Questions:
1. There is a negative relationship between two variables if:
they move in opposite directions.
they move in the same direction.
one variable changes and the other does not.
neither variable moves.
2. A firm produces its product using both capital and labor. When it does not change its capital usage, but doubles its labor input, its output increases by less than 50 percent. Which of the following is the most likely explanation of this finding?
The principle of opportunity cost
The principle of diminishing returns
The marginal principle
The spillover principle
3. The price of iPhones has fallen dramatically. Which of the following is likely to happen?
The quantity of iPhones supplied will decrease.
The quantity of iPhones supplied will increase.
The supply of iPhones will decrease.
The supply of iPhones will increase.
4. If the demand for school ball caps is inelastic, an increase in price will result in:
a decrease in profits.
an increase in total revenue.
a decrease in total revenue.
an increase in the quantity demanded.
5. An electrician licensing program in the state of North Carolina requires each electrician to obtain a license and renew it each year. Which of the following is a result of having the licensing program in North Carolina?
A decrease in total surplus
Excess demand for electrical service
An increase in the quality of electrician
All of the above are a result of the licensing program.
6. The self-interest theory of government was suggested by:
James Buchanan.
Charles M. Tiebout.
bureaucrats.
the European Union.
7. Suppose that the only input used in the generation of solar energy is sunlight, which has a zero cost. The average total cost of producing electricity is:
zero.
equal to the marginal cost.
equal to the average fixed cost.
immeasurably high.
8. When a firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is __________ and the firm is experiencing __________ .
horizontal; constant returns to scale
downward sloping; constant returns to scale
upward sloping; diseconomies of scale
downward sloping; economies of scale
9. Limit pricing occurs when a firm sets price:
Equal to marginal cost.
Equal to average cost.
At different amounts for different groups of consumers.
So low that other firms are prevented from entering the market.
10. Which of the following statements about featherbedding is correct?
It could increase production costs, resulting in higher prices for products.
The quantity of labor demanded by firms could actually decrease.
It could lead to a lower wage and smaller employment in the long run.
All of the above.