ECON

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Marketable permits can be viewed as a form of improved _______________. A. command-and-control regulations B. property rights C. refundable tax credits D. flat fee pollution tax

When economists attempt to predict the spending patterns of U.S. households, they will typically view the _____________________ as a primary determining factor that influences the individual consumption choices that each will make. A. income level of each household B. national average spending level C. national average savings level D. nation's perennial political debate

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale, A. the firm is a natural monopoly. B. there are close substitutes for the good the firm produces. C. firm is a single-price monopoly. D. firm is well protected from competition by a legal barrier.

46. The following table shows a monopolist's demand curve and cost information for the production of its good. What price will it charge? A. $13 B. $15 C. $11 D. $12

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge. A. price ceiling laws B. usury laws C. price floor laws D. minimum interest rate

Market competition can provide _______________ for _________________ , A. unsustained 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

Members of labor unions are able to use their ________________ to achieve better economic outcomes. A. cooperative nature B. bargaining power C. secret ballot votes D. excess supply of labor

Of the many available policies to reduce discrimination by race and gender in the U.S. labor market, the most controversial is likely to be A. laws prohibiting discrimination B. affirmative action goals and quotas C. increased access to child care D. improved educational opportunities

Once I'MaPharmaCo. has received confirmation of the registration for its latest drug patent application, it will have created a monopoly for that product by restricting A. demand for the product. B. entry into the market. C. amount of product advertising. D. the number of product compliments.

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.

One difficulty with direct government support of R&D is that it inevitably involves government decisions about ___________________. A. whether it can agree on the amount of social benefit conferred to private firms B. which of the vast number of proposed projects are worthwhile C. the location of the congressional district receiving the research funding. D. quantifying the social benefit conferred on a private firm by an R&D tax reduction.

One reason some economists doubt that patent protection encourages innovation is that economic studies show that inventors receive only __________________ of the total economic value of their inventions in countries that ______________ . A. one-half to two-thirds; previously had few patents B. one-third to one-half; already had patents C. one-third to one-half; previously had no patents D. one-half to two-thirds; had existing patents

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

Raven Farms raises a substantial number of bees and uses the honey to produce its own skin healing cream. Raven Farms is situated next to the Oakcreek Apple Orchard. The bees from Raven Farms pollinate Oakcreek's apple trees. In this instance, Raven Farms A. derives more private benefits and provides less social benefit. B. provides more social benefits than it derives in private benefits. C. provides a marginal social benefit and derives a complete private benefit. D. provides a complete social benefit and derives a marginal private benefit.

Refer to Figure 5-1. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm. A. Point A; Point B B. Point A; Point F C. Point A; Point D D. Point A; Point H

Refer to Table 5-1. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $4; 11 B. $4; 16 C. $6; 13 D. $8; 15

Refer to Table 5-1. If D2 and S2 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $12; 12 B. $10; 12 C. $8; 15 D. $6; 18

16. Refer to the budget line shown in the diagram above. At point U, __________. A. P1/P2 = MU1/MU2 B. pizza is an inferior product C. P2/P1 = MU2/MU1 D. roses are an inferior product

18. Refer to the diagram above. What is the significance of the point marked L1 at the bottom upward-sloping portion of the individual labor supply (2) curve? A. as wages increase over this range, the quantity of hours worked also increases. B. as wages increase over this range, the quantity of hours worked changes very little. C. as wages increase over this range, the quantity of hours worked actually decreases. D. as wages increase of this range, the quantity of hours worked is inelastic.

25. The town of Bookville has a massive public library system. Bookville's municipal government faces a trade off between retaining the current number of library workers and replacing some of its workers with computers. The four options available to the government are given in table below. Computers and software cost $5,000 each and must be replaced each year. In a non-unionized labor market, workers are paid $20,000 per year. In these circumstances, the optimal choice from a cost perspective for the city government is A. Choice A B. Choice B C. Choice C D. Choice D

29. Bob budgets $12 a week for entertainment. He splits his time between going to the movies and going to the gym. Each movie costs $3 and each session at the gym also costs $3. The total utility from each of these activities is shown in the table below. Bob's utility maximizing point is: A. 3 movies; 3 gym workout sessions B. 4 movies; 0 gym workout sessions C. 4 movies; 2 gym workout sessions D. 1 movie; 5 gym workout sessions

32. Refer to the diagram above. In this instance, at the range of output represented at point b, A. total costs exceed total revenues. B. total revenues exceed total costs. C. the firm is earning profits. D. the firm should shut-down.

39. Given the data provided in the table below, what will the amount of profit be for production at quantity (Q) level 7? A. -$10.00 B. zero C. -$5.00 D. $1.00

40. Refer to the table below. This information reflects the demand curve and the average cost curve for a firm that is a natural monopoly. What will this firm's profits equal? A. $2.50 B. $1.50 C. $1.25 D. $0.50

43. Refer to the diagram above. Based on the information illustrated in this graph, which of the following is an accurate statement? A. MC is initially downward sloping in the region of increasing MR at low output levels B. As production increases, marginal revenue always increase so profits rise C. as production decreases, marginal revenue will increase so profits will rise D. a profit-seeking firm should continue to expand production as long as MR is less than MC

43. The table below shows a monopolist's demand curve and the cost information for the production of its good. What will their profits equal? A. $1,200 B. $1,600 C. $1,000 D. $600

47. The following table shows a monopolist's demand curve and cost information for the production of its good. What price will it charge? A. $25 B. $30 C. $20 D. $40

52. Terry attends college and works part-time job in a drug store. She can work up to 40 hours each week, and is paid $9 per hour. The table below shows her utility from different levels of leisure and income. If Terry decides to work 20 hours per week, her total utility from both leisure and income would be: A. 142 B. 115 C. 110 D. 179

55. Refer to the table below. In this instance, expansion of output A. causes input prices to rise as demand for inputs increases. B. leaves input prices constant as demand for inputs increases. C. causes diseconomies of scale to occur. D. occurs because of increasing returns to scale.

57. Aleah is an electrical engineer. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. If Aleah decreased her hours of work from 30 to 20 hours per week before her raise, the marginal utility loss from having less income is: A. 23 B. 56 C. 19 D. 100

59. A drug company is deciding how much to invest in Research and Development into finding a cure for the common cold. The table below shows the company's demand for financial capital for R&D of this cold drug, based on its expected rates of return from selling the cure. Every investment has an additional 4% social return: that is, an investment that pays at least a 5% return to the drug company will create at least a 9% return for society as a whole. If the opportunity cost of financial capital for the drug company is 7%, the drug company will invest ___ in R&D if it receives both the private and the social benefits of this investment. A. $308 B. $264 C. $250 D. $228

59. The following figure ???shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what do the firm's costs equal? A. the area of rectangle ABGH B. the area of rectangle BDEG C. the area of rectangle ACFH D. the area of rectangle ADEH

64. The SaferGlass Co. makes windshields for the automotive industry. It wants to develop a new product with shatterproof glass to increase safety. The development of the new glass requires them to change their production process significantly. The company has developed a list of possible ways of implementing the production process changes, along with estimates of how each would affect the production and sales costs. Based on these estimates, the table below shows the value of R&D projects that provide at least a certain social rate of return. Every investment in R&D would have an additional 3% social return: that is, an investment that pays at least a 4% return to the glass company will pay at least 7% return for society as a whole. If the opportunity cost of financial capital for SaferGlass Co. is 9%, the company will invest ______ in R&D if it receives both the private and social benefits of this investment. A. $400 B. $450 C. $500 D. $550

66. ToasterOvensInc. is developing technology to make a toaster oven than uses less electricity. If successful, the technology will significantly reduce the amount of energy that is wasted due to product inefficiencies. If the firm sells only in response to the market price, the quantity shown in the third column is supplied. If the firm were also to receive the broader social benefits of the new technology, the willingness to supply is shown in the fourth column. If the firm were to receive a price based on both private and social benefits, the equilibrium price and quantity would be A. $16, 740 b. $17, 770 c. $18, 800 d. $19, 830

79. The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below. The equilibrium price and quantity when social costs are taken into account are A. Price = $55, Quantity = 30 B. Price = $40, Quantity = 55 C. Price = $30, Quantity = 20 D. Price = $30, Quantity = 80

Saving money is a(n) ____________________, because it involves less consumption in the present, but the ability to consume more in the future. A. budget constraint B. intertemporal choice C. risk premium D. opportunity cost

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

The imposition of a price ceiling on a market often results in: A. an increase in investment in the industry. B. a surplus C. a shortage D. a decrease in discrimination on the part of sellers.

In the Unites States, worker membership in labor unions has been A. steadily growing for 50 years. B. steadily growing in the last decade. C. steadily growing due to immigration. D. steadily declining for 50 years.

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

In the circular flow diagram model: A. households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. B. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. C. households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses. D. Both (a) and (b) are correct.

Intellectual property law is a body of law that includes A. the right of inventors to produce their inventions B. the right of inventors to sell their inventions C. trademark, patent and trade secret legislation D. copyright legislation, as well as all of the above

It is commonly understood that every invention A. has its own story of discovery and development. B. often involved a parade of characters and firms. C. has a unique story that develops over years or decades. D. often results in new technology and all of the above.

Labor unions can: A. be a primary line of defense against suppressed wage levels. B. be controversial in a for-profit market driven economy. C. bring better economic gains for their memberships. D. protect workers' pensions and all of the above.

Under which of the following government programs would the federal government's welfare spending rise or fall depending on the number of poor people, and on how each state set its own welfare contribution? A. ADFC B. TANF C. TNAF D. AFDC

Unions can be perceived as being economically harmful when they A. strike infrequently B. successfully negotiate higher wages C. support modernization and new technology D. none of the above

What happens in a perfectly competitive industry when economic profit is greater than zero? A. existing firms may expand their operations B. firms may move along their LRAC curves to new outputs C. there may be pressure on the market price to fall D. new firms may enter the industry and all of the above

What type of environmental tool was adopted by the U.S. government in 1990, in order to reduce emissions of coal burning electricity-generating plants? A. shrinkable marketable permits B. free marketable permits C. command-and-control permits D. both a and b above

When I'MaGoldMiner chooses what quantity of gold each of it/s mines will produce over the next 12 months, this quantity, along with the prices prevailing in the market for output and inputs, will A. determine the company's annual revenue, variable costs and its profits. B. no longer be dictated by the forces of demand and supply. C. have no effect on the market forces of demand and supply. D. determine the company's total revenue, total costs, and its profits

When a monopolist increases sales by one unit, A. it gains some marginal revenue from selling that extra unit. B. more low priced sales cause negative marginal revenues. C. every other unit must now be sold at a lower price. D. it loses some marginal revenue and all of the above.

When a natural monopoly exists in a given industry, the per-unit costs of production will be A. lowest when there are a large number of producers in the industry. B. lower for the smaller firms than for larger firms. C. minimized at the output that maximizes the industry's profitability. D. lowest when a single firm generates the entire output of the industry.

When it is costly or impossible to exclude someone who hasn't paid to use a particular good from using it, then that good is classified as being A. unexcludable B. free rider C. public good D. nonexcludable

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.

When reference is made to the ____________, it means the specific amount of income needed for a basic standard of living. A. poverty trap B. income line C. income gap D. poverty line

When the quantity of environmental protection is low so that pollution is extensive, then there are usually ______________ to reduce pollution and the ______________ . A. a few inexpensive and easy ways; average benefit are slightly higher B. a lot of expensive and innovative methods; marginal benefits are quite high C. only a few expensive and innovative methods; average benefits are higher D. a lot of cheap and easy ways; marginal benefits of doing so are quite high

Whenever there is a surplus at a particular price, the quantity sold at that price will equal: A. (quantity demanded plus quantity supplied)/2. B. the quantity supplied at that price. C. the quantity supplied minus the quantity demanded. D. the quantity demanded at that price.

Which of the following is a safety net that could provide a decent standard of living and/or incentives to work? A. government-subsidized school lunches and breakfasts B. Low Income Home Energy Assistance Program C. the Special Supplemental Food Program for WIC D. Supplemental Security Income and the above

Which of the following is an example of economic output that can injure the environment? A. gold mine discharging arsenic into a natural lake it's using for a tailings pond B. paper mill discharging raw chemical waste into a river C. excessive clear cutting of wood resources by logging companies D. radio-active waste leaking into a river, and all of the above

Which of the following is most likely to cause variation in American household spending patterns? A. differing levels of family income B. geographical location of households C. each household's personal preferences D. each of the above will cause a variation

Which of the following is most likely to have a large union membership that experiences little import competition? A. telemarketing B. lawyers in the legal services sector C. the real estate industry D. police services

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

Which of the following is viewed as a fundamental building block of the U.S. economic way of thinking? A. the principle of setting high toxic emission limits to preserve a healthy environment B. the belief that industry must be allowed to prevail over the environment C. the needs of both parties to a voluntary exchange must be completely satisfied D. the principle that a system of voluntary exchange benefits both parties

83. City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. An unregulated monopoly will produce ____ million therms of natural gas and sell each therm for ____. A. 3; $38 B. 2; $44 C. 38; $3 D. 44; $2

Which of the following best describes a fiscal policy tool? A. government spending B. bank lending C. financial capital markets D. household spending

Which of the following best describes a monetary policy tool? A. interest rates B. taxes C. household savings D. government spending

Which of the following completes the argument against deregulation of U.S. banks that began with the phrase: "if banks competed to pay higher rates of interest", A. they might also compete to make riskier loans, potentially imperiling the safety of the banking system. B. they might also compete to make less riskier loans, potentially imperiling the U.S. consumers' reliance on credit. C. they will end up playing a large role in setting the regulations that they will follow. D. they will send lobbyists to offer well-paid jobs to some of the retiring members of the regulatory board

Which of the following concerns would groups like the Consumer Federation of America and Public Knowledge most likely raise with regulators considering a merger application? A. the merger would reduce competition B. the merger would create regulatory capture C. the merger would lead to future decades of lower prices D. the merger would increase output and all of the above

Which of the following has become the least willing to sacrifice their environmental quality for some additional economic output? A. the European Union B. China C. Ohio D. command economies

Which of the following industries is the least likely to employ a unionized labor force? A. finance, insurance and real estate B. transportation and public utilities C. government D. precision, production, and repair

Which of the following is a key requirement imposed under the Welfare Reform Act's new antipoverty program? A. states receiving TANF grants must impose work or school attendance requirements B. no one can receive TNAF benefits for more than 3 years while attending school C. no one can receive AFDC benefits for more than 5 years over their lifetime D. states receiving ADFC benefits must impose work or school attendance requirements

Which of the following is a true statement? A. The government approves most proposed mergers. B. Government regulators agree that few mergers are beneficial to consumers. C. Government regulators agree that all mergers are beneficial to consumers. D. The government disapproves most proposed mergers.

Which of the following is considered to be a tell-tale signal that the point with the highest total utility has been found? A. the marginal utility per dollar is the same for both goods B. the marginal utility per dollar is controlled by trade-offs C. the quantities demanded change so total utility rises D. the demand curves are flatter reducing quantity

Which of the following represents one of the methods that the government uses to promote technology? A. protection of intellectual property B. provision of a greater number of public goods C. maintenance of stable regulated financial markets D. creation of public colleges and universities

Which of the following would an economist identify as a difficulty relating to environmental command-control regulations? A. high degree of inflexibility B. clear distinctions drawn between firms C. lack of incentive to reduce pollution D. obvious lack of loopholes

Which of the following would be classified as a situation where a third party benefits from a market transaction by others? A. City buying 10,000 trees for green space renewal projects. B. Increased levels of air pollution in neighborhoods near a football stadium. C. Allowing a mining company to use a natural lake to discharge waste. D. Two firms trading pollution credits to avoid cutting their toxic emissions.

While the traditional approach of U.S. government policies for environmental protection has had some level of success, some economists are proposing a change to A. a range of more flexible, market-oriented pollution control policies. B. a range of polices stipulating set limits governing pollutant emissions. C. stringent polices balance industry profit goals and environmental quality. D. stringent polices that will return the environment to its former pristine quality.

39. Refer to the table below. The information pertains to the demand curve and the average cost curve for a natural monopoly firm. What will the price be in this market? A. 20 B. 50 C. 35 D. 5

42. Refer to the diagram above. In this instance, point e shown on the graph indicates A. the point where profits will increase by increasing output B. the point where profits will increase by reducing output C. the profit-maximizing point where MR = MC D. the profit-maximizing point where MR is less an MC

84. Four companies, Alpha, Beta, Gamma and Delta, are burning coal to produce electricity. As a result, they also produce emissions. In the table below, the first row of shows the total pounds of emissions currently produced by each firm. The other rows of the table show the cost for each firm of reducing emissions by the first 50 tons, the second 50 tons, and so on. The total cost of requiring each firm to reduce its garbage by one third is A. $167 B. $137 C. $187 D. $127

87. Michigan (MI) and Wisconsin (WI) both border Lake Michigan. Both states pollute Lake Michigan and both states suffer the consequences of the pollution. However, the two states face a prisoner's dilemma of the sort studied in Chapter 12. Each country must decide whether to protect or not to protect Lake Michigan from pollution. The payoffs from the choices are shown in the table below. From the table, we know that the outcome of this game will be A. neither state choosing to protect the lake B. Wisconsin choosing to not protect the lake, Michigan choosing to protect the lake C. Wisconsin choosing to protect the lake, Michigan choosing to not protect the lake D. both states choosing to protect the lake

94. Bulgaria primarily produces two goods, nesting dolls and grapes. The production of both goods primarily requires labor. The following table shows possible combinations of nesting dolls and grapes. Which of the following points is more likely to represent a market-oriented policy? A. E B. C C. all points D. none

A __________________ exists when the quantity demanded in the market is less than the quantity at the bottom of the long-run average cost curve. A. natural monopoly B. monopoly C. oligopoly D. monopolistic competition

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 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 labor union seeks to __________________ between employers and workers. A. change the balance of negotiations B. change the economic balance C. force employers to deal with individual workers D. lobby government for changes

A local regulator has calculated the average cost of production for the public water utility. The regulator has allowed an adjustment for the normal rate of profit the firm should expect to earn, and then set the price that consumers can be charged accordingly. In this instance, the regulator has used which of the following? A. cost-plus regulation B. cost-plus analysis C. price-cap regulation D. market-price analysis

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

A pollution charge is a form of tax imposed on A. the quantity of pollution that a firm emits. B. pollution control technologies. C. every economy in the world. D. low-income market-orientated industries.

Although the earnings gap between men and women in the U.S. labor market ___________ in the 1970s, it has _________________________ . A. did not change much; been declining since 1980 B. did not change much; been on the increase since 1980 C. increased, ; been declining since 1980 D. declined, been increasing since 1980

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

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

Antipoverty programs that are set up so that the amount of government benefits will decline substantially as poor people earn more income typically create ______________. A. a poverty trap B. an income inequity C. a poverty line D. a safety net

Antitrust laws were created to give government the power to A. block certain mergers and break up large firms into smaller ones. B. block cartels, and break up regulatory capture. C. force the firm to sell off the profitable parts of its operation. D. block certain mergers that are determined to be uncompetitive.

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

Antitrust regulations would most likely require one of the following in order to determine whether or not a merger may enhance competition. Which one is it? A. analysis using numerical tools. B. obvious objective judgments. C. readily qualified judgments. D. highly complex analytical tools.

Any government policy that provides __________________ and _________________ deserves to be looked at twice, or even three times. A. gains to those with higher incomes; imposes costs on those with lower incomes B. gains to those with lower incomes; imposes costs on those with higher incomes C. public schooling; welfare benefits D. local tax revenue; state tax revenue

As a result of the American workers' ability to sell their labor though a union, profit-making firms must pay wages A. exceeding the equilibrium wage those firms would otherwise have selected. B. at the intersection of the demand and supply labor curves. C. below the equilibrium wage level those firms would otherwise be able to pay. D. that match the preferred equilibrium wage these firms have selected.

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

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right. A. technology B. low-skill labor C. market D. lower wage

Because of the nature of the comprehensive environmental laws adopted during the late 1960s and early 1970s by the United States government, these laws are typically referred to as ____________________ . A. positive regulations B. command and control regulations C. control and command regulations D. negative regulations

Copyright protection legislation provides protection for original works A. during the author's life plus 70 years B. during the author's life plus 20 years C. until the author is 70 years of age D. until the author is 75 years of age

Factors that contributed to the current level of the earnings gap in the U.S. labor market between black and white workers include: A. the combination of changes in law and changes in social attitudes B. changes in production techniques made white workers unproductive C. a large decline in the average education levels for white workers D. a vast increase in the number of well-educated black workers and a

Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency? A. output will be too small and its price too high. B. output will be too large and its price too high. C. output will be too small and its price too low. D. output will be too large and its price too low.

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

For a pure monopoly to exist, A. there is a single seller in a particular industry B. there is only one seller, therefore no industry C. there are a few sellers in a given industry D. there are limited sellers in a particular industry

For the past two years, a cellphone manufacturer has been selling to a group of distributors, who then sell the products to retailers to sell to the general public. The firm has now informed its distributors that each of them must sell the cellphones for a minimum price the manufacturer has set. In these circumstances, A. any resulting minimum resale price maintenance agreements will be illegal. B. the purpose of this contract is to encourage competition between the distributors. C. any resulting agreement to give dealers exclusive distribution rights is illegal. D. these tie-in sales encourage competition between the manufacturer's distributors.

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

Government has a variety of policies that allow inventors to _____________________ , such as the granting patents and __________________ . A. receive an increased rate of return; subsidization of research and development B. protect their inventions; limited copyrights during the inventor's lifetime C. register their inventions; unlimited copyrights during the inventor's lifetime D. receive a reasonable rate of return; lifetime intellectual property rights.

Government passed the ______________________ to limit the power of large, consolidated firms that were run by trustees as if they were a single firm. A. Sherman Act in 1890 B. Thatcher Act in 1980 C. Antitrust Act in 1890 D. Competition Act in 1980

I'maGoldMiner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is highly influenced by market speculation, if it wants to increase production to take advantage of the current profit-maximizing opportunity, the company A. must accept market price for its physical capital inputs. B. must reduce what it pays for inputs that make up its costs of production. C. must reduce production to encourage speculators to drive gold prices higher. D. must alter the price of its labor inputs to maximize profits.

Ideally, a patent should cover a long enough period of time for the inventor to _______________, but that period should not be so long that it allows the inventor to _____________________________. A. earn a hearty return; charge a high monopoly price permanently B. contribute to the social interest; only receive a slice of the social benefits C. earn a rate of return; prevent broad public access to classic works D. contribute to the social interest; prevent broad public access to inventions

If a competitive firm experiences a shift in costs of production that decreases marginal costs at all levels of output, A. expanding output levels at any given price will be profitable. B. producing less at any market price will off-set marginal cost . C. the firm's marginal cost curve will shift to the left. D. the firm's demand curve will also shift to the left.

If a firm is producing so that the point chosen along the production possibility frontier is socially preferred, then that firm is said to have reached its A. allocative efficiency B. productive efficiency C. utility-maximizing efficiency D. minimum price efficiency

If a glass manufacturer has only a few ________________ of reducing pollutants, it will ____________________ . A. costly ways; end up paying the pollution tax. B. inexpensive ways; incur the pollution tax instead. C. costly ways; do so to minimize its pollution taxes. D. inexpensive ways; buy the most expensive technology.

If a government chooses a system of marketable permits as its environmental managing tool, the reduction in pollution will A. take place in the firms where it is least expensive to do so. B. take place in every firm within the time set by the permit. C. be initiated at the household level. D. be rewarded with refundable charges.

If a monopolist increases quantity by one unit, but sells the increased output at a slightly lower price, A. marginal revenue is affected by adding one additional unit sold at the new price. B. all the previous units, which used to sell at a higher price, now sell for more. C. the marginal revenue of selling a unit is more than the price of the unit. D. because of higher output the marginal revenue curve is above the demand curve

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.

If a rise in incomes for both low-income and high-income workers is higher for the high-income workers, A. then poverty will fall and inequality will rise. B. then poverty will rise and inequality will rise. C. then poverty will fall and inequality will fall. D. then poverty will rise and inequality will rise.

If a small electric automobile manufacturer is able to gain the social return generated by its electric motor, its demand for financial capital would A. shift to the left. B. shift to the right. C. decrease substantially. D. increase slightly.

If an alternative policy could encourage both _____________________, instead of ________________________, consumers would benefit. A. invention and competition; invention and monopoly B. invention and monopoly; invention and public funding C. invention and monopoly; invention and competition D. invention and competition; invention and public funding

If an externality of pollution exists for all manufacturers in a given industry, then all related social costs A. are no longer represented in their supply curves. B. continue to be represented in their supply curves. C. are no longer represented in their demand curves. D. continue to be represented in their demand curves.

If incomes rise for low-income workers but don't change for high-income workers, A. then poverty will fall and inequality will fall. B. then poverty will rise and inequality will fall. C. then poverty will rise and inequality will rise. D. then poverty will fall and inequality will rise.

If some of the products developed by I'mASoftwareCo. must face market competition that can very quickly produce either an identical product or a close substitute for it, then A. it may decide against R&D projects of this sort. B. it will have to figure out innovative ways to prevent adaptation and copying of its products. C. the other firms will all save on their R&D costs. D. it must charge more for its products to quickly compensate for the research and development costs.

If the government determines that the private sector does not have sufficient incentive to carry out research and development, which of the following is likely to be a reasonable response? A. government can use public funds to pay for the R&D activities directly. B. setting up government-run laboratories to ensure public benefits arise from public funding. C. direct all public R&D funding to colleges and universities to ensure public benefits arise from public funding. D. ensure that firms are not entering cooperative ventures to lessen competition, as well as b and c above.

If the price that a firm charges is lower than its ____________ of production, the firm will suffer losses. A. average cost B. marginal cost C. fixed cost D. variable cost

If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers? A. price of competing products B. size of competing products C. purchaser's opportunity cost D. geographic origin of products

In 2010, Americans had about _____________ outstanding in credit card debts not paid on time. A. $900 billion B. $90 billion C. $900 million D. $90 million

In May and June, Tammy spent all her clothing budget on bathing suits and beach bags. Each bathing suit cost $75. At Tammy's optimal choice, her marginal utility from the last bathing suit purchased is 300 and her marginal utility from the last beach bag purchased is 200. This means that each handbag must cost: A. $50 B. $25 C. $100 D. $150

In Sam's greenhouse operation, labor is the only short term variable input. After completing a cost analysis, if the marginal product of labor is the same for each unit of labor, this will imply that A. the average product of labor is always equal to the marginal product of labor. B. the average product of labor is always greater that the marginal product of labor. C. the average product of labor is always less than the marginal product of labor. D. as more labor inputs are used, the average product of labor inputs will fall.

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

In order for a good to be classified as ______________ , when one person uses the good, others are also able to use it. A. nonrivalrous B. unrivalrous C. unexcludable D. nonexcludable

In the U.S., comparisons of high and low incomes raise issues of economic ______________________. A. inequality and poverty B. equality and wealth distribution C. wealth distribution and poverty D. equality and inequality

In the United States, a pharmaceutical company's exclusive patent rights last for A. 20 years. B. 25 years. C. 10 years. D. 70 years.

In the United States, the official definition of the poverty line traces back to a single person: ___________________, whose idea was to ___________________________. A. Mollie Orshansky; define a poverty line based on the cost of a healthy diet B. Lawrence Ellison; define a range of government policies to reduce poverty C. Molly Orshansky; define a range of government policies to reduce poverty D. Max Lorenz; define the Lorenz curve to illustrate the poverty line

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

Many residents of a particular town enjoy taking their dogs with them when they go to their local park for recreation and picnics. Everybody enjoys the park more when each group cleans up after themselves and their pets, but nobody enjoys the act of cleaning up after themselves or their dogs. We can expect the park to be _______, due to a _________ . A. dirty, prisoner's dilemma B. clean, prisoner's dilemma C. dirty, positive externality D. clean, positive externality

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.

Market-oriented environmental policies are ________, and __________ will work better in some situations than in others. A. a tool-kit; specific tools B. productive policies; some policies C. inflexible; incentives to protect endangered species D. flexible; the command-and-control approach

Medicaid is a federal-state joint program enacted in 1965 that provides medical insurance for A. the near-poor and the low-income elderly. B. all those below the poverty line. C. low-income mothers, but not their spouses. D. the disabled and all of the above.

Negotiations between unions and a firm or firms is called __________________ . A. collective bargaining B. cooperative bargaining C. united bargaining D. organized bargaining

Norway's government nationalized the country's oil resources, and it has been accumulating a massive sovereign wealth fund worth billions of dollars ever since. This sovereign fund is used as a monetary source for government funded national education and healthcare. This is because the wealth generated by nationalized industries A. is used to serve the citizens of the country. B. is used to serve the interests of oil industry. C. always charge high prices and reduce output. D. never return value to citizens of the country.

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

On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be? A. Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate. B. Low income workers will be better able to survive the recession at the new, higher wage rate. C. More people will be hired at the higher wage rate offsetting the effects of the recession. D. The higher wage will increase the supply of labor offsetting the effects of the recession.

One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then A. to divide all households into quintiles. B. comparing the groups. C. to divide all households by size. D. comparing the share of the population.

Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the highest quintile of this income distribution is ______, which is _____ than that for the highest quintile of the U.S. income distribution in 2005. A. 37.9%, lower B. 39.7%, lower C. 37.9%, higher D. 39.7%, higher

Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the second-to-bottom quintile of this income distribution is A. 11.6% B. 12.6% C. 13.6% D. 14.6%

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. A. normative statement B. budget constraint C. trade-off D. opportunity cost

Refer to Figure 5-1. The movement from __________ to __________ is consistent with a decrease in the price of cotton (a substitute). A. Point A; Point H B. Point A; Point D C. Point A; Point F D. Point A; Point B

Refer to Table 5-1. If D2 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. A. $8; 15 B. $10; 17 C. $12; 9 D. $12; 10

Regulations that permit a regulated firm to cover its costs and to make a normal level of profit are commonly referred to as A. cost-plus regulation. B. price cap regulations. C. regulatory capture. D. profit regulation.

Rick eats only french fries and burgers at his office cafeteria. His weekly lunch budget is $48. Each burger costs $6 and each order of fries costs $3. When deciding how much of each good to buy, Rick knows that 2 burgers and 4 orders of french fries will give him a utility of 8. At his utility-maximizing point, Rick's utility is: A. 32 B. 48 C. 40 D. 24

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

Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s. A. living wage law B. price ceiling C. price floor D. minimum wage

The FTC and the Department of Justice guidelines state that, in the US market-driven economy, firms will be forbidden to A. agree to rig bids or allocate lines of commerce. B. agree to let the market set prevailing prices or output. C. refuse to share customers, suppliers or territories. D. refuse to share or divide markets.

The International Ecotourism Society estimates that international tourists interested in seeing nature or wildlife spend over A. $450 billion per year. B. $550 billion per year. C. $250 billion annually. D. $200 billion annually.

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.

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

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________. A. allocative efficiency B. the production possibilities frontier C. trade-offs D. scarcity

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.

The comprehensive environmental laws adopted during the late 1960s and early 1970s by the United States government A. stipulated mandatory use of particular pollution-control technologies. B. allowed pollution credits to be traded between polluters to avoid bearing social costs. C. stipulated exemptions for industries that lobbied politicians hard to avoid regulation. D. allowed industries to determine pollution levels based on profit margins.

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.

The government distributes food stamps that can only be used to acquire food to low-income families. The budget line graph will show food on the horizontal axis and everything else on the vertical axis. After receiving food stamps, Ted's family is able to consume the same amount of food. The new consumption point for Ted's family will be: A. on the new budget line, directly above the old consumption point. B. on the new budget line, above and to the right of the old consumption point. C. on the new budget line, directly to the right of the old consumption point. D. remain precisely the same as the old consumption point.

The greater inequality 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.

The group of government programs that provide assistance to the poor and the near-poor is synonymous with which of the following? A. safety net B. safety quintiles C. poverty net D. antipoverty net

The information below sets out the estimated market shares for the cellular phone manufacturing market. Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3% LG 6% Motorola 16% Samsung 6% Sanyo 4% Siemens 7% Sony Ericsson 11% Plus 8 more firms with 1% each Based on this information, the four-firm concentration ratio is A. 70 B. 68 C. 65 D. 73

The marginal utility of two goods changes ______________. A. with the quantities consumed B. for the better, if taxes are imposed C. if they are intertemporal choices D. if the mother controls the household budget

The most common pattern for marginal utility is ____________________. A. diminishing marginal utility B. a budget constraint model C. a long-term perspective theoretical model D. substitute consumption

The number of people served by advanced wastewater treatment plants doubled between 1968 and the mid-1990s, but because the treatment plants _______________________, the quantity of waste emitted into the water after treatment ___________________ . A. became so much more effective; decreased by about one-third B. became so much less effective; increased by about one-third C. remained ineffective; remained the same D. moderately improved; increased by 10%

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

The percentage of workers belonging to a union is higher in the A. 45-64 age range. B. 25-45 age range. C. 40 -65 age range. D. 30-50 age range.

The presence of organized labor in the U.S. labor market creates a situation that resembles a A. government acting as a negotiator between workers and employers. B. union official acting like lawyers negotiating legal agreements. C. for profit-firm acting cooperatively to reduce unequal wealth distribution. D. union acting as a monopoly in selling labor to firms.

The proportion of workers in a number of the world's high-income economies who belong to unions, when compared to unionized workers in the U.S., is A. very high. B. very low. C. about the same, compared to Canada. D. high, compared to France and Spain.

The term "basic research" applies specifically to research pertaining to fundamental scientific breakthroughs that may offer commercial applications in the ______________. A. distant future B. near future C. immediate future D. short run

The term ____________ refers to the percentage share of a firm's total sales in the market. A. market share B. concentration ratio C. total market ratio D. market cap

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

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.

There have been two especially important shifts in how markets are defined in recent decades: one involves _________________ and the other involves _____________. A. technology; globalization B. the Internet; technology C. communication technologies; the Internet D. globalization; communication technologies

There is a skating rink in your city that is open to anybody to use at any time. They even provide skates for people who don't own any. This is an example of a good that is A. rivalrous and nonexcludable B. nonrivalrous and excludable C. rivalrous and excludable D. nonrivalrous and nonexcludable

There is little evidence that countries with high union membership _______________________________, and also very little evidence that the reduction in U.S. union membership over time has brought ___________________ for the U.S. economy as a whole. A. tend to suffer economic damage as a result; broad benefits or costs B. have economically benefited; economics benefits C. have broader benefits as a result; economic damage D. tend to enjoy economic benefits as a result; harmful economic costs

Tom, Mary and Jill have apartments in the same building. A security system for their building costs $750. Tom is willing to pay $100 for the security system, Mary is willing to pay $300 and Jill is willing to pay $300. They have a meeting to vote on whether to pay $250 each for the security system. At least two of them must vote for the system to be installed before the vote is passed. The efficient outcome is to have the security system installed. After the meeting the security system will __________, which illustrates ___________. A. be installed, the free rider problem B. not be installed, the free rider problem C. be installed, a negative externality D. not be installed, a negative externality

Using the term "spillover" is a less formal means of describing A. an externality. B. social costs. C. private costs. D. market failure.

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

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

When a firm makes plans for investments in physical capital, it compares the _______________ on these investments with ______________________ . A. projected rates of return; the cost of financial capital to the firm B. present inputs of physical capital; future hurdle rates C. present inputs of physical capita; future marginal revenue product D. projected rates of return; the competitive pressures for labor

Why was the Clean Air Act amended in 1990? A. to reduce sulfur dioxide emissions from electric power plants to half of 1980 levels B. so flat fees for excessive pollution could be determined by the federal government C. to reduce sulfur dioxide emission through command-and-control regulations D. to reduce sulfur dioxide emissions from electric power plants to half of 1970 levels

With respect to the benefits of clean air and water, which of the following would most likely be classified as being relatively easy to value in economic terms? A. gains in farming, fishing and tourism B. gains from lower levels of corrosion C. gains in environmental enjoyment D. all of the above are correct answers

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

_______________ 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

__________________ law implies ownership over an idea or concept or image A. Intellectual property B. Copyright C. Patent D. Trademark

____________________ 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

______________________ refers to the additional revenue gained from selling one more unit. A. Marginal revenue B. Total revenue C. Economic profit D. Accounting profit

17. Kim has $24 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $8 while each yoga class costs $3. The total utility from each of these activities is set out in the table below. What is Kim's total utility maximizing point? A. 0 movies, 8 yoga classes B. 1 movie, 5 yoga classes C. 2 movies, 2 yoga classes D. 3 movies, 0 yoga classes

22. Garth inherited $25,000. He needs to decide now much to spend now and how much to save for later. If he saves the money, then he can earn 15% interest on the total before he spends it. Using the information about his marginal utility in the table below, Garth should: A. spend $5,000 now and $22,250 in the future B. spend nothing now and $28,750 in the future C. spend $15,000 now and $13,500 in the future D. spend $10,000 now and $16,750 in the future

22. The table below shows the quantity demanded and supplied in the labor market for economics professors at the I'MaStateUniversity, where all the professors belong to a union. If no union existed, the equilibrium salary for economics professors will be A. $70,000 B. $80,000 C. $90,000 D. $100,000

33. Refer to the diagram above. In this instance, at the range of output represented at point c, A. the shutdown point has been reached. B. profits will be maximized. C. physical input levels have been reduced. D. capital input levels have been reduced.

38. Given the data provided in the table below, what will the marginal cost equal for production at quantity (Q) level 4? A. $5.00 B. $4.00 C. $1.00 D. $3.00

50. Molly attends college and works part-time job as a telemarketer. She can work up to 40 hours each week at her job, which pays $8 per hour. The table below shows her utility from different levels of leisure and income. Molly is currently working 20 hours per week. If she decides to work 30 hours instead, then her marginal utility loss from having less leisure is: A. 18 B. 34 C. 3 D. 6

50. Refer to the diagram above. At the point marked m, A. price is determining production at a level where P = MC. B. TR is exactly equal to TC, so profits equal zero. C. price is above average cost of production. D. the leftover rectangle is the profit earned.

54. Louisa works for a hedge fund company. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. Louisa decided to increase her hours of work from 10 to 20 hours per week after receiving her raise. As a result, her marginal utility gain from having more income will now be: A. 74 B. 36 C. 13 D. 12

56. Janie works for an accounting firm. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. Before her raise, if Janie decreases her hours of work from 30 to 20 hours per week, the marginal utility gain from having more leisure is: A. 29 B. 21 C. 13 D. 7

58. Celia works as an articling student with a large law firm. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. If Celia continues to work 50 hours per week after her raise, the raise will increase her utility by: A. 3 B. 4 C. 12 D. 32

61. Neil's Bakery is famous for its giant cinnamon buns. The bakery has fixed costs of $100. Neil must pay each worker a wage of $10.00 per hour and each works an 8 hour shift. He earns $2 for each cinnamon bun that is sold. The following table shows how many cinnamon buns he can sell, depending on the number of workers he hires. Refer to the table below. To maximize his profits in this competitive market, how many workers should he hire?A. 2 workers B. 3 workers C. 4 workers D. 5 workers

61. The following figure ??shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what do the firm's profit's equal? A. the area of rectangle ABGH B. the area of rectangle BDEG C. the area of rectangle BCFG D. the area of rectangle ADEH

62. CleanAir Motors Inc. wants to build electric cars with no emissions. However, electric motors require innovative battery technology for adequate energy storage to meet basic daily commuting needs. The company has several possibilities for alternative battery technology, along with estimates of how these approaches would affect their costs of producing the cars and their sales of the cars. Based on these estimates, the table below shows the value of R&D projects that provide at least a certain private rate of return. Every investment would have an additional 2% social return: that is, an investment that pays at least a 6% return to the car company will pay at least an 8% return for society as a whole. If the opportunity cost of financial capital for CleanAir Motors Inc. is 10%, CleanAir Motors Inc. will invest ___ in R&D if it receives both the private and social benefits of this investment. A. $2000 B. $1500 C. $1000 D. $500

62. The following graph ???shows the demand curve for a good and the long run average cost curve for a typical firm in this market. If the government does not intervene in the market, then A. there will be many firms in this market, all of whom will take the market price as given and produce where price equals marginal cost B. there will only be 1 firm in this market, and they will produce where marginal revenue equals marginal cost C. there will only be 1 firm in this market, and they will take the price as given and produce where price equals marginal cost D. no firms will enter this market

63. The SaferGlass Co. makes windshields for the automotive industry. It wants to develop a new product with shatterproof glass to increase safety. The development of the new glass requires them to change their production process significantly. The company has developed a list of possible ways of implementing the production process changes, along with estimates of how each would affect the production and sales costs. Based on these estimates, the table below shows the value of R&D projects that provide at least a certain social rate of return. Every investment in R&D would have an additional 3% social return: that is, an investment that pays at least a 4% return to the glass company will pay at least 7% return for society as a whole. If the opportunity cost of financial capital for SaferGlass Co. is 9%, the company will invest ______ in R&D if it receives only the private benefits of this investment. A. $400 B. $450 C. $500 D. $550

67. YummyCandiesCo. has developed a new candy bar that contains a full recommended daily allowance of vitamins and minerals. This invention will provide considerable spillover benefits to society. The table below shows the demand for the candy bars, the supply of candy bars if the company receives only the private benefits, and the supply of candy bars if the firm also receives the full social benefits. If the new candy bar were sold based only on private benefits, the equilibrium price and quantity would be A. $4, 100,000 b. $3, 150,000 c. $2, 200,000 d. $1, 250,000

80. Kip and Yale run separate mining companies in the same forest. Both pollute the river flowing through the forest with debris from their work. In the table below, the first row shows the current level of debris that makes its way into the river from their work. The following table set out information that shows how much it would cost each company to reduce its pollution by additional increments of 10 pounds. If each mining company is forced to cut its debris in half, the respective cost to Kip and Yale will be A. $5, $2 B. $10, $4 C. $30, $20 D. $30, $12

83. Carl and Don run separate chemical fertilizer manufacturing companies in the same industrial park. Both pollute the river flowing through the industrial park with debris and waste from their manufacturing processes. In the table below, the first row shows the current level of debris and waste each produces that makes its way into the river. The information in the table also indicates how much it would cost each manufacturer to reduce its pollution by additional increments of 10 pounds. If the government imposes a pollution tax of $7 for each 10 pounds of debris, total pollution will fall by ____ pounds, at a total cost of ____. A. 40; $28 B. 40; $17 C. 40; $22 D. 60; $30

85. City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. If the government decides to regulate this natural monopoly by forcing them to produce at the point where the demand curve intersects marginal cost, then the firm will make a ____ and ____ continue in the long run. A. loss of $24 million, will not B. loss of $33 million, will not C. profit of $33 million, will D. profit of $24 million, will

85. Four companies, Alpha, Beta, Gamma and Delta, are burning coal to produce electricity. As a result, they also produce emissions. The first row of the table below shows the total pounds of emissions currently produced by each firm. The other rows of the table show the cost for each firm of reducing emissions by the first 50 tons, the second 50 tons, and so on. The government wants to reduce emissions by one third, and does so by issuing marketable permits based on the current level of emissions where the permits will shrink the allowable amount of pollution by one third. Alpha will reduce emissions by ____ tons, Beta will reduce emissions by ____ tons, Gamma will reduce emissions by ____ tons, Delta will reduce emissions by ____ tons, for a total cost of ____. A. 50, 150, 50, 250, $130 B. 50, 200, 0, 250, $150 C. 0, 200, 50, 250, $120 D. 50, 200, 50, 200, $100

87. JustMeInc., is the only provider of high speed internet in Tinytown. The firm charges its customers on an annual basis. The firm's cost and demand information are given below. An unregulated monopoly will have ____ million subscribers and charge each of them ____. A. 3; $233.33 B. 4; $210 C. 5; $180 D. 6; $150

88. Two logging companies are deciding whether or not to cut down a significant portion of a particular forest that both have access too. Both companies understand the environmental consequences of their actions, knowing that they are trading off higher profits for a better outcome from society's point of view. The payoffs facing these companies are given in the table below.From the table, we know that if Company 2 chooses to cut, Company 1 will choose to ______ the forest. If Company 2 chooses to not cut, Company 1 will choose to ______ the forest. A. cut, do not cut B. cut, cut C. do not cut, do not cut D. do not cut, cut

93. Bulgaria primarily produces two goods, nesting dolls and grapes. The production of both goods primarily requires labor. The following table shows possible combinations of nesting dolls and grapes. Suppose Bulgaria prefers grapes. Which of the following points is better? A. A B. B C. C D. E

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is A. the cost of the bee hives to the beekeeper. B. the possibility of the bees stinging the students at the school. C. the bees helping to pollinate the orchard, leading to more fruit. D. the honey the bees produce.

A change in price of a good or service typically causes ___________________________ for that specific good or service. A. a new equilibrium price B. a change along the supply curve C. the supply curve to shift D. a decreased demand

A decrease in consumer preference for a product, other things being equal, will cause: A. a decrease in supply. B. market demand to shift to the left. C. market demand to shift to the right. D. quantity demanded is not a price function

A government program guarantees $18,000 in income, even for those who do not work at all. If the recipient earns income by working, then the $18,000 benefit is reduced by 50 cents for each $1 earned. Will this program eliminate the poverty trap? A. Yes, enacting such a program will eliminate the poverty trap. B. No, enacting such a program may still reduce the incentive to work. C. Yes, and enacting such a program will cost the government less money. D. Yes, enacting such a program will create adequate incentive to work.

A manufacturer that only allows a consumer to purchase one product if they also buy another product is using ____________ to increase its profits. A. exclusive dealing B. tie-in sales C. predatory pricing D. bundle dealing

A method often used by economists to look at distribution of income in a society's economy involves A. programs for wealth redistribution. B. quintiles, or dividing a whole group into fifths. C. imposing taxes to redistribute wealth. D. quads, or dividing a whole group into fourths.

A monopolist is able to maximize its profits by A. setting the price at the level that will maximize its per-unit profit. B. producing output where MR = MC and charging a price along the demand curve. C. setting output at MR = MC and setting price at the demand curve's highest point. D. producing maximum output where price is equal to its marginal cost.

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

A natural monopoly occurs when the quantity demanded is ________ the minimum quantity it takes to be at the bottom of the long-run average cost curve. A. greater than B. less than C. equal to D. a or c above

A public good is a good that is ____________________ , and thus is difficult for market producers to sell to individual consumers. A. excludable or rivalrous B. nonexcludable and nonrivalrous C. excludable and rivalrous D. unexcludable or unrivaled

A situation of __________ arises when one group receives a higher share of total income or wealth than others. A. poverty B. inequality C. poverty entrapment D. quintiles

A study by the Environmental Protection Agency looked at the costs and benefits of the Clean Air Act from 1970 to 1990. This study found that a middle-range estimate of the health and other benefits from cleaner air was $22 trillion. This amount was about __________________ than the costs of reducing the pollution. A. 10 time lower B. 44 times higher C. 10 times higher D. 44 times lower

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

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is: A. no change; only the supply curve for beef is likely to be affected. B. a shift of the demand curve for beef to the left. C. a movement down along the demand curve for beef to the right. D. a shift of the demand curve for beef to the right.

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________. A. everything is variable. B. all else is held equal C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole

Are markets always in equilibrium? A. No, they never "settle down" into a stable price and quantity. B. No, but if there is no outside interference, they tend to move toward equilibrium. C. Yes, because very few things tend to alter supply and demand. D. Yes, they are always at the equilibrium point, or very close to it.

As a general rule, utility-maximizing choices between consumption goods occur where the: A. rise in income has created the greatest utility. B. price ratio and marginal utilities ratio of two goods is equal. C. higher-income households have the greatest satisfaction. D. constraints on budget expenditures has fallen substantially.

Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 - however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 - however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. If both states clean the lake, the payoffs will be A. Wisconsin gains 100, Illinois gains 200 B. Wisconsin gains 200, Illinois gains 300 C. Wisconsin gains 200, Illinois loses 100 D. Wisconsin gains 100, Illinois loses 100

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.

Bruce is a single father with 1 child. He can work as a bagger at the local grocery store for $6 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 Bruce works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. With this policy in place, if Bruce works 600 hours, his income will be A. $3,600 B. $16,440 C. $15,000 D. $12,840

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________. A. the recession B. new technologies C. the rise of global markets D. inflation

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the toll road is A. nonrivalrous and excludable B. rivalrous and nonexcludable C. nonrivalrous and nonexcludable D. rivalrous and excludable

Certain schools of economic thought suggest that a _____________ would reduce pollution in a __________________, when compared to command-and-control regulation. A. marketable permit; less cost-effective way B. pollution tax; flexible, more cost-effective way C. marketable permit; less flexible manner D. pollution tax; less cost effective, but flexible way

Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it? A. prices that can be charged B. natural monopoly C. conditions of entry in a certain industry D. quantities that can be produced

Economic inequality compares the share of the ____________ in society that is received by different groups; such as comparing the share of income received by the _________ to the share of income received by the _____________ . A. total wealth; top 10%; bottom 10% B. answers a and c are correct. C. total income; bottom 10%; top 10% D. none of the above are correct.

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

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.

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

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. A. law of trade-offs B. law of diminishing marginal utility C. production possibilities frontier D. law of increasing marginal utility

Environmentalist groups tend to prefer ________________ to ___________________. A. command-and-control regulations; marketable permits B. marketable permits; pollution charges C. pollution taxes; marketable permits D. marketable permits; monetary refunds

Even when competitive firms are unable to calculate marginal revenue product directly, _________________________________________ will push wage rates toward the marginal revenue product of labor. A. planned future investment in physical capital B. the pressures of competition in the labor market C. the marginal workers ongoing skills training D. wages that exceed workers' net revenue product

Even with wage increases, the supply curve of labor is most often inelastic for which of the following? A. part-time workers B. full-time workers C. lawyers D. massage therapists

Every Lorenz curve diagram begins with a line __________________ . A. sloping down at a 45-degree angle B. sloping up at a 45-degree angle C. upward sloping U-shape D. downward sloping hump shape

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

For a perfectly competitive firm, the marginal cost curve is identical to the firm's ________________ . A. demand curve B. supply curve C. average total cost curve D. average variable cost curve

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

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

How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known? A. They increase the supply of apples. B. They increase the quantity of apples supplied. C. They decrease the supply of apples. D. They decrease the quantity of apples supplied.

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.

I'maSolarPanelCo. manufactures and distributes solar panels in the US market. Two years ago, it had 5 US competitors, but government stimulus in the industry has encouraged 7 new US competitors to enter the market. In these circumstances, I'maSolarPanelCo.'s price for its output A. can be tailored to exceed the price of its inputs. B. is dictated by the forces of demand and supply. C. can be tailored to meet the price of its inputs. D. can be set by management to maximize profits.

Idaho farmers can sell as large a quantity of their potato crop as they wish, A. if they set their own price in the short run, but in the long run, the market sets the price. B. provided each is willing to accept the prevailing market price. C. if they set their own price in the long run, but in the short run, the market sets the price. D. provided quality is perceptible and determines the market price.

If I'MSmartCo'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.

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

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase. A. higher demand B. lower costs of production C. equilibrium D. a shift in demand

If a firm holds a pure monopoly in the market and is able to sell 5 units of output at $4.00 per unit and 6 units of output at $3,90 per unit, it will produce and sell the sixth unit if its marginal cost is A. $3.90 or less B. $3.40 or less C. $3.50 or less D. $4.00 or less

If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ . A. price taking point B. shutdown point C. marginal point D. opportunity margin

If a steel manufacturer considers the costs of labor and materials, as well as the broader costs of environmental injuries resulting from its manufacturing processes, A. its supply curve will be based on perceived benefits of maximizing utility. B. it is factoring in the social costs of the pollution it generates. C. its demand curve will be based on production choices relating to marginal costs. D. its costs will be the same as society's costs and all of the above.

If it was possible for one company to gain ownership control all of the uranium processing plants in the US, then A. they will strive to reach efficiencies only they know how to make. B. that firm could set up barriers to entry to discourage competition. C. government will deregulate to ensure the company's monopoly. D. the factors of market demand and supply will set the price.

If large numbers of individuals choose to behave as free riders, A. more of the public good will be available for paying riders. B. the public good may never be provided. C. public goods will quickly be privatized. D. public domain technologies become more difficult to obtain.

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.

If the 2014 poverty line is based on the amount of money an individual has earned as income, then A. the poverty line will be adjusted to take the value of non-cash government assistance into account. B. government programs that provide non-cash assistance to the poor are not considered. C. the concept of what poverty means in the 21st century should be rethought from scratch. D. it will be difficult to compare poverty rates over time in a market-driven economy.

If the U.S. electricity and the telecommunications industry are deregulated, the challenge that will need to be met will involve A. injecting competition into industries where the arguments for deregulation are not obvious. B. combining competition where possible with regulation where necessary. C. focusing on the grid of wires that bring electricity to all categories of consumers. D. plans for aiding the concealment of Enron-style antitrust activities.

If the largest four firms in an industry control less than half the market, their competitive concentration ratio A. would be considered to be especially high. B. would not be considered particularly high C. would not be considered particularly low. D. would be considered to be especially low.

If the level of incomes rises for high-income workers but doesn't change for low-income workers, A. then poverty will not change and inequality will fall. B. then poverty will not change and inequality will rise. C. then poverty will rise and inequality will fall. D. then poverty will fall and inequality will rise.

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________ A. excess supply B. excess demand C. ceteris paribus D. a price ceiling

In circumstances involving millions of emitters of small amounts of pollution who have no strong interest in trading, _________________ will typically offer a better choice for achieving desired reductions of environmental pollution levels. A. marketable permits B. pollution charges C. enhanced property rights D. ecotourism

In competitive settings, profits will lead firms to _________________ and losses will lead firms ___________, so the incentives for producing at low cost and coming up with new ways of pleasing customers are strong. A. privatize; nationalize B. enter the market; to exit C. monopolize; to lower costs D. reduce output; increase price

In countries like _____________ the command economy predominates. A. China and Vietnam B. Cuba and North Korea C. South Africa and Kenya D. Germany and France

In economic terms, a practical approach to maximizing profits requires an examination of how changes in production affect ________________ and ________________ . A. total revenue; total cost B. marginal revenue; marginal cost C. total revenue; marginal cost D. marginal revenue; total cost

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

In order to produce 100 oatmeal cookies, GoodieCookieCo incurs an average total cost of $0.25 per cookie. The company's marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is A. $25 B. $20 C. $50 D. $60

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

In the U.S., government support programs that are focused specifically on the poor include which of the following? A. Medicaid credits B. welfare C. income stamps D. food credits

In the United States, the number of unionized government jobs has __________________. A. increased dramatically B. increased modestly C. modestly declined D. dramatically declined

In the United States, the share of wage and salary for workers who belong to unions A. declined sharply in the 1930s and 1940s. B. rose sharply in the 1930s and 1940s. C. rose sharply in the 1950s and 1960s. D. declined sharply in the 1940s and 1950s.

In the ________, the perfectly competitive firm will react to losses by __________________________ . A. short run; reducing production or shutting down B. long run; reducing production or shutting down C. short run; increasing physical inputs D. long run; increasing capital inputs

In the closing decades of the nineteenth century, many industries in the U.S. economy were dominated by a single firm that had most of the sales for the entire country. In many cases these large firms were ___________________ . A. as efficient and innovative as they could be B. organized in the legal form of a trust C. able to provide consumers with the lowest price products D. using illegal practices to dominate the US economy

In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely A. have a patent giving it exclusive legal rights to make, use, and sell for a limited time. B. raise prices, cut production, and realize positive economic profits. C. have legal protection to prevent copying its methods of production for commercial use. D. acquire rights for its investors to produce and sell their product.

Jay and Jen are married with two children. They are preparing a household budget for the coming year. Based on statistical information for American households, approximately what portion of this family's annual consumption will most likely be budgeted for food and vehicle expenses? A. one-fourth B. one-third C. one-quarter D. two-thirds

Jed's weekly budget for lunch is $24. He eats only pizza and burgers. Each pizza costs $6 and each burger costs $3. Jed knows that 2 pizzas and 4 burgers will give him a utility of 8. At his utility-maximizing point, Jed's utility is: A. 4 B. 8 C. 6 D. 10

Kate's 24-Hour Breakfast Diner menu offers one item, a $5.00 breakfast special. Kate's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies and business license average out to $1.25 per meal. Since the market is highly competitive, Kate should A. raise her prices above the perfectly competitive level set by the market. B. keep the business open in the short-run, but plan to go out of business in the long-run. C. keep the business open in the short-run, and plan to expand the business in the long-run. D. lay-off her staff, break her lease, and close the business down immediately.

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

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.

Since the Margaret Thatcher era of the 1970s, many countries have sold off vast numbers of government-owned firms to _________________ . A. private monopolies B. private ownership C. decrease regulation capture D. increase output

Splitting up a natural monopoly held by a public utility that produces and provides electricity would A. raise the total cost of production for all and force their profits to zero. B. raise the average cost of production and force consumers to pay more. C. evolve the structure of costs and demand to make competition less costly. D. evolve the structure of costs and demand to make competition more likely.

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel? A. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel. B. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. C. There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. D. The increase in wage costs will shift the demand curve for steel to the left, increasing the cost of steel.

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

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 shift the demand curve for low-income workers to the ______ while shifting the demand curve for high-income workers to the _____. A. left, left B. left, right C. right, left D. right, right

The Taft-Hartley Act made the legal climate ____________________ , and union membership levels ___________________ . A. more encouraging to women seeking to unionize; increased B. less encouraging to union movements; soon started declining C. friendlier to blacks seeking to form unions; increased sharply D. less friendly for firefighters wanting to unionize; stagnated.

The US government has registered ___________________ on behalf of business firms to protect a particularly distinct element each has selected for its ability to aid consumers to easily __________________ . A. 200,00 patents; license for use B. 800,000 trademarks; identify the source of goods C. 1 million copyright licenses; identify the authors of creative works D. 200,000 trade secrets; create a natural monopoly

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price. A. quantity demanded B. equilibrium quantity C. demand schedule D. supply schedule

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

The concept of restrictive practices in the U.S. market economy is ____________________. A. set out in law that remains relatively constant B. continually evolving C. useful and fair D. closed to interpretation

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

The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on: A. mental health therapy due to its higher marginal return rate. B. elective surgery due to its lower marginal return rate. C. both programs, which have the same marginal return rate. D. neither can be compared by measuring marginal utility.

The information below sets out the estimated market revenue for the television manufacturing market. Firm Revenue (in millions of $) Hitachi 525 Philips/Magnavox 1,270 JVC 630 Matsushita/Panasonic 840 Mitsubishi 520 Samsung 650 Sharp 615 Sony 1,930 Toshiba 950 10 more firms 1,120 Based on this information, the Herfindahl-Hirschman Index is A. 896.73 B. 1,074.04 C. 1,505.13 D. 1,742.10

The information below sets out the estimated market shares for the cellular phone manufacturing market are given in the table below. Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3% LG 6% Motorola 16% Samsung 6% Sanyo 4% Siemens 7% Sony Ericsson 11% Plus 8 more firms with 1% each If Samsung were to acquire Sanyo, the Herfindahl-Hirschman Index would be A. 1,272 B. 1,884 C. 1,836 D. 2,216

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.

The marginal revenue curve for a monopolist ____________________ the market demand curve. A. always rises above B. always lies beneath C. always runs parallel D. always is the same

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

The statistical models currently used by competition regulators do require some degree of ___________________, and can become the subject of ___________ between the antitrust authorities and the companies that wish to merge. A. objective judgment; legal disputes B. subjective judgment; legal disputes C. subjective judgment; expertise D. objective judgment; expertise

The step-by-step process of finding the choice with highest total utility involves a comparison of the: A. budget constraint and low-income housing expenses. B. marginal utility gained and lost from different choices along the budget constraint. C. household consumption choice budget and the labor-leisure budget using an utilimometer. D. various categories of economic proverbial wisdom.

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: A. a decline in college tuition. B. a sharp increase in the demand for and construction of wood-frame homes. C. an increase in the supply of lumberjacks. D. an end to government regulations that limit timber harvesting in national forests.

The term ____________ refers to a market exchange that affects a third party who is outside or external to the exchange. A. social costs B. spillover C. market failure D. private costs

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

The theoretical model of the intertemporal budget constraint for the U.S. economy as a whole suggests that the most common pattern seems to be that: A. the quantity of savings automatically adjusts to changes in the rate of return. B. the quantity of savings doesn't adjust much to changes in the rate of return. C. the result of a higher rate of return is a higher quantity of saving. D. the result of a lower rate of return is a lower quantity of saving.

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending. A. business B. government C. household D. capital market

The two primary factors determining monopoly market power are the firm's A. revenues and size of its customer base B. demand curve and its cost structure C. variable cost curve and its fixed cost structure D. demand curve and level of wealth within its market

There is sufficient evidence showing that union workers in the manufacturing sector generally A. tend to hold those jobs for less time than non-union workers. B. have higher productivity than non-union workers. C. have fewer years of experience than non-union workers, D. have lower productivity than non-union workers

Those firms in the oil refining industry that can reduce pollution __________________ will do so _______________________ . A. for a flat charge; at the industrial level B. cheaply and easily; to minimize their pollution taxes C. for a flat charge; with the most expensive technologies D. cheaply and easily; with the most expensive technologies

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 loose 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

Today, a common starting point is for US antitrust regulators to use statistical tools and real-world evidence to_______________________ faced by firms proposing a merger of their respective businesses. A. define the market and count up total sales B. estimate the demand and supply curves C. preserve competition in certain local markets D. analyze companies and narrowly defined markets

Traditionally, policies for environmental protection in the U.S. have focused on __________________ pollutant could be emitted. A. eliminating the risk that any B. setting limits for how much of each C. avoiding the risk that any air D. eliminating the risk that a toxic

Under perfect competition, any profit-maximizing producer faces a market price equal to its A. average costs B. marginal costs C. total costs D. variable costs

Under which of the following antipoverty programs does the federal government give a fixed amount of money to each state? A. ADFC B. TANF C. AFDC D. TNAF

What Act was passed to allow American workers to opt out of the union in their workplace? A. Labor Relations Act of 1947 B. Taft-Hartley Act of 1947 C. National Labor-Management Relations Act of 1935 D. National Workers' Rights Act of 1940

What qualities would ideally suit a monopolistic firm with regard to barriers to entry? A. a few impediments to limit new firms from operating and expanding within the market B. sufficient strength to prevent or discourage potential competitors from entering the market C. government rules on prices, quantities, or conditions of entry in an industry D. government regulations that provide no barriers to entry, exit, or competition

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.

When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is A. considering opportunity costs. B. preparing to exit operations. C. preparing to reach its shutdown point. D. considering capital investments.

When a firm uses retained profits to invest in more energy efficient equipment, an economist would calculate the _________________ of investing in physical capital. A. typical hurdle rate B. opportunity cost C. degree of risk D. hurdle rate premium

When technology is advancing so quickly, even a patent from, say, two years ago may be ___________________, because __________________________ . A. somewhat outdated; few firms are relying on the technology B. completely outdated; no firm is relying on that technology any longer C. irrelevant; inventors are only receiving a slice of the social value. D. irrelevant; not every idea can remain under patent protection forever.

When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing A. deregulation. B. price cap regulation. C. cost-plus regulation D. regulatory capture rules.

Which of the following best characterizes the circular flow of income? A. Businesses buy resources from the government, and households buy goods and services from businesses. B. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. C. The government purchases resources from businesses and households and then sells goods and services to businesses and households. D. Households buy factors of production from businesses, and businesses buy goods and services from households.

Which of the following denotes the typical shape of the monopolist's total cost curve? A. total costs decrease and become flatter as output rises B. total costs rise and grow steeper as output rises C. higher output levels create the typical downward sloping cost curve D. total costs are typically constant and are shown by a straight horizontal line

Which of the following government institutions bears the responsibility of enforcing US antitrust laws? A. Federal Trade Commission B. Department of Justice C. Supreme Court D. Congress and Senate

Which of the following has the power to allow a merger, prohibit it, or allow it if certain conditions are met? A. antitrust regulators at the FTC B. Department of Justice C. Congress and/or Senate D. Supreme Court

Which of the following have historically been more willing to sacrifice their environmental quality for some additional economic output? A. high-income, market-oriented economies B. low incomes and command economies C. the United States D. European Union

Which of the following is most likely to be a monopoly? A. local fast-food restaurant B. local electricity distributor C. local bathroom fixtures shop D. local television broadcaster

Which of the following is the most appropriate response of public policy to a negative externality like pollution? A. modernize, update, and restore homes in run down neighborhoods to decrease littering B. find ways to account for the social costs of the negative externality in economic decisions C. encourage high standards of public education to increase innovation capability of youth D. assist the private party creating the negative externality to receive more social benefits

Which of the following is used to describe the full spectrum of animal and plant genetic material? A. ecodiversity B. biodiversity C. envirodiversity D. duodiversity

Which of the following legislation was enacted in 1998 to allow copyright to be extended from 50 to 70 years after an author's death? A. Thomas Edison Patent Restoration Act B. Sonny Bono Copyright Term Extension Act C. Sonny Bono Patent Restoration Act D. Thomas Edison Copyright Term Extension Act

Which of the following may be legal and even common practice in a market economy? A. making the ability to buy one product conditional on also buying another B. bundling several products together and selling them as a package C. deterring new market entrants with short term predatory pricing D. selling product for less than the average variable cost of producing same.

Which of the following will need to strike some balance between economic output and environmental quality as a prominent climate change priority? A. countries with high-incomes B. every country C. market-oriented countries D. command-oriented countries

Which of the following would a market competition regulator be most likely to assign the maximum HHI valuation to? A. a perfect competitor B. a monopoly C. an oligopoly D. a monopolistic competitor

Which of the following would most likely shift the production possibilities curve inward? A. an increase in the number of hours factories are in use B. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time C. an increase in the production of capital goods D. technological progress

Which of the following would reduce the supply of microcomputers? A. a technological improvement that lowers the cost of producing the computers B. higher wage rates for the workers that assemble the computers C. a reduction in the price of computer chips used to produce the computers D. a reduction in the price of computers.

Why did Gordon Gould have to endure a lengthy legal battle in order to receive a patent for his innovative laser idea concocted in 1957? A. by 1957, several other scientists had filed patents ahead of him, but none of their laser inventions worked B. he delayed applying to patent his idea, mistakenly believing he needed to have a working laser to apply C. by 1957, his laser was no longer the inspiration of a single person. D. by 1957, his laser technology overlapped previous laser patents.

With regard to labor unions, which of the following is an accurate statement? A. percentage of members is higher for women than men B. membership is lower for agriculture or service-oriented jobs C. membership is lower in government and manufacturing D. membership is higher for blacks or Hispanics than for whites

_____________ and __________________ refer to the quantity and price at a point in time. A. Monopoly; productive efficiency B. Productive; allocative efficiency C. Monopoly; allocative efficiency D. Profit; maximization

______________ 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

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

__________________ involves active efforts to improve the job opportunities or outcomes of minority groups or women. A. Meritorious action B. Affirmative action C. Anti-discriminative action D. Aligned action

. In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. A. budget constraint B. opportunity set C. utility D. production possibilities frontier

23. The table below shows the quantity demanded and supplied in the labor market for economics professors at the I'MaStateUniversity, where all the professors belong to a union. If the union has enough negotiating power to raise the annual salary by $20,000 more than a non-unionized university would be willing to pay, then there will be excess ___ of labor of ___ economics professors. A. demand, 50 B. demand, 25 C. supply, 50 D. supply, 25

26. The town of Bookville has a massive public library system. Bookville's municipal government faces a trade off between retaining its current level of library workers and replacing some of them with computers. The four options available to the government are given in table below. After the introduction of a strong union, the annual salary for workers increases to $30,000. In these circumstances, the optimal choice from a cost perspective for the city government is A. Choice A B. Choice B C. Choice C D. Choice D

34. Refer to the diagram above. In this instance, the range of production possibilities at point d, A. is a steeper slope reflecting increasing profits due to diminishing costs. B. is a steeper slope reflecting a lower price. C. is a steeper slope reflecting a return to losses due to diminishing returns. D. is a steeper slope reflecting higher total revenue.

37. Given the data provided in the table below, what will the marginal revenue equal for production at quantity (Q) level 4? A. $20.00 B. $15.00 C. $5.00 D. $1.00

42. The following table shows a monopolist's demand curve and cost information for the production of its good. What quantity will it produce? A. 10 B. 20 C. 30 D. 40

49. Mark's annual after tax income earnings are $50,000. His $40,000, 3-year CD is maturing in the near future and he is planning to spend the interest on a 6 week holiday after that. His investments can earn a total of 10% before he starts his trip. If Mark's "present consumption" is the time he spends working and his "future consumption" is his trip, his optimal choice from the table below is to: A. spend $50,000 now and consume nothing in the future B. spend nothing now and consume $77,000 in the future. C. spend $10,000 now and consume $44,000 in the future. D. spend $20,000 now and consume $33,000 in the future

53. Larry attends college and works part-time job in a grocery store. He can work up to 30 hours each week at his job, which pays $9 per hour. The table below shows his utility from different levels of leisure and income. Larry's utility maximizing choice is to work for: A. 2.5 B. 15 C. 20 D. 10

58. A drug company is deciding how much to invest in Research and Development into finding a cure for diabetes. The table below shows the company's demand for financial capital for R&D based on its expected rates of return from selling the cure. Every investment provides an additional 4% social return: that is, an investment that pays at least a 5% return to the drug company will create at least a 9% return for society as a whole. If the opportunity cost of financial capital for the drug company is 7%, the drug company will invest ___ in R&D if it receives only the private benefits of this investment. A. $308 B. $264 C. $250 D. $228

61. CleanAir Motors Inc. wants to build electric cars with no emissions. However, electric motors require innovative battery technology for adequate energy storage to meet basic daily commuting needs. The company has several possibilities for alternative battery technology, along with estimates of how these approaches would affect their costs of producing the cars and their sales of the cars. These estimates are set out in the table below. Every investment has an additional 2% social return: that is, an investment that pays at least a 6% return to the drug company will pay at least an 8% return for society as a whole. If the opportunity cost of financial capital for Cleaner Motors Inc. is 10%, Cleaner Motors Inc. will invest ___ in R&D if it receives only the private benefits of this investment. A. $2000 B. $1500 C. $1000 D. $ 500

65. ToasterOvensInc. is developing technology to make a toaster oven than uses less electricity. If successful, the technology will significantly reduce the amount of energy that is wasted due to product inefficiencies. If the firm sells only in response to the market price, the quantity shown in the third column of the table below is supplied. If the firm were also to receive the broader social benefits of the new technology, the willingness to supply is shown in the fourth column. If the firm were to receive a price based only on private benefits, the equilibrium price and quantity would be A. $16, 740 B. $17, 680 C. $18, 620 D. $19, 660

66. The table below sets out the amount of capital needed for certain investment projects and the rate of return for each project. What is this firm's demand for physical capital if their hurdle rate is 5%? A. $11 million B. $12 million C. $23 million D. $33 million

81. Kip and Yale run separate mining companies in the same forest. Both pollute the river flowing through the forest with debris from their work. In the table below, the first row shows the current level of debris that makes its way into the river from their work. The following table set out information that show how much it would cost each company to reduce its pollution by additional increments of 10 pounds.If a system of tradable permits is introduced, the total cost of cutting current debris in half is A. $40 B. $45 C. $50 D. $55

82. Carl and Don run separate chemical fertilizer manufacturing companies in the same industrial park. Both pollute the river flowing through the industrial park with waste from their manufacturing processes. In the table below, the first row shows the current level of waste that makes its way into the river from their respective operations. The table also sets out information that indicates how much it would cost each manufacturer to reduce its pollution by additional increments of 10 pounds. If each company is required to reduce debris by exactly 20 pounds, the total cost will be A. $7 B. $14 C. $21 D. $30

84. City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. An unregulated monopoly will have a ____ of ____. A. loss, $24 million B. loss, $7 million C. profit, $24 million D. profit, $7 million

86. City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. If the government decides to regulate this natural monopoly by forcing them to produce at the point where the demand curve intersects average cost, then compared to the unregulated natural monopoly, the price will ____ and the quantity will ____. A. rise, rise B. rise, fall C. fall, rise D. fall, fall

88. JustMeInc. is the only provider of high speed internet in Tinytown. The firm charges their customers on an annual basis. Its cost and demand information are given below. An unregulated monopoly will have profits of A. $120 million B. $140 million C. $160 million D. $180 million

90. A country is currently creating 40 million tons of toxic waste per year. The table below shows the marginal costs and benefits of reducing the amount of toxic waste to various amounts. What level of toxic waste should the country reduce to? A. 30 million tons B. 20 million tons C. 10 million tons D. 0 tons

92. Ireland and England both fish in the Irish Sea. If this sea is over-fished, the fish stocks will fall and fish will eventually become extinct. Both countries have to decide whether to fish a lot or a little. The payoffs are given in the table below. The outcome of this game is ________ , which illustrates the _________ . A. both countries choosing to fish a little, prisoners dilemma B. both countries choosing to fish a lot, externalities C. both countries choosing to fish a lot, prisoner's dilemma D. both countries choosing to fish a little, externalities

96. Two rubber companies, Boing and Twang, are currently producing along, and polluting, the same river. Both companies are considering whether to install pollution filters on their factories. These filters cost $15 million each. If a filter is installed, there is a benefit of $20 million, but this benefit is divided equally between the two companies. If both firms install the filters, then Boing will earn ________ and Twang will earn ________ . A. $0 million, $0 million B. -$5 million, -$5 million C. $5 million, $5 million D. $10 million, $10 million

A Lorenz curve graphs the _________________ received by everyone up to a certain quintile. A. unequal distribution over time B. normative shares of income C. cumulative shares of income D. total share of income

A Lorenz curve refers to a graphic illustration of the share of population on the _______________ and the cumulative percentage of total income received on the __________________ . A. left quintile; right quintile B. right quintile; left quintile C. horizontal axis; vertical axis D. vertical axis; horizontal axis

A _____________ is an organization of workers that negotiates with employers as a group over wages and working conditions. A. affirmative union B. collective union C. labor union D. cooperative union

A ___________________ would lead a large greenhouse gas emitter to reduce emissions by less. A. flat charge B. higher pollution tax C. lower pollution tax D. pollution tax

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A positive externality that can result is A. the cost of the bee hives to the beekeeper. B. the possibility of the bees stinging the students at the school. C. the bees helping to pollinate the orchard, leading to more fruit. D. the honey the bees produce.

A business ________________ occurs when, for practical purposes, one firm purchases another. A. merger B. loss C. acquisition D. antitrust violation

A complementary approach to supporting R&D that does not involve the government's close scrutiny of particular R&D projects is to give firms A. a permanent monopoly over all their inventions that never expires. B. the option to fund all R&D projects through colleges or universities. C. a reduction in corporate taxes based on amount of R&D performed. D. assurance that antitrust authorities challenge cooperative R&D efforts.

A government sanctioned merger between two companies can sometimes lead to a clash _______________________ that makes both firms worse off. A. with government regulators B. other market participants C. of corporate personalities D. with market-oriented economy fundamentals

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

A merger will likely lessen competition if A. they are very beneficial to consumers. B. less concentration in the market results. C. it enables the new single firm to raise price. D. both b and c above are correct answers.

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: A. shift to the right, increasing the price of the drug. B. shift to the left, increasing the price of the drug. C. shift to the right, decreasing the price of the drug D. shift to the left, decreasing the price of the drug.

A perfectly competitive industry is a A. realistic extreme. B. hypothetical assumption. C. hypothetical extreme. D. realistic assumption

A pollution charge gives the trucking industry an incentive to reduce its emissions, as long as the _____________ of reducing the emissions is _______________ . A. total cost; less than the tax B. total cost; equal to the social cost C. marginal cost; less than the tax D. marginal cost; equal to the social cost

A positive externality arises in a situation where a third party, outside the transaction, A. fails to allocate resources efficiently. B. suffers from a market transaction by others. C. benefits from a market transaction by others. D. pays a pollution tax to balance social costs.

A straightforward example of a _______________, often used for simplicity, is the interest rate. A. price ceiling B. financial investment C. rate of return D. price floor

An agreement between a manufacturer and a distributor stipulating that a dealer will only distribute that manufacturer's products would be classified as a form of A. predatory pricing. B. tie-in-sales arrangement. C. exclusive dealing. D. price maintenance.

An individual who wants others to pay for public goods, but plans to use those goods for their own purposes, is often referred to as a ______________ . A. tax evader B. excludable C. free rider D. nonexcludable

An individual whose income level is just above the poverty line would most likely be classified as being a member of the _____________ . A. working poor B. poverty trapped C. near-poor D. illiterate poor

An inferior good is a product: A. for which demand increases as income increases. B. for which there is no demand. C. for which demand decreases as income increases. D. that has an upward sloping demand curve

Antitrust law includes specific rules against restrictive practices in particular because A. they're effective in creating natural monopolies. B. they're very disruptive and controversial practices. C. their effects can reduce competition. D. their specific contracts are complicated.

Around the world, the cities with the dirtiest air and water are typically found in ___________________________ . A. high-income countries like France and the U.S. B. in low-income African nations C. low-income countries in Africa and Asia D. in low-income East Asian nations

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

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

Attending college is a case where the ________________ exceeds the monetary cost. A. budget constraint B. marginal analysis C. opportunity cost D. marginal utility

Because attempting to define a particular market can be difficult and controversial the Federal Trade Commission has begun to look less at market share and more at the data on actual ______________________________. A. competition in the overall economy B. selective anti-competitive industry practices C. competition between businesses D. market definition

Because of the legal protection for intellectual property, such as patents, a firm has a better chance of recouping the costs of research if it pursues A. basic technological research B. technologically innovative research C. applied technological research D. technologically positive research

Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 - however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 - however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. If Wisconsin does not clean the lake and Michigan does then the payoffs will be A. Wisconsin gains 200, Illinois gains 100 B. Wisconsin gains 200, Illinois loses 100 C. Wisconsin gains 300, Illinois loses 100 D. Wisconsin gains 300, Illinois gains 100

Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 - however, Wisconsin will receive only 1100 of those social benefits while neighbor Illinois will receive the other 400. If Illinois cleans the lake, it will cost them 700 and generate social benefits of 900 - however, Illinois will receive only 600 of those benefits, Wisconsin will receive the remaining 300. If a state does not clean the lake, it experiences a cost of $0. In the absence of any agreement, the outcome of this game will be A. neither state cleaning the lake B. Wisconsin cleaning the lake, Illinois not cleaning the lake C. Wisconsin not cleaning the lake, Illinois cleaning the lake D. both states cleaning the lake

By 2007, US market deregulation has proven to be most toxic to the overall health of the US economy in the ________________________ . A. telecommunications sector B. postal services sector C. banking sector D. nuclear power sector

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

Environmentalist groups act to directly reduce of emissions by A. allowing a limited amount of pollution to occur. B. allowing a declining amount of pollution to occur. C. buying marketable emission permits and not re-selling them. D. buying, trading, and re-selling marketable emission permits.

Following the commencement of deregulation of US airline industry in the 1970s, reduced airfares saved consumers billions of dollar a year however, the more recent string of airline mergers has A. government safety regulators increasing employment opportunities for safety inspectors every year. B. doubled the number of high-paying jobs in the airline industry year after year. C. raised new concerns over how competition in the industry can once again be strengthened. D. encouraged deregulators to push further and consider industries where deregulation needs are not obvious.

For a monopolistic firm, the demand for its product is A. unitary elastic B. completely elastic C. completely inelastic D. neither b or c

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

For lunch, Maria eats only salads or vegetarian burgers. Her weekly food budget is $36. Each salad costs $6 and each vegetarian burger costs $3. When deciding how much of each good to buy, Maria knows that 2 salads and 4 vegetarian burgers will give her a utility of 8. Maria's utility-maximizing point is: A. 6 salads, 1 vegetarian burger B. 4 salads, 6 vegetarian burgers C. 3 salads, 6 vegetarian burgers D. 2 salads, 8 vegetarian burgers

From the Great Depression of the 1930s until 1996, the United States' most visible antipoverty program was Aid to Families with Dependent Children, which provided cash payments to A. married men with families who were below the poverty line. B. married women with families who were below the poverty line. C. all mothers with children who were below the poverty line. D. only those orphans who were living below the poverty line.

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: A. nothing, because he enjoys playing basketball more than studying. B. the increase in skill he obtains from playing basketball for that hour. C. the benefit to his grades from studying for an hour D. nothing, because he had a free pass into the sports complex to play basketball.

How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans? A. Consumer Spending Survey B. Consumer Income Budget Survey C. Consumer Expenditure Survey D. Consumer Income Survey

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded, A. it will enjoy a small temporary advantage over the competition. B. it would be able to set price to compensate for development costs. C. it could sell the new computers as a monopoly for at least a few years. D. it would receive a government bailout if losses could drive it out of business.

If a firm holds a pure monopoly in the market and is able to sell 4 units of output at $2.00 per unit and 5 units of output at $1.75 per unit, it will produce and sell the fifth unit if its marginal cost is A. $1.75 or less B. $2.00 or less C. $0.75 or less D. $1.00 or less

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.

If a for-profit firm that has paid out record bonuses to its executive every year while underfunding contributions to unionized workers' pensions required under the collective agreement then attempts to reduce workers' pension entitlements, the union members will most likely A. enter into collective bargaining. B. be unable to defend against this action. C. take defensive strike action. D. receive higher wages instead.

If a government wants to establish a marketable permit program, it must begin by determining A. how many permits will be issued in the overall market. B. the overall price to be charged for each permit. C. the overall quantity of a certain pollutant that will be allowed. D. whether or not permits will be issued free of charge.

If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the _______________ and the vertical axis will represent ______________________ . A. price, measured in dollars; quantity of goods produced B. total costs measured in dollars; quantity of goods produced C. quantity produced; both total revenue and total costs, measured in dollars. D. quantity produced; total revenue and total variable costs, measured in dollars.

If a rise in incomes is the same proportion for both low-income and high-income workers, A. then poverty will rise and inequality will remain unchanged. B. then poverty will rise and inequality will rise. C. then poverty will fall and inequality will remain unchanged. D. then poverty will fall and inequality will fall.

If accounting profits for a firm are 20% of output, and the opportunity cost of financial capital is 8% of output, then what do the firm's economic profits equal? A. 6% of output B. 10% of output C. 12% of output D. 8% of output

If an economist were to disregard unionized government employees, then current U.S. labor market statistics would show that A. 10% of the workers employed by private firms work for a union. B. 98% of the workers employed by private firms aren't unionized. C. 8% of the workers employed by private firms work for a union. D. 80% of the workers employed by private firms aren't unionized.

If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________. A. will stay the same B. will decrease C. will increase D. may increase, decrease or stay the same depending on the relative slopes

If macroeconomics looks at the economy as a whole, it focuses on which of the following? A. households B. business firms C. unemployed people D. the division of labor

If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then A. marginal cost is above average variable cost. B. marginal cost is below average fixed cost. C. marginal cost is below average variable cost. D. average fixed cost is constant

If market-oriented environmental tools offer a mechanism or providing either the same environmental protection at lower cost, or providing a greater degree of environmental protection for the same cost, then this ___________ will arise for ________________ . A. spillover; market-oriented countries B. trade-off; command-oriented countries C. trade-off; all countries around the globe D. spillover; only the high-income countries

If no externalities of pollution exist in a particular industry, the interaction of demand and supply _________________________ . A. is based on benefits individuals perceive while maximizing utility B. is based on choices about production relative to total average costs C. will coordinate social costs and benefits D. shifts so supply has no relation to social costs

If the average product for six workers is fifteen and the marginal product of the seventh worker is eighteen, then A. marginal product is rising. B. marginal product is falling. C. average product is rising. D. average product is falling.

If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________. A. increases; remain constant B. increases, rise C. increases; fall D. decreases; fall

If the government altered its invention patent policy from a monopolistic policy to a competitive policy, then consumers A. would face higher prices and less quantity in the long-run. B. would face lower prices and less quantity in the short-run C. would benefit from the lower price and greater quantity sold. D. would benefit from lower prices due to increased public investments

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.

If the price that a firm charges is higher than its ________________ cost of production for that quantity produced, then the firm will earn profits. A. marginal B. variable C. average D. fixed

If you are highly asthmatic, then having high levels of industrial air pollutants waft over your house every day A. is a voluntary exchange. B. is positively a voluntary exchange. C. would be a negative externality. D. would be an external voluntary exchange.

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.

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

In many cases, it is reasonable to refer to the ________________ as the price. A. budget constraint B. sunk cost C. opportunity cost D. budget constraint

In terms of microeconomic analysis, what is the function of "utils"? A. a form of budget constraint B. applies to changes in income C. a measurement of utility D. relates to a consumers original choice

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI between 1,000 and 1,800, then it would A. make a case-by-case decision on the proposal. B. probably challenge the proposal. C. probably approve the proposal. D. scrutinize the proposal prior to doing a above.

In the 1980s, the FTC followed guidelines stipulating that, should a proposed merger result in an HHI of less than 1,000, A. the FTC would probably challenge it. B. the FTC would scrutinize the proposal. C. the FTC would probably approve it. D. the FTC make a case-by-case decision.

In the U.S. manufacturing sector, unionized jobs have _________________ in recent years. A. increased modestly B. have trended up C. have trended down D. declined dramatically

In the U.S., the amount in savings contributed to IRAs rose from $239 billion in 1992 to $3,667 billion by 2005, while overall savings actually dropped from low to lower. Evidence suggests that, in the economy as a whole, increased savings in these retirement accounts: A. are the negative result of a change in wage levels and a higher work effort. B. the result of personal preferences and intertemporal budget constraints. C. are being offset by negative savings or less savings in other kinds of accounts. D. the result of a higher interest rates and preferences about present consumption.

In the U.S., the command-and-control environmental laws of the early 1970s, together with the ensuing amendments and updates that have been made to them over time, A. were necessary as US industries had zero incentive to control pollution. B. were an inexpensive incentive for industrial polluters to improve performance. C. are given considerable credit for cleaner air and water in recent decades. D. draws distinctions between the needs of firms and costly equipment upgrades.

In the United States, a typical credit card interest rate ranges from ______________ per year. A. .2% to .8% B. 2% to 8% C. 12% to 18% D. 22% to 28%

In the _________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _____________________ . A. long run; increasing production B. short run; fixed costs can be reduced C. short run; losses are smallest D. long run; fixed costs can be eliminated

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

In the ____________, households work and receive payment from firms. A. financial investment market B. financial capital market C. labor market D. savings market

In the ______________, households receive goods and services and pay firms for them. A. labor market B. financial capital market C. goods and services market D. savings market

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

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

In the framework of a Lorenz curve, the final entry in the cumulative income column needs to be _________. A. total income B. cumulative income C. 100% D. 45%

It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00, ____________________. A. will likely cause the firm to reach its shutdown point immediately B. will cause the firm to recover some of its opportunity costs C. could likely result in a notable loss of sales to competitors D. is a sure sign the firm is raising the given price in the market

Josh's weekly budget for lunch is $24. He eats only pizza and burgers. Each pizza costs $6 and each burger costs $3. Josh knows that 2 pizzas and 4 burgers will give him a utility of 8. What is Josh's utility-maximizing point? A. 0 pizzas, 8 burgers B. 3 pizzas, 2 burgers C. 2 pizzas, 4 burgers D. 4 pizzas, 1 burger

Lance is a single father with 1 child. He can work as a bagger at the local grocery store for $6 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 Lance works, the government policy is to deduct 60 cents from his welfare stipend for every $1 that he earns in income. When Lance works 1,200 hours, he receives _______ in government support and his total income is _______. A. $10,680, $15,000 B. $7,800, $15,000 C. $10,680, $17,880 D. $7,800, $17,880

Macroeconomics primarily examines: A. the behaviour of individual households and firms. B. how prices are determined within individual markets. C. broad issues such as national output, employment and inflation. D. the output levels that maximize the profits of business firms

Marginal utility can: A. be positive or negative, but not zero B. decrease, but not become negative C. be positive, negative, or zero D. increase positively, but not negatively

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

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

Measured in absolute numbers, the level of immigration during the 1990s into the United States was _________ compared with the levels of previous decades. When considered as a percentage of the population at the time, the level of immigration into the United States during the 1990s was ________ than the levels experienced during the earlier decades of the twentieth century. A. lower, higher B. lower, lower C. higher, lower D. higher, higher

Measuring economic inequality involves comparing those with ________________ . A. high incomes and those below the poverty line B. high incomes and those with low incomes C. high incomes middle incomes, and low incomes D. high incomes and those near the poverty line

On average, it can cost _____________ and take ___________ to discover a new drug, perform the necessary safety tests, and bring the drug to market. A. $500 million; five years B. $100 million; a year C. $800 million; more than a decade D. $300 million; less than a decade

Once it's patent application has been accepted, a firm is able to earn ________ on its product, which ___________________________________ . A. an increased rate of return for investors; raises doubts further R&D activities B. more profit; will allow it to recover the biggest slice of the social value created C. monopoly profits; offers an incentive for research and development to take place D. competitive profits; creates incentive for continuing innovative R&D projects

One concern that environmentalists have is that market-oriented environmental tools are A. an inflexible took that won't reduce pollution levels. B. an excuse to implement strict limits on emissions. C. an excuse to allow pollution to be maintained or to grow. D. able to achieve desired reductions in pollution at a lower cost.

Paddy has lots of cousins. With a family reunion in the near future, Paddy decides to collect income information for himself and all his cousins. He obtains the following data points: $52,000, $22,000, $92,000, $8,000, $118,000, $62,000, $38,000, $14,000, $132,000, $46,000, $26,000, $96,000, $54,000, $110,000, $80,000. The share of income received by the bottom quintile of this income distribution is _____, which is ______ than that for the bottom quintile of the U.S. income distribution in 2005. A. 2.6%, lower B. 4.6%, lower C. 4.6%, higher D. 2.6%, higher

Prior to the onset of deregulation in the US during the 1970s, it was common for measurements of concentration ratios and HHIs A. to exceed 1,000 B. to exceed 10,000 C. to stop at national borders. D. to extend past national borders.

Refer to Figure 2-1. An economy is operating at full employment, and then workers in the bread industry are laid off. This change is portrayed in the movement from: A. A to B B. B to E C. C to F D. G to F

Refer to Table 5-1. Suppose that D2 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D2 to D1, then: A. equilibrium price increases from $6 to $8. B. equilibrium quantity increases from 13 to 18 C. equilibrium quantity decreases from 15 to 13. D. equilibrium price decreases from $6 to $4.

Say the average increase in pay for non-union workers in 2011 is 2% across the U.S. If a workers' union successfully negotiates a 3 year collective agreement that provides a 4.5% raise in 2011, and a 4.3% raise in 2013, then the for-profit employer will typically A. begin to fire its older union workers. B. replace union workers with non-union workers. C. curtail expansion of labor as a trade-off. D. replace union workers with foreign workers.

Since 1960, the earnings gap between men and women in the U.S. labor market has A. steadily risen. B. been completely eliminated. C. continued to narrow. D. increased throughout the 1970s.

Since 1969, when the Cuyahoga River in Ohio was so polluted that it spontaneously burst into flame, the overall quality of water in the U.S. has A. steadily declined. B. remained unchanged. C. steadily improved. D. remained a non-issue.

Some studies done by economists have found that the original inventor receives _________________________________________________ from innovations, while other businesses and new product users receive the rest of the benefit. A. one-quarter to one-half of the social and economic benefits B. one-quarter to one-third of social and economic benefits C. one-third to one-half of the total economic benefits D. one-quarter to one-third of the total economic benefits

Temperatures have persisted below freezing levels in Florida throughout the months of December and January. As a result, demand for electricity sharply increased and the price of electricity rose sharply. The price of coal also rose. In these circumstances, any resulting shifts in the supply curves for coal miners and electricity producers A. will determine what price to produce at given the market demand. B. at all levels of output shifts marginal costs to the right. C. can also be interpreted as shifts of their respective marginal cost curves. D. shifts marginal costs to the right enabling both to produce more at any given market price.

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

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.

The _________________ budget constraint shows the tradeoff between present and future consumption. A. inflation B. utility-maximizing C. intertemporal choice D. time-value of money

The application of current US antitrust law A. extends its long reach to block mergers that reduce competition. B. reaches beyond the subjective judgments of antitrust regulators. C. includes a wide arrange of anticompetitive practices. D. includes a narrow range of anticompetitive practices.

The basic difference between macroeconomics and microeconomics is that: A. microeconomics looks at the forest (aggregate markets) while macroeconomics looks at the trees (individual markets). B. macroeconomics is concerned with groups of individuals while microeconomics is concerned with single countries. C. microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets). D. macroeconomics is concerned with generalization while microeconomics is concerned with specialization.

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.

The concept of a poverty line raises a number of complex questions. Which of the following represents such a question? A. Should the poverty line be adjusted to take income equality into account? B. Do antipoverty programs belong in a command economy? C. Should the national poverty line be applied in all states? D. Why give cash and not just food stamps to the poor?

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

The demand curve perceived by a perfectly competitive firm A. shows that such a firm is a price-maker B. shows economies of scale over a large range of output C. is horizontal D. all of the above

The earnings gap in the U.S. labor market between black and white workers ___________________. A. was completely eliminated by the end of the 1960s B. has not diminished at all since 1960 C. has diminished since 1960, but a gap still remains D. existed in the 1960s but was reversed throughout the 1970s

The federal government funds __________ of the nation's basic research, much of which ____________________________. A. more than half; carried out by private firms B. less than half; conducted in the labs of private firms C. about half; conducted at colleges and universities D. more than half; conducted a government run facilities

The food stamp benefit A. is a state funded program started in 1984. B. does not contribute to the poverty trap from an economic viewpoint. C. has time limits and is not a complete disincentive to work. D. is reduced by $35 for every $100 earned and a and c above.

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

The four-firm ___________________ measures the percentage share of the total sales in the industry that is accounted for by the largest four firms. A. coordination ratio B. market share ratio C. concentration ratio D. production ratio

The information below sets out the estimated market revenue for the television manufacturing market is given in the table below. Firm & Revenue (in millions of $) Hitachi 525 Philips/Magnavox 1,270 JVC 630 Matsushita/Panasonic 840 Mitsubishi 520 Samsung 650 Sharp 615 Sony 1,930 Toshiba 950 10 more firms 1,120 Based on this information, the four-firm concentration ratio is A. 45.3 B. 50 C. 55.1 D. 62.5

The information below sets out the estimated market shares for the cellular phone manufacturing market. Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3% LG 6% Motorola 16% Samsung 6% Sanyo 4% Siemens 7% Sony Ericsson 11% Plus 8 more firms with 1% each Based on this information, the Herfindahl-Hirschman Index is A. 1,272 B. 2,216 C. 1,836 D. 1,800

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

The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product. A. demand; left B. supply; left C. demand; right D. supply; right

The largest cattle rancher in a given region will be unable to have a __________ when sufficient numbers of smaller cattle ranchers provide sources of competition. A. oligopoly B. patent C. monopoly D. monopolistic competition

The law of ____________________________ explains why people and societies rarely make all-or-nothing choices. A. consumption B. marginal analysis C. diminishing marginal utility D. utility

The marginal benefit of a slice of pizza is the: A. total amount that a consumer is willing to pay for a whole pizza, divided by the number of slices B. difference between the value of the slice to the consumer and the price of the slice. C. maximum amount that a consumer is willing to pay for the slice. D. price of the slice of pizza

The most famous restrictive practices case of the last several decades involved a series of lawsuits by the U.S. government against Microsoft. These particular lawsuits were encouraged by A. all of Microsoft's competitors. B. U.S. consumers. C. some of Microsoft's competitors. D. U.S. antitrust regulators.

The objective of imposing a higher pollution tax is to A. ensure firms have pollution charge credits for all reduced emissions. B. provide incentive for firms to maintain regulation emission levels. C. provide adequate incentive for firms to reduce their emissions by more. D. ensure firms must pay the pollution charge for all reduced emissions.

The problem of pollution typically arises in ______________ economies around the world. A. high-income B. low-income C. high or low-income D. middle income

The property rights approach to environmental issues often becomes highly relevant in cases involving __________________. A. greenhouse gas emissions B. harmful affects of acid rain C. endangered species D. fresh water resources

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. Opportunity cost B. productive efficiency C. budget constraint D. production possibilities frontier

The study of unions and their economic effects needs to focus on ___________________, not on _____________ . A. economic benefits; economic harms B. economic harms; economic benefits C. specific situations; generalities D. generalities; specific situations

The term "applied research" refers to research that is focused on a particular product that promises A. to offer commercial applications in the short-term. B. to offer commercial applications in the long-term. C. an economic payoff in the short or medium-term. D. an economic payoff in the medium or long-term.

The term "tie-in sales" is synonymous with A. price maintenance B. exclusive dealing C. bundling D. predatory pricing

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

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

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

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

Union members earn ______________ than non-union members, even after adjusting for factors such as _____________________________ . A. about 10% more; racial discrimination and immigration. B. about the same; union dues and cost of lawyers for collective bargaining. C. about 20% more; years of work experience and education level. D. about 30% more; healthcare and retirement benefits.

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

What is the maximum value that can be reached using the HHI? A. 100 B. 1,000 C. 10,000 D. 100,000

What was created by the U.S. government in 1914 to specifically define what types of competition were legally unfair? A. Department of Justice B. Antitrust Act C. Federal Trade Commission D. Supreme Court

When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting A. the number of inventors. B. unit production costs. C. entry into the market. D. demand for the product.

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. A. prices rise B. equilibrium is achieved C. costs of production fall D. there is a population increase

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.

When a government establishes a marketable permit program to address environmental pollution, it is actually issuing a form of A. command-and-control regulation. B. pollution tax. C. permit to pollute. D. inflexible, costly regulation.

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.

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

When making decisions about what safety systems should be required in cars or airplanes, the ___________________ will only approve rules where the estimated cost per life saved is __________ or less. A. U.S. Senate; $5 million B. U.S. Congress; $2 million C. Environmental Protection Agency; $3 million D. Environmental Regulation Agency; $7 million

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being: A. balanced budget B. prudent monetary policy C. low inflation D. assuring competition between firms

Whenever there is a shortage at a particular price, the quantity sold at that price will equal: A. the quantity demanded at that price. B. the quantity supplied minus the quantity demanded. C. the quantity supplied at that price. D. (quantity demanded plus quantity supplied)/2.

Which of the following arguments would most likely be presented by a critic of labor unions? A. unions oppose suppression of wages by profit-seeking firms B. unions have a tendency to gain as much as possible in the long-term C. unions can prohibit economic growth if new technology is blocked D. unions have a higher percentage of women members than men

Which of the following can be thought of as an adjustment for the risks involved with respect to the cost of a firm acquiring financial capital? A. higher retained earnings from past profits B. cost of financial capital paid by a firm C. imposition of hurdle rates of interest D. tax credits for physical capital investments

Which of the following circumstances would encourage I'MaPharmaCo. to increase research and development activities? A. cost of financial capital is high B. patent term expires in 20 years C. cost of financial capital is low D. a low rate of return is likely

Which of the following denotes a weakness that is common to both the four firm concentration ratio and the HHI? A. assuming the subject market is poorly defined relative to measuring its concentration of competition B. case-by-case analysis of the extent of competition is highly subjective. C. assuming the subject market is well-defined relative to measuring how sales are divided within it. D. case-by-case analysis of the extent of competition is highly objective.

Which of the following has become a common condition for allowing a merger of large firms? A. commitment to operate in a market-oriented economy B. commitment to open a new factory C. commitment to sell off certain parts of the firms D. commitment to hire more workers

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

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

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

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

Which of the following will present the least amount of concern to a firm that has a monopoly over a particular industry? A. whether consumers will purchase its product B. whether consumers will spend on different products C. the competitive actions of other business firms D. barriers to entry and competitors' patent protection

Which of the following would most likely be recognized as a defining characteristic of a public good? A. the good is nonrivalrous item B. the good is nonexcludable item C. the good is both a and b above D. the good is a separate and identifiable item

Which one of the following is the most accurate description of a monopolist? A. a sole producer of a narrowly defined product class, such as brown, Grade A eggs produced in Eagle County, Colorado B. a firm that is very large relative to all its competitors within a narrow product class C. a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry D. a large, multinational firm that produces a single product in a narrow product class

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.

Why are some producers forced to sell their products at the prevailing market price? A. price takers find market analysis is too costly B. they are very small players in the overall market C. high degree of similarity to competitor's products D. they can increase output without affecting quality

Why do U.S. economists commonly refer to externalities as an example of market failure? A. firms that are required to pay social costs of externalities produce more B. externalities present a case where markets consider all social costs C. externalities present a case where markets only consider some social costs D. firms avoid having to pay social costs of externalities by lowering prices

Why is there scarcity? A. Because the opportunity set determines this. B. Because theory dictates it. C. Because our unlimited wants exceed our limited resources D. Because human wants are limited.

Why would a typical U.S. business fail to take the social costs of pollution into consideration during the development of their operating strategies? A. the range of flexible, market-oriented pollution control policies are flawed B. government regulated the limits for how much pollutant can be emitted C. it isn't required to pay any of the cost of cleaning up its pollution D. it is following the principle of voluntary exchange of benefits

______________ 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

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling. A. Rent controls B. Price ceilings C. Price floors D. Subsidies

_________________ is the level where half of all families had more than that level and half had less. A. The first quintile B. The third quintile C. The median D. The quintile

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: A. $0 B. $4 C. $40 D. $44

15. Refer to the above diagram. In this instance: A. the BC line is diagonal because the amount spent on both goods is less or equal to income. B. the consumer will find that every point along the I3 line is outside the budget constraint. C. the consumer will find the highest utility where x and y just touch the I2 line. D. all of the above and the consumer can choose any point on or below the budget constraint line BC.

19. Refer to the diagram above. What is the significance of the point at the top of the backward bending of the supply curve marked L3? A. as wages increase over this range, the quantity of hours worked also increases. B. as wages increase over this range, the quantity of hours worked changes very little. C. as wages increase of this range, the quantity of hours worked is more inelastic. D. as wages increase over this range, the quantity of hours worked actually decreases.

24. The table below shows the quantity demanded and supplied in the labor market for economics professors at I'mAStateUniversity, where all the professors belong to a union. All of the economics professors could also work as economic consultants, but the market for economic consultants is not unionized. If the union negotiates an annual salary increase for economics professors that is $20,000 higher than the market wage rate for economic consultants, then the market wage rate for the consulting positions will ___ and the quantity of economic consultants employed will ___. A. rise, rise B. rise, fall C. fall, fall D. fall, rise

31. Alex has $18 per week in his entertainment budget. He splits his time between going to the movies and renting video games. Each movie costs $6 while each video game rental costs $3. The measured total utility of each of his activities is shown in the table below. What is Alex's utility maximizing point? A. 2 movies, 2 video game rentals B. 0 movies, 6 video game rentals C. 5 movies, 7 video game rentals D. 1 movie, 4 video game rentals

31. Refer to the diagram above. Which of the following explains the slope of the total revenue curve illustrated in this graph? A. total revenue shown as a straight line sloping up indicates a perfectly competitive firm B. the slope of the total revenue curve is determined by the price of the goods produced C. at higher levels of output, diminishing returns will cause total cost to slope downward steeply D. the slope of the total revenue curve is explained by both a and b above.

36. Given the data provided in the table below, the total revenue (TR) for production at quantity (Q) level 4 equals A. zero B. $1.00 C. $15.00 D. $20.00

40. Given the data provided in the table below, what will the fixed costs equal for production at quantity (Q) level 4? A. $35.00 B. $4.00 C. $36.00 D. $9.00

40. Refer to the diagram above. Which of the following is a true statement? A. backward-bending supply curves for labor are typical in the short run B. workers react to higher wages by working more hours in the long run C. long run reaction to higher wages is an increase in hours worked to gain more income D. backward-bending supply curves for labor are not typical in the short run

41. Refer to the diagram above. In this instance, the marginal revenue curve A. reflects a perfectly competitive firm B. is equal to the price of the good C. is a horizontal straight line D. reflects each of the above

41. Refer to the table below. If the information pertains to the demand curve and the long run average cost curve for an electric company that is a natural monopoly, then what quantity will be produced in this market? A. 300 B. 400 C. 100 D. 200

44. Refer to the diagram above. Based on the information illustrated in this graph, which of the following is an accurate statement? A. production should keep expanding because MR is always less than MC B. because this is a perfectly competitive firm, the profit maximizing rule is not P = MC C. because this is a perfectly competitive firm, the profit maximizing rule is not P = MR D. profits will be reduced by production in the zone where MC exceeds MR

44. The table below shows a monopolist's demand curve and cost information for the production of its good. What quantity will it produce? A. 1,400 B. 1,300 C. 1,100 D. 1,000

51. Troy has a part-time job in a book store to help pay for his college. He can work up to 30 hours each week at his job, which pays $9 per hour. The table below shows his utility from different levels of leisure and income. Troy currently works 20 hours per week. If he decides to work 30 hours instead, his marginal utility gain from the additional income is ____. A. 12 B. 6 C. 3 D. 9

54. Refer to the table below. In this instance, confirmation that this firm is operating in a perfectly competitive market can readily be ascertained by the fact that its A. marginal cost is increasing. B. total cost is increasing. C. economic profits are zero. D. marginal revenue is constant.

55. Bruce works for a large bank. His wage increased from $30 per hour to $40 per hour. He can work up to 50 hours each week. The table below shows her utility from different levels of leisure and income. If Bruce decides to increase his weekly hours of work from 10 to 20 hours after his raise, the marginal utility loss from having less leisure is: A. 8 B. 27 C. 21 D. 15

58. The figure below??? shows the demand curve and the long run average cost curve for an electric company. This market is a natural monopoly because A. the long run average cost curve is U-shaped B. when producing large quantities, the long run average cost is greater than demand C. when producing small quantities, the demand is higher than long run average cost D. the demand curve intersects the long run average cost curve at a point where the long run average cost curve is downward sloping

60. A drug company is deciding how much to invest in Research and Development into finding a cure stomach cancer. The table below shows the company's demand for financial capital for R&D of this drug, based on its expected rates of return from selling the drug. Every investment has an additional 4% social return: that is, an investment that pays at least a 5% return to the drug company will create at least a 9% return for society as a whole. If the opportunity cost of financial capital for the drug company falls from 7% to 5%, the drug company will invest ___ more in R&D if it receives only the private benefits of this investment. A. $14 B. $16 C. $24 D. $30

60. The following figure??? shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what does the firm's revenue equal? A. the area of rectangle ABGH B. the area of rectangle BDEG C. the area of rectangle BCFG D. the area of rectangle ADEH

67. The table below sets out the amount of capital needed for certain investment projects and the rate of return for each project. What is this firm's demand for physical capital if their hurdle rate is 8%? A. $1.5 million B. $2 million C. $250,000 D. $500,000

Approximately what portion of annual consumption is typically spent by American households on shelter? A. one-fourth B. one-half C. one-quarter D. one-third

68. YummyCandiesCo. has developed a new candy bar that contains a full recommended daily allowance of vitamins and minerals. This invention will provide considerable spillover benefits to society. The table below shows the demand for the candy bars, the supply of candy bars if the company receives only the private benefits, and the supply of candy bars if the firm also receives the full social benefits. If the firm's candy bars were sold on the basis of both private and social benefits, the equilibrium price and quantity would be A. $4, 100,000 B. $3, 150,000 C. $2, 200,000 D. $1, 250,000

78. The supply and demand conditions facing a firm that makes widgets and generates a negative externality by dumping a highly toxic sludge in a nearby river is given in the table below. The equilibrium price and quantity when only private costs are taken into account are A. Price = $55, Quantity = 30 B. Price = $40, Quantity = 55 C. Price = $30, Quantity = 20 D. Price = $30, Quantity = 80

82. City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. The marginal cost of going from a production of 4 million therms to a production of 5 million therms is A. $133 million B. $113 million C. $23 million D. $20 million

86. Michigan (MI) and Wisconsin (WI) both border Lake Michigan. Both states pollute Lake Michigan and both states suffer the consequences of the pollution. However, the two states face a prisoner's dilemma of the sort studied in Chapter 12. Each country must decide whether to protect or not to protect Lake Michigan from pollution. The payoffs from the choices are shown in the table below. From the table, we know that if Wisconsin chooses to protect the lake, Michigan will choose to ______ the lake. If Wisconsin chooses to not protect the lake, Michigan will choose to ______ the lake A. protect, protect B. not protect, protect C. protect, not protect D. not protect, not protect

89. JustMeInc. is the only provider of high speed internet in Tinytown. The firm charges their customers on an annual basis. Its cost and demand information are given below. If the government decides to regulate this natural monopoly by forcing them to sell the quantity and price where the market demand curve crosses average cost, then the market price would be A. $233.33 B. $210 C. $180 D. $150

89. Two logging companies are deciding whether or not to cut down a significant portion of a particular forest that both have access too. Both companies understand the environmental consequences of their actions, knowing that they are trading off higher profits for a better outcome from society's point of view. The payoffs facing these companies are given in the table below. From the table, we know that the outcome of this game will be A. neither Company choosing to cut the forest B. Company 1 choosing to cut, Company 2 choosing not to cut C. Company 2 choosing to cut, Company 1 choosing not to cut D. both companies choosing to cut the forest

91. A country is currently creating 40 million tons of toxic waste per year. The table below shows the marginal costs and benefits of reducing the amount of toxic waste to various amounts. What number belongs in place of X? A. 700 B. 900 C. 1300 D. 1500

95. Bulgaria primarily produces two goods, nesting dolls and grapes. The production of both goods primarily requires labor. The following table shows possible combinations of nesting dolls and grapes. Which of the following points is not feasible? A. A B. B C. C D. D

97. Two rubber companies, Boing and Twang, are currently producing along, and polluting, the same river. Both companies are considering whether to install pollution filters on their factories. These filters cost $15 million each. If a filter is installed, there is a benefit of $20 million, but this benefit is divided equally between the two companies. In the absence of any government intervention or agreement between the firms, A. both firms will install filters B. Boing will install a filter, Twang will not C. Twang will install a filter, Boing will not D. neither firm will install a filter

A group of 10 golfing buddies have the following annual incomes: $32,000, $12,000, $56,000, $120,000, $10,000, $38,000, $70,000, $16,000, $20,000, $24,000. The share of income received by the lowest quintile of this income distribution is _______ than that for the bottom quintile of the U.S. income distribution in 2005. The share of income received by the highest quintile of this income distribution is _______ than that for the highest quintile of the U.S. income distribution in 2005. A. lower, lower B. lower, higher C. higher, higher D. higher, lower

A highly innovative firm operating in a competitive market will usually have A. a permanent edge over its competitors. B. a lack of ability to earn reasonable profits. C. vast numbers of competitors catching up to its innovations. D. some time before competitors catch up to its innovations.

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect: A. Andy's demand for pizza to increase. B. Andy's demand for pizza to decrease. C. Andy's quantity of pizza demanded to decrease. D. Andy's demand for beer to increase.

As environmental protection increases, A. the biggest marginal benefits are achieved first, smaller marginal benefits follow. B. inexpensive and easy methods of reducing pollution begin to dwindle. C. the more costly and innovative methods can be readily avoided. D. in addition to a and b above, the quality of environmental protection increases.

Command-and-control regulation is a body of law that A. fails to consider private costs of firms. B. specifies allowable quantities of pollution. C. details which pollution-control technologies must be used. D. can include both b and c.

Crystal 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. Crystal's labor-leisure opportunity set A. has doubled B. is smaller with the government support program C. is not affected by the government support program D. is larger with the government support program

Currently, the approach to antitrust regulation involves A. defining a market and counting up total sales. B. market concentration ratio. C. HHI and concentration ratio. D. detailed analysis of specific markets and companies.

Discrimination in labor markets arises if _________________________, as measured by education, receive different pay because of their _______________________ . A. workers with different skill levels; race or gender B. workers with no experience; race or marital status C. workers with work experience; race or marital status D. workers with the same skill levels; race or gender

Discriminatory impulses in the labor market can emerge at a number of levels: A. among managers B. among workers C. among customers D. all of the above

During a severe recession, the government issued food stamps that could only be used to acquire food to a greater number of families. The budget line graph shows food on the horizontal axis and everything else on the vertical axis. The government expects that issuing the food stamps will cause each family's budget constraint line to: A. pivot out along the horizontal axis. B. pivot out along the vertical axis. C. shift to the left. D. shift to the right.

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.

Firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of staff, A. because doing so creates efficiencies and innovation. B. because the market changes dramatically and they have incentive to meet new demand. C. because this will reduce the firm's costs more quickly and it can make a high level of profit. D. because what they can charge is linked to the costs they incur.

For lunch, Wendy eats only salads or fruit & yogurt smoothies. Her weekly food budget is $48. Each salad costs $6 and each smoothie costs $3. When deciding how much of each good to buy, Wendy knows that 2 salads and 4 smoothies will give her a utility of 8. What is Wendy's utility-maximizing point? A. 1 salad, 14 smoothies B. 6 salads, 4 smoothies C. 5 salads, 6 smoothies D. 4 salads, 8 smoothies

For the restaurant industry in Seattle, with dozens or hundreds of extremely small competitors, the value of the HHI A. might drop as low as 100, but not less. B. might reach as low as 1,000, but not less. C. might reach as high as 1,000, but not more. D. might drop as low as 100 or even less.

From a competitive firms' point of view, the key question regarding the higher wages paid to union workers is whether the higher wage level A. is matched by non-union producers. B. can be passed on to its costumers. C. leads to workers with more experience. D. is matched with higher productivity.

Generally, market competition and technology can A. support each other. B. oppose each other. C. compliment each other. D. sometimes a or b.

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

If Congress voted every few years to redefine completely what poverty means, A. it will be useful to have a poverty line whose basic definition changes a lot. B. then it will set two poverty lines that it applies to welfare and the near-poor. C. then a substantial share of the U.S. population will subsist in dire poverty. D. then it would be difficult to compare poverty rates over time.

If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use? A. a tax imposed on the value of inheritances B. redistribution from those with high incomes to those with low incomes C. trying to assure that a ladder of opportunity is widely available D. the three mains sets of tools it can use include all of the above

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: A. the price of Good Y will increase. B. Goods X and Y are normal goods. C. Goods X and Y are substitute goods. D. Goods X and Y are complement goods.

If an industry is perfectly competitive or monopolistically competitive, then the government has relatively little reason for concern about A. regulatory recapture. B. taking advantage of economies of scale. C. new ways of pleasing customers. D. the extent of competition.

If immigration consists of mainly high-skilled workers, then a(n) ________ in immigration will ________ the wages of high-skilled workers. A. increase, increase B. increase, not affect C. decrease, decrease D. decrease, increase

If incomes rise for both low-income and high-income workers, but rise less for the high-income workers, A. then poverty will rise and inequality will fall B. then poverty will fall and inequality will rise. C. then poverty will rise and inequality will rise. D. then poverty will fall and inequality will fall.

If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be A. elimination of barriers to entry B. irregularly high unsustainable profits. C. government deregulation. D. abnormally high sustained profits.

If pollutants are emitted into the air and water, what costs might be incurred as a result? A. compromised recreation possibilities B. decreased property values C. loss from destruction of wildlife habitat D. health injuries and all of the above

If the North American newsprint paper market has barriers to entry, then A. abnormally high profits will attract the entry of new firms. B. the entry of new firms will eventually cause price to decline. C. surviving firms earn only a normal level of profit in the long run. D. entry will be blocked even if firms are earning high profits.

If the income level falls for low-income workers, but remains unchanged for high-income workers, A. then poverty will rise and inequality will fall. B. then poverty will fall and inequality will fall. C. then poverty will fall and inequality will rise. D. then poverty will rise and inequality will rise.

If the maintenance fees for a lighthouse are paid in full each year by charging port fees, then the lighthouse is A. rivalrous and excludable B. nonrivalrous and excludable C. rivalrous and nonexcludable D. nonrivalrous and nonexcludable

If the research and development efforts of a firm have ended in failure, then A. the firm could be driven out of business. B. the firm will suffer losses. C. R & D projects rarely end in total failure. D. the firm could experience a and/or b.

If the two smallest firms in a competitive market merged, the four-firm concentration ratio _______________ because ____________________________ . A. would change; the degree of competition is notably diminished B. would not change; especially high concentration ratios can benefit consumers C. would change; the largest firms high concentration ratio is diminished D. would not change; the degree of competition isn't notably diminished

If two companies are seeking regulatory approval to merge their respective businesses, which of the following will most likely be the focus of the arguments that they will present in favor of the merger? A. consumers can purchase better quality goods or services at a lower price B. the newly created firm is able to take advantage of economies of scale C. the newly created firm could eliminate duplicative investments D. the new firm will produce more efficiently and all of the above

If unions help workers secure pension benefits, so that those workers are less dependent on government social assistance after their retirement, then A. the for-profit unionized industries will be less productive. B. the for-profit unionized industries will be harmed. C. the union is economically harmful. D. the union is economically beneficial.

In a perfectly competitive market setting, which of the following would be a true statement? A. Market price automatically sets itself exactly at equilibrium. B. Market price rarely trends toward the equilibrium value. C. Wage rates mirror marginal revenue product levels exactly. D. Wage rates trend toward marginal revenue product levels.

In addition to the current levels of air and water pollution, a list of important environmental issues would most likely include: A. emissions of greenhouse gases B. safe disposal of hazardous waste materials C. destruction of wetlands and other habitats D. extinction of species and all of the above

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

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.

In economics, labor demand is synonymous with A. market demand. B. average demand. C. marginal demand. D. derived demand.

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.

In order to analyze the effects of a particular business merger, economists typically measure whether the competitive change has A. helped consumers. B. hurt consumers. C. made much difference. D. all of the above.

In order to produce 100 pairs of oven gloves, Marcia incurs an average total cost of $2.50 per pair. Marcia's marginal cost is constant at $10.00 for every pair of oven gloves produced. The total cost to produce 50 pairs of oven gloves is A. $250.00 B. $500.00 C. $300.00 D. $200.00

In order to provide its workforce with an alternative to forming a union, the U.S. government passed laws about work conditions, namely, A. minimum wage and employment insurance. B. regulation of workers' pensions. C. paid parental leave for workers. D. overtime and all of the above.

In the U.S., about __________ of all reported merger and acquisition transactions in 2008 exceeded $500 million, while about _________ exceeded $1 billion. A. 80%; 20% B. 99%; 1% C. 60%; 40% D. 25%; 10%

In the U.S., poverty rates are relatively low A. for the elderly B. for the well-educated C. for the male-headed households D. for whites and all of the above

In the US, which of the following has likely been the most influential with respect to the increased level of competition faced by many local retail businesses? A. vast improvement in communications technologies B. development of the Internet C. global business-to business websites D. globalization and all of the above

Low and middle-income societies correctly point out that high-income countries have historically A. been the primary contributors to greenhouse warming. B. been the primary contributors to reduced biodiversity. C. failed to put environmental protection ahead of corporate profits. D. legitimately lacked moral standing in addition to all the above.

Many economists would view market competition as supporting the invention of new technology because it A. provides an competitive edge over competitors for the long-term. B. encourages methods of producing existing products at less cost. C. encourages creation of products with desirable characteristics. D. provides short-term above-normal profits, and b and c as well.

Marketable permits work best when there are _____________________ permit holders who are highly interested in trading. A. several dozen or a several hundred B. less than a hundred C. more than a thousand D. a few dozen or a few hundred

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

One reason that the welfare reform bill TANF worked as well as it did is that A. the EIC was greatly expanded in the early 1990s. B. the EIC was greatly expanded in the late 1980s. C. it was able to generate an increase in the returns to work for the poor. D. its worth about $2,500 per family with children and all of the above.

Other things being equal, a __________ supply of workers tends to __________ real wages. A. smaller; not change B. larger; increase C. smaller; decrease D. larger; decrease

Paddy and Mick are the only two inhabitants of a small island off the coast of Ireland. They burn coal to keep their houses warm at night. However, this coal burning is harming the air quality on their island. Both Paddy and Mick could install air filters on their chimneys. These filters cost 50 each. Each filter provides a social benefit of 80, but those benefits are divided equally among Paddy and Mick. If both Paddy and Mick install the filters A. both will gain 10 B. both will gain 0 C. both will lose 30 D. both will gain 30

Poverty is measured by the number of people who fall below A. a certain level of income. B. the income needed for a basic standard of living. C. the nation's economic poverty line. D. all the above are correct.

Practices that reduce competition without actual documented agreements between firms to raise price are commonly referred to as ______________________ . A. legal practices B. competitive practices C. regulated practices D. restrictive practices

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.

Refer to Table 5-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then: A. equilibrium price decreases from $6 to $4. B. equilibrium quantity decreases from 15 to 13. C. equilibrium quantity increases from 13 to 18. D. equilibrium price increases from $6 to $8

Refer to Table 5-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then: A. a 5 unit shortage will result. B. a 5 unit surplus will result. C. a 10 unit surplus will result. D. a 10 unit shortage will result.

Robert is a widower raising 5 year old twin boys. In 2013, after the plant where he had worked for 10 years shut down, he was able to obtain part-time work that paid him $13,000.00 a year. He receives the earned income tax credit. If Robert receives a raise, so that he will earn $16,350, the earned income credit will be A. reduced by 21 cents per dollar. B. reduced by 25 cents per dollar. C. phased out completely. D. will not be reduced.

Some economists argue that if privately owned firms were required to pay the social costs of their pollution, the result would be: A. each would create less pollution B. each would lower production to decrease pollution levels C. their supply curves will represent all of those social costs D. the price of goods will rise and a and b above

Some of the leading ecotourism destinations include: A. Costa Rica and Panama in Central America B. Malaysia and the Galapagos Islands C. the Serengeti in Tanzania; the Amazon rain forests D. the Caribbean, New Zealand and all of the above

Substitution and income effects of a change in price of a good may be used to explain the: A. direct relationship between price and quantity purchased. B. inverse relationship between price and quantity demanded. C. direct relationship between price and quantity supplied. D. direct relationship between income and demand.

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 _____ wages in for low-income workers and _____ income inequality. A. increase, decrease B. increase, increase C. decrease, decrease D. decrease, increase

Suppose that the government implements a new policy that provides free skills training to all low-skilled workers, which makes them more productive and turns them into high-skilled workers. This will ______ the supply of low-skilled workers and ______ the supply of high-skilled workers. A. increase, decrease B. increase, increase C. decrease, decrease D. decrease, increase

The US laws dealing with original works of authorship allow the US Copyright Office to enforce protection for all but one of the following. Which one is it? A. contemporary sculptures B. contemporary paintings C. pantomimic works D. ancient Bible texts

The United States has approximately ___________ credit card holders. A. 1.8 million B. 18 million C. 80 million D. 180 million

The arguments presented by economists regarding U.S. environmental command-and-control regulations generally A. accept the goal of reducing pollution. B. question the regulations as being the best policy tools for meeting reduction goals. C. assert that these laws are clear of the usual fine print, loopholes and exceptions. D. lack flexibility and a and b above.

The challenge of preserving biodiversity, A. any nation itself can reduce emissions to solve global warming. B. any nation acting alone can protect biodiversity around the world. C. includes the full spectrum of animal and plant genetic material. D. a nation can protect biodiversity within its own borders and c.

The demand schedule for a good: A. indicates the quantity that people will buy at the prevailing price. B. indicates the quantities that suppliers will sell at various market prices. C. is determined primarily by the cost of producing the good. D. indicates the quantities that will be purchased at alternative market prices.

The difference between playing a board game and a playing a video game is the A. elimination of free riders B. involvement of fewer rivals C. involvement of free riders D. technology of the video game

The existence of labor unions forces employers to deal with workers ________________________ . A. individually, rather than as a collective B. cooperatively, rather than uncooperatively C. equitably, rather than inequitably D. collectively, rather than as individuals

The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead A. will reduce the revenue a firm receives and it should shut down. B. means the firm has reached it shutdown point and should exit. C. is part of the process to a sustained pattern of profits. D. are two stark realities any business firm must recognize.

The flexibility of marketable permits program developed for the oil refining industry is credited with achieving the reduction in lead pollution for __________ less cost than command-and-control regulation would have required. A. at least 50% B. 50% C. 20% D. at least 20%

The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will A. contravene antitrust regulations. B. lead to attracting more customers. C. let them produce more efficiently. D. the right answer is both b and c.

The implicit assumption that competitive conditions across industries are similar enough to make a decision about the effects of a merger is A. fundamental to case-by-case analysis of how sales are divided in a particular market. B. fundamental to antitrust regulators for conducting case-by-case competitive analysis. C. a fundamentally sound principle found in all antitrust law. D. a weakness of the concentration ratio analysis method.

The information below sets out the estimated market shares for the cellular phone manufacturing market. Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3% LG 6% Motorola 16% Samsung 6% Sanyo 4% Siemens 7% Sony Ericsson 11% Plus 8 more firms with 1% each If Samsung were to acquire Sanyo, the four-firm concentration ratio would be A. 70 B. 68 C. 65 D. 73

The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if: A. the economy moves along the production possibilities in the direction of a greater quantity of defense. B. the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve. C. the production possibilities frontier shifts outward due to an improvement in technology. D. either b) or c) occurs, but not as a result of a).

The main challenge for antitrust regulators is A. to figure out how to best benefit consumers. B. to facilitate privatization of government assets. C. to promote the concept of a market-oriented economy. D. to determine when a merger may hinder competition.

The nature of demand indicates that as the price of a good increases: A. suppliers wish to sell less of it. B. more of it is produced. C. more of it is desired. D. buyers desire to purchase less of it.

The problem of pollution arises in primarily ______________ economies around the world. A. command-oriented B. market-oriented C. middle income D. both a and b

The refundable charge of 5 or 10 cents for returning recyclable cans and bottles works like A. an incentive to throw bottles and cans in the trash. B. command-and-control regulation. C. a market permit program. D. a pollution tax incentive to avoid littering.

The result of regulatory capture is that government price regulation can often become a way for existing competitors to work together to A. reduce output. B. limit competition. C. keep prices high. D. all of the above

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

The term ______________ refers to a situation where the firms supposedly being regulated end up playing a large role in setting the regulations that they will follow. A. regulatory tie-in B. deregulation C. privatization D. regulatory capture

The total revenue curve for a monopolist will A. start high, rise, and then decline. B. start low, decline, and then rise. C. start high, decline, and then rise. D. start low, rise, and then decline.

The trick in graphing a Lorenz curve is that you must transform the shares of income ________________, which are shown in the first column of numbers in the table, into ___________, shown in the ________ column of numbers. A. for each distribution; total income; third B. for each distribution; total income; second C. for each specific quintile; cumulative income, third D. for each specific quintile; cumulative income; second

The typical pattern of costs for a monopoly can be analyzed by using: I) total cost II) fixed cost III) variable cost IV) marginal cost V) average cost VI) average variable cost A. I, II, and III B. I, III and IV C. I, II, III, IV, and VI D. all of the above

The typical pattern of costs for a perfectly competitive firm can be analyzed by using: I) total cost II) fixed cost III) variable cost IV) marginal cost V) average cost VI) average variable cost A. I, II, and III B. I, III and IV C. I, II, III, IV, and VI D. all of the above

There seems to be little evidence that poor families experienced _______________ as a result of ____________ . A. a tax refund; having earned income B. a tax break; having earned income C. an increased standard of living; EIC D. a reduced standard of living; TANF

Tim is a single father with 1 child. He can work as a bagger at the local grocery store for $6 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

To be effective, U.S. command-and-control environmental regulation required A. social costs of industrial pollution to become unavoidable business costs. B. firms to take the social costs of pollution into account. C. firms to increase their costs by installing specified anti-pollution equipment. D. the EPA to oversee all environmental laws and all of the above.

Todd is a cattle rancher. In June and July he spent his clothing budget on jeans and cowboy hats. Each pair of jeans cost $50 and each hat cost $100. At Todd's optimal choice, his marginal utility from the last pair of jeans purchased is 200. This means that his marginal utility from the last cowboy hat purchased is: A. 550 B. 500 C. 450 D. 400

Under current U.S. copyright legislation, works produced on a for-hire basis and owned by firms enjoy monopoly protection for A. 50 years after date of publication. B. 70 years after date of publication. C. 75 years from the date of publication. D. 95 years from the date of publication.

Which of the following mechanisms will increase the rate of return that can be earned by inventors of new technology? A. intellectual property rights B. government research and development grants C. cooperative research ventures between companies D. patents, copyrights, and each of the above

Which of the following occurs simultaneously with an income effect? A. backward-bending supply curve B. Giffen good effect C. preferences effect D. substitution effect

Which of the following poses a difficult challenge for U.S. competition policy? A. monopoly B. monopolistic competition C. perfect competition D. natural monopoly

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

Which of the following statements most likely lies within the realm of microeconomics? A. Unemployment rises during a recession and falls during an expansion. B. An increase in government spending will increase the aggregate demand for goods and services in the economy. C. A rapid acceleration of the supply of money may create inflation. D. An increase in labor costs will increase the additional cost of producing another bus.

Which of the following typically leads to two formerly separate firms being under common ownership? A. government regulation B. business mergers C. business acquisitions D. mergers and acquisitions

Which of the following would be classified as a positive externality? A. a surcharge for ambulance service is shifted to property taxes B. reselling outdated textbooks to under-funded public schools C. removing government education subsidies for public schools D. converting a derelict empty lot to a public vegetable garden

Which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology? A. to help inventors earn higher rates of return B. to help inventors earn reasonable returns C. to encourage a stream of inventions that monetarily benefit the inventor. D. to encourage a stream of invention that benefits the whole of society.

Which of the following would some economists be likely to perceive as the most appropriate public policy response to a positive externality created by the development of a highly innovative new technology? A. not taking into account the negative externality associated with social benefit B. not taking into account the positive externality associated with social benefit C. have reasonable rates of return not based on a notion of unearned social benefits D. develop ways to provide a greater share of the social benefits to the innovator

While the majority of economists acknowledge that intellectual property rights do provide a method for increasing the rate of return for inventors, some have suggested there are number of reasons to doubt whether patents provide A. sufficient benefits for society as a whole. B. completely appropriate benefits for the whole of society. C. completely appropriate incentives for innovation. D. sufficient incentives for innovation, as well as c.

Why did Thomas Edison vow that he would work only on ideas for things that people would buy? A. only things that people will buy produce a social benefit. B. only ideas that people will pay a high price for are protected by patents. C. he wanted to hold the record for registering the most patents. D. no government would buy his first patented invention.

Why did inequality of household income increase in the United States in recent decades? A. growth of single-parent families at the top end of the income distribution B. higher-earner couples near the top end of the income distribution C. increase in earnings received by high-skilled labor relative to low-skilled labor D. demand for high-skilled labor at higher wages increased and b and c

Why would a competition regulator need details relating to how firms are competing to cut prices, raise output levels, or build a high quality reputation? A. to be able to determine and specify how competition occurs in an industry B. to build a statistical model to estimate the likely outcome of a merger C. to block mergers that would reduce competition and harm consumers D. to permit competitive mergers to proceed, as well as all of the above

Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases? A. to produce the highest profitable quantity of output at the lowest possible marginal cost B. deciding what quantity to produce is one of the major choices a profit-seeking firm makes C. the quantity of labor is the only variable cost choice a profit-seeking firm can make D. to produce the profit-maximizing quantity of output at the lowest possible average cost

Why would regulators find that a proposed merger is likely to lessen competition? A. it can lead to lower prices B. it can increase availability of goods C. it can enhance innovation D. it can lead to lower quality products

With respect to market forces and/or labor markets that determine peoples' wages, which of the following is a true statement? A. labor markets consider how much a family needs for health care B. market forces consider what happens to families in their business decisions C. labor markets consider how much a family needs for necessities D. labor markets create considerable inequalities relating to income

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 severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: A. the supply curve. B. the demand curve, as consumers try to economize because of the shortage. C. both the supply and demand curves. D. the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.

According to the law of supply: A. there is a direct relationship between price and the quantity supplied. B. there is an inverse relationship between price and the quantity supplied. C. there is a direct relationship between price and quantity demanded. D. there is an inverse relationship between price and quantity demanded.

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

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

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. A. division of labor B. interconnected economy C. task economy D. modern economy

Macroeconomic topics do not usually include: A. the profit maximizing decisions of an individual manufacturer. B. the rate of inflation. C. the rate of unemployment. D. economic growth.

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

Refer to Figure 2-2. At Point A in the production possibilities graph shown above, the economy: A. is not using its resources efficiently. B. is using its resources efficiently while producing clothing but no food. C. is using its resources efficiently while producing food but no clothing. D. is using its resources efficiently to produce both food and clothing

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. A. utility B. marginal benefit C. opportunity cost D. sunk costs

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. sunk costs B. opportunity costs C. marginal analysis D. budget constraints

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

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

But nearly all supply curves share a basic similarity: they slope _______________. A. down from left to right B. up from left to right C. up from right to left D. down from right to left

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

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: A. all consumers. B. buyers and sellers. C. producers and input suppliers. D. producers and government planning committees.

In economics, the demand for a good refers to the amount of the good that people: A. would like to have if the good were free. B. will buy at various prices. C. need to achieve a minimum standard of living. D. will buy at alternative income levels.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy? A. China B. Cuba C. Canada D. Chile

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A. utility B. marginal analysis C. the budget constraint D. consumption

Philosophers 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

Refer to Figure 4-3. A change from Point A to Point E represents a(n): A. increase in supply. B. decrease in supply. C. increase in quantity supplied. D. decrease in quantity supplied.

Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is: A. 8 points on the history exam. B. 15 points on the history exam. C. 14 points on the history exam. D. 17 points on the history exam.

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change. A. market B. economy C. production D. firm

Specialization: A. leads to greater self-sufficiency. B. can lead to an increase in overall production. C. allows workers to develop skills by working on a large number of tasks D. is always the result of an inefficient use of resources

The term "ceteris paribus" means that: A. everything is variable. B. all variables except those specified are constant. C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole.

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

Refer to Figure 4-1. Using the graph above and beginning on D1, a shift to D2 would indicate a(n): A. increase in quantity demanded. B. decrease in quantity demanded. C. increase in demand. D. decrease in demand.

Refer to Figure 4-2. A change from Point A to Point B represents a(n): A. increase in demand. B. decrease in demand. C. decrease in quantity demanded. D. increase in quantity demanded.

Refer to Figure 4-3. A change from Point A to Point B represents a(n): A. increase in supply. B. decrease in supply. C. increase in quantity supplied. D. decrease in quantity supplied.

Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is: A. 10 points on the economics exam B. 8 points on the history exam C. 7 points on the economics exam D. 12 points on the economics exam

Macroeconomics: A. is concerned with the expansion of a small business into a large corporation. B. is narrower in scope than microeconomics. C. analyzes mergers and acquisitions between firms. D. is concerned with the expansion and contraction of the overall economy.

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. A. utility B. opportunity cost C. benefit analysis D. marginal analysis

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is: A. Point B B. Point C C. Point D D. All points on the production possibilities frontier are equally efficient.

Refer to Figure 2-1. The most inefficient point depicted is: A. Point A B. Point C C. Point D D. Point G

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: A. the economy begins using its resources efficiently to produce both food and clothing. B. the economy operates at its productive capacity once it reaches Point B. C. the economy increases production of both clothing and food. D. All of the above occur.

Refer to Figure 4-3. A change from Point A to Point D represents a(n): A. decrease in quantity supplied. B. increase in quantity supplied. C. decrease in supply. D. increase in supply.

Scarcity exists because of: A. the market mechanism. B. specialization and division of labor. C. the allocation of goods by prices D. unlimited wants and limited resources.

The opportunity cost of an action: A. can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. B. can be determined by adding up the bills incurred as a result of the action. C. can be objectively determined only by economists. D. is a subjective valuation that can be determined only by the individual who chooses the action.

Which of the following is most likely a topic of discussion in macroeconomics? A. an increase in the price of a hamburger B. a decrease in the production of DVD players by a consumer electronics company C. an increase in the wage rate paid to automobile workers D. a decrease in the unemployment rate

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market." A. The statement is correct. B. The statement would be correct if "quantity of wheat demanded" were substituted for "quantity of wheat supplied." C. The statement is incorrect because it confuses a change in quantity supplied with a change in supply. D. The statement would be correct if it read that a "decrease in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

Which of the following lies primarily within the realm of macroeconomics? A. a study of the demand for gasoline B. a study of how tax cuts stimulate aggregate production C. an analysis of supply and demand conditions in the electricity market D. a study of the impact of "mad cow" disease on the price of beef worldwide

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ . A. demand curve to the right B. supply curve to the left C. supply curve to the right D. demand curve to the left

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

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

Which of the following statements most likely lies within the realm of macroeconomics? A. An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. B. Due to process innovations in computer chip manufacturing, the market supply of computers increased. C. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. D. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.

_____________ - 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

ECON

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