a) the behavior of small firms in the marketplace
b) the economic behavior of individual decision makers
c) the behavior of the economy as a whole
d) how to use the fewest natural resources to produce goods and services
a) Workers with families should be paid at least minimum wages.
b) If crime rates were reduced, the world would be a better place in which to live.
c) Marginal tax rates should be reduced for individuals in the highest tax brackets.
d) An increase in the price of gasoline will cause a reduction in the amount purchased.
a. the more likely an individual will go to college.
b. the more economics classes an individual will take at college.
c. the fewer economics classes an individual will take at college.
d. the less likely an individual will go to college.
a. of scarcity.
b. opportunity costs are constant as a country moves along its production possibilities frontier.
c. wants are insatiable.
d. in general resources are not perfect substitutes.
a. the government.
d. what resources are available.
a) It is the most prevalent form of business organization.
b) It is responsible for the largest portion of business sales.
c) It offers the owner the least personal liability of any form of business organization.
d) There is no opportunity cost to operating the business.
a. personal income taxes
b. corporate income taxes
c. sales taxes
d. borrowing on financial markets
a. the market price will fall.
b. the market is in equilibrium.
c. the market price will rise.
d. none of the above are true.
a. increase the equilibrium quantity of good X.
b. decrease both the equilibrium price and quantity.
c. increase the equilibrium price but decrease equilibrium quantity.
d. increase the equilibrium price.
a. the quantity supplied of pork will increase.
b. the demand for pork will decrease.
c. the equilibrium quantity of beef will decrease.
d. the equilibrium price of pork will increase.
a. The price increase shifted the supply curve rightward.
b. Demand remained unchanged and supply increased during the 1981 to 1984 period.
c. Supply increased and demand decreased during the 1981 to 1984 period.
d. Supply remained unchanged and demand increased during the 1981 to 1984 period.
a. a decrease in the supply of refined petroleum products.
b. an increase in the quantity supplied of refined petroleum products.
c. a rightward shift of the supply curve of refined petroleum products.
d. an increase in the quantity demanded of refined petroleum products.
a. a shortage will occur as the quantity sold falls.
b. the market will remain in equilibrium as the quantity sold will remain the same.
c. a surplus will occur as the quantity sold falls.
d. the effect cannot be determined without knowledge of the original quantity sold.
a. is greater in the long run than in the short run.
b. is negative in the short run but positive in the long run.
c. is always zero in the long run and positive in the short run.
d. is greater in the short run than in the long run .
a. the more price elastic is supply.
b. the more price inelastic is demand.
c. the smaller is the price elasticity of supply.
d. the more price elastic is demand.
c. any straightline supply curve
d. any supply curve intersecting a perfectly elastic demand curve
a. the price of the good will rise by the full amount of any sales tax placed on the good.
b. the consumer and producer will share the incidence of the sales tax placed on the good.
c. the producer will bear the full burden of any sales tax placed on the good.
d. the consumer and producer will share equally the incidence of any sales tax placed on the good.
a. the demand for bus rides is price elastic.
b. the magnitude of the price elasticity of demand is less than one.
c. the demand for bus rides is price inelastic.
d. the price elasticity of demand is equal to minus one.
d. any of the above depending upon the individual’s preferences.
a. reduce the marginal utility of the good but leave total utility unchanged.
b. increase the total utility from consumption of the good.
c. always reduces the total utility derived from the good.
d. increase the marginal utility of the good.
a. all of the firm’s resources are variable.
b. some, but not all, of the firm’s resources are variable.
c. none of the firm’s resources are variable.
d. the time period always exceeds one year.
a) total revenue plus total costs
b) total revenue minus the opportunity cost of production.
c) total revenue minus variable costs
d) total revenue minus explicit costs.
a. average variable cost must be greater than average total cost.
b. marginal cost must be greater than average total cost.
c. marginal costs must be falling.
d. all of the above must be true.
a. receiving a lower price for its product and producing less output.
b. lowering the price of its product to maintain its share of the market.
c. producing more output and receiving a higher price for its output.
d. doing none of the above.
a. also its marginal revenue curve.
b. its marginal cost curve above the minimum point of the average variable cost curve.
c. the firm’s average revenue curve.
d. the same as its average total cost curve.
a. the new equilibrium price and output will be greater but the number of firms in the industry will be smaller.
b. the new equilibrium price will be less but the number of firms in the industry and output will be the same.
c. the new equilibrium price will be the same but the number of firms and industrial output will be greater.
d. the new equilibrium price and the number of firms will be less but industrial output will be greater.
a. sustain a economic loss.
b. make a positive economic profit.
c. expand production.
d. decrease production.
a. can earn a positive level of economic profit as long as there are barriers to entry .
b. must earn zero economic profit.
c. is likely to incur economic losses.
d. will always earn the same level of economic profits as a perfectly competitive firm.
a. the demand curve the monopolist faces is downward sloping.
b. the monopolist lowers the price on the marginal unit only.
c. the demand curve the monopolist faces is perfectly price elastic.
d. the market supply curve is upward sloping.
a. determines the profit maximizing level of output by equating marginal revenue and marginal cost and then charges whatever price the firm wishes to for that output.
b. always makes a positive economic profit in the short run.
c. can increase product price and output simultaneously.
d. is constrained by the market demand curve in setting the price of its output.
a) is more elastic than a perfectly competitive firm’s demand curve
b) is the market demand curve
c) is as elastic as a perfectly competitive firm’s demand curve
d) is not affected by the prices of complements
a. loss minimizing solution
b. dominant strategy equilibrium
c. revenue maximizing equilibrium
d. marginal revenue solution
a. the demand curve of the typical firm will shift to the left.
b. firms will leave the industry.
c. the marginal revenue curve of the typical firm will shift upward.
d. the short-run supply curve of the product will shift to the right as firms enter.
a. cut prices.
c. avoid government regulation.
d. prevent entry into the industry.
a. There will be excess capacity in the industry.
b. Product price will exceed marginal cost.
c. Marginal revenue will be less than the product price.
d. The firm will operate at the minimum point of the average total cost curve.
a) a group of oligopolistic firms that engage in formal collusion
b) a group of monopolistically competitive firms which charge the same price
c) usually legal in the United States
d) an agreement among rival firms to set prices independently
a. higher under monopolistic competition.
b. equal to marginal revenue in both cases.
c. equal to average total cost in perfect competition but equal to average variable cost in monopolistic competition.
d. higher under perfect competition.
a. final demand
b. induced demand
c. derived demand
d. marginal demand
a) the demand for land is high
b) land has few uses
c) location is the inherent quality that often determines its value
d) real estate brokers are inefficient
a. price of that resource is determined exclusively by supply
b. the price of that resource is determined exclusively by demand
c. the price and quantity of that resource are determined exclusively by supply
d. the price and quantity of that resource are determined exclusively by demand
a) take more leisure
b) be more inclined to supply their labor to market work than to nonmarket work
c) be more inclined to supply their labor to nonmarket work than to market work
d) provide more labor to nonmarket work even if the market can provide the services more cheaply
a) decreases your demand for leisure time and reduces your allocation of time to market work
b) decreases your demand for leisure time and increases your allocation of time to market work and/or nonmarket work
c) increases your demand for leisure time and reduces your allocation of time to market work and/or nonmarket work
d) increases your demand for leisure time and increases your allocation of time to market work and/or a nonmarket work
a) always work in the same direction
b) always work in opposite directions
c) work in opposite directions only if the change is a decrease
d) work in the same direction only if the change is an increase
a. organize most workers in the industry.
b. limit union membership.
c. bargain only at the plant level.
d. organize only industries that have a large number of firms.
a. an inclusive union.
b. a company union.
c. an exclusive union.
d. none of the above.
a. increasing the demand for the product its members produce.
b. decreasing the supply of labor.
c. increasing the productivity of its members.
d. doing any of the above.
a. increase an individual’s supply of labor if the substitution effect outweighs the income effect
b. have no impact on an individual’s labor supply decision
c. increase an individual’s supply of labor
d. decrease an individual’s supply of labor
a. the income effect
b. the price of the firm’s output
c. their ability