resources so as to equalize payments for similar resources are […]

The most important characteristic of the equilibrium price is that it a. guarantees that producers earn profit b. clears the market, leaving neither a surplus nor a shortage c. maximizes the quantity demanded d. minimizes the quantity demanded e. guarantees […]

Which of the following conditions would distinguish a competitive firm from a monopolist? a. The existence of a demand curve for the firm. b. The slope of the demand curve facing the firm. c. The rule of profit maximization, i.e., […]

A profit-maximizing monopoly will always produce at the minimum point of its average total cost (ATC) curve. a. True b. False In the case of a normal good, an increase in consumers’ incomes would shift the a. demand curve inward […]

Exhibit 15-5 The natural monopoly depicted in exhibit 15-5, if unregulated would earn how much profit? a. $10 b. $20 c. $30 d. $40 e. $50 Exhibit 6-23 Answer: C In Exhibit 6-23, the marginal rate of substitution of food […]

If the U.S. dollar depreciates, it means that a. the value of the U.S. dollar has increased b. the value of foreign exchange has decreased c. fewer U.S. dollars are required to purchase foreign exchange d. more U.S. dollars are […]

The average work week in the United States has declined to fewer than 40 hours even though wage rates have been increasing. The best explanation of this phenomenon is that a. the labor supply curve shifted to the right b. […]

Which of the following is a fixed cost for Wendy’s Hamburgers? a. the cost of beef b. electricity to light up the Wendy’s sign c. gasoline for the trucks that deliver supplies to the various franchises d. interest on funds […]

Exhibit 5-5 In Exhibit 5-5, what is the total revenue at point a? a. $4 b. $5 c. $10 d. $50 e. $100 Exhibit 8-13 Answer: D For the market shown in Exhibit 8-13, at what price will a perfectly […]

The exchange of secondhand securities a. takes place in an oligopolistic market b. does not provide funds to the firm that issued those securities c. includes the initial sale when securities are issued by a firm d. involves very few […]

Which of the following is true about sole proprietorship in the United States? a. It is the most common form of business organization. b. It is responsible for a large portion of total production of goods and services. c. It […]

The loanable funds market brings together savers and borrowers to determine the a. marginal rate of return on investment b. rate of time preference c. market rate of interest d. marginal resource cost of investment e. marginal revenue product of […]

The world price of a good is a. the price paid by consumers in all nations b. the price at which it is traded internationally c. the price paid in U.S. dollars d. the price paid in foreign currency e. […]

A firm that minimizes average cost will not survive in the long run. a. True b. False Marginal revenue product is obtained by multiplying the price of the product by the marginal resource cost. a. True b. False Answer: B […]

Any movement along the production possibilities frontier involves the production of a. more of both goods b. more of one good and less of the other c. less of both goods d. more resources e. better technology Exhibit 7-2 Given […]

Cross-price elasticity of demand measures a. elasticity of demand at the intersection of the supply and demand curves b. elasticity of supply at the intersection of supply and demand curves c. the relative elasticity of supply and demand at the […]

What replaced the Bretton Woods system? a. the gold standard b. a pooled currency system c. a free float system d. a managed float system e. fixed exchange rates Individuals maximize utility in allocating their time only when a. any […]