QN=1 (1633) (17147) The invisible hand refers to a how central planners made economic decisions b how the decisions of households and firms lead to desirable market outcomes c the control that large firms have over the economy d government regulations without which the economy would be less efficient QN=2 (1628) (17128) When a society cannot produce all the goods and services people wish to have it is said that the economy is experiencing a scarcity b communism c externalities d market failure Q.
QN=1 (1633) a b c d (17147) The invisible hand refers to how central planners made economic decisions how the decisions of households and firms lead to desirable market outcomes the control that large firms have over the economy government regulations without which the economy would be less efficient QN=2 (1628) (17128) When a society cannot produce all the goods and services people wish to have it is said that the economy is experiencing scarcity communism externalities market failure a b c d QN=3 (1605) a b c d QN=4 (1668) a b c d QN=5 (1641) (17134) The term used to describe a situation in which markets not allocate resources efficiently is economic meltdown market failure equilibrium the effect of the invisible hand (17174) The production possibilities frontier is a graph that shows the various combinations of output that an economy should produce wants to produce can produce demands (17152) Refer to Figure 2-2 Malika works as an attorney for a corporation and is paid a salary in exchange for the legal services she performs Jarel owns office buildings and rents his buildings to companies in exchange for rent payments If Malika’s income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram, then Jarel’s income is represented by a flow of dollars a b c d QN=6 (1637) a b from Box A to Box C from Box C to Box A from Box B to Box D from Box D to Box B (17182) Which of the following is not an example of a positive, as opposed to normative, statement? Higher gasoline prices will reduce gasoline consumption Equality is more important than efficiency c d Trade restrictions lower our standard of living If a nation wants to avoid inflation, it will restrict the growth rate of the quantity of money QN=7 (1701) a b c d (17223) Which of the following would shift the supply curve for gasoline to the right? An increase in the demand for gasoline An increase in the price of gasoline An increase in the number of producers of gasoline An increase in the price of oil, an input into the production of gasoline QN=8 (1677) a b c d (17211) Which of the following is an example of a market? (i) a gas station (ii) a garage sale (iii) a barber shop All of (i), (ii), and (iii) are examples of markets QN=9 (1679) a b c d (17188) Soup is an inferior good if The demand for soup falls when the price of a substitute for soup rises The demand for soup rises when the price of soup falls The demand curve for soup slopes upward The demand for soup falls when income rises QN=10 (1716) a b c d (17239) The flatter the demand curve through a given point, the greater the price elasticity of demand smaller the price elasticity of demand closer the price elasticity of demand will be to the slope of the curve more equal the price elasticity of demand will be to the slope of the curve QN=11 (1712) a (17191) In a market economy, supply determines demand and demand, in turn, determines prices b c d QN=12 (1718) demand determines supply and supply, in turn, determines prices the allocation of scarce resources determines prices and prices, in turn, determine supply and demand supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources a b c d (17251) Which of the following is not a determinant of the price elasticity of demand for a good? the time horizon the steepness or flatness of the supply curve for the good the definition of the market for the good the availability of substitutes for the good QN=13 (1752) a b c d (17243) The price elasticity of supply measures how responsive sellers are to a change in price sellers are to a change in buyers' income buyers are to a change in production costs equilibrium price is to a change in supply QN=14 (1775) a b c d (17292) A tax on the sellers of popcorn increases the size of the popcorn market decreases the size of the popcorn market has no effect on the size of the popcorn market may increase, decrease, or have no effect on the size of the popcorn market QN=15 (1743) a (17250) Which of the following statements is correct? (i) The demand for natural gas is more elastic over a short period of time than over a long period of time (ii) The demand for smoke alarms is more elastic than the demand for Persian rugs (iii) The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general b c d All of (i), (ii), and (iii) are correct QN=16 (1742) a b c d (17236) An inelastic demand means that consumers hardly respond to a change in price consumers respond substantially to a change in price consumers respond directly to a change in income the change in quantity demanded is equal to the change in price QN=17 (1744) a b c d (17248) In the market for oil in the short run, demand and supply are both elastic and supply are both inelastic is elastic and supply is inelastic is inelastic and supply is elastic QN=18 (1763) a b c d (17275) A shortage results when a nonbinding price ceiling is imposed on a market a nonbinding price ceiling is removed from a market a binding price ceiling is imposed on a market a binding price ceiling is removed from a market QN=19 (1749) a b c d (17229) Knowing that the demand for wheat is inelastic, if all farmers voluntarily did not plant wheat on 10 percent of their land, then consumers of wheat would buy more wheat wheat farmers would suffer a reduction in their total revenue wheat farmers would experience an increase in their total revenue the demand for wheat would decrease QN=20 (1784) a b (17273) When a tax is levied on buyers of tea buyers of tea and sellers of tea both are made worse off buyers of tea are made worse off and the well-being of sellers is unaffected c d buyers of tea are made worse off and sellers of tea are made better off the well-being of both buyers of tea and sellers of tea is unaffected QN=21 (1807) (17323) Suppose there is an early freeze in California that ruins the lemon crop What happens to consumer surplus in the market for lemons? It increases It decreases It is not affected by this change in market forces It increases very briefly then decreases a b c d QN=22 (1799) a b c d QN=23 (1803) (17313) Brock is willing to pay $400 for a new suit, but he is able to buy the suit for $350 His consumer surplus is $50 $150 $350 $400 a b c d (17330) Which of the Ten Principles of Economics does welfare economics explain more fully? The cost of something is what you give up to get it Markets are usually a good way to organize economic activity Trade can make everyone better off A country’s standard of living depends on its ability to produce goods and services QN=24 (1800) a b c d (17340) Consumer surplus is equal to the Value to buyers - Amount paid by buyers Amount paid by buyers - Costs of sellers Value to buyers - Costs of sellers Value to buyers - Willingness to pay of buyers QN=25 (1827) a b c d QN=26 (1820) a b (17307) Which tools allow economists to determine if the allocation of resources determined by free markets is desirable? profits and costs to firms consumer and producer surplus the equilibrium price and quantity incomes of and prices paid by buyers c d (17325) Consumer surplus is the amount of a good that a consumer can buy at a price below equilibrium price is the amount a consumer is willing to pay minus the amount the consumer actually pays is the number of consumers who are excluded from a market because of scarcity measures how much a seller values a good QN=27 (1824) a b c d (17339) Consumer surplus equals the value to buyers minus the amount paid by buyers value to buyers minus the cost to sellers amount received by sellers minus the cost to sellers amount received by sellers minus the amount paid by buyers QN=28 (1869) a b c d (17378) Which of the following policies is the government most inclined to use when faced with a positive externality? taxation permits subsidies usage fees QN=29 (1879) a b c (17399) Goods that are nonexcludable and nonrival are public goods private goods natural monopolies d common resources QN=30 (1873) a (17347) An externality is the costs that parties incur in the process of agreeing and following through on a bargain the uncompensated impact of one person's actions on the well-being of a bystander the proposition that private parties can bargain without cost over the allocation of resources a market equilibrium tax b c d QN=31 (1892) a b c d b (17409) An overcrowded beach is an example of a positive externality a Tragedy of the Commons an environmentally inefficient allocation of resources an economically unfair allocation of resources QN=32 (1898) (17397) If one person's use of a good diminishes another person's enjoyment of it, the good is rival excludable normal exhaustible a b c d QN=33 (1912) a b c d (17401) Suppose a human life is worth $10 million Installing a better lighting system in the city park would reduce the risk of someone being murdered there from 2.6 to 1.9 percent over the life of the system The city should install the new lighting system if its cost does not exceed $70,000 $260,000 $190,000 $10,000,000 QN=34 (1925) a b c d QN=35 (1948) (17450) Kirsten sells 300 glasses of lemonade at $0.50 each Her total costs are $125 Her profits are $25 $124.50 $125 $150 a b c d (17443) When, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of economies of scale diseconomies of scale coordination problems arising from the large size of the firm fixed costs greatly exceeding variable costs QN=36 (1946) a b c d (17444) Which of the following costs would be regarded as an implicit cost? the cost of accounting services the opportunity cost of financial capital that has been invested in the business the cost of compliance with government regulation all costs that involve outlays of money by the firm QN=37 (1973) (17507) Which of the following represents the firm's long-run condition for exiting a market? exit if P < MC exit if P < FC exit if P < ATC exit if MR < MC a b c d QN=38 (1952) (17448) Refer to Figure 13-9 The firm experiences economies of scale at which output levels? a b c d (i) output levels less than M (ii) output levels between M and N (iii) output levels greater than N All of (i), (ii), and (iii) are correct as long as the firm is operating in the long run QN=39 (1956) (17466) Refer to Table 13-6 What is the average variable cost of producing units of output? a b c d $4 $5 $40 $44 QN=40 (2018) a b c d (17548) Antitrust laws allow the government to (i) prevent mergers (ii) break up companies (iii) promote competition All of (i), (ii), and (iii) are correct QN=41 (2016) (17527) Refer to Figure 15-5 A profit-maximizing monopoly's profit is equal to a b c d QN=42 (2014) a b c P4 * Q3 (P4-P2) * Q3 (P4-P1) * Q3 (P5-P0) * Q1 (17532) If a monopolist has zero marginal costs, it will produce the output at which total revenue is maximized in the range in which marginal revenue is still increasing at the point at which marginal revenue is at a maximum d in the range in which marginal revenue is negative QN=43 (2040) a b c d (17558) A monopoly market always maximizes total economic well-being always minimizes consumer surplus generally fails to maximize total economic well-being generally fails to maximize producer surplus QN=44 (2035) (17543) A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it (i) can prevent children from buying the lower-priced tickets and selling them to adults (ii) has some degree of monopoly pricing power (iii) can easily distinguish between the two groups of customers All of (i), (ii), and (iii) are correct a b c d QN=45 (2028) a b c d QN=46 (2091) (17534) Which of the following is an example of a barrier to entry? (i) A key resource is owned by a single firm (ii) The costs of production make a single producer more efficient than a large number of producers (iii) The government has given the existing monopoly the exclusive right to produce the good (i) and (ii) (ii) and (iii) (i) only All of these examples are barriers to entry (17615) In which of the following market structures is the number of sellers less than "many?" (i) monopolistic competition (ii) monopoly (iii) oligopoly a b c d (i) and (ii) only (ii) and (iii) only (ii) only In all of (i), (ii), and (iii) QN=47 (2061) (17581) When quality cannot be easily judged in advance, what provides consumers with information about the quality of a product? a brand name a tie-in the quantity available for sale the amount of deadweight loss a b c d QN=48 (2120) a d (17636) The prisoners' dilemma game (i) is a situation in which two players both have dominant strategies which lead to the highest total payoff for the two players (ii) has no Nash equilibrium since players, after agreeing to play their dominant strategy, will have an incentive to switch to another strategy (iii) has a Nash equilibrium, but the Nash equilibrium outcome is not the outcome the players would agree to if they could cooperate with each other Both (i) and (iii) are correct QN=49 (2149) a b c d (17653) Labor markets are different from most other markets because labor demand is represented by a vertical line on a supply-demand diagram represented by an upward-sloping line on a supply-demand diagram such an elusive concept derived QN=50 (2089) (17624) In which of the following games is it clearly the case that the cooperative outcome of the game is good for the two players and good for society? Two guilty criminals have been captured by the police, and each prisoner decides whether to confess or to remain silent b c a 3b c d Two airlines dominate air travel between City A and City B, and each airline decides whether to charge a “high” airfare or a “low” airfare Two duopoly firms account for all of the production in a market, and each firm decides whether to produce a “high” amount of output or a “low” amount of output Two oil companies own adjacent oil fields over a common pool of oil, and each company decides whether to drill one well or two wells [id=1633, Mark=1]1 B [id=1742, Mark=1]16 A [id=1892, Mark=1]31 B [id=1628, Mark=1]2 A [id=1744, Mark=1]17 B [id=1898, Mark=1]32 A [id=1605, Mark=1]3 B [id=1763, Mark=1]18 C [id=1912, Mark=1]33 A [id=1668, Mark=1]4 C [id=1749, Mark=1]19 C [id=1925, Mark=1]34 A [id=1641, Mark=1]5 D [id=1784, Mark=1]20 A [id=1948, Mark=1]35 A [id=1637, Mark=1]6 B [id=1807, Mark=1]21 B [id=1946, Mark=1]36 B [id=1701, Mark=1]7 C [id=1799, Mark=1]22 A [id=1973, Mark=1]37 C [id=1677, Mark=1]8 D [id=1803, Mark=1]23 B [id=1952, Mark=1]38 A [id=1679, Mark=1]9 D [id=1800, Mark=1]24 A [id=1956, Mark=1]39 C [id=1716, Mark=1]10 A [id=1827, Mark=1]25 B [id=2018, Mark=1]40 D [id=1820, Mark=1]26 B [id=1712, Mark=1]11 D [id=1824, Mark=1]27 A [id=2016, Mark=1]41 C [id=1718, Mark=1]12 B [id=1869, Mark=1]28 C [id=2014, Mark=1]42 A [id=1752, Mark=1]13 A [id=1879, Mark=1]29 A [id=2040, Mark=1]43 C [id=1775, Mark=1]14 B [id=1873, Mark=1]30 B [id=2035, Mark=1]44 D [id=1743, Mark=1]15 C [id=2028, Mark=1]45 D [id=2091, Mark=1]46 B [id=2061, Mark=1]47 A [id=2120, Mark=1]48 C [id=2149, Mark=1]49 D [id=2089, Mark=1]50 D MIC_01 ... Mark=1]46 B [id=2061, Mark=1]47 A [id=2120, Mark=1]48 C [id=2149, Mark=1]49 D [id=2089, Mark=1]50 D MIC_01