Econ 202 Final

The term ___________________ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit. A. diminishing marginal utility B. marginal utility pattern C. marginal income utility D. decreasing marginal utility

A. diminishing marginal utility

In the competitive market for candy bars, manufacturers offer an array of products that are A. distinctly different in a particular way. B. distinctly similar in a particular way. C. virtually identical on the competition spectrum. D. at opposite ends of the competition spectrum.

A. distinctly different in a particular way.

Demand is said to be ___________ when the quantity demanded is very responsive to changes in price. A. elastic B. unit elastic C. inelastic D. independent

A. elastic

The _________ is the only price where quantity demanded is equal to quantity supplied. A. equilibrium price B. horizontal axis intercept C. vertical axis intercept D. market price

A. equilibrium price

A bond is a form of ___________ through which a corporation agrees to repay the amount that was borrowed together with ___________ over a period of time in the future. A. financial contract; a rate of interest B. financial instrument; a rate of return C. initial public offering; a rate of interest D. financial investment; guarantees the investment

A. financial contract; a rate of interest

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production. A. fixed costs; do not change, B. variable costs; are constantly changing, C. fixed costs; are consistently changing, D. variable costs; do not change,

A. fixed costs; do not change,

The circular flow diagram of economic activity is a model of the: A. flow of goods, services, and payments between households and firms. B. influence of government on business behaviour. C. role of unions and government in the economy. D. interaction among taxes, prices, and profits.

A. flow of goods, services, and payments between households and firms.

Which of the following is not a short-run impact of imposing quotas on the American industries they seek to protect? A. government tax revenues increase B. domestic production and sales by the protected industries increase C. consumers' real incomes decrease D. prices of the goods produced by protected industries increase

A. government tax revenues increase

Lesley is a single mother with 2 children. She can earn $10 per hour and can work up to 1,800 hours per year. However, if she does not earn any income at all, she will receive government benefits totaling $18,000 per year. For every $1 of income she earns, her level of government support is reduced by $1. Lesley A. has no monetary incentive to work, though she may still choose to work B. has a monetary incentive to work and will maximize her income if she works for 300 hours C. has a monetary incentive to work and will maximize her income if she works for 600 hours D. has a monetary incentive to work and will maximize her income if she works for 900 hours

A. has no monetary incentive to work, though she may still choose to work

If a firm's efforts to be technologically innovative will create a positive externality, then that firm will likely A. have more incentive to innovate to the extent that the whole of society desires. B. invest significantly more in its research and development activities. C. have less incentive to innovate to the extent that the whole of society desires. D. demand more financial capital investment to expand its R&D activities.

A. have more incentive to innovate to the extent that the whole of society desires.

If a website facilitates the sale of goods by individuals and businesses over the internet, but requires actual photos of every item for sale to be posted instead of a manufacturer's stock picture of the product, demand for that product will likely ___________ due to the improved information, causing quantity to ___________ . A. increase, increase B. decrease, increase C. increase, decrease D. decrease, decrease

A. increase, increase

In some instances where voters have more than two choices in a democratic election, the principle that the _____________________ will decide the outcome may no longer make logical sense. A. majority of voters B. under-educated voters C. economically challenged D. eligible voters

A. majority of voters

An economist is more likely to identify__________________as a more efficient and flexible way for society to__________________. A. marketable permits; allow a limited, declining amount of pollution to occur B. better defined property rights; to address issues of allowable levels of pollution C. market-oriented environmental tools; enforce strict limits on emissions D. better defined property rights; to shrink pollution levels over time

A. marketable permits; allow a limited, declining amount of pollution to occur

Economists are able to determine total utility by: A. multiplying the marginal utility of the first unit consumed by the number of units consumed. B. multiplying the marginal utility of the last unit consumed by the number of units consumed. C. multiplying the marginal utility of the last unit consumed by the unit price. D. summing up the marginal utilities of each unit consumed.

A. multiplying the marginal utility of the first unit consumed by the number of units consumed.

The demand curve for a typical good has a(n): A. negative slope because some consumers switch to other goods as the price rises. B. negative slope because consumer incomes fall as the price of the good rises. C. negative slope because the good has less "snob appeal" as its price falls. D. inverse slope because as the price goes up, the good has more profitability.

A. negative slope because some consumers switch to other goods as the price rises.

The reasons that nations trade includes the fact that: A. no one country produces all of what citizens within the country want. B. the wants of their citizens exceeds their productive capacity. C. different countries have different levels of greed. D. labor costs are too high in some countries to efficiently produce goods.

A. no one country produces all of what citizens within the country want.

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible. A. opportunity set B. consumption choice C. time value of money D. risk premium

A. opportunity set

Perfect competition and monopoly stand at ___________ of the spectrum of competition. A. opposite ends B. the high end C. the low end D. the mid-way point

A. opposite ends

Roughly speaking, patent law covers ____________ and ___________ law protects an author's original books. A. original inventive creations; copyright B. trade secrets; trademark C. all inventions; trademark D. original audiovisual creations; copyright

A. original inventive creations; copyright

Investors who believe that the stock is _____________ , relative to the fundamental value of its future expected profits, will sell their shares to those who believe that the stock is __________. A. overvalued; undervalued B. undervalued; overvalued C. momentum trading; less risky D. high risk; disadvantaged

A. overvalued; undervalued

Government _____________ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for _______________. A. patent; a limited time B. trademark; an unlimited time C. copyright; a limited time D. trade secret; an unlimited time

A. patent; a limited time

What role does the US government play with respect to market competition? A. policing anticompetitive behavior and prohibiting contracts that restrict competition B. preserving competition by regulating price and/or quantity of output C. intervening in the price and output decision of businesses D. maintaining abundant government-owned firms to ensure consumer friendly pricing

A. policing anticompetitive behavior and prohibiting contracts that restrict competition

If a perfectly competitive firm is a price taker, then A. pressure from competing firms will force acceptance of the prevailing market price. B. it must be a relatively small player compared to its competitors in the overall market. C. it can increase or decrease its output without affecting overall quantity supplied in the market. D. quality differences will be very perceptible and will play a major role in purchasers' decisions.

A. pressure from competing firms will force acceptance of the prevailing market price.

The "law of supply" functions in labor markets; that is, a higher ___________ for labor leads to a higher quantity of labor supplied. A. price B. demand C. supply D. quantity

A. price

When a firm invests in new technology, the _____________________ that the firm receives are _____________________. A. private benefits; only a portion of the overall social benefits B. social benefits; only a portion of the overall private benefits C. private benefits; about three-quarters of the economic benefits D. social benefits; about one-third of the overall private benefits

A. private benefits; only a portion of the overall social benefits

For a negative externality, the _____________________ than the costs imposed on society as a whole. A. private costs of an action are less B. social costs of an action are less C. private benefits of an action are more D. social benefits of an action are more

A. private costs of an action are less

A demand curve shows the relationship between price and ______________ on a graph. A. quantity demanded B. quantity produced C. economies of scale D. costs

A. quantity demanded

The theory of _____________________ holds that people won't bother incurring the costs of becoming informed and voting, because they know that their vote _____________________. A. rational ignorance; won't be decisive in the election B. imperfect competition; has little impact on election outcomes C. inequality of incomes; won't be decisive in the election D. democracy by majority rule; won't impact election outcomes

A. rational ignorance; won't be decisive in the election

Why are politicians more likely to focus their political actions on individuals with higher incomes and higher levels of education? A. research shows this group has greater informed voter participation B. research shows this group has a higher percentage of conservatives C. research shows this group has a higher percentage of liberals D. research shows members of this group have employment concerns

A. research shows this group has greater informed voter participation

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to: A. rise and the equilibrium quantity to fall. B. rise and the equilibrium quantity to stay the same. C. rise and the equilibrium quantity to rise. D. stay the same and the equilibrium quantity to fall.

A. rise and the equilibrium quantity to fall.

Political institutions play a role in allocating the _____________________, and economists have played an active role along with other social scientists in analyzing _____________________. A. scarce resources of society; how such political institutions work B. single political district spending; the impossibility of the majority deciding what it prefers C. resources to pork barrel projects; the impossibility of deciding on spending limits D. funding to 51 tuition-free colleges and universities; disadvantages of price controls

A. scarce resources of society; how such political institutions work

Some nations that seek to produce all of their own needs face the problem that: A. some industries are too small to be efficient if restricted to their domestic markets alone. B. they can deplete their natural resources as a result. C. the opportunity cost of producing some of their own goods is lower than that of trading with others for them. D. they will not be able to satisfy the wants of all of their citizens

A. some industries are too small to be efficient if restricted to their domestic markets alone.

A government has decided to phase out its antipoverty program support payments more slowly to help the near-poor become self-sufficient. One criticism about this policy is likely to be A. that this antipoverty program costs the government more money. B. that the near-poor will not be required to pay back benefits. C. that the near-poor may still lack skills for menial jobs. D. that antipoverty programs shift wealth from the rich to the poor.

A. that this antipoverty program costs the government more money.

The opportunity cost of attending university is likely to include all except which of the following? A. the cost of haircuts received during the school term B. the income you forgo in order to attend classes C. tuition fees D. the cost of required textbooks

A. the cost of haircuts received during the school term

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. A. the production possibilities frontier B. allocative efficiency C. scarcity D. utility

A. the production possibilities frontier

If cola and iced tea are good substitutes for consumers, then it is likely that: A. their cross price elasticities are greater than zero. B. their price elasticities of demand are less than one. C. their income elasticities are less than zero. D. their price elasticities of supply are less than one .

A. their cross price elasticities are greater than zero.

Market competition may sometimes encourage a firm to innovate out of fear because of the perception that A. they will inevitably fall behind other competitors seeking out innovations. B. the firm will only have a very temporary edge over its competitors. C. the ability to earn above-normal profits is also available to its competition. D. higher profits can only be earned by finding less expensive ways to produce.

A. they will inevitably fall behind other competitors seeking out innovations.

The typical pattern revealed in a budget constraint model shows that as the quantity consumed rises, A. total utility rises, but marginal utility falls. B. marginal utility increases. C. total utility decreases, but marginal utility rises. D. total utility decreases.

A. total utility rises, but marginal utility falls.

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice? A. what quantity to produce B. what price to charge C. what quantity of labor is needed D. what quality to produce

A. what quantity to produce

___________ give government the power to block certain mergers, and in some cases, to break up large firms into smaller ones. A. Market regulations B. Antitrust laws C. Nationalization policies D. Restrictive practices

B. Antitrust laws

To address a common poverty trap problem for many low-paid Americans whose jobs pay enough that a family could lose its eligibility for _________________________, yet those jobs don't offer _________________________ either, some states guaranteed that children would not lose their coverage if their parents worked. A. food stamps; retirement benefits B. Medicaid; health insurance benefits C. Medicaid; drug insurance benefits D. food stamps; Medicaid benefits

B. Medicaid; health insurance benefits

Say that Alland can produce 32 units of food per person per year or 16 units of clothing per person per year, but Georgeland can produce 36 units of food per year or 18 units of clothing. Which of the following is true? A. Georgeland has an absolute but not a comparative advantage in producing clothing. B. Georgeland has both an absolute and a comparative advantage in producing clothing. C. Alland has an absolute but not a comparative advantage in producing food. D. Alland has both an absolute and a comparative advantage in producing food.

A. Georgeland has an absolute but not a comparative advantage in producing clothing.

_____________________ can lead to a situation where, even if sellers are faced with a situation of _______________, they will decide not to cut prices for awhile because they know that buyers in this situation will not react by purchasing a _______________ . A. Imperfect information; excess supply; higher quantity B. Adverse selection; reduced supply; lower quantity C. Adverse selection; excess supply; better quality D. Imperfect information; reduced supply; higher quality

A. Imperfect information; excess supply; higher quantity

It is sometimes argued that a nation should not depend too heavily on other countries for supplies of certain key products. This argument is commonly known as the _______________. A. National Interest Argument B. Import Limitation Argument C. Anti-Dumping Argument D. Buy-American Argument

A. National Interest Argument

______________________ describes a situation where a third party, outside the transaction, suffers from a market transaction by others. A. Negative externality B. Positive externality C. A spillover D. A market failure

A. Negative externality

________________________ arises where many firms are competing in a market to sell similar but differentiated products. A. Oligopolistic competition B. Perfect competition C. Monopolistic competition D. Monogopolised competition

A. Oligopolistic competition

___________ has occurred if a government-owned firm becomes privately owned. A. Privatization B. Nationalization C. Deregulation D. Regulatory capture

A. Privatization

______________________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process. A. Social costs B. Private costs C. Market costs D. External costs

A. Social costs

Why are the underlying economic meanings of the perceived demand curves for a monopolist and monopolistic competitor different? A. a monopolist faces the market demand curve and a monopolist competitor does not B. a monopolist competitor faces the market demand curve and a monopolist does not C. because the demand curve for a monopolistic competitor is upward sloping D. because the demand curve perceived by the monopolist is flatter than that of a monopolist competitor

A. a monopolist faces the market demand curve and a monopolist competitor does not

A firm that holds a monopoly position in the market place is A. a price maker B. a price taker C. monopolistically competitive D. subject to infinite market forces

A. a price maker

A tariff differs from a quota in that a tariff is: A. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported. B. a tax levied on exports, whereas a quota is a limit on the number of units of a good that can be exported. C. levied on exports, whereas a quota is imposed on imports. D. levied on imports, whereas a quota is imposed on exports.

A. a tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported.

An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________. A. accounting profit; excluding opportunity cost B. accounting profit; including opportunity cost C. economic profit; excluding opportunity cost D. opportunity cost; including economic profit

A. accounting profit; excluding opportunity cost

In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output. A. acquire energy efficient production technologies B. increase the returns to scale C. maintain constant returns to scale D. create perfect competition between firms

A. acquire energy efficient production technologies

How does the cost of financial capital influence innovative research and development activities in a competitive market? A. at a high cost, firms demand a large quantity, as R&D projects return high rates. B. at a low cost, firms demand a large quantity, as R&D projects will likely return a higher rate. C. financial capital at a high cost means more projects are likely to pay a much higher return rate. D. at a low cost, the firm receives only small private benefits from investing in R&D.

A. at a high cost, firms demand a large quantity, as R&D projects return high rates.

Occasionally, ________________ may lead to pure monopoly; in other market conditions, they may limit competition ______________________-. A. barriers to entry; to a few oligopoly firms B. barriers to entry; to a natural monopoly C. deregulation; requiring new patent law D. deregulation; requiring new copyright law

A. barriers to entry; to a few oligopoly firms

Marginal thinking is best demonstrated by: A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. B. deciding to never purchase a coat made with animal skins or furs C. acquiring the information relevant to a choice before making that choice D. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

The U.S. government strongly encouraged unions to be formed in the early 1940s because they held the view that unions would help to A. co-ordinate the all-out production efforts needed during World War II. B. develop uniform procedures for forming unions across the country. C. raise the standard of living of the American people during World War II. D. end the racial discrimination that was prevalent in American workplaces.

A. co-ordinate the all-out production efforts needed during World War II

In the U.S. political arena, _____________________ may tend to emphasize the virtues of markets and the limitations of government, while _____________________ may tend to emphasize the shortcomings of markets and the need for government programs. A. conservatives; liberals B. politicians; economists C. economists; politicians D. liberals; conservatives

A. conservatives; liberals

The greater disparity of wages can be viewed as a sign that A. demand for skilled labor is increasing faster than supply. B. supply for skilled labor is decreasing faster than demand. C. demand for skilled labor is decreasing faster than supply. D. supply for skilled labor is increasing faster than demand.

A. demand for skilled labor is increasing faster than supply.

The concept of ____________________ means that as the measure of output goes up, average costs of production decline—at least up to a point. A. relative advantage B. economies of scale C. absolute advantage D. comparative advantage

B. economies of scale

Once the U.S. government opened its domestic markets to international trade, the competition from imported cars, steel, and other products caused demand for similar U.S. goods to: A. continually increase leading to an overall increase in union membership. B. fall, leading to lower output, fewer workers, and an overall decline in union membership. C. decline, causing workers to call upon governments to pass indexed wage protection laws. D. rise, but laws made it difficult for new workers to become union members.

B. fall, leading to lower output, fewer workers, and an overall decline in union membership.

The earnings gap in the U.S. labor market between black and white workers__________________ in the 1960s and 1970s, but, since 1980, the gap ____________________. A. rose substantially; has not changed much B. fell substantially; is pretty well unchanged C. rose substantially, has declined substantially D. fell substantially, has substantially increased

B. fell substantially; is pretty well unchanged

A narrowly defined market will tend to make concentration appear ____________, while a broadly defined market will tend to make it appear _____________. A. concerning; less concerning B. higher; smaller C. less concerning; concerning D. smaller; higher

B. higher; smaller

A buyer confronted with __________________ will often believe that the price being charged reveals something about the ________________ of the product. A. adverse selection; condition B. imperfect information; quality C. adverse information; condition D. imperfect selection; quality

B. imperfect information; quality

Economic profit can be derived from calculating total revenues minus all of the firm's costs, A. excluding its opportunity costs. B. including its opportunity costs. C. including its marginal revenue. D. excluding its marginal revenue.

B. including its opportunity costs.

If the demand curve is perfectly elastic, then an increase in supply will: A. decrease the price but result in no change in the quantity exchanged. B. increase the quantity exchanged but result in no change in the price. C. increase the price but result in no change in the quantity exchanged. D. increase both the price and the quantity exchanged.

B. increase the quantity exchanged but result in no change in the price.

Suppose that new high-technology farming equipment is developed. These new machines are substitutes for low-income workers such as farm laborers, but they are complements for high- income workers such as farm technicians and farm owners. This new technology will _________________________ employment and _________________________ wages for high-income workers. A. increase, decrease B. increase, increase C. decrease, decrease D. decrease, increase

B. increase, increase

Demand is said to be _____________ when the quantity demanded is not very responsive to changes in price. A. independent B. inelastic C. unit elastic D. elastic

B. inelastic

Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization? A. division of labour B. international trade C. economies of scale D. command economy

B. international trade

The City of New Orleans needs to upgrade its levies and its water drainage systems. The cost will exceed the amount of tax revenue the City expects to receive over the next 10 years. How will the City be able to raise the funds needed to finance this upgrade? A. issue Treasury Bonds B. issue municipal bonds C. borrow from Banks D. borrow from large corporations

B. issue municipal bonds

Scarcity implies that: A. consumers would be willing to purchase the same quantity of a good at a higher price. B. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. C. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. D. consumers are too poor to afford the goods and services available.

B. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

Rather than arguing over whether the ultimate goal is zero pollution or a reasonable level of pollution, the immediate focus should be to tackle the environmental issues where the __________________and the__________________. A. marginal benefits are least; marginal costs are greatest B. marginal benefits are greatest; marginal costs are least C. environmental benefits are greatest; social costs are least D. social costs are greatest; environmental benefits are least

B. marginal benefits are greatest; marginal costs are least

The term _________________ refers to the additional utility provided by one additional unit of consumption. A. utility B. marginal utility C. added utility D. Giffen utility

B. marginal utility

The main categories of market-oriented approaches to pollution control are A. redefined property rights; pollution permits; marketable charges. B. marketable permits; better-defined property rights; pollution charges. C. pollution charges; extended property rights; marketable permits. D. pollution permits; defined property rights; marketable charges.

B. marketable permits; better-defined property rights; pollution charges.

The idea behind comparative advantage reflects the possibility that one party: A. may be able to produce everything relatively more efficiently than another party. B. may be able to produce something at a lower opportunity cost than another party. C. may be able to produce something at a lower dollar cost than another party. D. with an absolute advantage in producing two different may export goods both of those goods to the other party.

B. may be able to produce something at a lower opportunity cost than another party.

Why would a large publicly traded corporation likely prefer issuing bonds as a way to raise new money as opposed to issuing more shares? A. the rate of return the corporation promised will be more difficult to deliver B. more shares will dilute the existing value of the stock, causing its market price to fall C. the market will view the new share issue as a sign the company is in financial difficulty D. issuing bonds is a more secure method for corporations to raise needed money

B. more shares will dilute the existing value of the stock, causing its market price to fall

Jackie has invested $25,000 for a 10 period at a guaranteed interest rate of 9%. If Jackie decides to sell her investment before the 10-year period has ended, she may receive less if the interest rates at that time are lower. Jackie is a A. shareholder B. owner of a certificate of deposit C. angel investor D. bondholder

B. owner of a certificate of deposit

Firms operating in a market situation that creates ______________________, sell their product in a market with other firms who produce identical or extremely similar products. A. a perfect monopoly B. perfect competition C. an oligopoly D. a free-market

B. perfect competition

Economists draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be. A. negative statements B. positive statements C. tradeoffs D. utilitarianism

B. positive statements

Low-wage U.S. workers suffer from protectionism in all the industries that they don't work in, because: A. protectionism provides a barrier to entry to the job markets that the low-wage earners want entry to. B. protectionism forces them to pay higher prices for basic necessities like clothing and food. C. protectionism will encourage foreign workers to apply for American jobs. D. protectionism will prevent them from applying for those jobs in other industries.

B. protectionism forces them to pay higher prices for basic necessities like clothing and food.

Jeremy is an 18-year-old college student with no prior credit history, who still lives at home. He will have a part-time job while he is attending college and has applied for a car loan. In these circumstances, the bank's loan officer will most likely approve the loan if Jeremy can A. sign over his parent's car as collateral. B. provide a cosigner on the loan. C. increase his student loan. D. maintain a "B" grade average.

B. provide a cosigner on the loan.

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and _________________, shown on the horizontal axis. A. demand B. quantity C. quantity supplied D. quantity demanded

B. quantity

_____________ refers to the total number of units that are purchased at that price. A. quantity B. quantity demanded C. supply D. market quantity

B. quantity demanded

If the supply curve for housing is perfectly inelastic, then a reduction in demand will cause the equilibrium price to: A. rise and the equilibrium quantity to fall. B. rise and the equilibrium quantity to stay the same. C. fall and the equilibrium quantity to fall. D. fall and the equilibrium quantity to stay the same

B. rise and the equilibrium quantity to stay the same.

Which of the following characteristics differentiates the private economy from government? A. public policy with appropriate incentives B. self-correcting mechanism C. spending programs and unwanted results D. moderate future behavior

B. self-correcting mechanism

The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price. A. income effect B. substitution effect C. backward-bending supply curve D. preferences effect

B. substitution effect

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. A. marginal utility B. sunk costs C. marginal analysis D. budget constraints

B. sunk costs

If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then, A. the firm's perceived demand will shift to the left. B. the firm should keep expanding production. C. each marginal unit adds profit by bringing in less revenue than its cost. D. the firm is now earning zero for profit.

B. the firm should keep expanding production.

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? A. wage levels B. the macroeconomy C. the firm's income D. household income

B. the macroeconomy

Product differentiation may occur in ____________ because ______________ created strong preferences for certain brands. A. shaping intangible preferences; predatory pricing B. the minds of buyers; past habits and advertising C. imperfect competition; the concept of differentiated products D. imperfect competition; advertising and consumer habits

B. the minds of buyers; past habits and advertising

Market competition can provide ___________________ for __________________, A. unstained profits; firms with marketable patents B. the needed incentive; discovering new technologies C. time; competitors to catch up with other's inventions D. an opportunity; competitors seeking out innovations

B. the needed incentive; discovering new technologies

If new manufacturers enter the computer industry, then (ceteris paribus): A. the supply curve shifts to the left. B. the supply curve shifts to the right. C. the demand curve shifts to the left. D. some established manufacturers must exit the industry.

B. the supply curve shifts to the right.

Government regulations allow a manufacturer of natural weight loss products to advertise A. using any amount of exaggerated claims because, in a free market, caveat emptor prevails. B. using a certain amount of exaggeration about the general delight of using those products. C. any benefits of using their products, even if those benefits are exaggerated. D. about factual benefits only, because exaggerations of any sort are strictly prohibited.

B. using a certain amount of exaggeration about the general delight of using those products.

If U.S. immigration consists of mainly low-skilled workers, then an increase in immigration_____________________ the wages of low-skilled workers. A. will increase B. will reduce C. may increase or reduce D. will not affect

B. will reduce

_________________________ allows the government to collect wealth for redistribution based on the amount of stored wealth that is being passed on in the form of an inheritance. A. An inheritance tax B. A redistribution tax C. An estate tax D. A death tax

C. An estate tax

_________________ occurs when circumstances have allowed several large firms to have all or most of the sales in an industry. A. Collusion B. A monopoly C. An oligopoly D. A cartel

C. An oligopoly

Why would foreign firms export a product at less than its cost of production—which presumably means making a loss? A. Many nations participate in poor planning and as a result produce a surplus of product which they sell at a loss. B. This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic competition, they would then raise prices. C. Many nations simply wish to keep their workers employed, no matter what the cost. D. Many nations simply produce and sell inferior goods at prices that reflect this fact.

B. This may be part of a long-term strategy in which foreign firms would sell at below the cost of production in the short-term for a time, and when they have driven out the domestic competition, they would then raise prices.

______________ include all of the costs of production that increase with the quantity produced. A. Fixed costs B. Variable costs C. Average costs D. Average variable costs

B. Variable costs

Bringing the nations of the world to act together in addressing environmental issues that spill over national borders requires __________________ between countries with__________________. A. a different approach to negotiations; similar income levels and sets of priorities B. a difficult set of negotiations; different income levels and sets of priorities C. a different approach to negotiations; low and middle-income levels. D. deliberate negotiations; high-income levels and similar sets of priorities.

B. a difficult set of negotiations; different income levels and sets of priorities

In economics, a firm that faces no competitors is referred to as _________________. A. an oligopoly B. a monopoly C. a perfect competitor D. an oligopolizor

B. a monopoly

Economic theory offers ____________________ about the full range of possible events and responses, which can prevent __________________ about how households will respond to changes in prices or incomes. A. one budget constraint theory; unrealistic possibilities B. a systematic way of thinking; misguided conclusions C. two budget constraint theories; misguided possibilities D. systematic consumption choices; unrealistic conclusions

B. a systematic way of thinking; misguided conclusions

Of all the available policies to reduce discrimination by race and gender, the costliest is likely to be: A. affirmative action outreach B. affirmative action goals and quotas C. laws prohibiting discrimination D. improved educational opportunities

B. affirmative action goals and quotas

A mutual fund that seeks to imitate the overall behaviour of the stock market is called ____________________ . A. a long-run collectibles fund B. an index fund C. a mortgage-backed securities fund D. an indexed retirement age fund

B. an index fund

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: A. the equilibrium price will fall and the equilibrium quantity will fall. B. both the equilibrium price and quantity will rise. C. the equilibrium price will rise and the equilibrium quantity will decrease. D. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate.

B. both the equilibrium price and quantity will rise.

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible. A. consumption set B. budget constraint C. original budget D. income cap

B. budget constraint

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories. A. financial capital market B. circular flow diagram C. financial investment market D. Specialization Model

B. circular flow diagram

As international trade increases, it contributes to a shift in jobs away from industries where that economy does not have a(n) __________ advantage and toward industries where it has a(n) ___________ advantage. A. absolute; absolute B. comparative; comparative C. comparative; competitive D. comparative; absolute

B. comparative; comparative

If SmartCo's research and development project succeeds, then A. market competition will ultimately discourage commercialization of the new technology. B. competitors may find a way to adapt and copy the underlying idea without incurring R&D costs. C. their success will be temporary because they will inevitably fall behind other innovative competitors. D. they will need to find a less expensive way to add even more desirable characteristics.

B. competitors may find a way to adapt and copy the underlying idea without incurring R&D costs.

Pork-barrel spending can be thought of as another case where democracy is challenged by _____________________ and _____________________. A. specials interest groups; disconnected voters B. concentrated benefits; widely dispersed costs C. conventional wisdom; lawyers and judges D. higher income earners; low-educated individuals

B. concentrated benefits; widely dispersed costs

Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs? A. costs that increase with the quantity produced B. costs of research and development C. costs related to labor expenditures D. costs related to physical inputs

B. costs of research and development

In recent years, the U.S. labor market has experienced a_____________________ in the earnings gap between men and women. One of the main factors behind this is _____________________. A. big decline; men have steadily been less productive and their wages have fallen B. decline; women's' career focus and rewards gained with top-level job expertise C. increase; women are getting married and having children earlier in life D. big increase; an increase in gender-based discrimination in labor markets

B. decline; women's' career focus and rewards gained with top-level job expertise

Government developed a method called _________________ to assist the working poor through the tax system. The amount of the tax break __________________ with the amount of income earned, ______________________. A. eligible income credit; decreases; and by age of child B. earned income credit; increases; up to a point C. eligible income credit; increases; and by age of child D. earned income credit; decreases; up to a point

B. earned income credit; increases; up to a point

________________________ is theoretically possible, even sensible: give an industry a short-term indirect subsidy through protection, and then reap the long-term economic benefits of having a vibrant healthy industry. A. Protectionism B. The infant industry argument C. Dumping D. Import quotas

B. The infant industry argument

If a perfectly competitive firm raises its price, the quantity demanded of its product ____________. A. diminishes temporarily in the short run B. falls to zero C. stays the same D. falls below marginal cost

B. falls to zero

Since the 1980s, national elections in Germany, Spain and France have all recorded _____________________ than was recorded for presidential elections in the United States. A. lower voter participation B. higher voter participation C. a 50% higher number of votes cast D. a 50% lower number of votes cast

B. higher voter participation

When Marietta chooses to only purchase a combination of goods that lie within her budget line, she: A. is decreasing utility. B. is maximizing utility. C. likely has negative savings. D. must reduce the quantity.

B. is maximizing utility.

Trade allows each country to take advantage of ______________ in the other country. A. economies of scale B. lower opportunity costs C. specialization D. worker productivity

B. lower opportunity costs

What do service contracts, occupational licenses and cosigners all share in common? A. reduced risk of adverse selection B. reduced the risk of imperfect information C. eliminate the risk of adverse selection D. eliminate the risk of imperfect information

B. reduced the risk of imperfect information

Why would a bank require a borrower to have collateral or a cosigner before agreeing to lend funds? A. discourages some borrowers from asking for a loan B. reduces risk associated with imperfect information C. both act like a service contract in the goods market D. complicates the process to discourage risking borrowers

B. reduces risk associated with imperfect information

Which of the following best denotes the reason for the existence of substantial black markets? A. a market-oriented economy B. a command economy C. government laws and rules D. the microeconomy

A. a market-oriented economy

In economic terms, when I'mASoftwareCo. invests in new technology innovations, A. competitive externalities arise. B. potential externalities arise. C. negative externalities arise. D. positive externalities arise.

A. competitive externalities arise.

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. A. personal preference B. utility level C. budget constraint D. opportunity set

C. budget constraint

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. A. market-oriented economy B. macroeconomy C. microeconomy D. command economy

A. market-oriented economy

In microeconomic terms, the ability of a good or a service to satisfy wants is called: A. opportunity cost. B. utility. C. scarcity maximization. D. profit potential.

B. utility.

The US Federal Trade Commission justifies their record of approval of most mergers by asserting that, even though competition is diminished by consolidating two firms into one, mergers actually benefit A. competition and consumers by forcing firms to lower consumer pricing. B. competition and consumers in the short-run. C. competition and consumers by allowing firms to operate more efficiently. D. competition and consumers at the outset.

C. competition and consumers by allowing firms to operate more efficiently.

The form of legal protection intended to prevent reproduction of original works is referred to as _________ law. A. patent B. trademark C. copyright D. trade secret

C. copyright

Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs? A. costs that must be made before production starts B. costs that vary according to specific line of business C. costs incurred in the act of producing D. costs incurred as advertising expenses

C. costs incurred in the act of producing

Market-oriented environmental tools ______________________ for firms to take the social costs of pollution into account and ______________________ in reacting to these incentives. A. draw distinctions; lower the social costs incurred B. lack incentives; prohibit firms from having flexibility C. create incentives; allow firms some flexibility D. specify particular technology; lower the social costs incurred

C. create incentives; allow firms some flexibility

The old proverb: "Don't put all your eggs in one basket" is synonymous with which of the following? A. an average rate of return B. predicting value of tangible assets C. diversified investments D. a flexible rate of return

C. diversified investments

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls. A. diminishing marginal returns B. marginal cost output C. economies of scale D. diseconomies of scale

C. economies of scale

Which of the following is generally accepted as a valid criticism of the production of useful goods and services? A. government involvement B. the black market C. environmental pollution D. economic freedom

C. environmental pollution

Market failure describes a situation in which the market itself ______________________ in a way that balances social costs and benefits. A. remains outside the transaction B. incurs the costs outside the production process C. fails to allocate resources efficiently D. avoids externalities

C. fails to allocate resources efficiently

Union membership has_____________________ in the United States because of _____________________. A. risen; the shift from service to manufacturing industries B. risen; increased global trade from U.S. manufacturers C. fallen; laws enacted making it more difficult to unionize D. fallen; laws making workplace protection more difficult

C. fallen; laws enacted making it more difficult to unionize

Automobile manufacturers use warranties as incentives for buyers to purchase their products. Why are warranties on vehicles important to buyers? A. manufacturers pay insurance policy premiums on the buyer's vehicle for a set period of time B. for a fixed time period, buyer's can return vehicles for a full refund of the purchase price C. for a specific time period, the manufacturer bears the cost of fixing or replacing the vehicle D. manufacturers bear the cost of fixing the vehicles under unlimited-term service contracts

C. for a specific time period, the manufacturer bears the cost of fixing or replacing the vehicle

If the poverty trap were made even more difficult to overcome because a working mother will have extra expenses like transportation and child care that a nonworking mother will not face, then A. she will have a powerful incentive to work more than one job. B. the family better off than if she did not work at all. C. her economic gains from working will be even smaller. D. working now and in the future is even more attractive.

C. her economic gains from working will be even smaller.

The key assumption that accompanies the use of numbers for measuring utility is that: A. utility cannot be measured by an outside party. B. utility can be perfectly measured. C. individuals choose based on their preferences. D. people make consumption decisions.

C. individuals choose based on their preferences.

If a nation has a comparative disadvantage in the production of some commodity: A. it cannot gain from international trade unless it has an absolute advantage in every other commodity. B. it cannot gain from international trade in the commodity. C. it can still gain from international trade in that commodity, by getting it at a lower opportunity cost than if it produced it domestically. D. it can gain from international trade in that commodity only if it has an absolute advantage in that commodity

C. it can still gain from international trade in that commodity, by getting it at a lower opportunity cost than if it produced it domestically.

While the U.S. command-and-control environmental regulations initiated in the 1970s have been very effective at reducing pollution, some economists have difficulty with the legislation because A. it often requires different pollution-control technology for each polluter. B. it usually requires different standards for all current and potential polluters. C. it is full of fine print and exceptions, and costly for some firms to comply with. D. it is not subject to compromises in the political process and all of the above.

C. it is full of fine print and exceptions, and costly for some firms to comply with.

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________________. A. income gap B. market equilibrium C. law of demand D. price model

C. law of demand

As a person receives more of a good, the _______________ from each additional unit of the good declines. A. utility B. sunk costs C. marginal utility D. budget constraint

C. marginal utility

Which of the following is a valid criticism of the reduction of competition that results from corporate mergers? A. merged firms generally are as efficient and innovative as they can be B. consumers will have greater access to lower priced goods and services C. merged firms can increase price and maintain permanently higher profits D. merged firms are better positioned to take advantage of economies of scale

C. merged firms can increase price and maintain permanently higher profits

The basic difference between macroeconomics and microeconomics is: A. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. B. microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms. C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. D. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

C. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines. A. Skill B. Specialization C. Economies of scale D. Division of labor

C. Economies of scale

Banks are required by law to pay a small fraction of their deposits to the _______________, which goes into a __________ fund that is used to repay depositors their money if the bank should go bankrupt. A. Federal Reserve Deposit Insurance Fund; deposit insurance B. U.S. Deposit Insurance Fund; pooled C. Federal Deposit Insurance Corporation; deposit insurance D. Federal Bank Deposit Insurance Fund; pooled

C. Federal Deposit Insurance Corporation; deposit insurance

Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what type of industry strucutre _______________. A. a cartel B. collusion C. monopolistic competition D. perfect competition

C. monopolistic competition

The term _____________ is used to describe circumstances where government takes over ownership of a business. A. privatization B. regulatory capture C. nationalization D. deregulation

C. nationalization

The costs that immigrants impose on governments arise mainly in terms of _____________________, which are primarily the responsibilities of the _____________________ government(s). A. administration, state and local B. administration, federal C. public schools and healthcare, state and local D. public schools and healthcare, federal

C. public schools and healthcare, state and local

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the ________________. A. demand schedule B. market price C. quantity supplied D. demand curve

C. quantity supplied

The price elasticity of demand measures the: A. responsiveness of quantity demanded to a change in quantity supplied. B. responsiveness of price to a change in quantity demanded. C. responsiveness of quantity demanded to a change in price. D. responsiveness of quantity demanded to a change in income.

C. responsiveness of quantity demanded to a change in price.

In the _______________, the perfectly competitive firm will seek out _______________. A. long run; the quantity of output where profits are highest B. short run; profits by ignoring the concept of total cost analysis C. short run; the quantity of output where profits are highest D. long run; methods to reduce production and shut down

C. short run; the quantity of output where profits are highest

When consumers and businesses have greater confidence that they will be able to repay in the future, ___________________. A. the quantity demanded of financial capital at any given interest rate will remain unchanged. B. the quantity demanded of financial capital at any given interest rate will shift to the left. C. the quantity demanded of financial capital at any given interest rate will shift to the right. D. the quantity demanded of financial capital at any given interest rate will achieve equilibrium.

C. the quantity demanded of financial capital at any given interest rate will shift to the right.

When a firm pursues a predatory pricing strategy, it does so A. to hire more staff to lower unemployment. B. to increase supply to benefit consumers. C. to maximize profits in the long run. D. to discourage short run competition.

C. to maximize profits in the long run.

In the business world, a __________ is recognized as a legally acceptable way for any business to keep knowledge of its particular methods of production from being known by competing firms. A. patent B. monopoly C. trade secret D. trademark

C. trade secret

If a monopoly or a monopolistic competitor raises their prices, the quantity demanded ____________. A. will expand B. stays the same C. will decline D. will decline in the short run

C. will decline

If a monopolistic competitor raises its price, it ___________ customers than a perfectly competitive firm, but ____________ customers compared to the number that a monopoly that raised its prices would. A. will lose more; it will lose as many B. will lose more; it will lose more C. will lose fewer; it will lose more D. will lose fewer; it will lose as many

C. will lose fewer; it will lose more

In the U.S., individuals often pay a small portion of their earnings into a state _________________ pooled fund that will compensate them if they are injured on the job. A. Medicare B. Social Security C. workman's compensation insurance D. unemployment insurance

C. workman's compensation insurance

Small, growth-oriented companies typically prefer _________________ to borrowing from a bank because it is a source of funding where the company is not obligated to _____________________ . A. issuing bonds; to proceed with an IPO B. an IPO; issue bonds C. an IPO; make interest payments D. issuing bonds; make interest payments

C. an IPO; make interest payments

Which of the following will not result in a rightward shift of the market supply curve for labor? A. a decrease in non-wage income B. an increase in the working-age population C. an increase in labor productivity D. an increase in immigration

C. an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in demand for the firm's product C. an increase in the wage rate D. a decrease in the firm's product price

C. an increase in the wage rate

Tim is a single father with 1 child. He can work as a bagger at the local grocery store for $9 per hour up to 1,200 hours per year. He is eligible for welfare, and if he does not earn any income, he will receive $15,000 a year. If Tim works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. This government policy provides a monetary incentive to work, because A. it pays the same amount, regardless of how much Tim works D. benefits are not phased out C. Tim receives a stipend regardless of whether he works or not D. Tim's income level increases the more he works

D. Tim's income level increases the more he works

Which of the following is the best example of a tariff? A. a tax placed on all small cars sold in the domestic market B. a limit imposed on the number of small cars that can be imported from a foreign country C. a subsidy from the American government to domestic manufacturers of small cars so they can compete more effectively with foreign producers of small cars D. a $1000-per-car fee imposed on all small cars imported

D. a $1000-per-car fee imposed on all small cars imported

Politicians often argue for tariff increases in order to reduce the nation's dependence on imports. If tariffs are increased, the long-run effect is most likely to be: A. an increase in American imports, and a decrease in American exports. B. an decrease in American imports, and an increase in American exports. C. an increase in both American imports and exports. D. a decrease in both American imports and exports.

D. a decrease in both American imports and exports.

Which of the following is most unlikely to present a barrier to entry into a market? A. market forces B. patent laws C. technological advantages D. deregulation

D. deregulation

Alpha can produce either 18 oranges or 9 apples an hour, while Beta can produce either 16 oranges or 4 apples an hour. Which of the following statements is true? A. Alpha should export to Beta, but Beta should not export to Alpha. B. Since Alpha has an absolute advantage in both goods, no mutual gains from trade are possible. C. If Alpha specializes in growing oranges and Beta specializes in growing apples, they could both gain by specialization and trade. D. If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.

D. If Alpha specializes in growing apples and Beta specializes in growing oranges, they could both gain by specialization and trade.

How would a sustained increase in the market price of its shares directly benefit a publicly traded company? A. It will be able to lower the dividend yield on its preferred shares. B. It will be able to borrow larger sums from other companies. C. It would be able to borrow larger sums from banks. D. It could sell any shares it owns in itself at the higher valuation.

D. It could sell any shares it owns in itself at the higher valuation.

A manufacturer would likely make an ___________________ in a market following the long-run process of beginning and expanding production in response to. A. accounting profit; a strategy to grow profits B. accounting profit; an incentive for profit C. entry; a sustained pattern of profits D. entry; an incentive to add to profits

C. entry; a sustained pattern of profits

The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed. A. substitution effect; lower price B. intertemporal budget; higher price C. income effect; higher price D. intertemporal budget; lower price

C. income effect; higher price

Improvements in the productivity of labor will tend to: A. decrease wages. B. decrease the supply of labor. C. increase wages. D. increase the supply of labor.

C. increase wages.

The Herfindahl-Hirschman index is calculated by taking ___________, squaring it, and adding them up to get a total. A. concentration ratio of each firm in the industry B. total revenues of each firm in the industry C. market share of each firm in the industry D. market capitalization of each firm in the industry

C. market share of each firm in the industry

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, ______________ decreases. A. quantity demanded, price B. quantity supplied, quantity demanded C. price, quantity demanded D. price, quantity supplied

C. price, quantity demanded

As the _______________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. A. high-skill labor B. lower wage C. technology D. market

C. technology

A price cut will increase the total revenue a firm receives if the demand for its product is: A. unit inelastic. B. unit elastic. C. inelastic. D. elastic.

D. elastic

How does being caught in a poverty tap affect an individual's future job prospects? A. it causes working in the future even less attractive B. it causes a lack of job experience and contacts C. it creates a powerful incentive to acquire skills training D. it creates the outcomes presented in both a and b

D. it creates the outcomes presented in both a and b

In the _____________, the perfectly competitive firm will react to profits by __________________. A. short run; increasing quality of products B. long run; tailoring their quality controls C. short run; reducing its labor inputs D. long run; increasing its production

D. long run; increasing its production

In economics, the term "shutdown point" refers to the point where the A. marginal cost curve crosses the total revenue curve. B. average variable cost curve crosses the total revenue curve. C. average variable cost curve crosses the marginal cost curve. D. marginal cost curve crosses the average variable cost curve.

D. marginal cost curve crosses the average variable cost curve.

Government policy-makers often must decide how to balance the potential benefits of _____________ against the potential benefits of _______________. A. competition; nationalization B. corporate size; competition C. corporate size; predatory pricing D. nationalization; privatization

D. nationalization; privatization

What do an optician and a lawyer share in common? A. government regulators require that each must guarantee their services B. each must warranty their services C. each must provide a money-back guarantee D. need for a valid occupational license from government regulators

D. need for a valid occupational license from government regulators

The ownership in a company is represented by ________________ and those who are legally recognized as having ownership in a company are called ________________. A. ownership of the shares with voting rights; shareholders B. shares with voting rights; stockholders C. ownership of stock; stockholders D. ownership of shares in the company's stock; shareholders

D. ownership of shares in the company's stock; shareholders

In circumstances dealing with poverty, the term _________________________ means taking income from those with higher incomes and providing income to those with lower incomes. A. safety net B. estate tax C. minimum wage D. redistribution

D. redistribution

Price elasticity of demand is defined as: A. the slope of the demand curve. B. the slope of the demand curve divided by the price. C. the percentage change in price divided by the percentage change in quantity demanded. D. the percentage change in quantity demanded divided by the percentage change in price.

D. the percentage change in quantity demanded divided by the percentage change in price.

A minimum resale price maintenance agreement requires a dealer who buys from a manufacturer ______________. A. to sell for at least a certain minimum price B. to avoid engaging in restrictive practices. C. to guarantee a certain percentage of market share D. to sell for at least a certain maximum price

D. to sell for at least a certain maximum price

In the United States, which of the following would be most likely to participate in an election by informing themselves and casting their vote? A. single people B. newcomers C. the employed D. the socially isolated

C. the employed

Which of the following results in a rightward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in the firm's product price C. an increase in the wage rate D. an increase in demand for the firm's product

D. an increase in demand for the firm's product

In order to determine ____________, the firm's total costs must be divided by the quantity of its output. A. diminishing marginal returns B. fixed costs C. variable cost D. average cost

D. average cost

What matters most in determining the efficient distribution of production over the world is: A. absolute advantage. B. efficiency. C. the allocation of resources. D. comparative advantage.

D. comparative advantage

The slope of the demand curve for a monopoly firm is A. horizontal, parallel to the x-axis B. vertical, parallel to the y-axis C. upward sloping D. downward sloping

D. downward sloping

The term _____________ is used to describe the additional cost of producing one more unit. A. average cost B. fixed cost C. variable cost D. marginal cost

D. marginal cost

Property rights are the legal rights of ownership on which others are A. allowed to infringe by paying the property owner's pollution tax. B. able to enforce use of pollution-control technologies. C. able to specify allowable quantities of pollution. D. not allowed to infringe without paying compensation.

D. not allowed to infringe without paying compensation.

When quantity demanded decreases in response to a change in price: A. the demand curve shifts to the right. B. the demand curve shifts to the left. C. there is a movement down along the demand curve. D. there is a movement up along the demand curve.

D. there is a movement up along the demand curve.

Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop? A. 0.15 B. 3.0 C. 0.10 D. 0.05

B. 3.0

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made. A. government B. market C. firm D. business sector

a. government

The race to the bottom scenario of global environmental degradation is explained roughly like this: A. Companies seek to reduce their costs of operations on plant and equipment design and this results in higher levels of pollution. B. Companies seek the lowest market prices on products in order to gain market share, resulting in inferior goods and increased waste and pollution. C. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits. D. Companies seek to influence environmental legislation standards are set to the lowest possible standards in the USA in order to maximize profits.

C. Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits.

_____________________ are more likely to arise from a group that is easily identifiable, rather than from a group where some of those who suffered may not even recognize that _____________________. A. Connected peoples; specific tax breaks exist for them B. Socially isolated people; government intervention is needed C. Special interests; they are bearing the costs D. Beneficiaries; rent controls are in effect

C. Special interests; they are bearing the costs

Suppose that the USA can make 15,000,000 cars or 20,000,000 bottles of wine with one year's worth of labor. France can make 10,000,000 cars or 18,000,000 bottles of wine with one year's worth of labor. From these numbers, we can conclude: A. The USA has a comparative advantage in the production of wine. B. France has a comparative advantage in the production of cars. C. The USA has an absolute advantage in the production of cars. D. France has an absolute advantage in the production of wine.

C. The USA has an absolute advantage in the production of cars.

The use of sharp, temporary price cuts as a form of ________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers. A. natural monopoly B. monopolistic competition C. predatory pricing D. oligopolistic competition

C. predatory pricing

In contrast to goods and services markets, ______________ are rare in labor markets, because rules that prevent people from earning income are not politically popular. A. minimum wages B. price floors C. price ceilings D. living wage laws

C. price ceilings

The term _______________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product. A. price setter B. business entity C. price taker D. trend setter

C. price taker

For a positive externality, _____________________ than the social benefits. A. private benefits of an action are more B. social benefits of an action are more C. private benefits of an action are less D. social costs of an action are less

C. private benefits of an action are less

In the case of technology, it can sometimes be quite difficult for _____________________ to earn a _____________________ rate of return from their inventions. A. individuals; high B. public investors; low C. private investors; reasonable D. the whole of society; high

C. private investors; reasonable