Microecon

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Angele1990
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119945
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Microecon
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2011-12-12 14:09:12
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Final!!
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  1. Which of the following is true?

    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.
  2. The name of Andrew Carnegie is most closely associated with

    A. the computer industry.
    B. the meatpacking industry.
    C. the chemical industry.
    D. the rubber industry.
    E. the steel industry.
    E. the steel industry
    (this multiple choice question has been scrambled)
  3. The transcontinental railroads were completed in the 25 years

    A. before the Civil War.
    B. after the 20th century began.
    C. after the Civil War.
    D. after 1890.
    C. after the Civil War.
    (this multiple choice question has been scrambled)
  4. 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.
  5. 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%.
  6. 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.
  7. 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.
  8. The suburbanization of America _______________ our dependence on oil imports.

    A. increased substantially
    B. had on effect on
    C. decreased substantially
    A. increased substantially
  9. 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
  10. 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
  11. 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.
  12. 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
  13. 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.
  14. 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.
  15. 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.
  16. 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.
  17. 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.
  18. 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.
  19. 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.
  20. 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.
  21. 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.
  22. 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.
  23. 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.


  24. 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.


  25. 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


  26. 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.
  27. 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.
  28. 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.


  29. 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.


  30. 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.
  31. 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.
  32. 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.
  33. 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.

  34. 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


  35. 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


  36. 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


  37. 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.


  38. 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.
  39. 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.
  40. 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
  41. 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.
  42. 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.
  43. 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.
  44. 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
  45. 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.
  46. 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.
  47. 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.
  48. "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.
  49. Under capitalism the role of government is best described as

    A. Nonexistent.
    B. Limited.
    C. Significant.
    D. Extensive.
    B. Limited.
  50. 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
  51. Karl Marx believed the central figures in an industrial economy were the

    A. capitalists.
    B. heads of the ruling political party.
    C. farmers.
    D. stock market speculators.
    E. labor union leaders.
    A. capitalists.
    (this multiple choice question has been scrambled)
  52. 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?

    A. Milton Friedman
    B. John Maynard Keynes
    C. Thorstein Veblen
    D. Karl Marx
    E. Adam Smith
    D. Karl Marx
    (this multiple choice question has been scrambled)
  53. Which one of the following is not a mixed economy?

    A. Japan
    B. China
    C. United States
    D. All of the countries listed are mixed economies.
    E. Sweden
    D. All of the countries listed are mixed economies.
    (this multiple choice question has been scrambled)
  54. In a capitalist country most resources are owned by

    A. business firms.
    B. households.
    C. the government.
    B. households.
    (this multiple choice question has been scrambled)
  55. Which one of the following is a public good?

    A. A toll road
    B. A local police department
    C. Conrail
    D. A rent-a-cop agency
    B. A local police department
    (this multiple choice question has been scrambled)
  56. In the circular flow model, households

    A. supply both resources and products
    B. demand both resources and products.
    C. demand products and supply resources.
    D. demand resources and supply products.
    C. demand products and supply resources.
    (this multiple choice question has been scrambled)
  57. An economic model is

    A. a larger, more complicated version of reality.
    B. a tool of logic that assumes that if event A precedes event B, A must be the cause of B.
    C. a simplified version of reality.
    D. a tool of logic that assumes that the whole is greater than the sum of the parts.
    C. a simplified version of reality.
    (this multiple choice question has been scrambled)
  58. Adam Smith believed that people are guided by

    A. the principle "let your conscience be your guide."
    B. an innate sense of fairness.
    C. greed.
    D. the public good.
    C. greed.
    (this multiple choice question has been scrambled)
  59. The U.S. economy does a very good job with respect to

    A. equity, but not efficiency.
    B. neither equity nor efficiency.
    C. both equity and efficiency.
    D. efficiency, but not equity.
    D. efficiency, but not equity.
    (this multiple choice question has been scrambled)
  60. Lowering the level of pollution to very close to zero would

    A. raise our standard of living.
    B. have little effect on our standard of living.
    C. lower our standard of living.
    C. lower our standard of living.
    (this multiple choice question has been scrambled)
  61. The most glaring economic problem in the former Soviet Union was

    A. a shortage of civilian goods
    B. a surplus of military goods
    C. a shortage of military goods
    D. a surplus of civilian goods
    A. a shortage of civilian goods
    (this multiple choice question has been scrambled)
  62. 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.
  63. Which of the following statements is false?

    A. In the former Soviet Union, most of the crops were produced on collective farms.
    B. Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living.
    C. The price system is based on supply and demand.
    D. Critics feel that wage and price controls interfere with the price mechanism.
    B. Sweden has one of the world's most equal distributions of income, but also has a relatively low standard of living.
    (this multiple choice question has been scrambled)
  64. 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.
  65. According to most economists,

    A. incentive-based regulations work better than command-and-control regulations.
    B. command-and-control regulations work better than incentive-based regulations.
    C. command-and-control regulations have about the same effectiveness as incentive-based regulations
    A. incentive-based regulations work better than command-and-control regulations.
    (this multiple choice question has been scrambled)
  66. A $3 increase in the federal gasoline tax would

    A. reduce air pollution.
    B. convince many Americans to buy SUV's.
    C. very likely be voted for by most Representatives and Senators.
    D. have little effect on the number of miles driven.
    A. reduce air pollution.
    (this multiple choice question has been scrambled)
  67. A $3 increase in the federal gasoline tax would do all of the following except
    A. convince some American's to get rid of their gas-guzzling vehicles.
    B. reduce shipping costs.
    C. lower gasoline consumption.
    D. reduce air pollution.
    B. reduce shipping costs.
    (this multiple choice question has been scrambled)
  68. 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.
  69. Which of the following is NOT an example of a command-and-control regulation to limit pollution?

    A. Mandating the use of catalytic converters on all new vehicles
    B. Fuel economy standards for all new cars
    C. A ban on leaded gasoline
    D. A 50-cent tax on gasoline
    D. A 50-cent tax on gasoline
    (this multiple choice question has been scrambled)
  70. 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.
  71. A decrease in demand means that quantity demanded falls

    A. at most prices.
    B. at all prices.
    C. at least one price.
    D. at a few prices.
    B. at all prices.
    (this multiple choice question has been scrambled)
  72. If the market price is below equilibrium price,

    A. quantity demanded is equal to quantity supplied.
    B. quantity demanded is less than quantity supplied.
    C. quantity demanded is greater than quantity supplied.
    C. quantity demanded is greater than quantity supplied.
    (this multiple choice question has been scrambled)
  73. If market price is equal to equilibrium price

    A. there is neither a surplus nor a shortage.
    B. there is a shortage.
    C. there is a surplus.
    A. there is neither a surplus nor a shortage.
    (this multiple choice question has been scrambled)
  74. There is a surplus of quantity supplied over quantity demanded when

    A. market price equals equilibrium price.
    B. market price is below equilibrium price
    C. market price is above equilibrium price.
    C. market price is above equilibrium price
    (this multiple choice question has been scrambled)
  75. When demand falls and supply remains the same, equilibrium price _______ and equilibrium quantity
    ________.

    A. falls, rises
    B. falls, falls
    C. rises, rises
    D. rises, falls
    B. falls, falls
    (this multiple choice question has been scrambled)
  76. When supply falls and demand remains the same, equilibrium price _____ and equilibrium quantity
    ________.

    A. rises, rises
    B. falls, falls
    C. rises, falls
    D. falls, rises
    C. rises, falls
    (this multiple choice question has been scrambled)
  77. Which statement is true?

    A. The quantity demanded is determined by sellers and the quantity supplied is determined by buyers.
    B. None of these statements are true.
    C. The quantity supplied is determined by the quantity demanded.
    D. The quantity demanded is determined by the quantity supplied.
    B. None of these statements are true.
    (this multiple choice question has been scrambled)
  78. For there to be demand for a good, people must

    A. know the prices of all other goods.
    B. feel there are few substitutes for the good.
    C. need the good.
    D. want the good more than they want other goods.
    E. be willing and able to buy the good at the market price.
    E. be willing and able to buy the good at the market price.
    (this multiple choice question has been scrambled)
  79. When the supply of a good increases and the demand stays the same

    A. the price of the good will fall and quantity will rise.
    B. the price of the good will fall and quantity will not change.
    C. the price of the good will remain the same.
    D. the price of the good will rise.
    A. the price of the good will fall and quantity will rise.
    (this multiple choice question has been scrambled)
  80. If the demand for mushrooms increases while the supply remains unchanged, this will result in

    A. an increase in the quantity of mushrooms sold and an increase in their price.
    B. a decrease in the quantity of mushrooms sold and an increase in their price.
    C. a shortage of mushrooms as the market price remains unchanged.
    D. an increase in the quantity of mushrooms sold but no change in price.
    A. an increase in the quantity of mushrooms sold and an increase in their price.
    (this multiple choice question has been scrambled)
  81. If the government legislates a price ceiling that is above the equilibrium price

    A. a shortage will develop.
    B. some non-price method of rationing will develop.
    C. market price and quantity sold will be unaffected.
    D. a surplus will develop.
    C. market price and quantity sold will be unaffected.
    (this multiple choice question has been scrambled)
  82. When there is a price floor there will be

    A. a surplus.
    B. neither a shortage nor a surplus.
    C. either a shortage or a surplus.
    D. a shortage.
    A. a surplus.
    (this multiple choice question has been scrambled)
  83. When market price is above equilibrium price

    A. market price will rise.
    B. a shortage is generated.
    C. quantity supplied is greater than quantity demanded.
    D. None of these choices are correct.
    C. quantity supplied is greater than quantity demanded.
    (this multiple choice question has been scrambled)
  84. Which statement is false?

    A. The government, to encourage family farms to stay in business, created price supports for corn and
    B. Rent control is a price ceiling.
    C. Usury laws can lead to a surplus of loanable funds.
    wheat.
    D. Price ceilings prevent prices from rising.
    C. Usury laws can lead to a surplus of loanable funds.
    (this multiple choice question has been scrambled)
  85. The _____________ is constantly sending buyers and sellers thousands of signals.

    A. price ceiling
    B. price floor
    C. None of these answers are correct.
    D. price system
    D. price system
    (this multiple choice question has been scrambled)


  86. Equilibrium price is _____ and equilibrium quantity is _____ units.

    A. $8, 16
    B. $4, 4
    C. $6, 10
    D. $8, 10
    C. $6, 10
    (this multiple choice question has been scrambled)
  87. Which statement is false?

    A. A demand curve shows an inverse relationship between price and quantity.
    B. Moving up a demand curve, price rises and quantity rises.
    C. Moving down along a demand curve, price falls and quantity rises.
    D. A demand curve slopes downward to the right.
    B. Moving up a demand curve, price rises and quantity rises.
    (this multiple choice question has been scrambled)

  88. Equilibrium price is

    A. $4
    B. $8
    C. $6
    D. $10
    E. $2
    C. $6
    (this multiple choice question has been scrambled)


  89. When price is $2

    A. price must fall to get to equilibrium.
    B. quantity demanded is less than quantity supplied.
    C. there is a shortage.
    D. there is a surplus.
    C. there is a shortage.
    (this multiple choice question has been scrambled)
  90. If the government imposes a maximum price that is above the equilibrium price,

    A. this maximum price will have no economic impact.
    B. quantity demanded will be less than quantity supplied.
    C. demand will be greater than supply.
    D. the available supply will have to be rationed with a non-price rationing mechanism.
    A. this maximum price will have no economic impact.
    (this multiple choice question has been scrambled)
  91. 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 ______________________.

    A. be impossible to determine
    B. rise to about 25 cents
    C. increase to 30 cents
    D. remain at 20 cents
    C. increase to 30 cents
    (this multiple choice question has been scrambled)
  92. 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.

    A. Both statements are false.
    B. Statement II is true and statement I is false.
    C. Statement I is true and statement II is false.
    D. Both statements are true.
    A. Both statements are false.
    (this multiple choice question has been scrambled)


  93. If price was set by the government at $11, there would be a price __________, that would cause a
    ___________ of ______ units.

    A. floor, shortage, 8
    B. floor, surplus, 10
    C. ceiling, shortage, 12
    D. floor, surplus, 8
    E. ceiling, surplus, 14
    D. floor, surplus, 8
    (this multiple choice question has been scrambled)
  94. 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?

    A. All of these choices are correct.
    B. The temporary shutdown of some of the oil refineries due to Hurricane Katrina.
    C. The greed of the sellers.
    D. The temporary shutdown of offshore oil wells due to Hurricane Katrina.
    A. All of these choices are correct.
    (this multiple choice question has been scrambled)
  95. 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
  96. When we go from one demand curve to another, there has definitely been

    A. a decrease in demand.
    B. a change in quantity demanded.
    C. a change in demand.
    D. an increase in demand.
    C. a change in demand.
    (this multiple choice question has been scrambled)
  97. If good A and good B are substitutes and the price of good A decreases, the demand for good B will

    A. become nonexistent.
    B. not change.
    C. increase.
    D. decrease.
    D. decrease.
    (this multiple choice question has been scrambled)
  98. 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.
  99. All of the following could shift the demand curve, except?

    A. A successful advertising campaign convincing people that they want more of this good
    B. An increase in population in the age group buying that good
    C. A change in the price of substitutes
    D. A shift of the supply curve
    E. A rise in income
    D. A shift of the supply curve
    (this multiple choice question has been scrambled)
  100. Assuming Coors and Budweiser are substitutes, an increase in the price of Coors is likely to cause

    A. a decrease in the demand for Budweiser.
    B. a decrease in the demand for Coors.
    C. an increase in the demand for Budweiser.
    D. an increase in the demand for Coors.
    C. an increase in the demand for Budweiser.
    (this multiple choice question has been scrambled)
  101. An increase in the price of gasoline will cause a

    A. increase in the quantity demanded for gasoline.
    B. decline in the quantity demanded for gasoline.
    C. decline in the demand for gasoline.
    D. increase in the demand for gasoline.
    B. decline in the quantity demanded for gasoline.
    (this multiple choice question has been scrambled)
  102. According to the law of demand, an increase in the price of Pepsi will

    A. increase the quantity of Pepsi demanded.
    B. decrease the demand for Pepsi.
    C. increase the demand for Pepsi.
    D. decrease the quantity of Pepsi demanded.
    D. decrease the quantity of Pepsi demanded.
    (this multiple choice question has been scrambled)
  103. 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

    A. a decrease in supply for fish.
    B. an increase in demand for fish.
    C. a decrease in demand for fish.
    D. an increase in supply for fish.
    C. a decrease in demand for fish.
    (this multiple choice question has been scrambled)
  104. If coffee is a substitute for tea, and the price of coffee rises, what will happen?

    A. Demand for tea will increase.
    B. The quantity demanded of coffee will rise.
    C. Demand for tea will decrease.
    D. The quantity demanded of tea will decrease
    A. Demand for tea will increase.
    (this multiple choice question has been scrambled)
  105. The market demand curve for most goods and services is

    A. not related in any way to individual demand curves.
    B. calculated by multiplying all individual demand curves by each other.
    C. not important for most analytical purposes.
    D. the horizontal summation of individual demand curves.
    D. the horizontal summation of individual demand curves.
    (this multiple choice question has been scrambled)
  106. If a person's income falls, then the demand for a normal good will

    A. remain the same.
    B. fall to zero.
    C. increase.
    D. decrease.
    D. decrease.
    (this multiple choice question has been scrambled)
  107. If beans are an inferior good, a decrease in income will

    A. increase the production of rice.
    B. cause rice to sell at a lower price.
    C. shift the demand curve for rice to the left.
    D. shift the demand curve for rice to the right.
    D. shift the demand curve for rice to the right.
    (this multiple choice question has been scrambled)
  108. A decrease in the price of memberships to Gold's Gym fitness centers is likely to:

    A. increase the demand for workout clothing.
    B. increase the demand for Gold's Gym memberships.
    C. decrease the demand for Gold's Gym memberships.
    D. decrease the demand for workout clothing.
    A. increase the demand for workout clothing.
    (this multiple choice question has been scrambled)
  109. An increase in the price of fabric (an input in the production of pants) will tend to

    A. decrease the supply of pants.
    B. increase the supply of pants.
    C. cause a movement along the supply curve for pants.
    D. decrease the demand for pants.
    A. decrease the supply of pants.
    (this multiple choice question has been scrambled)
  110. Which of the following will cause an outward (rightward) shift of the supply curve for TVs?

    A. An improvement in TV technology
    B. An increase in the price of TVs
    C. A decrease in the number of firms producing TVs
    D. A decrease in the price of TVs
    A. An improvement in TV technology
    (this multiple choice question has been scrambled)
  111. The market supply consists of the

    A. industry's equilibrium output.
    B. quantities supplied at all prices.
    C. individual firm's supply curve.
    D. quantity supplied at one price.
    B. quantities supplied at all prices
    (this multiple choice question has been scrambled)
  112. As price rises, quantity demanded gets _______ and quantity supplied gets _______.

    A. larger; smaller
    B. smaller; smaller
    C. larger; larger
    D. smaller; larger
    D. smaller; larger
    (this multiple choice question has been scrambled)
  113. Which of the following most likely would cause an increase in demand for good Z?

    A. A technological advance in the method of producing good Z
    B. A decrease in the number of suppliers of good Z
    C. An increase in a tax on good Z
    D. A decline in income of consumers most likely to purchase good Z
    E. None of the choices are correct.
    E. None of the choices are correct.
    (this multiple choice question has been scrambled)
  114. 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?

    A. Thomas Carlyle
    B. Alfred Marshall
    C. Edward Scissorshands
    D. Adam Smith
    B. Alfred Marshall
    (this multiple choice question has been scrambled)
  115. If price declines,

    A. there may have been a decrease in demand AND a decrease in supply.
    B. there may have been an increase in supply.
    C. there may have been an increase in supply AND a decrease in demand.
    D. there may have been a decrease in supply.
    E. there may have been a decrease in demand.
    C. there may have been an increase in supply AND a decrease in demand.
    (this multiple choice question has been scrambled)
  116. 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 true.
    B. Both statements are false.
    C. Statement I is true and statement II is false.
    D. Statement II is true and statement I is false.
    B. Both statements are false.
    (this multiple choice question has been scrambled)
  117. 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.
  118. 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.

    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.
    (this multiple choice question has been scrambled)


  119. If quantity demanded increased by 5 units at each price, you would conclude that

    A. demand increased.
    B. demand decreased.
    C. supply increased.
    D. supply decreased.
    A. demand increased.
    (this multiple choice question has been scrambled)
  120. 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.


  121. The curve in the above graph

    A. is a perfectly elastic demand curve.
    B. is a perfectly inelastic demand curve.
    C. is a very elastic demand curve.
    D. is a very inelastic demand curve.
    A. is a perfectly elastic demand curve.
    (this multiple choice question has been scrambled)
  122. If demand is inelastic and price is lowered, total revenue will

    A. stay the same.
    B. fall.
    C. rise.
    D. possibly rise or possibly fall.
    B. fall.
    (this multiple choice question has been scrambled)
  123. If demand is elastic and price is lowered, total revenue will

    A. fall.
    B. possibly rise and possibly fall.
    C. rise.
    D. stay the same.
    C. rise.
    (this multiple choice question has been scrambled)
  124. The lowest possible elasticity shown here is

    A. 0.01.
    B. 10.
    C. 1.0.
    D. 0.1.
    E. 0.001.
    E. 0.001.
    (this multiple choice question has been scrambled)
  125. 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. unit elastic.
    B. price elastic.
    C. price inelastic.
    D. rebate inelastic.
    E. unknown.
    B. price elastic.
    (this multiple choice question has been scrambled)
  126. Cross elasticity of demand measures the response in

    A. the income of consumers to the change in the price of goods.
    B. the price of a good to a change in the quantity of another good demanded.
    C. quantity of one good demanded when the quantity demanded of another good changes.
    D. the quantity of one good demanded to a change in the price of another good.
    D. the quantity of one good demanded to a change in the price of another good.
    (this multiple choice question has been scrambled)
  127. If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would

    A. reduce the quantity demanded to zero no matter what the initial price.
    B. increase the price and decrease the quantity demanded.
    C. have no effect on either price or quantity demanded.
    D. increase the price while not affecting the quantity demanded.
    D. increase the price while not affecting the quantity demanded.
    (this multiple choice question has been scrambled)
  128. The demand for items on which we spend a large percentage of our income

    A. will tend to be inelastic.
    B. will be perfectly elastic.
    C. will tend to be elastic.
    D. will be perfectly inelastic.
    C. will tend to be elastic.
    (this multiple choice question has been scrambled)
  129. If the income elasticity for Ramen Noodles is -3.0, we may conclude that Ramen Noodles are
    _________.

    A. neither a normal good nor an inferior good
    B. a normal good
    C. both a normal good and an inferior good
    D. an inferior good
    D. an inferior good
    (this multiple choice question has been scrambled)
  130. 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)
  131. Since the cross elasticity of demand between hamburger patties and cheese is negative, these are
    ________ goods.

    A. substitutable
    B. both complementary and substitutable
    C. normal
    D. complementary
    D. complementary
    (this multiple choice question has been scrambled)
  132. If the elasticity of demand for a service is 1, then the demand for that service is

    A. inelastic.
    B. perfectly elastic.
    C. unit elastic.
    D. elastic.
    E. perfectly inelastic.
    C. unit elastic.
    (this multiple choice question has been scrambled)
  133. 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.

    A. Statement II is true and statement I is false.
    B. Both statements are true.
    C. Statement I is true and statement II is false.
    D. Both statements are false.
    C. Statement I is true and statement II is false.
    (this multiple choice question has been scrambled)


  134. The curve in the above graph:

    A. may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve.
    B. can only be a perfectly inelastic demand curve.
    C. can only be a perfectly inelastic supply curve.
    D. can be neither a perfectly inelastic demand curve nor a perfectly inelastic supply curve.
    A. may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve.
    (this multiple choice question has been scrambled)


  135. About how much of the tax is paid by cigarette sellers?

    A. 10 cents
    B. 8 cents
    C. 18 cents
    D. 20 cents
    E. 2 cents
    E. 2 cents
    (this multiple choice question has been scrambled)
  136. A tax increase is usually borne

    A. entirely by the seller.
    B. partially by the seller and partially by the buyer.
    C. entirely by the buyer.
    B. partially by the seller and partially by the buyer.
    (this multiple choice question has been scrambled)
  137. When supply is more elastic than demand, the buyer pays _____ of a tax.

    A. most
    B. none
    C. half
    D. all
    E. less than half
    A. most
    (this multiple choice question has been scrambled)
  138. When a tax is lowered this will

    A. raise both demand and supply.
    B. lower both demand and supply.
    C. lower only supply.
    D. raise only supply.
    D. raise only supply.
    (this multiple choice question has been scrambled)
  139. 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.
  140. If the elasticity of demand for good ALPHA is 2.0,

    A. A 17% increase in the price of ALPHA will lower quantity demanded by 17%.
    B. A 10% fall in the price of ALPHA will raise quantity demanded by 2%.
    C. A 10% rise in the price of ALPHA will lower quantity demanded by 20%.
    D. A price increase will raise total revenue for sellers.
    C. A 10% rise in the price of ALPHA will lower quantity demanded by 20%.
    (this multiple choice question has been scrambled)
  141. If your income goes up by 10% and you increase your pedicures by 5%, then your demand for pedicures
    is _______.

    A. income inelastic
    B. income unit elastic
    C. income elastic
    A. income inelastic
    (this multiple choice question has been scrambled)
  142. Demand is elastic

    A. when the percentage change in quantity is greater than the percentage change in price.
    B. All of the choices are correct.
    C. when price increases lower total revenue.
    D. when price decreases raise total revenue.
    B. All of the choices are correct.
    (this multiple choice question has been scrambled)
  143. The seller will bear the entire burden of a tax in all of the following except

    A. when the supply is perfectly inelastic.
    B. when the demand curve is a vertical line.
    C. when the supply curve is a vertical line.
    D. when the demand is perfectly elastic.
    B. when the demand curve is a vertical line.
    (this multiple choice question has been scrambled)
  144. 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.

    A. Both statements are true.
    B. Statement II is true and statement I is false.
    C. Both statements are false.
    D. Statement I is true and statement II is false.
    C. Both statements are false.
    (this multiple choice question has been scrambled)
  145. If the elasticity of demand for tongue depressors is 0.5,

    A. a 10% increase in the price of tongue depressors will not change its total revenue.
    B. a 10% fall in the price of tongue depressors will raise quantity demanded by 5%.
    C. an increase in the price of tongue depressors will lower total revenue for sellers.
    D. a 10% rise in the price of tongue depressors will lower quantity demanded by 50%.
    B. a 10% fall in the price of tongue depressors will raise quantity demanded by 5%.
    (this multiple choice question has been scrambled)
  146. 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. Statement II is true and statement I is false.
    B. Both statements are false.
    C. Statement I is true and statement II is false.
    D. Both statements are true.
    D. Both statements are true.
    (this multiple choice question has been scrambled)
  147. If water became very scarce and diamonds became very plentiful

    A. the marginal utility of water would rise and the marginal utility of diamonds would fall.
    B. the marginal utility of diamonds would rise and the marginal utility of water would fall.
    C. the marginal utility of diamonds and water would both rise.
    D. the marginal utility of both water and diamonds would both fall.
    A. the marginal utility of water would rise and the marginal utility of diamonds would fall.
    (this multiple choice question has been scrambled)
  148. 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
    B. high; low
    C. low; low
    D. high; high
    A. low; high
    (this multiple choice question has been scrambled)
  149. We are maximizing our utility when the ______ of each good and service we purchase is equal to
    ______.

    A. total utility; its price
    B. marginal utility; its price
    C. total utility; one
    D. marginal utility; one
    B. marginal utility; its price
    (this multiple choice question has been scrambled)
  150. If your marginal utility from your last session with your personal trainer is equal to the price they charged
    you, then

    A. there is no way to determine whether you have had enough sessions.
    B. you have had exactly the right number of sessions.
    C. you have had too many sessions.
    D. you have not had enough sessions.
    B. you have had exactly the right number of sessions.
    (this multiple choice question has been scrambled)
  151. 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. negative
    B. zero
    C. None of these choices are correct.
    D. positive
    D. positive
    (this multiple choice question has been scrambled)
  152. 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?

    A. It remains the same.
    B. It is lower.
    C. It is higher.
    C. It is higher.
    (this multiple choice question has been scrambled)
  153. 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?

    A. They definitely enjoy a consumer surplus.
    B. They may or may not enjoy a consumer surplus.
    C. They definitely do not enjoy a consumer surplus.
    A. They definitely enjoy a consumer surplus.
    (this multiple choice question has been scrambled)

  154. Given the demand curve in this graph, if price were $3.00, how much is consumer surplus?

    A. $5.00
    B. $0
    C. $10.50
    D. $1.50
    B. $0
    (this multiple choice question has been scrambled)
  155. The price of a drink at the juice bar is $7. Melody Miller buys six carrot juices over the course of the
    afternoon.

    A. She is enjoying a consumer surplus.
    B. She is not enjoying a consumer surplus.
    C. There is no way to determine whether or not she is enjoying a consumer surplus.
    A. She is enjoying a consumer surplus.
    (this multiple choice question has been scrambled)
  156. If you received a free month's trial membership in a gym, you would keep going until your marginal
    utility reached

    A. a maximum.
    B. a negative number.
    C. zero.
    D. a positive number.
    C. zero.
    (this multiple choice question has been scrambled)
  157. When marginal utility is negative, total utility is

    A. negative.
    B. falling.
    C. zero.
    D. rising.
    B. falling.
    (this multiple choice question has been scrambled)

  158. The marginal utility of your fourth milk shake would be
    A. $13.
    B. $.50.
    C. $2.00.
    D. $2.50.
    D. $2.50.
    (this multiple choice question has been scrambled)
  159. The concept based on the assumption that we get bargains on each unit we purchase until the last one is
    called

    A. the law of diminishing marginal utility.
    B. marginal utility.
    C. consumer surplus.
    D. total utility.
    C. consumer surplus.
    (this multiple choice question has been scrambled)
  160. If you bought eight pairs of shoes, the marginal utility of the seventh pair was

    A. equal to the price.
    B. less than the price.
    C. greater than the price.
    C. greater than the price.
    (this multiple choice question has been scrambled)
  161. Which statement is false?

    A. A person would maximize her total utility when she had no consumer surplus.
    B. As the price of a good rises the consumer surplus decreases.
    C. We will consume a service when its marginal utility is equal to its price.
    D. A product's utility to a buyer is measured by how much the buyer is willing to pay for it.
    A. A person would maximize her total utility when she had no consumer surplus.
    (this multiple choice question has been scrambled)
  162. 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

    A. less than a second steak burger you plan to eat.
    B. zero.
    C. negative.
    D. positive.
    D. positive.
    (this multiple choice question has been scrambled)

  163. Her marginal utility of her fifth scented candle would be
    A. $5.
    B. $4.
    C. $26.
    D. $30.
    E. $20.
    B. $4.
    (this multiple choice question has been scrambled)
  164. 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.

    A. Statement I is true and statement II is false.
    B. Both statements are true.
    C. Statement II is true and statement I is false.
    D. Both statements are false.
    B. Both statements are true
    (this multiple choice question has been scrambled)
  165. 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?"

    A. Statement II is true and statement I is false.
    B. Both statements are true.
    C. Statement I is true and statement II is false.
    D. Both statements are false.
    A. Statement II is true and statement I is false
    (this multiple choice question has been scrambled)
  166. When average total cost is declining, then

    A. marginal cost must be greater than average total cost.
    B. marginal cost must be less than average total cost.
    C. average total cost must be greater than average fixed cost.
    D. average variable cost must be declining.
    B. marginal cost must be less than average total cost.
    (this multiple choice question has been scrambled)
  167. _______ is (are) the relationship between the maximum amounts of output a firm can produce and
    various quantities of inputs.

    A. Economies of scale
    B. A production function
    C. The law of diminishing returns
    D. Diseconomies of scale
    B. A production function
    (this multiple choice question has been scrambled)
  168. Which statement is true?

    A. AFC declines with output.
    B. ATC declines with output.
    C. AFC - AVC = ATC.
    D. Output divided by fixed cost = AFC.
    A. AFC declines with output.
    (this multiple choice question has been scrambled)
  169. In the short run, output

    A. can be varied by changing the amount of equipment in factories.
    B. can be varied by using the factories and equipment in the industry with more or less of other inputs.
    C. can be varied by changing the size of factories.
    D. cannot be varied because inputs are fixed.
    B. can be varied by using the factories and equipment in the industry with more or less of other inputs.
    (this multiple choice question has been scrambled)
  170. In the long run

    A. all costs become variable.
    B. all costs become fixed.
    C. all costs are a combination of fixed and variable
    A. all costs become variable.
    (this multiple choice question has been scrambled)
  171. The average fixed cost curve

    A. slopes downward to the right as output rises.
    B. is U-shaped (it declines as output rises, reaches a minimum, and then rises).
    C. is a vertical line.
    D. is a horizontal line.
    A. slopes downward to the right as output rises.
    (this multiple choice question has been scrambled)
  172. As a firm's output expands, the

    A. ATC will reach a minimum before the AVC.
    B. AVC will reach a minimum before the ATC.
    C. ATC and AVC will reach minimums at the same output
    B. AVC will reach a minimum before the ATC.
    (this multiple choice question has been scrambled)
  173. A variable input is an input that can change

    A. in both the long run and the short run. D. without changing the level of output.
    B. in the long run but not in the short run.
    C. in the short run but not in the long run.
    A. in both the long run and the short run.
    (this multiple choice question has been scrambled)
  174. The basic characteristic of the short run is that

    A. the firm does not have sufficient time to change the size of its plant.
    B. a firm does not have sufficient time to change the amounts of any of the resources it employs.
    C. the firm does not have sufficient time to cut its rate of output to zero.
    D. the time frame is sufficient to allow new firms to enter the industry.
    A. the firm does not have sufficient time to change the size of its plant.
    (this multiple choice question has been scrambled)
  175. In the long run,

    A. a firm can vary all inputs, but it cannot change the mix of inputs it uses.
    B. there are no fixed factors of production.
    C. a firm can shut down, but it cannot exit the industry.
    D. None of the choices are correct.
    B. there are no fixed factors of production.
    (this multiple choice question has been scrambled)
  176. Which statement is false?

    A. A firm will operate when prospective sales are greater than variable cost.
    B. When output falls, variable costs fall.
    C. Total cost rises with output because variable cost rises.
    D. None of the statements are false.
    D. None of the statements are false.
    (this multiple choice question has been scrambled)
  177. 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 true.
    B. Both statements are false.
    C. Statement I is true and statement II is false.
    D. Statement II is true and statement I is false.
    B. Both statements are false
    (this multiple choice question has been scrambled)
  178. 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.

    A. Statement II is true and statement I is false.
    B. Both statements are true.
    C. Both statements are false.
    D. Statement I is true and statement II is false.
    A. Statement II is true and statement I is false.
    (this multiple choice question has been scrambled)
  179. 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.

    A. Both statements are false.
    B. Statement II is true and statement I is false.
    C. Statement I is true and statement II is false.
    D. Both statements are true.
    A. Both statements are false.
    (this multiple choice question has been scrambled)
  180. 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; stay in business
    B. shut down; go out of business
    C. operate; stay in business
    D. operate; go out of business
    B. shut down; go out of business
    (this multiple choice question has been scrambled)
  181. When output is 1,

    A. total cost equals average total cost.
    B. total cost equals fixed cost plus variable cost.
    C. marginal cost equals variable cost.
    D. All of the choices are correct
    D. All of the choices are correct
    (this multiple choice question has been scrambled)
  182. 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.
  183. Diseconomies of scale are associated with

    A. a downward-sloping long-run average cost curve.
    B. a horizontal long-run average cost curve.
    C. an upward-sloping long-run average cost curve.
    C. an upward-sloping long-run average cost curve.
    (this multiple choice question has been scrambled)

  184. 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.
  185. Who said "Work expands so as to fill the time available for its completion," and "Work expands to
    occupy people available for its completion"?

    A. Karl Marx
    B. John Maynard Keynes
    C. Adam Smith
    D. Alfred Marshall
    E. C. Northcote Parkinson
    E. C. Northcote Parkinson
    (this multiple choice question has been scrambled)
  186. 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.

    A. Statement I is true and statement II is false.
    B. Statement II is true and statement I is false.
    C. Both statements are false.
    D. Both statements are true.
    D. Both statements are true.
    (this multiple choice question has been scrambled)
  187. If ATC is declining, MC

    A. must be below ATC.
    B. may be below ATC.
    C. must be above ATC.
    D. may be above ATC.
    A. must be below ATC.
  188. When MC is rising, AVC

    A. may be falling or rising.
    B. will remain constant.
    C. must be falling.
    D. must be rising.
    A. may be falling or rising.
    (this multiple choice question has been scrambled)
  189. When MC is rising, ATC

    A. will remain constant.
    B. must be falling.
    C. may be falling or rising.
    D. must be rising.
    C. may be falling or rising
    (this multiple choice question has been scrambled)
  190. 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

    A. increasing returns.
    B. diminishing returns.
    C. negative returns.
    B. diminishing returns
    (this multiple choice question has been scrambled)
  191. Which statement is true?

    A. The minimum point on the firm's average variable cost curve is the shutdown point.
    B. The minimum point on the firm's average total cost curve is the shutdown point.
    C. The minimum point on the firm's marginal cost curve is the break-even point.
    D. The minimum point on the firm's marginal cost curve is the shutdown point.
    A. The minimum point on the firm's average variable cost curve is the shutdown point.
    (this multiple choice question has been scrambled)
  192. 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 indefinitely.
    B. increase output to increase profit.
    C. decrease output to reduce the costs.
    D. shut down.
    E. continue to operate in the short run.
    E. continue to operate in the short run.
    (this multiple choice question has been scrambled)
  193. As output expands beyond the break-even point, the vertical distance between the AVC and ATC will

    A. remain constant.
    B. get smaller.
    C. get larger.
    B. get smaller.
    (this multiple choice question has been scrambled)
  194. 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.

    A. Both statements are false.
    B. Statement I is false and statement I is true.
    C. Statement I is true and statement II is false.
    D. Both statements are true.
    D. Both statements are true
    (this multiple choice question has been scrambled)

  195. This firm's most profitable output is at

    A. 150.
    B. 300.
    C. 230.
    D. 350.
    C. 230
    (this multiple choice question has been scrambled)
  196. A company is operating most efficiently when it is at

    A. neither the break-even nor the shutdown point.
    B. the break-even point.
    C. both the break-even and shutdown points.
    D. the shutdown point.
    B. the break-even point
    (this multiple choice question has been scrambled)

  197. If the price were $60, this firm would _________ in the short run and __________ in the long run.

    A. operate; go out of business
    B. operate; stay in business
    C. shut down; go out of business
    D. shut down; stay in business
    B. operate; stay in business
    (this multiple choice question has been scrambled)
  198. Which statement is true?

    A. The lowest point on the short-run supply curve is at the break-even point.
    B. When price exceeds marginal cost, a profit-maximizing firm will decrease production.
    C. Price is calculated by dividing output by total revenue.
    D. The marginal cost curve intersects the average total cost curve at the break-even point.
    D. The marginal cost curve intersects the average total cost curve at the break-even point.
    (this multiple choice question has been scrambled)
  199. 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.
  200. The crucial aspect of competition among firms that leads to the condition of zero profits in the long run
    is

    A. free entry and exit of firms in the industry.
    B. all costs are at their least cost level.
    C. fixed costs equal zero.
    D. the number of firms in the industry is fixed.
    A. free entry and exit of firms in the industry.
    (this multiple choice question has been scrambled)

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