Economics
Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of the purchase
False
Supply refers to the amount of a product that a producer will offer in the market at some particular price
False
Surpluses drive the market up; Shortages drive the market down
False
Technological progress in the health care industry has typically reduced costs and increased supply
False
The benefits-received principle of taxation is used to support corporate and personal income taxes
False
The benefits-received principle of taxation supports the case for highly progressive taxation
False
The closer the Lorenz curve is to the diagonal, the greater is the degree if income inequality
False
The demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are downsloping
False
The law of diminishing returns explains diseconomies of scale
False
The law of diminishing returns explains why the long-run average total cost curve is U-shaped
False
The monopolistically competitive seller maximizes profits by equating price and marginal cost
False
The optimal (economically-effiecient) level of air pollution is zero emissions
False
The regulation of natural monopolies has been criticized because it creates a tendency for regulated firms to use too much labor and too little capital in the production process
False
The short run is a period of time during which all costs are fixed costs
False
The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it
False
The supply of loanable funds is perfectly elastic
False
The top 20 percent of U.S. income earners receive nearly 80 percent of total U.S. income.
False
Toothbrushes and toothpaste are substitute goods
False
The economic profits earned by monopolistically competitive sellers are zero in the long run
True
The law of diminishing returns explains why short-run marginal cost curves are upward sloping
True
The marginal revenue product curve of a purely competitive seller declines solely because of the law of diminishing returns
True
The real opportunity cost of producing product X is the amounts of product Y,Z, and so forth, that might have been produced if resources had nit been used to produce X
True
The total revenue curve of a competitive seller graphs as a straight, up sloping line
True
Variable costs are costs that vary directly with output
True
Although sleeping in on a work day or school day has an opportunity cost, sleeping in on weekends does not
False
An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy
False
An economy cannot produce at a point outside of its PPC because human economic wants are insatiable
False
An increase in quantity supplied might be caused by an increase in production costs
False
Because economic generalizations are simplifications from reality, they are impractical and useless.
False
Because of the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously
False
Because of their large-scale level of production, pure monopolists over allocate resources to their industry by producing beyond the P=MC output
False
Certain inherently desirable products such as education and health care should be produced so long as resources are available
False
Economic profit is found by subtracting accounting costs from total revenue
False
Elasticity of a resource demand is measured by dividing "percentage change in resource price" by "percentage change in resource quantity"
False
The demand for a resources depends on its productivity and the market value of the product that it is producing
True
In the long run, monopolistically competitive firms make normal profits because they are forced to operate at the minimum point on their avg total cost curve
False
In the short run, a pure monopolist will charge the highest price the market will bear for its product
False
If market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes
False
In a purely competitive industry competition centers more on advertising and sales promotion than on price
False
In maximizing profit, a firm will always produce that output where total revenues are at a maximum
False
In the long run, a pure monopolist must produce at that output where average total cost is at a minimum
False
Labor market discrimination increases the size of the nations Gross Domestic Product
False
Majority voting assures that government will provide a public good if it yields total benefits in excess of total costs
False
Normative statements are expressions of facts
False
Positive statements are expressions of value judgements
False
Price discrimination is illegal in the United States under antitrust regulations
False
Price discrimination occurs every time a firm sells a good for two different prices
False
Pure monopolists always earn economic profits
False
A ceiling price in a competitive market will result in persistent surpluses of a product
False
A competitive firm will produce in the short run so long as its price exceeds its average fixed cost
False
A decrease in supply of X increases the equilibrium price of X, which reduces the demand for X and automatically returns the price of X to its initial level
False
A price floor in a competitive market will result in persistent shortage of a product
False
Although individual purely competitive firms can influence the price of their product, these firms as a group cannot influence market price
False
The demand curve of a monopolistically competitive producer is less elastic than that of a purely competitive producer
True
A government subsidy per unit of output increases supply
True
A government tax per unit of output reduces supply
True
A highly progressive tax takes relatively more from the rich than it does from the poor
True
A monopolistic employer may sell its product in a competitive market
True
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
True
An improvement in the technology of pollution control is likely to increase societies optimal amount of pollution abatement
True
An increase in demand accompanied by an increase in supply will increase the equilibrium quantity but the effect on equilibrium price will be indeterminate
True
At zero units of output a firm's variable costs are zero
True
Average fixed costs diminish continuously as output increases
True
Because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces up to an efficient allocation of economic resources
True
Choices entail marginal costs because resources are scarce
True
Consumers buy more of a normal good as their incomes rise
True
Cost-benefit analysis is frequently difficult to apply because it is difficult to quantify the full benefits of a public good or service
True
Critics of the minimum wage contend that higher minimums cause employers to move up their labor demand curves, reducing employment of low-wage workers
True
Demand is the active and supply is the passive determinant of land rent
True
Diseconomies of scale stem primarily from the difficulties in managing and coordinating a large-scale business enterprise
True
Generally speaking, the demand for luxury goods is more elastic than demand for necessities
True
Generally speaking, the larger the number of firms in an oligopolistic industry, the more difficult it is for those firms to collude
True
Human capital investment refers to spending on education and worker training
True
If demand increases and supply simultaneously decreases, equilibrium price will rise
True
If price and total revenue are directly related, demand is elastic
True
If price changes and total revenue changes in the opposite direction, demand is relatively elastic.
True
If the XYZ company can sell 4 units per week at $10 per unit and 5 units per week at $9 per unit, the marginal revenue of the fifth unit is $5
True
If the demand for wheat is highly price inelastic, an extraordinarily large crop mat reduce farm incomes
True
If three or four homogeneous oligopolists collude, the resulting price and production outcomes will be similar to those of a pure monopoly
True
If you pay a $1000 tax on $10,000 of taxable income and a $3000 tax on a taxable income of $16,000, the tax is progressive
True
It will be profitable for a firm to hire additional units of any resource up to the point at which it MRP is equal to is MRC
True
Marginal analysis means that decision makers compare the extra benefits with the extra costs of a specific choice
True
Marginal cost is a measure of the alternative goods which society forgoes in using resources to produce an additional unit of some specific product
True
Marginal revenue is the addition to total revenue resulting from the sale of one more unit of output
True
Price and marginal revenue are identical for an individual purely competitive market
True
Products and services are scarce because resources are scarce
True
Rational individuals may make different choices because their preferences and circumstances differ
True
Taxes and/or mandatory fees can solve the free rider problem
True
The PPC shows various combinations of two products that an economy can produce when achieving full employment
True
The U.S. poverty rate was considerably lower in 2004 than in 1960
True