Other things being equal, the increase in rents that occurs after rent controls are abolished is smaller when A) the own price elasticity of demand for rental homes is price inelastic. B) the own price elasticity of demand for rental homes is price elastic. C) the own price elasticity of demand for rental homes has […]
Use the information in Scenario 4.2. What is the price elasticity of demand if the price of artichokes is $10? A) 0 B) -0.25 C) -1 D) -4 E) negative infinity ANSWER B
A farmer uses L units of labor and K units of capital to produce Q units of corn using a production function F(K,L). A production plan that uses K’ = L’ = 10 to produce Q’ units of corn where Q’ < F(10, 10 ) is said to be A) technically feasible and efficient. B) […]
If all producers in a market are cartel members, then the demand curve facing the cartel is A) the market demand curve. B) horizontal. C) identical to the demand curve in the dominant firm model. D) identical to the monopolist’s demand curve. ANSWER D
When there are externalities, economic efficiency can be achieved without government intervention A) at no time. B) when the externality affects many people and property rights are not well defined. C) when the externality affects many people and property rights are well defined. D) when the externality affects only a few parties and property rights […]
Why doesn’t the marginal worker hired earn economic rent in a competitive labor market? A) His reservation wage is less than the wage. B) His reservation wage is greater than the wage. C) His reservation wage is equal to the wage. D) He is paid a wage that is lower than the others. ANSWER […]
What is the shape of the marginal revenue curve derived from a linear downward sloping demand curve? A) Horizontal B) Vertical C) U-shaped D) Downward sloping, with a constant slope ANSWER D
Suppose the U.S. government imposes a maximum price of $5 per gallon of gasoline, and the current equilibrium price is $3.50 per gallon. This policy represents a: A) binding price floor. B) non-binding price floor. C) binding price ceiling. D) non-binding price ceiling. ANSWER D
A function that indicates the maximum output per unit of time that a firm can produce, for every combination of inputs with a given technology, is called A) an isoquant. B) a production possibility curve. C) a production function. D) an isocost function. ANSWER C
Use the information in Scenario 4.2. Suppose that the price of artichokes is increased slightly from $10. The total expenditure by consumers on artichokes will ________ and the number of artichokes sold will ________. A) rise, rise B) rise, fall C) fall, rise D) fall, fall ANSWER B
