45. The change in total output resulting from a 1-unit increase in the quantity of an input used, holding the quantities of all other inputs constant, is ______. (Points: 3)
average cost
average product
marginal cost
marginal product
46. When an additional unit of a variable input adds less to total product than the previous unit, the firm must be experiencing ______. (Points: 3)
increasing returns
diminishing marginal returns
diminishing average returns
both B and C
47. The marginal cost curve intersects the average variable cost curve at ______. (Points: 3)
its lowest point
its maximum
its endpoint
no point; the curves don't intersect
48. When marginal cost is below average variable cost, average variable cost must be ______. (Points: 3)
at its minimum
at its maximum
falling
rising
49. When diseconomies of scale outweigh economies of scale, the ______. (Points: 3)
long-run average cost curve rises
marginal cost curve declines
average total cost curve declines
average variable cost curve declines
50. A firm that is experiencing diminishing returns in management's ability to use and disseminate information as it increases production in the long run is an example of ______. (Points: 3)
economies of scale
diseconomies of scale
being too small for the relevant market
not having enough managers
51. The assumptions of perfect competition imply that ______. (Points: 3)
individuals in the market accept the market price as given
individuals can influence the market price
the price will be a fair price
the price will be low
52. Individuals in a market who must take the market price as given are ______. (Points: 3)
quantity minimizers
quantity takers
price takers
price searchers
53. If a perfectly competitive firm sells 30 units of output at a price of $10 per unit, its marginal revenue is ______. (Points: 3)
$10
more than $10
less than $10
$300
54. Marginal revenue is a firm's ______. (Points: 3)
ratio of profit to quantity
ratio of average revenue to quantity
price per unit times the number of units sold
increase in total revenue when it sells an additional unit of output
55. If price is greater than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will _____. (Points: 3)
produce at a loss
produce at a profit
shut down production
produce more than the profit-maximizing quantity
56. When economic profits in an industry are zero ______. (Points: 3)
firms are really doing badly
it means that firms are doing as well as they could do in other markets
firms should exit, so they can make an economic profit in some other market
the industry is not in long-run equilibrium
57. A decrease in production costs for firms in a perfectly competitive market will cause a(n) ______. (Points: 3)
permanent increase in price
economic profit for firms in the short run
increase in demand
increase in firms' marginal revenue
58. In long-run equilibrium, economic profits in a perfectly competitive industry are _____. (Points: 3)
positive
zero
negative
indeterminate
59. A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to a price change have been completed is a long-run ______. (Points: 3)
marginal revenue curve
marginal cost curve
industry supply curve
production curve
60. When total utility is at a maximum, marginal utility is ______. (Points: 3)
rising
at its average value
at a maximum
zero
61. Whatever the time period involved, a consumer's spending will be _______ by his or her _______. (Points: 3)
unlimited; marginal utility
limited; marginal utility
limited; budget
unlimited; budget
62. An increase in the consumer's income will do all of the following, except ______. (Points: 3)
shift the budget line away from the origin
increase the horizontal intercept
increase the vertical intercept
change the slope of the budget line
63. If a consumer derives more utility by spending an additional $1 on good X rather than on good Y, then ______. (Points: 3)
MUx/Px > MUy/Py
MUx/Px = MUy/Py
MUx/Px < MUy/Py
Px/MUx > Py/MUy
64. Assume that a person is consuming the utility-maximizing quantities of pork and chicken. We can conclude that ______. (Points: 3)
the price of pork equals the price of chicken
the marginal utility of pork equals the marginal utility of chicken
the ratio of the marginal utility to price is the same for pork and for chicken
both A and B are true
65. If the price of a good falls and the consumer decides to buy more of the good solely because it is relatively less expensive, this describes the ______. (Points: 3)
income effect
substitution effect
consumer surplus effect
marginal-maximizing rule
66. Market demand is found by ______. (Points: 3)
adding individual quantities demanded at each price
adding individual prices at each quantity demanded
multiplying individual quantities demanded at each price
multiplying individual prices at each quantity demanded
67. The income effect refers to ______. (Points: 3)
changes in income because of changes in business investment
changes in money or nominal income because of changes in wages
a change in the quantity demanded of a good because of an implicit change in the buyer's income caused by a change in the price of a good or service
a change in the quantity demanded of a good because of a change in the buyer's money income
68. The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition and on the other end by ______. (Points: 3)
monopoly
duopoly
oligopoly
monopolistic competition
69. A monopoly is a market characterized by a ______. (Points: 3)
product with no close substitutes
single buyer and several sellers
large number of small firms
small number of large firms
70. Conditions that prevent the entry of new firms in a monopoly market are ______. (Points: 3)
barriers to entry
terms of sale
labor market stipulations
production controls
71. The demand curve facing a monopolist is ______. (Points: 3)
horizontal, the same as that facing a perfectly competitive firm
downward sloping, the same as that facing a perfectly competitive firm
upward sloping, the same as that facing a perfectly competitive firm
downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm
72. Marginal revenue for a monopolist is ______. (Points: 3)
equal to price
greater than price
less than price
equal to average revenue
73. Which of the following is(are) true? (Points: 3)
Profit-maximizing behavior is based on the marginal decision rule.
Additional units of a good should be produced as long as MR > MC.
The profit-maximizing solution occurs where MR = MC.
All of the above are true.
74. In monopoly _______. (Points: 3)
because P > MC, a basic condition for efficiency is violated
consumers are confronted with a price that is lower than marginal cost
consumers will consume more of the good than is economically efficient
all of the above are true
75. Public policies toward monopoly in the United States consists of _______. (Points: 3)
laws outlawing all of them
regulation of natural monopolies
government takeover if monopoly profit exceeds a certain level
forcing monopoly industries to become perfectly competitive
76. Oligopoly is a market structure that is characterized by a ______. (Points: 3)
small number of interdependent firms producing identical or differentiated products
small number of independent firms producing identical or differentiated products
large number of relatively small independent firms producing differentiated products
large number of relatively small independent firms producing identical products
77. Oligopoly is a market structure characterized by ______. (Points: 3)
independence in decision making
uncertainty about the behavior of rival firms
substantial diseconomies of scale
a large number of small firms
78. The industry characterized by a few interdependent firms where there are barriers to entry is called ______. (Points: 3)
monopolistic competition
perfect competition
oligopoly
monopoly
79. A way to measure the degree of concentration in oligopoly is to use ______. (Points: 3)
an elasticity ratio
a demand ratio
the percentage of sales accounted for by the four largest firms in the industry
the ratio of MC to ATC
80. An analytical approach through which strategic choices can be assessed is called _____. (Points: 3)
benefit-cost analysis
econometric theory
game theory
none of the above
81. A well-known example of an international cartel is ______. (Points: 3)
Japan
OPEC
Exxon
General Motors
82. When one firm responds to a rival's cheating by cheating and to a rival's cooperation by cooperating, that firm is practicing a ______. (Points: 3)
dormant strategy
trigger strategy
conclusive strategy
-for-tat strategy
83. Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for chiropractors is best considered ______. (Points: 3)
an oligopoly
perfect competition
monopolistic competition
a monopoly
84. A firm in monopolistic competition maximizes its profit by producing at the level at which ______. (Points: 3)
MC = ATC
MC = AR
MC = MR
MC = P
85. Product differentiation under monopolistic competition means that each firm ______. (Points: 3)
charges slightly different prices
has a pure monopoly
maximizes profit where MC = P
faces a horizontal demand curve
86. In monopolistic competition ______. (Points: 3)
to maximize profits MR = MC, yet P > MC
people would be better off if output were reduced
output could be increased without an increase in total cost
A and B are true
87. Assuming identical production functions and cost curves, the long-run equilibrium of a monopolistically competitive firm, as compared with that of a perfectly competitive firm, is such that, for the former, price is ______. (Points: 3)
higher and output is greater
higher and output is smaller
lower and output is greater
lower and output is smaller
88. Because monopolistically competitive firms charge a P > MC ______. (Points: 3)
monopolistic competition is efficient
monopolistic competition is inefficient
the marginal benefit to society of an additional unit of output is below its cost
B and C are true
89. Critics of advertising argue that it ______. (Points: 3)
tends to make markets more perfect
leads to low-cost mass production
results in higher prices to consumers
encourages competition through new-product advertising
90. If an activity generates external costs, decision makers generating the activity will ______. (Points: 3)
be faced with its full costs
be faced with no costs
not be faced with its full costs
be faced with excessive costs
91. If external costs exist, the competitive free market ______. (Points: 3)
allocates resources inefficiently
allocates resources efficiently
automatically corrects an overallocation of resources
automatically corrects an underallocation of resources
92. As the quantity of pollution emissions rises, the marginal social cost of pollution ______. (Points: 3)
remains constant
falls
rises
rises at first, but eventually falls
93. Which of the following is usually associated with a positive externality? (Points: 3)
smoking cigarettes
purchasing a new CD
innovation in the semiconductor industry
all of the above
94. A tax system _______ when the “right people actually bear the burden of taxes.” (Points: 3)
is efficient
is equitable
has no deadweight loss
is both A and B
95. A tax that takes a higher percentage of income as income rises is a(n) ______. (Points: 3)
proportional tax
ability tax
progressive tax
regressive tax
96. The rate that would apply to an additional $1 of taxable income received by a taxpayer is the ______. (Points: 3)
marginal tax rate
average tax rate
total tax rate
lower tax rate
97. If the marginal tax rate is less than the average tax rate, we know that the tax system is ______. (Points: 3)
proportional
progressive
degressive
regressive
98. An example of a means-tested program is _______. (Points: 3)
expenditure on national defense
a Social Security payment to the disabled
the food stamp program
purchasing a new city police car
99. Which of the following is associated with poverty? (Points: 3)
lack of adequate employment
lack of education
lack of proficiency in English
all of the above
100. The single most important factor influencing children's later socioeconomic attainment is ______. (Points: 3)
parental income
education
health care
geographic mobility
8 answers
MUx/Px = MUy/Py
• An increase in the money income shifts the budget line to the right.
• An increase in the money income shifts the line to the left.
• An increase in the money income causes movement along the curve.
• There is no change in the budget line when money income changes
1 answer