Microeconomics

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Which of the following is not a multinational corporation? A.Gillette CorporationB.The United States governmentC.Ford Motor CompanyD.MicrosoftE.PepsiCo

Cable television companies, natural gas distributors, and electricity distributors are all examples of natural monopolies regulated by some level of government. True False

true

In order for customers to establish the reliability of a product, they must experience the product over a relatively long period of time. True False

true

It is illegal for businesses in the United States to attempt to monopolize a market or to compete unfairly by conspiring with other firms. True False

true

Monopolistic competition is characterized by many firms selling differentiated products in a market with no barriers to entry or exit. True False

true

Movie theaters are able to offer discounts to senior citizens because it is easy to distinguish them from other customers and prevent resale of tickets. True False

true

Nonprice competition is an important feature of monopolistically competitive markets in the real world. True False

true

OPEC is probably the most famous cartel of the last half of the twentieth century. True False

true

Oligopolists, like monopolists, can arise for similar reasons, such as economies of scale or government regulations. True False

true

One difference between economic and social regulation is that economic regulation usually pertains to a specific industry, whereas social regulation applies across industries. True False

true

Scarcity is a concept that implies that choices must be made. True False

true

The demand schedule is a table showing that the quantity of a good purchased increases when the price of the good decreases, everything else held constant.

true

The number of firms in an oligopoly industry must be small enough that firms are interdependent in decision making. True False

true

Utility is most closely defined as A.extra.B.usefulness.C.opportunity cost.D.satisfaction.E.marginal.

A federal budget deficit exists when government spending exceeds tax revenue. True False

true

For the use of their resources, owners of capital receive A.profit.B.gifts.C.rent.D.interest.E.wages.

Which of the following statements is true?

Demand is the quantities of a product that people are willing and able to purchase at different prices.

A monopoly is a market model in which just one firm sells a product with no good substitutes. True False

true

A person in whose name the house or apartment is owned or rented is called householder. True False

true

A professional accountant is an example of a resource. True False

true

Brand names may be signals of information that consumers associate with a specific firm. True False

true

If a nation is operating at a point lying inside its production possibilities curve, that is a sign of which of the following conditions?

The nation is not fully or efficiently utilizing its resources.

Under what circumstances would a nation be operating inside its production possibilities curve?

The nation is not utilizing its existing labor force efficiently.

In the long run, in a monopolistically competitive market, A.resources are inefficiently allocated only because consumers desire a wide variety of products.B.price equals marginal cost.C.marginal revenue is greater than average revenue.D.price equals minimum average total cost.E.resources are efficiently allocated.

In which of the following market structures do firms produce the output level at which A.Perfect competitionB.Monopolistic competitionC.OligopolyD.MonopolyE.All of the above

A consumer is in equilibrium when A.the last dollar spent on each item provides the same additional satisfaction as that dollar would if spent on any other item.B.each dollar spent on each item provides more and more satisfaction.C.each dollar spent on each item provides less and less satisfaction.D.his or her average utility for each item is the same.E.his or her marginal utility derived from each good is maximized.

A monopolistically competitive firm cannot A.earn a positive profit in the long run.B.earn a normal profit in the long run.C.earn economic profits in the short run.D.incur losses in the short run.E.earn zero profits in the short run.

A movie theater recognizes that demand for tickets to its matinee movies is quite elastic. To increase its sales it should A.lower the ticket price.B.realize it can't increase sales and simply stop showing the matinees.C.raise the ticket price.D.increase the price of popcorn.E.reduce the price of popcorn and raise the price of soda pop.

A person has a comparative advantage in producing a good if A.that person can produce the good at a lower opportunity cost than anyone else.B.that person spends less money in out-of-pocket expenses than anybody else.C.that person can produce the good at a lower absolute cost than anyone else.D.that person can do a better job than anyone else.E.that person can produce the good at a higher opportunity cost than anyone else.

A sole proprietorship is a business form in which A.the owner has unlimited liability for the firm's debts and enjoys unlimited rights to all the profits.B.a government-issued charter has established its legal existence.C.shareholders are the rightful owners of the company.D.the owner is protected against failure of the firm to pay its debt.E.the owner is prohibited from selling shares of stock.

A table that shows the relationship between prices and the corresponding quantities supplied is called A.a supply schedule.B.a demand curve.C.a supply curve.D.a demand schedule.E.a production schedule.

A world-renowned brain surgeon can type twice as fast as her secretarial assistant. Which of the following statements is true in this situation? A.The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the secretary has a comparative advantage in typing.B.The secretary has an absolute advantage in typing.C.The surgeon should do her own typing to save money.D.The surgeon should fire the assistant and work weekends and evenings to stay up on her typing.E.The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the surgeon has a comparative advantage in typing.

According to the text, actions that make one person happy A.will not necessarily make others happy.B.are sure to displease others.C.do not affect other people.D.are sure to please others.E.are most likely to make others happy.

According to the text, foreign buyers and sellers A.have a significant effect on economic conditions in the United States.B.have almost no effect on U.S. buyers and sellers.C.have an effect on U.S. buyers and sellers by causing shortages.D.have an effect on U.S. buyers and sellers through business investment.E.have a very small effect on economic conditions in the United States.

According to the text, rational self-interest A.is the term economists use to describe how people make choices.B.means that people have perfect information about choices.C.means that people try to make themselves better off only when the cost of doing so is small.D.means that people never act foolishly in the eyes of others.E.means that people are never fooled by crafty marketing.

According to the text, the economic way of thinking consists of A.the manner in which the principles of scarcity and rational self-interest are used to search out answers to questions about the real world.B.the manner in which the principles of scarcity and rational self-interest are used to search out new worlds and new civilization.C.defining what is rational and what is not.D.conclusions based on opinion.E.an expression of what ought to be.

Advertising, brand names, guarantees, packaging, and celebrity endorsements all occur in monopolistically competitive markets because A.consumers have imperfect information in the real world.B.monopolistically competitive firms have an incentive to spend as much money as possible compared with their rivals.C.significant barriers to entry exist in the real world.D.in the real world, there are very few markets with many firms.E.product differentiation seldom occurs in the real world.

Assume that the structure of the airline industry is characterized as an oligopoly. Airline A observes that if it raises its prices, the other airlines do not follow the change, but if it lowers its prices, the other airlines always follow the change. The shape of Airline A's demand curve is A.kinked.B.perfectly horizontal.C.the market-demand curve.D.a straight line and downward sloping.E.perfectly vertical.

Assume the demand for watermelons is downward sloping. An increase in price from $2 per pound to $3 per pound A.will cause a smaller quantity of watermelons to be demanded.B.could have been caused by a bumper crop (an extra large crop).C.will cause demand to decrease.D.will cause a larger quantity of watermelons to be demanded.E.could have been caused by an increase in supply.

At any point along a production possibilities curve, we assume that A.the economy's resources are fully and efficiently employed.B.specialization occurs.C.the economy's available resources steadily increase.D.the economy's technological level steadily increases.E.None of these occur.

Comparative advantage is A.the ability to produce a good or service at a lower opportunity cost than another incurs in producing it.B.determined by a person's formal education level.C.always expressed in terms of dollars spent on one good versus dollars spent on an alternative good.D.measured by a person's relative financial security.E.a person's willingness to work hard and be successful.

During the summer of 2006 a Nokia 3560 phone was selling for $29.99 after a $30 rebate. Since the Nokia phone has many substitutes, A.Nokia was lowering its price in the face of elastic demand.B.Nokia was lowering its price in the face of inelastic demand.C.Nokia was raising its price because of elastic demand.D.Nokia should shut down.E.None of the above.

Economists refer to financial capital and physical capital. Examples of these include all the following except A.land.B.equipment.C.machinery.D.offices and warehouses.E.stocks and bonds.

Given the differences in opportunity costs within individual countries, it makes sense for countries A.to specialize in activities in which opportunity costs are lowest and then trade.B.to devalue their currencies at least once a year.C.to force protectionism of the most important domestic industries, using tariffs and quotas.D.to insist on protection against foreign competition through legislation.E.to specialize in activities in which opportunity costs are highest and then avoid trade in order to manage trade deficit.

If Carmelo likes chocolate ice cream more than vanilla ice cream, then A.chocolate ice cream provides a higher level of utility.B.chocolate ice cream must be more expensive.C.vanilla ice cream provides a higher level of utility.D.Carmelo should get strawberry ice cream.E.vanilla ice cream must be more expensive.

If a firm has a perfectly elastic demand curve, then A.the firm has no market power.B.it can charge any price it desires.C.the firm should shut down.D.it must be a monopoly firm.E.the firm has significant market power.

If a nation is producing at a point below its PPC, then A.it is operating at less than maximum efficiency.B.it may not have enough technological know-how to produce on the PPC.C.it may not have enough resources.D.it cannot increase the production of one product without sacrificing another product.E.it is not realizing its opportunity costs.

If a politician stated, "All Americans should be entitled to public health care," this statement would be considered a A.normative statement.B.macroeconomic statement.C.positive statement.D.model.E.microeconomic statement.

If demand is elastic and the price is lowered, then A.revenue will rise.B.revenue will fall.C.revenue and profit will both change in the same direction.D.profit will rise.E.profit will fall.

If health care is allocated by the government, then A.Congress and the president will get the best health care.B.those needing the health care the most will get the health care.C.the poor will not get the best health care.D.those who rent seek with the government will get the best health care.E.the poor will get the best health care.

If the Justice Department and the Federal Trade Commission (FTC) are successful in a suit against alleged violators of antitrust laws, which of the following is not true? A.The FTC and the Justice Department can receive compensation up to three times the damages caused.B.The Justice Department can file criminal actions that could result in fines and prison sentences.C.The FTC and the Justice Department can impose substantial penalties.D.The FTC and the Justice Department can force firms to break up through divestiture.E.The FTC and the Justice Department can force firms to break up through dissolution.

If the price of a product decreases, this causes A.demand to increase.B.the demand curve to shift to the left.C.movement down along the demand curve.D.movement up along the demand curve.E.None of these.

If the quantity demanded equals the quantity supplied, then A.buyers are willing and able to purchase the quantities that sellers are willing and able to produce, at the market price.B.buyers will competitively bid down the price.C.sellers will competitively bid up the price.D.buyers will competitively bid up the price.E.sellers will competitively bid down the price.

In 2000 and 2001, California deregulated part of the state's electrical provider service. The objective of the deregulation was A.to provide lower prices to consumers.B.to ensure that more power plants would be built in the state.C.to provide a more reliable source of power to consumers.D.to ensure that power could be acquired from neighboring states.E.to create havoc in the markets.

In its most fundamental sense, economics is the study of A.scarcity and choice.B.SpongeBob and Patrick.C.supply and demand.D.specialization and trade.E.good and evil.

Inefficient use of a nation's technological know-how would A.be depicted as a point inside or below a PPC.B.be depicted as a point on a PPC.C.be depicted as a point outside or above a PPC.D.shift a PPC outward.E.cause the economy's PPC to bow in.

Late last year, the price of good A dropped dramatically. Within one week, the demand for good B almost doubled. This implies that goods A and B are probably A.complementary goods.B.economic bads.C.overpriced.D.shifting to the right.E.substitute goods.

Microeconomics is the branch of economics that focuses on A.the individual units that make up an economy.B.state and local economic problems.C.deficit spending.D.development in the absence of economic growth.E.the problems of inflation and unemployment.

One rationale for the regulation of monopoly firms is to A.reduce the deadweight loss in the market.B.increase the profits of monopoly firms.C.provide jobs for Parker Brothers' employees who manufacture the Monopoly board game.D.reward the monopolist for innovative products.E.reduce the size of government bureaucracy.

Perfect competition provides one model by which there are many firms with no barriers to entry. If perfect competition as a model lies on one extreme, the model that lies on the opposite extreme is A.monopoly.B.oligopoly.C.monopolistic competition.D.oligopolistic competition.E.imperfect competition.

Status quo means A.people do not like to make a change.B.if people receive higher-risk securities, they typically want to change.C.people do not consider making a change when the cost is too high.D.people like to make a change.E.if people receive a low-return security, they typically want to change.

The Supreme Court doctrine that substantial monopoly control alone is not illegal but that the intent to abuse that control is illegal is called A.the rule of reason.B.predatory price cutting.C.a cartel.D.the contestable market.E."big is bad" policy.

The aging of the population stimulates the demand for A.health care.B.television classics.C.rock music.D.luxury vacation cruises.E.real estate in Los Angeles and other urban areas.

The basic economic problem is A.scarcity.B.unemployment.C.inflation.D.poverty.E.lack of money.

The current surplus generated by the social security tax is being used to finance A.the retirements of future recipients.B.the health care needs of working-class Americans.C.foreign aid expenditures abroad.D.state and local pension fund obligations.E.other government expenditures.

The efficiency loss that occurs when a market is monopolized is known as A.a deadweight loss.B.a monopoly loss.C.an economic loss.D.an X-loss.E.None of the above

The law of demand is composed of the following five phrases:1. the quantity of a well-defined good or service2. that people are willing and able to purchase3. during a particular period of time4. decreases as the price of that good or service rises and increases as the price falls5. everything else held constant.According to the text, phrase 4 means that A.there is an inverse relationship between price and quantity demanded.B.there is a direct relationship between price and demand.C.there is an inverse relationship between price and demand.D.there is a direct relationship between price and quantity demanded.E.people will always be willing and able to purchase more of anything if the price decreases.

The law of demand states that A.as price decreases, quantity demanded increases.B.as price increases, demand decreases.C.as price increases, demand increases.D.as price increases, quantity demanded increases.E.as quantity demanded increases, price decreases.

The model that lies at the heart of economics, and is most useful in describing the behavior of markets, is known as A.demand and supply.B.ceteris paribus.C.the production function.D.marginal utility.E.quasi-experimentation.

Utility is A.the satisfaction a consumer obtains from a product.B.the price of a product.C.a decline in the supply of a product.D.a shift in the demand curve for a product.E.the number of uses of a product.

When demand is inelastic, A.an increase in price will lead to an increase in total revenue.B.a decrease in price will lead to an increase in total revenue.C.an increase in price will lead to a decrease in total revenue.D.an increase in price will lead to an increase in profits.E.a change in price has no effect on total revenue.

Which of the following is a condition of monopolistic competition? A.A large number of independent sellersB.A small number of sellersC.A standardized productD.Significant barriers to entryE.Interdependence in pricing

Which of the following is an industry that has not been deregulated in the United States since 1980? A.Internet service providersB.TelecommunicationsC.TruckingD.Air transportationE.Financial services

Which of the following is held constant when a PPC is constructed for the economy? A.The amount of resourcesB.The combination of goods producedC.The amount of goods producedD.The price levelE.The marginal opportunity cost

Which of the following is not a determinant of supply? A.The price of the good or serviceB.The technology availableC.The prices of resourcesD.The expectations of producersE.The number of producers in the market

Which of the following statements about marginal utility is true? A.If marginal utility becomes negative, total utility decreases.B.When marginal utility is zero, total utility is at its lowest.C.Marginal utility is total utility divided by the number of units consumed.D.Marginal utility is always negative.E.Marginal utility is always positive.

Which of the following statements best represents antitrust policy in the United States? A.Antitrust policy is stricter in the United States than it is in other nations.B.Antitrust policy is not as strict in the United States as it is in other nations.C.The only activity that antitrust policy attempts to control in the United States is restraint of trade.D.In the United States, antitrust policy does not attempt to control pricing or advertising.E.In the United States, antitrust policy does not attempt to control mergers or supplier relationships.

in general, the main purpose of markets is to A.facilitate the exchange of goods and services between buyers and sellers.B.provide a means for exchange via barter.C.provide a means for exposing illegal transactions.D.provide a forum for exchange of political benefits.E.facilitate unrecorded transactions.

a producer who wants to offer the good or service for sale and has the ability to produce and sell it is counted as part of supply

Actions against alleged violators of the antitrust statutes may be initiated by the Justice Department, by the Federal Trade Commission, and by private plaintiffs. True False

true

The law of supply

asserts that as the price of a good or service rises, the quantity supplied rises

A budget deficit is A.the excess that results when government revenue is less than spending.B.the shortage that results when government spending is greater than revenue.C.the excess that results when government spending is less than revenue.D.the excess that results when tax revenue is greater than anticipated in the budget proposal.E.Both a and b

A capital gain is the A.increase in the value of bonds less the face value.B.increase in the value of capital.C.gain in technology.D.increase in the annual return.E.gain in dividend.

A demand schedule is A.posted regularly outside the New York Stock Exchange.B.a table or list of the prices and the corresponding quantities demanded of a particular good or service.C.shows how the price of one good is inversely related to the price of another good.D.posted regularly outside of major supermarket chains.E.not important when constructing a demand curve.

A firm operating as a monopoly has no competitors, offers a product for which there are no close substitutes, and enjoys the benefits of significant barriers to entry. Which of the following is true? A.It will earn above-normal profits as long as its average-total-cost curve lies above the demand curve.B.It could experience a loss just like any other firm.C.A monopoly firm is guaranteed above-normal profits in the long run.D.A monopoly firm can charge any price it wants and reap unseemly profits.E.The firm will show no regard for basic economic principles.

A fund for which you pay a fee when you purchase the fund is a A.no-load fund.B.front-end-load fund.C.fixed-end-fund.D.back-end-load fund.E.face-end-load fund.

A good or service is said to be scarce when A.it can be purchased only by high income earners.B.at a price of zero, there will not be enough to satisfy everyone's desire for it.C.its price is too high.D.no one wishes to purchase it.E.it can't be easily transported.

A group of physicians who contract with a firm to provide services at a price discount is known as a(n) A.medical group HMO.B.preferred provider organization.C.independent practice association HMO (IPA).D.staff HMO.E.network HMO.

A point lying outside the production possibilities curve of a certain nation A.is a sign of impending high unemployment.B.is not achievable at this time for this nation, given its current resources.C.means this nation has developed a new technology.D.causes labor unrest.E.angers politicians.

A positive statement A.cannot be tested in the real world.B.concerns what is.C.deals with values and opinions.D.is always accurate.E.may also be normative.

A price-leadership oligopoly is one in which A.small-market participants have a strong influence over price.B.a dominant firm in the market sets the price and other firms follow.C.a prisoner's dilemma exists.D.all firms face downward-sloping demand curves.E.there is a large kink in the demand curve.

A table that shows the relationship between prices and the corresponding quantities supplied is called A.a production schedule.B.a supply schedule.C.a supply curve.D.a demand schedule.E.a demand curve.

According to the text, in a market system, as firms seek to produce goods and services in the least-cost manner and earn the highest possible profits, A.consumers must earn more money in order to purchase the goods and services.B.consumers not only get the goods and services they want but get them at the lowest possible price.C.consumers get the goods and services they want but at a price that is higher than what they want to pay.D.consumers have to pay higher and higher prices.E.consumers do not always get the goods and services they want but do purchase things at the lowest possible price.

According to the text, in a market system, firms produce the goods and services and use the resources that enable them to A.provide what the consumer wants below cost.B.earn the highest possible profit.C.produce what the government wants.D.rip off the consumer.E.earn a normal profit.

According to the text, there are two categories of regulation; they are A.the regulation of industries in which the Herfindahl index exceeds 2,000 and social regulation.B.economic regulation and social regulation.C.social regulation and the regulation of health and safety.D.the regulation of natural monopolies and the regulation of large Herfindahl indices.E.economic regulation and monopoly regulation.

An "all you can eat" restaurant illustrates the economic principle A.that marginal utility is always positive.B.that consumers will stop eating when marginal utility is zero.C.that consumers will stop eating when total utility is zero.D.that economic theory clearly breaks down under certain circumstances.E.of consumers' inability to maximize their total utility.

An increase in technology will cause the production possibilities curve to A.bow in.B.shift to the right, or outward.C.become a straight line.D.not change.E.shift to the left, or inward.

Antitrust policy is the term used to describe government policies and programs designed to A.create an environment in which firms will trust the government.B.control the growth of monopoly and enhance competition.C.deal with the threat of competitive practices to the public interest.D.promote the creation of trusts, or combinations of independent firms.E.create an environment in which firms will distrust the government.

Assume there is an inverse relationship between the price and quantity demanded of personal computers. If the price of computers increases, A.the demand curve shifts to the right.B.the quantity demanded decreases.C.the quantity demanded increases.D.the demand curve shifts to the left.E.the quantity supplied decreases.

Because it is by definition illegal, the easiest type of antitrust violation to prove in court is A.violation of Section 2 of the Sherman Act, which prohibits monopolization.B.price fixing.C.price discrimination.D.any activity that restricts entry.E.the existence of monopoly.

By specializing in activities in which opportunity costs are lowest and then trading, a country or individual will end up with A.politicians who could never get reelected because of resentful constituents.B.more than if each tried to produce everything.C.high inflation.D.disgruntled workers.E.a huge deficit.

Compared with monopolistic competition, a perfectly competitive firm A.has a downward-sloping demand curve.B.produces a greater amount of output at a lower price.C.is not economically efficient.D.can earn economic profits in long-run equilibrium.E.All of the above

Consumers complain about the cost of things. They argue that big businesses are taking advantage of individuals. Which of the following statements might an economist put forth in reaction to statements such as this? A.Since price is determined solely by the supplier of any good, consumers are by definition subject to whatever price is set by those suppliers.B.The price of any good is determined by supply and demand.C.Demand alone determines the price of a good, and it is therefore impossible for consumers to be ripped off.D.Suppliers unwilling to supply their products at reasonable prices that consumers can afford to pay should be prohibited by law from conducting business.E.This is merely one example of how the government fulfills its role through its benevolent attempts to keep price gouging to a minimum.

Economic growth can be illustrated A.by an inward shift of the production possibilities curve.B.by an outward shift of the production possibilities curve.C.by a downward movement along the production possibilities curve.D.by a movement toward the production possibilities curve.E.by an upward movement along the production possibilities curve.

Even though the public often hears of economists' disagreements, economists agree on a wide variety of topics. Particularly, economists tend to agree on A.the role of monetary policy in the economy.B.the logic of economics.C.the best method of providing health care in the United States.D.the role of fiscal policy in the economy.E.the latest verdict in the Microsoft anti-trust trial.

For a downward-sloping straight-line demand curve, the top portion of the curve is generally A.unit-elastic.B.elastic.C.inelastic.D.perfectly inelastic.E.perfectly elastic.

Health care is such a major national concern because A.of the slow rate of technological development in medical equipment.B.of the rapidly increasing costs.C.other countries, such as Canada and Japan, spend a greater amount of money on medical expenditures.D.of the Clinton health care reform proposals.E.the quality of health care has declined at an alarming rate.

If a market becomes deregulated and is forced from monopoly to competition, the monopolist may be stuck with costly assets for which no returns are possible. These assets are known as A.market assets.B.stranded assets.C.monopoly assets.D.sunk assets.E.nonreturnable assets.

If demand is perfectly inelastic, then the demand curve is A.concave (bowed away from the origin).B.vertical.C.upward sloping.D.horizontal.E.downward sloping.

If health care is allocated by the market system, then A.those needing the health care the most will get the health care.B.those willing and able to pay will get the health care.C.only the wealthy will get the best health care.D.those wanting the health care the most will get the health care.E.the poor will not get the best health care.

If the price of CD (compact disk) players is suddenly cut in half due to a technological innovation, what is likely to happen to the demand for the CDs? A.There will be a movement upward along the demand curve for CDs.B.The demand curve for CDs will probably shift out.C.There will be a movement downward along the demand curve for CDs.D.The demand curve for CDs will probably shift in.E.There will be no direct impact.

In __________, the owners of the business are responsible for all the debts incurred by the business and may have to pay these debts from their personal wealth. A.sole proprietorships onlyB.sole proprietorships and partnerships onlyC.partnerships onlyD.corporations onlyE.sole proprietorships, partnerships, and corporations

In economics, investment includes all of the following activities except A.the purchase of a warehouse.B.the purchase of stocks or bonds.C.the purchase of an office.D.the purchase of tools.E.the purchase of machinery.

In monopolistic competition, firms A.attempt to differentiate their products through advertising or trivial product changes.B.sell homogeneous products.C.face high barriers to entry.D.lack information about their own demand curves.E.All of the above

In order to maximize utility, consumers A.will continue to make purchases until the marginal utility of each good is zero.B.compare the marginal utilities of the last dollar spent on each good.C.equate the total utilities of each good consumed.D.continue to purchase a good until total utility is equal to zero.E.None of the above

In the long run, a monopolist will A.shut down if it is incurring an economic loss but is unlikely to go out of business under such circumstances.B.go out of business if it is incurring an economic loss.C.go out of business if it is earning only normal profit.D.always earn normal profit.E.always earn a positive economic profit.

In the spring of 2003, Coke introduced a new drink called Vanilla Coke. In the summer of 2003, Pepsi responded by marketing its own brand of Pepsi Vanilla. Such moves by firms are known as A.long-run equilibrium in perfect competition.B.product differentiation.C.extremely stupid to most informed observers.D.profit determination.E.price discrimination.

In the theory of utility, it is assumed that marginal utility A.is zero as consumption of a product increases.B.diminishes as consumption of a product increases.C.increases as consumption of a product increases.D.increases as additional consumption of a product remains unchanged.E.remains constant as consumption of a product increases.

Total utility increases until A.marginal utility sets in.B.dissatisfaction never sets in.C.dissatisfaction sets in.D.marginal utility no longer applies.E.people have to demand more of the good or service.

In which market structure is the firm's demand for its product likely to be most elastic? A.The elasticity of firm demand is the same in all market structures.B.Perfect competitionC.MonopolyD.OligopolyE.Monopolistic competition

Marginal utility is A.the change in total utility associated with consuming an additional good that was not consumed before.B.the change in total utility associated with consuming an additional unit of a good.C.the usefulness of the last or next unit of a good consumed.D.the utility associated with the consumption of a market basket of goods and services.E.equal to the price of the good.

Medicaid A.is the same thing as Medicare.B.is a jointly funded federal and state program.C.has over 32 million aged and disabled enrollees.D.is the largest publicly sponsored health care program.E.constitutes the largest part of government health care spending.

Medicare is a federal program that provides health care for A.the homeless.B.the elderly and disabled.C.poor families who could not otherwise obtain health care.D.victims of AIDS, child abuse, and drug addiction.E.military personnel on active duty only.

Monopolistic competition is a market structure in which firms produce a A.standardized product, and entry is difficult but not impossible.B.differentiated product, and entry is easy.C.standardized product, and entry is impossible.D.differentiated product, and entry is difficult but not impossible.E.standardized product, and entry is easy.

Most natural monopolies are regulated by some level of government because A.taxpayers like the government to spend more money.B.an unregulated monopolist would charge an inefficiently high price in the market.C.an unregulated monopolist would produce an inefficiently high level of output.D.an unregulated monopolist would charge an inefficiently low price in the market.E.an unregulated monopolist would produce only for government bureaucrats.

Most stock indexes use which of the following measures to weigh the companies that participate in the index? A.The current profitsB.The market capitalizationC.The company's book valueD.The available cashE.The company's sales

Mutual funds that attempt to mimic the performance of a broad market index, such as the Dow Jones Industrial Average, are known as A.money market funds.B.index funds.C.socially responsible funds.D.fixed-income funds.E.equity funds.

One reason that monopolistically competitive firms often use celebrity endorsements is that A.the firm owners like to be around celebrities so they can feel important.B.they can link their product's reputation with the celebrity's reputation.C.celebrity endorsements are so inexpensive.D.firms like to spend money on famous people.E.None of the above

Positive economics A.always gives an optimistic outlook for the economy.B.is objective.C.produces the best economic policies.D.deals with what ought to be.E.is concerned with how people should behave.

Price fixing A.represents a high level of competition in an industry.B.is, by definition, illegal, as there is no economic justification for it.C.is legal in most states, including the District of Columbia.D.occurs only in monopolistically competitive industries.E.is allowed only under the provisions of the Federal Trade Commission Act.

Strategic behavior occurs in a market when A.there are many firms with differentiated products.B.what is best for A depends on what B does and vice versa.C.the market is a monopoly.D.the market is perfectly competitive.E.All of the above

Suppose that you visit a physician who practices "defensive medicine" by ordering unnecessary tests. Your physician is most likely defending A.your body against the onset of disease.B.himself or herself against the possibility of a malpractice suit.C.your body against the stress of life.D.the general health of the community.E.the hospital's bottom line.

The "rule of reason" in antitrust A.stipulates that a firm should follow a reasonable pricing policy.B.focuses on the intent and conduct of firms with respect to competition.C.protects consumers against false advertising.D.has been applied only to a single Supreme Court case.E.ensures the existence of a reasonable number of firms in an industry.

The Sherman Antitrust Act of 1890 A.has never been enforced.B.forbids attempts to monopolize an industry.C.explicitly prohibits competition.D.was outlawed in the early 1980s.E.explicitly prohibits monopoly.

The argument made in favor of privatization is A.that more prisoners will escape under the private sector.B.that the private sector will operate more efficiently than the public sector.C.that the government can make more money with which to pay off its deficit.D.that the private sector can only make zero economic profit.E.that the abuse of monopoly power requires it.

The characteristic referring to ease of selling a financial asset in the secondary market is commonly known as A.cashlikeness.B.liquidity.C.responsiveness.D.easiness.E.cash convertibility.

The concept of scarcity is important in economics because A.scarcity allows us to model the world with graphs.B.scarcity forces consumers to make decisions.C.scarcity forces producers to sell as much as they can.D.scarcity allows governments to collect revenues through taxation.E.All of the above.

The goal of the Social Security System is to ensure that the elderly retire with A.all health care needs met by the federal government.B.a lifestyle that is above the poverty level.C.a slightly reduced income level and a significantly earlier retirement.D.a better lifestyle than they enjoyed when working.E.the same lifestyle they enjoyed when working.

The largest publicly sponsored health care program is A.Head Start.B.Medicare.C.social security.D.group care.E.Medicaid.

individuals acting with rational self-interest A.always try to attain satisfaction at the expense of others.B.choose options that give them the greatest amount of satisfaction.C.are selfish.D.always choose the same options as other rational individuals.E.never do voluntary work.

If there is a market where there are many identical products from which consumers may choose, the price elasticity of demand for such a product would be A.nonexistent.B.negative 1.C.infinite.D.zero.E.a constant positive 1.

The law of supply is composed of the following five phrases:1. the quantity of a well-defined good or service2. that producers are willing and able to offer for sale3. during a particular period of time4. increases as the price of that good or service rises and decreases as the price falls5. everything else held constant.According to the text, phrase 3 means A.that if goods are not sold for a while and then are sold at a discount sale several months later, they are not part of supply.B.that supply may be different depending on whether we are talking about a month or a year.C.that supply is the same whether we are talking about a month or a year.D.that wants and ability to produce will not change over time.E.that if goods are produced in one month and sold in a different month, they are not part of supply.

The market structure called monopolistic competition is named using both monopoly and perfect competition. Why? A.There are a huge number of firms and entry and exit are both difficult.B.There are many firms with easy entry and exit but each firm sells a unique product.C.There is just one firm whose products cannot be easily differentiated.D.There are few firms in the market all producing the same product.E.Firms spend very little on advertising and promotion and thus are price takers.

The monopoly market structure A.is inefficient because price equals marginal cost in the long run.B.does not yield efficiency.C.is efficient in the short run only.D.is efficient in both long and short runs.E.is efficient in the long run only.

The preceding table is a partial listing of the stock report given daily in newspapers. What do the titles refer to? A.Dividends, yield, partial equilibrium, economic profitB.Dividends, yield, price-to-earnings ratio, earnings per shareC.Division, yearly return, price-to-earnings ratio, economic profitD.Division, yield, price-to-earnings ratio, earnings per shareE.Division, yield, partial equilibrium, earnings per share

The term private property right refers to A.a good that could never be owned by the government.B.the limitation of ownership to an individual or an institution.C.a good or service that can never be sold.D.the limitation of ownership only to corporations.E.a good or service that no government can ever sell.

The text argues that a result of monopolistic competition is A.that firms are economically efficient.B.that consumers pay higher prices than in perfect competition in return for a greater variety of products.C.that firms make profits in the long run.D.zero economic profits in the short run.E.None of the above

The yield on a bond is A.directly related to the price of the bond.B.inversely related to the price of the bond.C.directly related to the price of stocks.D.not related to the price of the bond.E.inversely related to economic value added.

There are stock exchanges that do not have a specific trading location but that are instead a virtual network of computers through which trades are made electronically. What is the largest of these exchanges? A.The NYSEB.The NASDAQC.The American Stock ExchangeD.The Chicago Stock ExchangeE.None of the above

Total utility is maximized when A.marginal utility per dollar expenditure is maximized.B.marginal utility per dollar expenditure is the same for all goods consumed.C.any change in purchasing from good A to good B reduces marginal satisfaction.D.marginal utility is maximized.E.marginal utility is the same for all goods consumed.

What distinguishes monopolistic competition from perfect competition? A.In perfect competition each firm sells a slightly different or unique product; that is not the case in monopolistic competition.B.In monopolistic competition each firm sells a slightly different or unique product; that is not the case in perfect competition.C.The number of firmsD.The difficulty new firms have in entering monopolistic competition as compared with perfect competition.E.The ease of entry and exit

When an individual is behaving according to "rational self-interest," the individual A.is behaving out of greed.B.is making choices that provide him or her with the greatest amount of satisfaction possible.C.will always choose the path of least resistance.D.is making a lot of money.E.will always buy the cheapest product.

When attempting to explain why a consumer purchases a Ford automobile instead of a Honda automobile, or a Compaq computer instead of an IBM computer, an economist would assert A.because everyone knows Hondas are superior to Fords, the consumer cannot possibly be maximizing his utility.B.only that the consumer who is making the decision is maximizing his utility.C.that consumers really have no idea how to maximize their own utility.D.because everyone knows IBM computers are superior to Compaq computers, the consumer may be maximizing his utility at the margin, but is not maximizing total utility.E.the consumer must have looked to the government for guidance in making this purchase decision.

Which of the following agencies is responsible for controlling the water and air emissions of factories? A.Consumer Products Safety Commission (CPSC)B.Environmental Protection Agency (EPA)C.Food and Drug Administration (FDA)D.Occupational Safety and Health Administration (OSHA)E.Equal Employment Opportunity Commission (EEOC)

Which of the following can occur when a market is in equilibrium? A.The quantity demanded is less than the quantity supplied.B.The quantity demanded and the quantity supplied are equal.C.The quantity demanded is greater than the quantity supplied.D.There is a shortage.E.There is a surplus.

Which of the following goods or services will most likely have an inelastic demand? A.HamburgerB.Insulin (used to treat diabetes)C.BeerD.HaircutsE.Pizza

Which of the following is most like a monopoly? A.Safeway (a grocery store chain)B.The U.S. Postal ServiceC.America Online (AOL)D.Motorola (an electronics company)E.Intel (a computer chip manufacturer)

Which of the following is not true about antitrust policy in the United States? A.The laws that define the government's approach to antitrust policy are designed to limit the creation and behavior of trusts.B.Antitrust policy stops large firms from merging unless the resulting firm would have a large influence on the domestic and international markets.C.Antitrust policy limits what large firms, or corporations, can do.D.Antitrust policy prohibits large firms from colluding to fix prices.E.Antitrust policy is governed by the Sherman, Clayton, and Federal Trade Commission acts.

"If a tax cut is good for me, it must be good for the whole economy." This statement is an example of the pitfall called A.rational self-interest.B.interpretation of association as causation.C.the fallacy of composition.D.the scientific method.E.ceteris paribus.

A firm that cannot have any influence on setting prices is A.a local monopoly.B.in a monopolistically competitive market structure.C.in a perfectly competitive market structure.D.in an oligopolistic market structure.E.a natural monopoly.

A market is in equilibrium when A.the price is high.B.government imposes price controls.C.the demand and supply curves intersect.D.equilibrium price equals equilibrium quantity.E.the price is low.

A monopolistically competitive market is characterized by A.many firms selling identical products.B.few firms selling similar but differentiated products.C.many firms selling similar but differentiated products.D.few firms selling identical products.E.one firm selling a homogeneous product.

A most-favored customer is one who A.buys the most of a firm's product.B.is a relative of the owner of the firm.C.is given a guarantee of receiving the lowest price.D.spends the most money.E.None of the above

A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following statements reflects this relationship best? A.The higher the risk of an asset, the lower the expected return on the asset.B.There is usually no relationship between risk and return.C.The higher the risk of an asset, the higher the expected return on the asset.D.The return on an asset is normally positively related to the risk of comparable assets.E.None of the above correctly defines the relationship between risk and returns.

A price-discriminating monopolist A.produces quality products only.B.does not sell products to minority groups.C.sells the same product in different markets at different prices.D.would not engage in dumping.E.must have a very large operation.

According to the Economic Insight in the text, it is a myth that what people put into the system is exactly what they get out. Why is this a myth? A.Retirees pay in for over 40 years and only collect benefits for about 20.B.The system ensures that people won't profit from social security.C.At least through 2003, retirees had received significantly more in benefits than they have ever paid into the system.D.People never live long enough to collect all their benefits.E.Retirees pay in current value dollars and don't receive an equivalent amount in future value dollars.

According to the Economic Insight in the text, there are several myths about social security. Which of the following is not a myth? A.What people put into the system is what they get out.B.Social security ensures that only the elderly poor are cared for.C.The Social Security System was not meant to be a full retirement program but instead was to be just a portion of a person's retirement funds.D.The benefits and taxes of the system are determined by a scientific formula designed to ensure that the fund remains viable.E.The typical retiree collects in benefits only the amount paid in taxes while working.

According to the text, even when two people make exactly opposite decisions, A.both compare their own costs to the same amount of benefits.B.neither is necessarily self-interested.C.both look at the choices in terms of the costs and benefits to themselves.D.both can make that decision taking into account how others feel.E.both define costs and benefits the same way.

Actions that allow oligopoly firms to coordinate their pricing behavior are called facilitating practices. True False

true

According to the text, over their lifetimes college-educated people earn A.more than people with a high school degree but no more than those with two years of college.B.more than people with limited college but less than those with just a high school degree.C.nearly twice as much as people without college degrees.D.more than those without a college degree for the first ten years of working, but after that the two are nearly the same.E.nearly 10 times as much as people without college degrees.

According to the text, regulation A.is used only when it is less expensive than antitrust policy.B.is used when the competitive environment can be enhanced.C.is used when the competitive environment cannot be enhanced using antitrust policy.D.is used to create a level playing field.E.is never used to control monopoly.

According to the text, which of the following statements is false? A.When people choose one good, they have to forgo other things.B.People do not have time to do everything they want to do.C.People do not have to make choices if they don't want to.D.People have to make choices because of scarcity.E.Even rich people do not have everything they want.

According to utility theory, a consumer is in equilibrium when A.total income is spent.B.total utility per unit of a good is maximized.C.marginal utility per dollar spent is equal for all goods.D.total utility per dollar spent is equal for all goods.E.marginal utility per dollar spent for a good is maximized.

Actions that allow oligopoly firms to coordinate their pricing behavior without explicit collusion are called A.independent practices.B.game theory.C.facilitating practices.D.duopoly.E.differential pricing.

Any change in price that causes a limitless response in the quantity demanded of a product indicates that demand is A.perfectly inelastic.B.elastic.C.perfectly elastic.D.inelastic.E.unitary elastic.

Assume that butter and margarine are substitute goods. Last week at a local food store, when the price of butter increased sharply, the demand for margarine immediately A.moved back up along the original demand curve.B.remained unchanged.C.shifted outward.D.disappeared.E.shifted inward.

Assume that you are better than your roommate at both computer programming and literature. You will specialize in computer programming if A.your roommate has a comparative advantage in computer programming.B.you have an absolute advantage in computer programming.C.you have a comparative advantage in computer programming.D.you have an absolute advantage in literature.E.Both b and c

Because each firm in monopolistic competition produces a unique product, A.it is not necessary for any of the firms to advertise its product.B.each has an ironclad monopoly over its product.C.each has a "mini" monopoly over its product.D.it is never required to compete in price.E.it can completely lock out other competitors.

Because of the strategic interdependence of firms, a useful model to describe oligopolistic behavior is A.the production function.B.the law of supply.C.game theory.D.the law of demand.E.long-run equilibrium.

Charles Hires was the first person to commercialize which of the following products in 1875? A.TamponsB.Coca-ColaC.Root beerD.Steam boatsE.Toothpaste

Diminishing marginal utility refers to A.the increase in the price of a good during a particular period of time.B.the decrease in the price of a good during a particular period of time.C.the decrease in utility received from each additional unit of a good that is consumed during a particular period of time.D.the increase in utility received from each additional unit of a good that is consumed during a particular period of time.E.the constant utility received from each additional unit of a good that is consumed during a particular period of time.

Each of the following is a factor of production except A.machinery in a factory.B.entrepreneurial ability.C.the government.D.water.E.a farmer.

Economists refer to financial capital and physical capital. Financial capital is A.the accounting value of physical capital not paid for by debt.B.the same as net income.C.the assets that are backed by stocks and bonds.D.the economic value of physical capital not paid for by debt.E.the money used to purchase physical capital.

Fees paid to the mutual fund manager are known as A.agency fees.B.fund fees.C.load.D.freed fees.E.dividends.

Government control of the conditions under which goods and services are produced and the impact of these goods on the public is known as A.productive regulation.B.economic regulation.C.social regulation.D.social control.E.None of the above

Government intervention in the health care market to guide competition for the purpose of cost reduction is known as A.the Clinton Plan.B.reinventing government.C.managed care.D.health-maintenance planning.E.managed competition.

Grocery store coupons, mail-in rebates, senior discounts, and in-state versus out-of-state tuition are all examples of A.price neutrality.B.ways to disprove economic theory.C.price discrimination.D.illegal business practice.E.perfect competition.

Hospital efficiency is typically measured in terms of A.amount of funding received through government programs such as Medicare or Medicaid.B.minimum average total cost.C.expenditures per care or per patient-day.D.total costs per employee.E.minimum marginal cost.

If a consumer purchases more of a product, then most likely the marginal utility A.of that product remains the same.B.of other products increases.C.of that product decreases.D.of that product increases.E.of other products decreases.

If it is true that "the last drop tastes as good as the first," then marginal utility must be A.diminishing.B.increasing.C.constant.D.rising only slowly.E.decreasing.

If the general education level within a country rises significantly over time, it is likely that A.the country will move to a different point along its current production possibilities curve.B.the country's production possibilities curve will shift in.C.the country's production possibilities curve will shift out.D.the country's production possibilities curve will become convex to the origin.E.the country's production possibilities curve will not change in any way.

If there is a surplus in a country's international trade, then A.macroeconomic equilibrium does not exist.B.net exports exceed transfer payments.C.the value of net exports is positive.D.the value of net exports is negative.E.the value of net exports is zero.

In an antitrust lawsuit, which party is entitled to receive treble damages? A.The Antitrust Division of the Justice DepartmentB.The Federal Trade CommissionC.Private plaintiffsD.DefendantsE.All of the above

In economic terms, pollution, garbage, and disease illustrate A.problems that can be solved only through government intervention.B.a situation for which economics can offer no solution.C.what is meant by an economic bad, or items people would be willing to pay a price to have less of.D.scarce resources.E.intolerable waste and must be legislated away.

In terms of internationally traded stocks, what does ADR stand for? A.Asset Derived ReceiptB.American Discount RetailC.American Depository ReceiptD.Asian Derived ReturnE.None of the above

Incorrectly implying a cause-and-effect relationship between two events is a logical pitfall called A.ceteris paribus ("everything else held constant").B.normative analysis.C.interpreting association as causation.D.the fallacy of composition.E.rational self-interest.

Marginal utility declines more quickly A.the longer the time period.B.the greater the number of consumers.C.the shorter the time period.D.the greater the number of firms producing the good.E.None of the above.

Multinational firms A.license their products to foreign distributors.B.employ foreign agents to sell their products abroad.C.possess production facilities in more than one country.D.export products to foreign nations.E.are engaged in joint ventures with foreign firms.

One reason that lawyers and financial advisors have fancy offices, drive luxury cars, dress in expensive clothes, and carry expensive briefcases is that A.they want to cater to only the richest clients.B.they can afford these things.C.they want to present an image of success.D.they want to look like they don't need the job.E.consumers are offended when they are forced to purchase services from ordinary people.

One tool of antitrust policy available to the government is economic regulation, which is A.a group of laws meant to protect the quality of the environment.B.a group of laws that protect the health and safety of workers.C.price and output guidelines for individual industries.D.the regulation of the safety and effectiveness of over-the-counter drugs.E.All of the above.

Privatization is the opposite of A.efficiency.B.retailing.C.nationalization.D.contracting out.E.perfect competition.

Privatization occurs when A.more bathrooms are built.B.electric utilities become nationalized.C.a publicly owned enterprise is transferred to private ownership.D.the Bush administration disregards privacy rights after September 11.E.private resources become publicly owned.

Section 2 of the Sherman Antitrust Act forbids A.price discrimination.B.monopolies.C.monopolization or the attempt to monopolize.D.price making.E.substantial market power.

Senior citizens are often offered discount movie theater tickets because A.movie theaters have great respect for the elderly in society.B.senior citizens tend to have inelastic demand for movie tickets.C.senior citizens tend to have elastic demand for movie tickets.D.senior citizens have high incomes.E.None of the above.

Social security exists A.in most less developed countries in the world.B.in every country in the world.C.in most developed countries in the world.D.only in a very few developed nations.E.only in the United States.

Stranded assets are A.the capital used up in the production process.B.those assets to which firms have no access.C.the capital that the firm purchased in the past for which no return is possible in a competitive market environment.D.never an issue in deregulation.E.All of the above

The Social Security System in the United States is financed by A.a payroll tax levied solely on the employee.B.a tax on individual retirement accounts.C.a payroll tax levied equally on the employer and employee.D.a payroll tax levied solely on the employer.E.an income tax collected by the Internal Revenue Service.

The additional satisfaction gained from consuming one more unit of a product or service is A.total utility.B.not measurable.C.marginal utility.D.the same for every person.E.average utility.

The coupon of a bond is A.the variable amount that the bondholder agrees to pay the borrower each year.B.the variable amount that the borrower agrees to pay the bondholder each year.C.the fixed amount that the borrower agrees to pay the bondholder each year.D.the fixed amount that the bondholder agrees to pay the borrower each year.E.the face value.

The demand curve for a product illustrates that A.as the price of a good falls, the marginal utility of that good rises.B.as the marginal utility of a good falls, the price of that good falls.C.as the price of a good falls, the quantity demanded of that good rises.D.as the price of a good falls, the marginal utility of that good falls.E.as the marginal utility of a good falls, the price of that good rises.

The maturity date of a bond is A.the time period over which a stock is viable.B.the time when the principal matures.C.the time when the coupon payments end and the principal is paid back.D.the time when the coupon payments mature.E.the time when a stock is sold.

The unique alphabetic name that identifies a listed stock is known as the A.fixed call number.B.stock's alpha sign.C.ticker symbol.D.stock nickname.E.alternative name

Today, the process of combining two or more smaller firms into one larger firm is known as A.a multinational corporation.B.an illegal business practice.C.a merger.D.a combination.E.a partnership.

Total utility increases until A.dissatisfaction never sets in.B.marginal utility no longer applies.C.dissatisfaction sets in.D.marginal utility sets in.E.people have to demand more of the good or service.

Under certain conditions, a firm operating in markets that are not perfectly competitive can increase profits by charging different customers different prices. This practice is called A.consumer discrimination.B.product extension.C.price discrimination.D.illicit discrimination.E.consumer extension.

Under the rule-of-reason approach to antitrust enforcement, A.only those decisions made by regulatory agencies are automatically legal.B.only those actions that are procompetitive are illegal.C.to be illegal, an action must be unreasonable in a competitive sense, and the anticompetitive effects must be demonstrated.D.actions that could be anticompetitive are intrinsically illegal.E.only those actions that always have an anticompetitive effect are illegal.

What is produced in a market system is determined ultimately by A.the desires of producers and consumers.B.resource owners.C.consumers.D.producers.E.the government.

What is the fastest-growing health care-expenditure category in recent years? A.Cancer treatmentB.AIDS treatmentC.Prescription drugsD.Hospital administrationE.None of the above

What is the main difference between common and preferred stocks? A.Common stocks pay interest; preferred stocks pay dividends.B.Preferred stocks are the only ones that have voting rights.C.Preferred stocks pay a guaranteed dividend, whereas common stocks pay dividends only at the discretion of the company.D.In case of bankruptcy, preferred stocks are the only ones that have asset rights.E.None of the above

When antitrust policy is based on whether or not an action is unreasonable in a competitive sense and the anticompetitive effects must be demonstrated, the policy is known as A.social regulation.B.a per se rule.C.the rule of reason.D.a voluntary merger.E.none of the above

When net exports are negative, A.there is a trade surplus.B.exports exceed imports.C.there is a net flow of goods from firms in foreign countries to thedomestic country.D.there is a net flow of money from foreign countries to the firms of the domestic country.E.there is a net flow of goods from the firms of the domestic country to foreign countries.

When some goods are used to produce other goods, those goods that are used in the production process are called A.economic bads.B.capital rents.C.factors of production.D.money.E.unskilled workers

When the value of imports exceeds the value of exports for a given economy, that economy A.is in macroeconomic disequilibrium.B.is experiencing unemployment.C.has an international trade deficit.D.is unstable.E.is experiencing stagnation.

When the value of net exports is positive, A.there is a trade deficit.B.imports exceed exports.C.imports are less than exports.D.exports equal imports.E.none of these.

Whether to have more or less government involvement in the overall economy is essentially a A.matter of personal opinion.B.positive issue.C.positive or normative issue; it could be either.D.normative issue.E.political issue, and therefore the techniques of economic analysis are not applicable.

Which of the following is by definition illegal, according to the text? A.Monopoly pricingB.Predatory pricingC.Price fixingD.Quantity fixingE.Price discrimination

Which of the following is more of a microeconomic concept than a macroeconomic concept? A.Concern over simultaneous high rates of inflation and of unemploymentB.Concern over an entire economy's balance of paymentsC.Price determination in the resource marketD.The rate of economic growthE.How the composition of output is determined in an econ

Which of the following is not a service that the government usually provides? A.National defenseB.EducationC.Religious servicesD.Police and fire protectionE.Postal services

Which of the following is not a signal of information that consumers associate with a specific firm? A.The golden archesB.The Nike name on shoesC.TelevisionD.The name on a can of Paul Mitchell hair sprayE.The Gloria Vanderbilt name on jeans

Which of the following names is given to the highest-risk corporate bonds? A.Risky-time bondsB.Failure bondsC.Junk bondsD.Revelation bondsE.Blue-chip bonds

Which statement concerning opportunity costs is not true? A.Every choice involves opportunity costs.B.Opportunity costs are the highest-valued alternatives that must be forgone when a choice is made.C.Opportunity costs can always be expressed in money terms.D.The full cost of an activity includes the opportunity costs.E.Economists refer to the forgone benefits of the next-best alternative as opportunity costs.

A point lying inside the PPC A.illustrates resources being used to their fullest potential.B.requires more resources than are presently available.C.represents an increase in resources.D.indicates that resources are not being fully or efficiently used.E.is not an attainable combination.

A production possibilities curve shows that more of one type of good can be produced only by A.decreasing employment.B.increasing the quantity of both types of goods that are produced.C.increasing the quantity of other types of goods that are produced.D.decreasing the quantity of other types of goods that are produced.E.government intervention.

A rational consumer A.never acts until he or she has perfect information.B.will avoid mistakes.C.always has perfect information.D.seeks to gain the greatest possible satisfaction from purchases, using the available information.E.is also an entrepreneur.

A.the Sherman Antitrust Act of 1890.B.the Clayton Antitrust Act of 1914.C.the Federal Trade Commission Act of 1914.D.All of the aboveE.None of the above

According to the text, economists think that most of the time, most human beings A.are wasting resources by spending too much time weighing alternatives, looking at costs and benefits, and making decisions in a way that they believe makes them better off.B.are weighing alternatives, looking at costs and benefits, and making decisions in a way that they believe makes them better off and hurts others.C.weighing alternatives, looking at costs and benefits, and making decisions in a way that they believe makes society better off.D.are weighing alternatives, looking at costs and benefits, and making decisions in a way that they believe makes them better off.E.are weighing alternatives and looking at costs and benefits in a selfish manner.

According to the text, the Department of Justice and the Federal Trade Commission try to A.determine what the per se rule says about a business practice.B.determine just what a rule of reason is.C.define unacceptable business practices.D.distinguish beneficial from harmful business practices.E.distinguish between rule of reason and per se rules.

According to the text, the objective of economics is A.to understand greed.B.to understand money.C.to understand scarcity.D.to understand why the real world is what it is.E.to understand the stock market.

According to the text, the subject matter of economics is A.selfishness.B.recessions.C.the Federal Reserve.D.knowledge of human behavior.E.altruism.

According to the text, there would be less worry about the Social Security System if the amount paid into the System by an individual A.were equal to the amount of the social security trust fund.B.were equal to the amount collected from all individuals.C.were equal to the amount of private savings that individual had.D.were equal to the amount received by that individual in retirement benefits.E.were the minimum an individual could receive in retirement benefits.

Along a straight-line demand curve, in what range is demand most elastic? A.At the midpoint of the demand curveB.At the horizontal intercept of the demand curveC.At the lower portion of the demand curve, below the midpointD.At the upper portion of the demand curve, above the midpointE.None of the above.

An economy's PPC illustrates A.the difference between enterprise and entrepreneurship.B.the difference between innovation and invention.C.the fact that real-world economies have no choices in terms of production.D.the concepts of scarcity and opportunity cost.E.the extent to which an economy consumes what it produces.

Antitrust policy includes all of the following except A.prohibiting collusion.B.preventing price fixing.C.breaking up existing firms with significant monopoly power.D.limiting competitive arrangements between firms and their suppliers.E.preventing mergers that would reduce competition significantly.

Assume that the structure of the washing machine industry is characterized as an oligopoly. In the industry firm A observes that if it raises its prices, the other airlines do not follow the change, but if it lowers its prices, the other airlines always follow the change. The shape of the firm A's demand curve is A.perfectly vertical.B.perfectly horizontal.C.a straight line and downward sloping.D.kinked.E.the market-demand curve.

Because of incomplete information in markets, firms often use advertising to A.convince consumers to try a rival's product.B.increase their costs so they are justified in charging higher prices.C.increase the elasticity of demand for their product.D.convince consumers to try their product and that it is reliable and to build consumer loyalty.E.All of the above

Competitive firms produce in the manner that _________ costs and __________ profits. A.minimizes; minimizesB.maximizes; minimizesC.eliminates; maximizesD.minimizes; maximizesE.maximizes; maximizes

Consumers are willing to pay a higher price for a brand-name product as opposed to a generic product because A.consumers maximize utility by purchasing the most expensive products.B.they are willing to pay more for the privilege of watching the firm's commercials.C.a brand-name product itself is always of higher quality.D.a brand name provides a signal about a product's quality and reliability.E.consumers are irrational.

Consumers often do not know they want something until a firm introduces it. This means that A.in a market system, entrepreneurs ultimately determine what is produced, because they invent it.B.in a market system, stockholders ultimately determine what is produced, because they must be able to make money or they won't invest.C.in a market system, the government ultimately determines what is produced, because the government is always in control through taxation.D.in a market system, consumers ultimately determine what is produced, because they will either purchase the item or not.E.in a market system, business firms ultimately determine what is produced.

Consumers should allocate their income so that the marginal utility associated with the A.last dollar spent is lower for high-priced items than for lower- priced items.B.first dollar spent is greater for high-priced items than for lower-priced items.C.first dollar spent is equal for all goods.D.last dollar spent is equal for all goods.E.first dollar spent is less for high-priced items than for lower-priced items.

Economics can help explain why the real world is what it is because A.consumers could never know what will satisfy their individual needs and wants without economics.B.economists always know what makes people and their families happy.C.understanding economics gives consumers all the information they need to make the best possible buying decisions.D.economics is based on the premise that most people behave in ways that make them better off.E.mathematical models always correctly predict future economic occurrences.

Economists assume that people A.cannot compare the values of goods.B.prefer less to more.C.experience diminishing marginal utility of income.D.act so as to maximize utility.E.act so as to maximize marginal utility.

If a change in price causes no response at all in the quantity of the product demanded, then demand for the product is A.unitary elastic.B.infinitely elastic.C.elastic.D.perfectly inelastic.E.relatively inelastic.

If the price elasticity of demand for peanuts is equal to 4, then A.a 1 percent increase in price will result in a 4 percent increase in quantity demanded.B.a 1 percent increase in quantity demanded will result in a 4 percent decrease in price.C.demand is inelastic.D.a decrease in the price of peanuts will lead to an increase in total revenue for peanut producers.E.All of the above.

If total revenue falls as price rises, then the demand for the product A.is unit-elastic.B.is upward sloping.C.is inelastic.D.is elastic.E.has a slope greater than 1.

In comparing perfect competition and monopoly markets with similar cost characteristics, which of the following statements is false? A.A perfectly competitive market will produce more than a monopoly will.B.A perfectly competitive market will charge a lower price than a monopoly will.C.A perfectly competitive market is economically efficient in long-run equilibrium.D.Consumer surplus is larger in a monopoly than in a perfectly competitive market.E.None of the above

In long-run equilibrium, the monopolistically competitive firm A.will cease to advertise.B.will no longer need to engage in nonprice competition.C.will earn a positive economic profit.D.will break even.E.will face a perfectly elastic demand curve.

In oligopoly, A.each firm is completely independent.B.firms always manufacture differentiated products.C.there are so many firms that no single firm has any influence over market price.D.each firm's pricing and output decisions depend on those of its rivals.E.there are no barriers to entry.

In which market structure do firms possess market power? A.In monopolistic competition and oligopoly onlyB.In perfect and monopolistic competitionC.In perfect competition onlyD.In every market structure but perfect competitionE.In monopoly only

One potential example of the outcome of deregulation is A.that the airline industry has become safer.B.the savings and loan crisis of the 1980s.C.increased electricity outages.D.lower long-distance telephone charges.E.more trucking accidents.

One proposal for solving the social security problem is privatization. The primary argument against this proposal is that A.people will take huge risks, knowing that even if they lose everything they will be taken care of.B.people believe the government can do a better job of investing than they themselves can.C.people will take advantage of the system.D.with private investments there is no guaranteed return.E.people will be afraid to invest and thereby won't have enough when they retire.

PPOs have come about because of the A.erosion of standards formerly set by the federal government.B.perceived lack of quality care provided by many clinics.C.increasing shortage of physicians in certain key specialties.D.increased costs of medical care.E.steady decrease in the number of hospital beds nationwide.

Positive economics A.is strictly quantitative and so has little to say to those with philosophical goals to achieve in policymaking.B.is the same as normative economics.C.is concerned with what ought to be.D.produces verifiable statements.E.will usually indicate which economic policy is best.

Spending by which sector is the largest single component of spending in the U.S. economy? A.GovernmentB.InvestorsC.FirmsD.HouseholdsE.Sole proprietors

The annual return until the bond matures is known as the bond's A.specialized return.B.face value.C.profitability.D.yield to maturity.E.payout ratio.

The greatest share of spending on hospital care and nursing homes goes for care of A.drug addicts.B.mental patients.C.AIDS victims.D.the elderly.E.children with birth defects.

The market-demand curve is A.the horizontal sum of an individual firm's marginal-cost curves.B.a good indicator of market structure.C.usually upward sloping in perfectly competitive markets.D.the same as the monopolist's demand curve.E.always elastic.

The monopolist's demand curve A.shows increasing total revenue with decreasing prices.B.has the same constant elasticity throughout when it is a straight line.C.is zero-elastic.D.is the market-demand curve.E.is usually very elastic.

The percentage of the U.S. population over age 65 is expected to A.decline slightly.B.grow rapidly until the year 2008, and then grow more slowly.C.increase dramatically for the female population but decrease slightly for the male population.D.continue to grow.E.decline dramatically.

The private sector consists of A.private citizens.B.households and businesses.C.households and individuals in other nations who purchase goods and services in this nation.D.households, businesses, and the international sector.E.households, businesses, and foreign government purchases.

The text argues that one reason that governments may intervene in the operation of a business through regulation is to A.increase monopoly profits.B.reduce the amount of information consumers have about a product.C.increase negative externalities.D.promote competitive behavior.E.All of the above+

Typically, which of the following health care personnel are not hospital employees? A.Speech pathologistsB.NursesC.Medical records personnelD.PhysiciansE.Laboratory technicians

What characteristic is unique to oligopolistic firms? A.Economic profits can exist in the short run.B.Economic profits can exist in the long run.C.Homogeneous productsD.Interdependence of firmsE.Barriers to entry in the market

What is most likely to happen to a firm that produces something that no consumer wants? A.It will be "bought out" by an international firm.B.It will be "bought out" by a competitor.C.It will "buy out" one of its competitors.D.It will not remain in business very long.E.It will remain in business for a long time through government subsidies.

When a cartel is successful, A.it has no effective mechanism for enforcing agreements.B.it minimizes profits for its members.C.it offers consumers the lowest possible prices.D.it behaves as a monopolist in the market.E.it will always be stable.

When making decisions, consumers tend to A.choose the most expensive items.B.choose that option with the highest total benefits.C.choose that option with the lowest total costs.D.compare perceived costs and benefits and choose that option with the greatest relative benefits.E.None of the above.

When was the New York Stock Exchange founded? A.1864B.1995C.1890D.1792E.1974

Which of the following are not barriers to entry? A.Economies of scale and actions on the part of firmsB.Natural barriers, actions on the part of firms, governmentally created barriersC.Licenses and government restrictionsD.Setting price to maximize profitE.Patents

Which of the following describes the relationship between bond prices and bond yields? A.It varies with the performance of the stock market.B.The relationship is far too difficult to quantify.C.There is a direct and positive relationship between the yield and the price.D.There is an inverse relationship between the yield and the price.E.A relationship between yield and price exists, but it is complex and unreliable.

Which of the following is an example of product differentiation? A.A wheat farmer in Kansas sells a bumper crop of wheat.B.The dairy industry introduces the "Got Milk?" campaign.C.The last of the original Volkswagen Beetles is produced in Mexico.D.Kellogg's introduces Cinnamon-Marshmallow Scooby-Doo cereal.E.All of the above

Which of the following is the best definition of the concept of a tradeoff, as discussed in the text? A.The price of a movie ticket at prime timeB.The tuition you pay to attend collegeC.Having your cake and eating it tooD.Giving up one good or activity in order to obtain some other good or activityE.Not having enough information available to make a rational decision

Who was Ida Mae Fuller? A.The first female governor of a U.S. state.B.The woman with the highest pension ever given by the Social Security System.C.The person in charge of originally devising the Social Security System.D.The first recipient of social security in the United States.E.None of the above

You are hosting a party. You are concerned that people will drink too much alcohol and then drive home unsafely. Which of the following situations would induce the most drinking? A.One where you restrict drinking to a small back room in the house.B.One where you provide the drinks for a priceC.One where people bring their own drinksD.One where you provide the drinksE.One where people purchase drinks at the party

You decide to buy a new Toyota, so you go to a Toyota dealer and exchange money for the car. According to the text, your expenditure for the Toyota A.is made in Japanese yen.B.is not counted as part of the national economy.C.is registered only in some regional economic segment of the United States.D.creates additional expenditures and revenues.E.must be translated into the Japanese currency before being posted by the accountants.

"Since a household cannot afford to keep adding indefinitely to its debt, a country cannot afford to do so either." This statement is an example of A.rational behavior.B.marginal analysis.C.interpretation of association as causation.D.ceteris paribus ("everything else held constant") analysis.E.the fallacy of composition.

A change in the quantity demanded of skis is a movement along the demand curve for skis. In contrast, a change in demand for skis A.is not related to the price of a lift ticket.B.reflects a change in the price of skis.C.is a movement along the demand curve for skis.D.is a movement along the demand curve for ski boots.E.can be caused by an increase in the popularity of the sport.

A factor that may help to determine how the costs of social regulation are split between consumers and producers is A.the number of consumers in the market.B.the average total costs of the firm before regulation.C.the quantity produced by the firm.D.the number of producers in the market.E.the price elasticities of demand and supply.

A monopolist maximizes profit A.where the average-cost curve intersects the demand curve.B.by charging the highest possible price on the demand curve.C.where average revenue equals average cost.D.where price equals marginal cost.E.where marginal revenue equals marginal cost.

A monopoly A.consists of two to eight players, like the board game.B.must be inexpensive to create, as so many of them exist.C.is continually prone to the threat of entry from new rivals.D.will never earn economic losses in the short run.E.None of the above

According to the text, when we observe last year's sweaters piled up on sale racks, when we wait over an hour for a table at a restaurant, or when the video rental store never seems to a copy in stock of the movie we want to rent, A.we can be sure the government will set a price floor.B.we know that the market is not currently in equilibrium and that the disequilibrium represents a market failure.C.we can be sure the government will set a price ceiling.D.the market cannot reach equilibrium without government-imposed price floors.E.we know that the market is not currently in equilibrium and that the price and quantities demanded and/or supplied will change until equilibrium is established.

Advertising may provide information about a firm or product through A.word of mouth.B.expenditures.C.business parties.D.fraudulent actions.E.signals, such as brand names and guarantees.

Antitrust policy is the responsibility of A.the Federal Trade Commission.B.the Antitrust Division of the Justice Department.C.the Environmental Protection Agency.D.the Federal Bureau of Investigation.E.Both a and b

Assume the supply of sirloin steak is upward sloping. If the price increases from $4.25 to $8.60 per pound, a greater quantity of sirloin steak will be supplied. True False

true

Any time firms in monopolistic competition are earning above-normal profit, A.new firms have incentive to enter the market but are legally barred from doing so.B.they can maintain those levels indefinitely.C.new firms have no incentive to enter the market.D.their cost structure automatically shifts up, eliminating the additional profit.E.new firms enter the market, and entry continues until firms are earning normal profit.

Assume the demand curve for a certain good is a horizontal line. This demand curve illustrates the idea that A.people are unwilling to pay less than a certain price for the good.B.producers of the good are not acting in their own best interest.C.people cannot or will not change the quantity of the good when the price of the good is changed.D.people are not acting in their own best interest.E.people can purchase any quantity they want at the single prevailing price.

Barriers to entry associated with a monopoly would not include A.government restrictions.B.ownership of an essential resource.C.economies of scale.D.patents.E.a well-known brand name with loyal customers.

Barriers to entry occur when A.economies of scale in production exist in an industry.B.the government requires a professional license or franchise agreement.C.the firm that introduces a product is granted a patent.D.a firm controls a scarce resource.E.All of the above

Because of their brand names, Kodak, IBM, Honda, Daimler-Chrysler, and other well-known firms are able to charge significantly higher prices for their products than their competitors without losing any business. Expenditures made by firms to create brand names A.would not exist if information was less costly for firms to obtain than consumers.B.necessarily lead to deadweight losses.C.lead to monopolies.D.are always inefficient.E.provide information to consumers.

Economists believe that people A.never behave as if they are measuring the extra satisfaction associated with additional units of product consumed.B.never move toward consumer equilibrium.C.move away from consumer equilibrium.D.never diverge from consumer equilibrium.E.move toward consumer equilibrium

Economists use the term supply to refer to A.the downward-sloping line that relates consumer expenditures to different output levels.B.the amount producers are willing but not able to produce at each price.C.a particular quantity supplied at a specific price.D.the upward-sloping line that relates consumer expenditures to different output levels.E.a set of price and quantity-supplied combinations, everything else held constant.

Firms in a monopolistically competitive industry A.are likely to be successful at practicing price leadership.B.have no incentive to advertise.C.are likely to dominate that industry.D.are likely to have kinked demand curves.E.will produce a greater variety of products than those in a purely competitive industry.

For the use of their resources, owners of land receive A.wages.B.gifts.C.profit.D.interest.E.rent.

If a country is at a point inside the PPC, then A.there are no technology advances.B.the country cannot produce more of one good with out giving up some of another good.C.the population is starving.D.the people must be unhappy.E.not all resources are being used efficiently and/or fully.

If the sixth slice of pizza you eat yields dissatisfaction, then A.the marginal utility of the sixth slice is positive.B.you receive utility from that slice.C.the principle of diminishing marginal utility does not hold.D.total utility is increasing.E.you receive disutility from that slice.

In economics, one or more persons who occupy the same unit of housing are considered a(n) A.enterprise.B.business firm.C.organization.D.family.E.household.

In economics, one or more persons who occupy the same unit of housing are considered a(n) A.family.B.organization.C.enterprise.D.business firm.E.household.

In simple terms, what are American Depository Receipts? A.Stocks that Americans sell in fixed amountsB.Stocks that form part of a no-load fundC.Stocks that have been upgraded in terms of the stock market on which they listD.Stocks that have been bought but not paid forE.Stocks that are listed in more than one exchange

It is often observed that, over the same period of time and for the identical good, marginal utility declines rapidly for some consumers and very little for others. This observation illustrates A.tastes and preferences among consumers are quite similar.B.tastes and preferences should not be included in any discussion of consumer choice.C.that if consumers weren't identical, economic theory would not be able to provide insight into consumer behavior.D.that economic theory is of little value in explaining consumer behavior.E.very simply, that consumers are not identical.

Macroeconomics is primarily concerned with A.what goods a nation should produce in the world economy.B.how to produce a particular good.C.how individual decision makers behave.D.unemployment in a particular firm or industry caused by mechanization and automation.E.aggregate economic activity.

Markets A.must be specialized.B.must consist of many buyers and many sellers.C.must consist of one buyer and one seller.D.must be general.E.can be organized either loosely or formally.

Medicaid is a joint A.state-federal program that provides short-term medical care.B.public-private partnership that helps cut health care expenditures.C.U.S.-Canadian partnership that is an experiment in national health care.D.state-local program that provides crisis intervention.E.state-federal program that provides long-term health care.

Microeconomics focuses on A.inflation.B.unemployment of resources.C.growth and development.D.the economy as a whole.E.individual entities within the economy.

Microeconomics is the branch of economics that focuses on A. deficit spending. B. development in the absence of economic growth. C. the problems of inflation and unemployment. D. state and local economic problems. E. the individual units that make up an economy.

Most antitrust cases are filed by A.foreign firms.B.the Federal Trade Commission and Justice Department combined.C.the Federal Trade Commission.D.the Justice Department.E.private plaintiffs.

One proposal for solving the social security problem is privatization. The countries that have privatized their social security systems have found that A.people are foolish with their investments.B.people use so many resources trying to make the correct investments that they lose their jobs.C.people do not have enough savings to retire.D.the returns people have received are less than what they would have received from the government.E.the returns people have received are more than what they would have received from the government.

Perfect competition and monopolistic competition are alike in all the following ways except in A.the number of firms in the market.B.the profit-maximizing level of productionC.the ease of entry into the market.D.the amount of long-run economic profits.E.the type of product produced.

Price elasticity of demand is a measure of the A.percentage change in price times the percentage change in quantity demanded.B.absolute change in price.C.extent of competition in the market.D.percentage change in the prices of two products.E.degree of consumer responsiveness to changes in price.

Rational self-interest implies that A.all other variables are held constant.B.individuals have studied economics.C.individuals consider themselves better off when they take actions that make others worse off.D.individuals are selfish.E.individuals make choices that provide them with the greatest satisfaction.

The circular flow of income model for the private sector shows that A.the goods and services produced by business firms are sold through resource markets.B.business firms are the revenue source for consumers.C.net exports are always equal to zero.D.factors of production are demanded only by the government.E.financial intermediaries use the deposits from households to make loans to businesses.

The current surplus generated by the social security tax is being used to finance A.state and local pension fund obligations.B.other government expenditures.C.the retirements of future recipients.D.the health care needs of working-class Americans.E.foreign aid expenditures abroad.

The fact that world leaders come to the United States when they need medical care demonstrates that A.the United States is the richest nation in the world and thus has the best hospitals.B.the world leaders are able to obtain health care from a government-provided system.C.the world leaders are rich.D.the world leaders also receive Medicare.E.the market system must provide the best medical care.

The heart of the economic problem is to A.increase our standard of living.B.provide for full employment.C.increase leisure.D.eliminate scarcity.E.allocate limited resources among unlimited uses.

The prices that people are willing to pay for goods and services mostly depend on A.the availability of the goods.B.the total utility derived from the goods.C.whether the goods are legal since the laws affect the position of both supply and demand curves.D.the cost of producing the goods.E.the marginal utility derived from the goods.

The term level playing field implies A.the desire to redistribute wealth from the extremely rich to those living in poverty.B.the desire to give government employees something important to do.C.the desire to limit the number of firms that are allowed to operate within certain industries.D.the ultimate goal of creating a utopian society.E.the desire to enhance the competitive environment.

To say that "there is a scarcity of gold" means that A.gold prices will rise.B.the demand for gold is changing.C.gold is very expensive.D.there are very few substitutes for gold.E.there is not enough gold to satisfy people's demand for it at a zero price.

Under conditions of monopolistic competition, A.consumers will always purchase products at the lowest price.B.advertising is used to convey information.C.there is no excessive overhead.D.there are no warranties or guarantees.E.All of the above

What does "determinants" of supply mean? A.It means that changing one of these variables will change the quantity demanded.B.It refers to variables that affect supply, such as price and income.C.It means that changing one of the determinants will cause a movement down the supply curve.D.It means the same as ceteris paribus.E.It refers to variables that affect supply, such as the prices of resources, but not the price itself.

What economic concept is illustrated by the saying "You can't have your cake and eat it too"? A.Normative statementsB.Human capitalC.Entrepreneurial abilityD.Marginal unitE.Opportunity cost

When income elasticity of demand is a negative number, one can correctly conclude that A.the good is a complement.B.the good is a substitute.C.total revenue will decrease when the price increases.D.the good is a normal good.E.the good is an inferior good.

Which economic concept is the closest parallel to the saying "There's no free lunch"? A.Unlimited wantsB.Overutilization of resourcesC.SpecializationD.Underutilization of resourcesE.Opportunity costs

Which nation has the world's largest economy? A.GermanyB.JapanC.SwitzerlandD.United KingdomE.United States

Which of the following is a macroeconomic concern? A.Wage determination for an individual workerB.Choices made by a particular consumerC.The price of an apple in a local storeD.The manner in which a certain firm tries to maximize profitsE.The rate of unemployment in the country

Which of the following is an example of a monopoly? A.Postal services in most nations are run by the government.B.Cable television service in most areas is provided by a single company.C.In most nations, money is printed by the central bank.D.Electricity is delivered to your house by a single utility company.E.All of the above

Which of the following is an example of capital? A.EducationB.Natural resourcesC.Innate abilityD.TrainingE.Machinery

Which of the following is an example of price discrimination? A."Kids stay free" signs at chain hotelsB.Preffered Shpper CardsC.Discount airline fares for leisure travelersD.Senior citizen discountsE.All of the above.

Which of the following is an industry without significant barriers to entry? A.Natural gas distributionB.Postal servicesC.Electricity generationD.Cable television provisionE.Corn farming

Which of the following is most likely to be a characteristic of an elastic product? A.There are very few substitutes for the product.B.The product is considered a necessity.C.There are a small number of competitors from which to purchase the product.D.There is a short time period under consideration.E.The cost of the product is a relatively large percentage of consumers' income.

Which of the following is not an example of nonprice competition? A.LocationB.AdvertisingC.SalespersonshipD.Quality improvementsE.Price discounts

Which of the following is the best way to describe the term market as used by economists? A.A market includes only transactions involving multinational corporations.B.A market includes only transactions involving the large publicly traded corporations.C.A market is a busy grocery store.D.A market includes only transactions involving large franchise operations.E.A market arises when buyers and sellers exchange a well-defined good or service.

Which of the following phrases correctly describes at least one of the factors of production? A.InventoriesB.AutomobilesC.The physical and intellectual services of technological advancesD.Buildings and warehouses, but not factoriesE.Natural resources, such as minerals, timber, and water, as well as land itself

Which of the following provides the best description of the Social Security System in the United States? A.Funds that were deposited in a trust fund and allowed to accumulate interest-free for use in future yearsB.Funds that were deposited in a trust fund and allowed to accumulate at market rates of interest for the use in future years only by the individuals who voluntarily deposited the fundsC.A trust fund into which every American citizen has voluntarily paid a certain amount of money each yearD.Funds that were deposited in a trust fund and allowed to accumulate at market rates of interest for general use in future yearsE.A transfer payment that taxes the working population today and pays benefits for current retirees from the proceeds of that tax.

You are hosting a back-to-school party with very limited funds. On the invitations you tell people the party is BYOB (bring your own bottle). You have decided to do this rather than provide the drinks because A.people will bring a better-quality drink.B.people will not consume alcoholic beverages if they bring their own.C.people will consume the same amount of drinks but less food.D.people like to have a choice among drinks.E.people will consume less if they bring their own.

A monopolist can charge whatever price it wants and can therefore reap phenomenal profits. True False

false

A monopoly is a market structure with easy entry and many substitutes for the firm's product. True False

false

Attempts by a government to establish price and output guidelines for individual industries are known as social regulation. True False

false

Because a monopolist is the only firm producing in a market, it has no incentive to advertise. True False

false

Because a monopolist is the only producer in its market, it is not limited by the laws of demand and can set any price it desires. True False

false

Bill Gates is the richest person in the world, so he does not have to make choices. True False

false

Economists are famous for their ability to agree with each other, both in the logic of their approach to the subject and in their remedies to specific social problems. True False

false

If economies of scale exist in an industry, then entry into the market by other firms is easy.

false

If economies of scale exist in an industry, then entry into the market by other firms is easy. True False

false

Labor (input) includes skilled workers, but not unskilled workers. True False

false

Significant barriers to entry exist in monopolistically competitive markets. True False

false

The three basic business forms in the United States are partnerships, corporations, and multinational firms. True False

false

There are no barriers to entry in oligopolistic markets. True False

false

Ronnie waits one hour in line to buy a ticket to a rock concert. The opportunity cost of buying the $28 ticket

is Ronnie's best alternative use of both the $28 and the one hour spent in line.

If the price of a product decreases, this causes

movement down along the demand curve.

The term consumer sovereignty refers to

the idea that consumers ultimately determine what is produced

Economists refer to financial capital and physical capital. Financial capital is

the money used to purchase physical capital.

A fair rate of return requires that a natural monopoly earns a normal economic profit. True False

true

A local monopoly is a monopoly that exists in a limited geographic area. True False

true

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