A.The Japanese rebuilt their economy after World War II by selling its goods to their own rapidly
growing population.
B. Slow U.S. population growth in the 19th century forced American farmers and manufacturers to seek
foreign markets to propel its rapid economic growth.
C. The Japanese rebuilt their economy after World War II by targeting the large U.S. market, while their
own market remained largely closed to U.S. manufactured goods.
D. America's rapid population growth in the 19th century slowed its economic growth rate.
C. The Japanese rebuilt their economy after World War II by targeting the large U.S. market, while their own market remained largely closed to U.S. manufactured goods.
The name of Andrew Carnegie is most closely associated with
A. the steel industry
The transcontinental railroads were completed in the 25 years
D. after the Civil War.
Which statement is true?
A. More than any other region in the nation, the South prospered the most in the years following the Civil
War.
B. The transcontinental railroads that were completed in the 1860s, 1870s, and 1880s, all bypassed the
South.
C. Before the Civil War most of the nation's large farms were located in the North.
D. None of the choices are true.
B. The transcontinental railroads that were completed in the 1860s, 1870s, and 1880s, all bypassed the South.
Between 1921 and 1929 national output
A. declined slightly.
B. stayed about the same.
C. rose slightly.
D. rose by about 50%.
E. almost doubled.
D. rose by about 50%.
Comparing the United States economy in 1900 with our economy today, all of the following are still present EXCEPT
A. large agricultural surpluses.
B. an abundance of entrepreneurial ability.
C. "cutting edge" technological progress.
D. a positive balance of trade with the rest of the world.
D. a positive balance of trade with the rest of the world.
Which statement is true?
A. There was brief depression in the early 1920s.
B. Between 1921 and 1929 national output tripled.
C. The automobile market was completely saturated by 1921 and sales remained low for the rest of the
decade.
D. None of these statements are true.
A. There was brief depression in the early 1920s.
The suburbanization of America _______________ our dependence on oil imports.
A. increased substantially
B. had on effect on
C. decreased substantially
A. increased substantially
Which statement is true?
A. The recessions of 1973-1975 and 1981-1982 were both mild.
B. The recessions of 1973-1975 and 1981-1982 were both severe.
C. The recession of 1973-1975 was mild; the recession of 1981-1982 was severe.
D. The recession of 1973-1975 was severe; the recession of 1981-1982 was mild.
B. The recessions of 1973-1975 and 1981-1982 were both severe
Which is the most accurate statement?
A. The number of family farms has been increasing since 1960.
B. Nearly 20 million Americans live on farms today.
C. The output of farm labor doubled between 1900 and 1947, and doubled again between 1947 and 1960.
D. Today one farmer feeds about 20 people.
C. The output of farm labor doubled between 1900 and 1947, and doubled again between 1947 and 1960
What was the most important consequence of suburbanization?
A. It made people less dependent on their cars.
B. It was very bad for the construction industry.
C. It left the cities with large concentrations of poor people.
D. It raised the tax bases of most cities.
C. It left the cities with large concentrations of poor people.
Statement I. Suburbanization increased our dependence on foreign oil. Statement II. Once returning World War II veterans found new housing in the suburbs, the process of suburbanization came to a halt.
A. Statement I is true and statement II is false.
B. Statement II is true and statement I is false.
C. Both statements are true.
D. Both statements are false.
A. Statement I is true and statement II is false
Statement I. The New Deal brought the nation back to full employment within four years.
Statement II. The Social Security program was part of the New Deal.
A. Statement I is true and statement II is false.
B. Statement II is true and statement I is false.
C. Both statements are true.
D. Both statements are false.
B. Statement II is true and statement I is false.
Which of the following is false?
A. The completion of the national railroad network by 1890 led to the development of a national American
market rather than just a series of smaller regional markets.
B. Before the Civil War the North and the South were in agreement on the issue of protective tariffs, but
were in conflict over the spread of slavery into the new Western territories.
C. The U.S. was the first mass-consumption society.
D. From 1900 to the end of World War I, U.S. farmers prospered.
B. Before the Civil War the North and the South were in agreement on the issue of protective tariffs, but were in conflict over the spread of slavery into the new Western territories.
Which statement is true?
A. There was a great deal of stagflation in the 1970s.
B. We had the worst recession since World War II in the late 2000s.
C. We have had twelve recessions since January, 1945.
D. All of the choices are true.
D. All of the choices are true.
Which of the following statements is false?
A. In the early 19th century, the United States suffered from a scarcity of labor-relative to land.
B. At the time of the American Revolution, about nine of every ten Americans lived on a farm.
C. The transcontinental railroads completed in the 1880s brought railroads to every region of the country.
D. Between 1939 and 1944, federal government spending rose by 400 percent.
C. The transcontinental railroads completed in the 1880s brought railroads to every region of the country.
During George W. Bush's presidency
A. the job market was quite robust.
B. our federal budget deficit hit a record high.
C. the federal budget surpluses in the last years of the Clinton presidency continued.
D. we experienced a very high inflation rate.
B. our federal budget deficit hit a record high.
Statement I: Over the last two or three decades, our economy has become increasingly integrated with the global economy. Statement II: While the global economy has caused the loss of millions of manufacturing jobs, so far white-collar jobs have not moved offshore.
A. Statement I is true and statement II is false.
B. Statement II is true and statement I is false.
C. Both statements are true.
D. Both statements are false.
A. Statement I is true and statement II is false.
The massive shift of population and industry out the large central cities from the late 1940s through the 1960s was caused by
A. terrorist attacks.
B. the mechanization of agriculture.
C. suburbanization.
D. the widespread use of electricity.
E. fear of nuclear war.
C. suburbanization.
At the end of World War I (1918), the United States
A. emerged as the world's leading industrial power.
B. was the world's largest economy.
C. was the largest consumer market.
D. had become the greatest military power.
E. All of the choices are true.
E. All of the choices are true.
Which statement is true?
A. Entrepreneurial ability is in short supply in the U.S.
B. Land, labor and capital may be considered passive resources.
C. The concept of opportunity cost is irrelevant when there is scarcity.
D. None of these statements are true.
B. Land, labor and capital may be considered passive resources.
Which statement is true?
A. On the production possibilities frontier we have zero unemployment.
B. On the production possibilities frontier 95 percent of the labor force is employed.
C. To get out of a recession, we must produce at some point beyond our production possibilities frontier.
D. To have economic growth, we must push the production possibilities frontier inward.
B. On the production possibilities frontier 95 percent of the labor force is employed.
Which statement is true?
A. It is easier to attain full employment than full production.
B. Employment discrimination no longer exists in the U.S. labor market.
C. We are usually operating on our production possibilities frontier.
D. None of these statements are true.
A. It is easier to attain full employment than full production.
Assuming the inner curve is our current production possibilities frontier, points J, N and K represent
A. an inefficient use of resources.
B. an output that is not possible to produce.
C. points of unemployed resources.
D. points of fully employed resources.
D. points of fully employed resources.
Assuming the inner curve is our current production possibilities frontier, which of the following points would eventually lead to the greatest level of economic growth?
A. Point J
B. Point N
C. Point K
D. Point P
A. Point J
A movement from point J to point M would represent
A. an increase in consumer goods, but not capital goods.
B. an increase in capital goods, but not consumer goods.
C. an increase in both capital goods and consumer goods.
D. no increase in either capital goods or consumer goods.
B. an increase in capital goods, but not consumer goods.
A production possibilities curve shows
A. that in order to acquire more of one good, none of the alternative good must be given up.
B. that in order to acquire more of one good, some of the alternative good must be given up.
C. that any amount of goods could be produced by society if people worked harder.
D. various combinations of guns and butter that can be produced under conditions of 6 percent
unemployment
B. that in order to acquire more of one good, some of the alternative good must be given up.
The production possibilities curve tells us that if full employment exists and a nation wishes to permanently increase its production of military goods, it must
A. also increase its production of nonmilitary goods.
B. reduce its output of nonmilitary goods.
C. suffer inflation.
D. suffer unemployment
B. reduce its output of nonmilitary goods.
If our economy were operating on its production possibilities frontier, it would have the best chance of temporarily reaching point F if
A. we were at war.
B. we were in a depression.
C. we were in a period of inflation.
D. we invested more in plant and equipment
A. we were at war.
A move from point H to I would
A. raise employment substantially.
B. raise employment slightly.
C. lower employment slightly.
D. lower employment substantially.
E. have no effect on employment.
E. have no effect on employment.
Unlimited wants need not be a problem if
A. resources are also unlimited.
B. resources are flexible in what they can do.
C. resources are basic energy resources like oil.
D. resources are human resources such as skilled labor.
E. resources cannot be captured in a war.
A. resources are also unlimited.
Which of the following demonstrates opportunity cost?
A. With a new strain of wheat, the wheat crop of Canada grows by 20% with no change in the productive
resources devoted to wheat farming.
B. A tax cut increases people's purchases of consumer goods and decreases state expenditures on
education.
C. The ravages of World War II reduced Japan's ability to produce goods.
D. Flora gets a 10% raise and increases her expenditures on movies.
B. A tax cut increases people's purchases of consumer goods and decreases state expenditures on education.
Statement I. Our economy only rarely attains productive efficiency. Statement II. The U.S. economy reached productive efficiency from mid-1997 through early 2001.
A. Statement I is true and statement II is false.
B. Statement II is true and statement I is false.
C. Both statements are true.
D. Both statements are false.
C. Both statements are true.
Which point shows where our economy was operating during the low point of the Great Depression?
A. Point A
B. Point B
C. Point C
D. Point D
E. Point E
D. Point D
Which point shows where our economy would have a 100 percent unemployment rate?
A. Point A
B. Point B
C. Point C
D. Point D
E. Point E
E. Point E
Which set of points would show a movement from depression to full employment?
A. A movement from Point C to B
B. A movement from Point B to A
C. A movement from Point C to E
D. A movement from Point D to C
D. A movement from Point D to C
If the economy produces 12 capital goods and 40 consumer goods,
A. it is producing outside its production possibilities curve.
B. this combination of output will most likely result in economic growth.
C. the ability to produce more consumer goods can only be realized by sacrificing capital goods.
D. this economy has some unemployed resources.
D. this economy has some unemployed resources.
If the economy were producing at point Z and moved to point D,
A. it could only produce more butter at the sacrifice of some gun production.
B. it could only produce more guns at the sacrifice of some butter production.
C. it could produce more guns and more butter at the same time.
D. it would be impossible to produce more guns without the sacrifice of some butter production.
C. it could produce more guns and more butter at the same time.
Statement I: In the modern global economy, if our steel industry were operating at full capacity we could easily get steel from other steel-producing countries. Statement II: The only constraints on our production possibilities frontier are physical constraints such as the number of steel factories available, etc.
A. Statement I is true and statement II is false.
B. Statement II is true and statement I is false.
C. Both statements are true.
D. Both statements are false.
A. Statement I is true and statement II is false.
Why did the U.S. temporarily operate outside the production possibilities frontier in 1942, 1943, and 1944?
A. The Civil War
B. World War I
C. The Great Depression
D. World War II
D. World War II
If a nation is currently operating at a point inside its production possibilities curve, it
A. must shift resources from producing one good to produce more of an alternative good.
B. is fully employing all of its resources.
C. is operating beyond its possible capacity.
D. is utilizing its resources efficiently.
E. none of the choices are true.
E. none of the choices are true.
Tommy spends most of his monthly budget on $3 video game rentals or $6 packets of Pokemon cards. The opportunity cost to Tommy of an extra packet of Pokemon cards is
A. one video game rental.
B. two video game rentals.
C. the cost of the Pokemon cards.
D. he does not incur an opportunity cost.
B. two video game rentals.
An increase in the unemployment rate would be shown on a production possibilities curve by
A. shifting the entire curve outward.
B. shifting the entire curve inward.
C. moving from a point on or near the curve to a point closer to the origin, rather than shifting the entire
curve.
D. moving from a point inside the curve to a point on or at least closer to, the curve, rather than shifting
the entire curve.
C. moving from a point on or near the curve to a point closer to the origin, rather than shifting the entire curve.
The closer we are to the production possibilities frontier and the farther away we are from the origin,
A. the more unemployment there is.
B. the less unemployment there is.
C. the only way to produce more guns will be to give up some butter production.
D. the only way to produce more butter will be to give up some gun production.
B. the less unemployment there is
According to the law of increasing costs, as the United States expends more of its resources on reducing air pollution,
A. the quantity of other goods that must be given up for further reductions in air pollution will decrease.
B. the quantity of other goods that must be given up for further reductions in air pollution will increase.
C. the social cost of additional air pollution will increase.
D. there will be no change in the marginal cost of reducing air pollution.
B. the quantity of other goods that must be given up for further reductions in air pollution will increase.
Adam Smith believed that the best way to promote the public interest was to
A. have the government produce most goods and services.
B. let people pursue their own selfish interests.
C. wait for individuals to set out to promote the public interest.
D. get rid of the price mechanism.
B. let people pursue their own selfish interests.
The government performs each of the following economic functions except
A. collecting taxes.
B. spending.
C. issuing regulations.
D. operating the price mechanism.
D. operating the price mechanism.
"From each according to his ability; to each according to his needs" is from
A. The Communist Manifesto.
B. The Capitalist Manifesto.
C. The Socialist Manifesto.
D. The Fascist Manifesto.
A. The Communist Manifesto.
Under capitalism the role of government is best described as
A. Nonexistent.
B. Limited.
C. Significant.
D. Extensive.
B. Limited.
Externalities consist of ___________________.
A. only external costs
B. only external benefits
C. both external costs and external benefits
C. both external costs and external benefits
Karl Marx believed the central figures in an industrial economy were the
A. capitalists.
Which of the following economists believed that the factory owner, by paying his workers meager wages,
was able to use this surplus to buy more capital goods?
C. Karl Marx
Which one of the following is not a mixed economy?
A. All of the countries listed are mixed economies.
In a capitalist country most resources are owned by
B. households.
Which one of the following is a public good?
A. A local police department
In the circular flow model, households
B. demand products and supply resources.
An economic model is
D. a simplified version of reality.
Adam Smith believed that people are guided by
D. greed.
The U.S. economy does a very good job with respect to
C. efficiency, but not equity.
Lowering the level of pollution to very close to zero would
C. lower our standard of living.
The most glaring economic problem in the former Soviet Union was
A. a shortage of civilian goods
Which statement most closely reflects the viewpoint of Karl Marx?
A. Whoever controls a society's capital controls that society.
B. By pursuing his own interest, a business owner frequently promotes that of the society more effectually
than when he really intends to promote it.
C. The capitalist, who has saved for years to buy his machinery and factory is entitled to all the profits he
earns.
D. The worker and the capitalist are both exploited by the government.
A. Whoever controls a society's capital controls that society.
Which of the following statements is false?
C. Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living.
Which statement is the most accurate?
A. Ordering a pencil for work in a communist economy usually is less complicated than the same process
in a capitalist economy.
B. Rules and regulations bind Communist bureaucrats because there is no trust that a bureaucrat can make
simple business decisions.
C. Because of underlying trust, business flows smoothly in virtually all communist societies.
D. Ordering a pencil for work is equally complicated in a capitalist and a communist business.
B. Rules and regulations bind Communist bureaucrats because there is no trust that a bureaucrat can make simple business decisions.
According to most economists,
A. incentive-based regulations work better than command-and-control regulations.
A $3 increase in the federal gasoline tax would
A. reduce air pollution.
A $3 increase in the federal gasoline tax would do all of the following except
B. reduce shipping costs.
Which statement is false?
A. Nearly all economists prefer incentive-based regulations to command-and-control regulations to curb
pollution.
B. Emissions trading originated as a result of the 1990 Amendments to the Clean Air Act.
C. In most other economically advanced countries, gasoline taxes are much higher compared to the
United States.
D. Since the passage of the Clean Air Act in 1972, there has been very little improvement in air quality in
the United States.
D. Since the passage of the Clean Air Act in 1972, there has been very little improvement in air quality in the United States.
Which of the following is NOT an example of a command-and-control regulation to limit pollution?
B. A 50-cent tax on gasoline
Which of these is NOT an example of opportunity cost?
A. Lobster catchers in Point Judith, Rhode Island continued to trap lobsters at the cost of depleting the
lobster population.
B. President George W. Bush's administration has pushed for oil exploration in the Arctic National
Wildlife Refuge in Alaska at the cost of environmental preservation.
C. Lobster catchers in Port Lincoln, Australia paid a licensing fee for the right to own lobster traps.
D. The "bridge to nowhere" to be built near Anchorage, Alaska comes at the cost of adding to the federal
budget deficit.
C. Lobster catchers in Port Lincoln, Australia paid a licensing fee for the right to own lobster traps.
A decrease in demand means that quantity demanded falls
A. at all prices.
If the market price is below equilibrium price,
B. quantity demanded is greater than quantity supplied.
If market price is equal to equilibrium price
C. there is neither a surplus nor a shortage.
There is a surplus of quantity supplied over quantity demanded when
A. market price is above equilibrium price
When demand falls and supply remains the same, equilibrium price _______ and equilibrium quantity ________.
D. falls, falls
When supply falls and demand remains the same, equilibrium price _____ and equilibrium quantity ________.
A. rises, falls
Which statement is true?
D. None of these statements are true.
For there to be demand for a good, people must
B. be willing and able to buy the good at the market price.
When the supply of a good increases and the demand stays the same
C. the price of the good will fall and quantity will rise.
If the demand for mushrooms increases while the supply remains unchanged, this will result in
D. an increase in the quantity of mushrooms sold and an increase in their price.
If the government legislates a price ceiling that is above the equilibrium price
D. market price and quantity sold will be unaffected.
When there is a price floor there will be
B. a surplus.
When market price is above equilibrium price
D. quantity supplied is greater than quantity demanded.
Which statement is false?
wheat.
D. Price ceilings prevent prices from rising.
A. Usury laws can lead to a surplus of loanable funds.
The _____________ is constantly sending buyers and sellers thousands of signals.
B. price system
Equilibrium price is _____ and equilibrium quantity is _____ units.
B. $6, 10
Which statement is false?
B. Moving up a demand curve, price rises and quantity rises.
Equilibrium price is
B. $6
When price is $2
A. there is a shortage.
If the government imposes a maximum price that is above the equilibrium price,
C. this maximum price will have no economic impact.
If the equilibrium price of corn is 20 cents an ear and the government imposes a floor of 30 cents an ear, the price of corn will ______________________.
B. increase to 30 cents
Statement I: A price floor will always have an effect on a market. Statement II: A price ceiling which has been set above equilibrium will cause a shortage.
D. Both statements are false.
If price was set by the government at $11, there would be a price __________, that would cause a ___________ of ______ units.
A. floor, surplus, 8
Which of the following could have caused the price of gasoline to reach nearly $6 per gallon in some parts of the South on Labor Day weekend, 2007?
B. All of these choices are correct.
The price of gasoline was much higher in 2007 than in 2003 because
A. The increase in demand from the emerging industrial nations China and India.
B. The decrease in supply due to the disruption in drilling and refining oil in the Southern United States
due to Hurricane Katrina.
C. Both of the choices.
D. Neither of the choices.
C. Both of the choices
When we go from one demand curve to another, there has definitely been
C. a change in demand.
If good A and good B are substitutes and the price of good A decreases, the demand for good B will
C. decrease.
A normal good is defined as a good for which demand increases
A. as the income of consumers increases. B. as its own price decreases.
C. as the price of close substitutes decreases.
D. as the total number of consumers increases.
E. as a reflection of changing consumer tastes.
A. as the income of consumers increases.
All of the following could shift the demand curve, except?
E. A shift of the supply curve
Assuming Coors and Budweiser are substitutes, an increase in the price of Coors is likely to cause
C. an increase in the demand for Budweiser.
An increase in the price of gasoline will cause a
A. decline in the quantity demanded for gasoline.
According to the law of demand, an increase in the price of Pepsi will
C. decrease the quantity of Pepsi demanded.
When Pope Paul VI issued a decree allowing American Catholic bishops to end year-round meatless Fridays, except during Lent, the effect in terms of supply and demand was to cause
B. a decrease in demand for fish.
If coffee is a substitute for tea, and the price of coffee rises, what will happen?
B. Demand for tea will increase.
The market demand curve for most goods and services is
B. the horizontal summation of individual demand curves.
If a person's income falls, then the demand for a normal good will
B. decrease.
If beans are an inferior good, a decrease in income will
D. shift the demand curve for rice to the right.
A decrease in the price of memberships to Gold's Gym fitness centers is likely to:
C. increase the demand for workout clothing.
An increase in the price of fabric (an input in the production of pants) will tend to
C. decrease the supply of pants.
Which of the following will cause an outward (rightward) shift of the supply curve for TVs?
D. An improvement in TV technology
The market supply consists of the
C. quantities supplied at all prices
As price rises, quantity demanded gets _______ and quantity supplied gets _______.
D. smaller; larger
Which of the following most likely would cause an increase in demand for good Z?
B. None of the choices are correct.
Who said, "We might as reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper" as whether price is set by demand or supply?
B. Alfred Marshall
If price declines,
E. there may have been an increase in supply AND a decrease in demand.
Statement I: A change in supply and a change in quantity supplied are two ways of saying exactly the same thing. Statement II: A change in income or changes in tastes and preferences for a good will cause a shift in the supply curve.
A. Both statements are false.
Which statement is false?
A. The retail market for gasoline is regional.
B. An increase in the wage rate paid to construction workers will tend to decrease the supply of new
homes.
C. An increase in the demand for steak could be caused quickly by the expectation of a future cutback in
the supply of steak.
D. A shift in the supply curve for gasoline in the United States would result if the OPEC nations increased
production of oil for worldwide distribution.
A. The retail market for gasoline is regional.
Statement I: Much of the analysis of supply and demand is based on the work of Alfred Marshall over a century ago. Statement II: When Alfred Marshall compared the determination of price by supply and demand to the blades of a scissors, he was implying that one was no more important than the other in determining price.
B. Both statements are true.
If quantity demanded increased by 5 units at each price, you would conclude that
A. demand increased.
A shift in the supply curve for gasoline in the United States would result if
A. magnet-lift trains, that were capable of going 300-miles-per-hour, were built connecting all major cities
in the America.
B. the price of gasoline decreased.
C. a new method for drilling through rock opened up vast new oil reserves in Wyoming.
D. electric cars became inexpensive and popular.
C. a new method for drilling through rock opened up vast new oil reserves in Wyoming.
The curve in the above graph
A. is a perfectly elastic demand curve.
If demand is inelastic and price is lowered, total revenue will
A. fall.
If demand is elastic and price is lowered, total revenue will
B. rise.
The lowest possible elasticity shown here is
A. 0.001.
If a car dealership decides to offer a rebate to reduce the selling price of its cars and as a result finds an increase in its total revenues, then the demand for cars from this dealership is
A. price elastic.
Cross elasticity of demand measures the response in
A. the quantity of one good demanded to a change in the price of another good.
If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would
B. increase the price while not affecting the quantity demanded.
The demand for items on which we spend a large percentage of our income
C. will tend to be elastic.
If the income elasticity for Ramen Noodles is -3.0, we may conclude that Ramen Noodles are _________.
B. an inferior good
Cross elasticity is defined as the _______________.
A. percentage change in price of a one good (A), divided by the percentage change in the quantity
demanded of a related good (B)
B. percentage change in quantity demanded for one good (A), divided by the percentage change in the
price of a related good (B)
C. percentage change in quantity demanded for one good (A), divided by the percentage change in the
price of that good (A)
D. change in quantity demanded for one good (A), divided by the change in the price of a related good
(B)
B. percentage change in quantity demanded for one good (A), divided by the percentage change in the price of a related good (B)
Since the cross elasticity of demand between hamburger patties and cheese is negative, these are ________ goods.
A. complementary
If the elasticity of demand for a service is 1, then the demand for that service is
A. unit elastic.
Statement I: Over time the demand for most goods becomes more elastic. Statement II: The more uses a product has, the less elastic its demand.
D. Statement I is true and statement II is false.
The curve in the above graph:
C. may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve.
About how much of the tax is paid by cigarette sellers?
B. 2 cents
A tax increase is usually borne
A. partially by the seller and partially by the buyer.
When supply is more elastic than demand, the buyer pays _____ of a tax.
C. most
When a tax is lowered this will
D. raise only supply.
Which of the following characteristics would describe a product with an elastic demand?
A. The good is considered a necessity and many substitutes for the product exist.
B. The good is considered a necessity and few substitutes for the product exist. C. The good is considered a luxury and many substitutes for the product exist.
D. The good is considered a luxury and few substitutes for the product exist.
C. The good is considered a luxury and many substitutes for the product exist.
If the elasticity of demand for good ALPHA is 2.0,
A. A 10% rise in the price of ALPHA will lower quantity demanded by 20%.
If your income goes up by 10% and you increase your pedicures by 5%, then your demand for pedicures is _______.
A. income inelastic
Demand is elastic
B. All of the choices are correct.
The seller will bear the entire burden of a tax in all of the following except
A. when the demand curve is a vertical line.
Statement I: A tax increase on a product is usually borne by the buyer. Statement II: The supply curve is usually more elastic in the short run than the long run.
D. Both statements are false.
If the elasticity of demand for tongue depressors is 0.5,
B. a 10% fall in the price of tongue depressors will raise quantity demanded by 5%.
Statement I: Consumer surplus is the difference between what you have to pay and what you would have been willing to pay. Statement II: A person's total utility reaches a maximum when that person's marginal utility falls to zero.
A. Both statements are true.
If water became very scarce and diamonds became very plentiful
D. the marginal utility of water would rise and the marginal utility of diamonds would fall.
The water-diamond paradox is resolved once we realize that the marginal utility of the last gallon of water consumed is very ____ and the marginal utility of the last diamond carat purchased is very ___.
A. low; high
We are maximizing our utility when the ______ of each good and service we purchase is equal to ______.
A. marginal utility; its price
If your marginal utility from your last session with your personal trainer is equal to the price they charged you, then
D. you have had exactly the right number of sessions.
If a person consumes excessive amounts of a good or service, to the point that their total utility actually
begins declining, then that person's marginal utility of the last unit consumed is _________.
A. positive
Suppose you buy eight pairs of shoes every spring. This year, your shoe store has a huge sale and you end
up buying 12 pairs. How does your consumer surplus now compare to how much it would have been had
there been no sale?
B. It is higher.
If the Santiago family, which pays a charge of one cent a gallon, uses about 1,200 gallons of water a
month, what is the most accurate statement we can make about their consumer surplus?
B. They definitely enjoy a consumer surplus.
Given the demand curve in this graph, if price were $3.00, how much is consumer surplus?
A. $0
The price of a drink at the juice bar is $7. Melody Miller buys six carrot juices over the course of the
afternoon.
C. She is enjoying a consumer surplus.
If you received a free month's trial membership in a gym, you would keep going until your marginal
utility reached
A. zero.
When marginal utility is negative, total utility is
C. falling.
The marginal utility of your fourth milk shake would be
D. $2.50.
The concept based on the assumption that we get bargains on each unit we purchase until the last one is
called
A. consumer surplus.
If you bought eight pairs of shoes, the marginal utility of the seventh pair was
B. greater than the price.
Which statement is false?
B. A person would maximize her total utility when she had no consumer surplus.
If the marginal utility you derived from the first "steak burger" you ate was $4.00 and yet the cost of
the "steak burger" was $2.00. Your marginal utility was definitely
D. positive.
Her marginal utility of her fifth scented candle would be
A. $4.
Statement I: It would be meaningless to say that a certain good is worth $25.
Statement II: A person's utility schedule can change over time.
C. Both statements are true
Statement I: If a poor person found a ten-dollar bill lying on the sidewalk, he would get more utility from
what he could buy with it than a rich person.
Statement II: There is no answer to the question: "What is the utility of the economics course you're
taking?"
B. Statement II is true and statement I is false
When average total cost is declining, then
C. marginal cost must be less than average total cost.
_______ is (are) the relationship between the maximum amounts of output a firm can produce and
various quantities of inputs.
C. A production function
Which statement is true?
A. AFC declines with output.
In the short run, output
A. can be varied by using the factories and equipment in the industry with more or less of other inputs.
In the long run
C. all costs become variable.
The average fixed cost curve
C. slopes downward to the right as output rises.
As a firm's output expands, the
C. AVC will reach a minimum before the ATC.
A variable input is an input that can change
C. in both the long run and the short run.
The basic characteristic of the short run is that
C. the firm does not have sufficient time to change the size of its plant.
In the long run,
C. there are no fixed factors of production.
Which statement is false?
A. None of the statements are false.
Statement I: In the short run a firm has two options: stay in business or go out of business.
Statement II: In the short run there are no fixed costs.
A. Both statements are false
Statement I: Shutting down and going out of business mean exactly the same thing.
Statement II: A firm will shut down if variable cost is greater than total revenue.
C. Statement II is true and statement I is false.
Statement I: Average total cost can be found by dividing output by total cost.
Statement II: At one unit of output marginal cost is always zero.
D. Both statements are false.
If variable cost is $15 million, fixed cost is $14 million, and total revenues are $13 million, in the short
run the firm will _____ and in the long run the firm will ____.
A. shut down; go out of business
When output is 1,
C. All of the choices are correct
Which is the most accurate statement?
A. There is basically no real difference between shutting down and going out of business.
B. One big difference between shutting down and going out of business is that after you've shut down
you're still paying bills, but when you've gone out of business, there are no more bills to pay.
C. When you shut down you must still pay your variable costs, but when you go out of business you have
no costs at all.
D. Shutting down is a long run option, while going out of business is a short run option.
B. One big difference between shutting down and going out of business is that after you've shut down you're still paying bills, but when you've gone out of business, there are no more bills to pay.
Diseconomies of scale are associated with
B. an upward-sloping long-run average cost curve.
If you wanted to produce an output of 1,000 in the long run, you would choose a plant whose size was represented by A. ATC1.
B. ATC2.
C. ATC3.
D. ATC4.
E. ATC5.
A. ATC1.
Who said "Work expands so as to fill the time available for its completion," and "Work expands to
occupy people available for its completion"?
D. C. Northcote Parkinson
Statement I: Average fixed cost at an output of 4 is double average fixed cost at an output of 8.
Statement II: If average variable cost is rising, average total cost may be falling.
D. Both statements are true.
If ATC is declining, MC
A. must be below ATC.
When MC is rising, AVC
D. may be falling or rising.
When MC is rising, ATC
B. may be falling or rising
Suppose you owned a 40-acre farm and worked it with two helpers. If you hired an additional six helpers,
you would most likely encounter
C. diminishing returns
Which statement is true?
B. The minimum point on the firm's average variable cost curve is the shutdown point.
At the level of output where marginal revenue equals marginal cost, assume that the price of a
competitive firm's product is between the firm's average total cost curve and its average variable cost
curve. In this case the firm would
A. continue to operate in the short run.
As output expands beyond the break-even point, the vertical distance between the AVC and ATC will
A. get smaller.
Statement I. As output expands beyond the break-even point, the vertical distance between the AVC and
ATC will get smaller.
Statement II. The minimum point on the firm's AVC curve is the shutdown point.
D. Both statements are true
This firm's most profitable output is at
C. 230
A company is operating most efficiently when it is at
A. the break-even point
If the price were $60, this firm would _________ in the short run and __________ in the long run.
B. operate; stay in business
Which statement is true?
B. The marginal cost curve intersects the average total cost curve at the break-even point.
The implicit cost of a farmer's own labor is determined by
A. the cost of food, clothing, and shelter. B. the price of the products sold.
C. wages in farming occupations.
D. the cost of purchased inputs.
C. wages in farming occupations.
The crucial aspect of competition among firms that leads to the condition of zero profits in the long run
is