The term “opportunity cost” points out that
there may be such a thing as a free lunch.
not all individuals will make the most of life’s opportunities because some will fail
to achieve their goals.
executives do not always recognize opportunities for profit as quickly as they
should.
any decision regarding the use of a resource involves a costly choice.
Which of the following is a normative economic statement?
The government’s cuts in welfare spending impose an unfair hardship on the poor.
Next year’s inflation rate will be under 4 percent.
Consumers will buy more gasoline over the Christmas holiday even if the price of
gas is 10 cents higher than it was during the Thanksgiving holiday.
The current butte surplus is the result of federal policies.
The fallacy of composition is the (false) statement that
the error of reasoning from timing to cause and effect.
models can be positive without being normative.
what is true of the part is true of the whole.
experiments can be designed to analyze human behavior.
A PPF bows outward because
consumers prefer about equal amounts of the different goods.
entrepreneurial talent is more abundant than human capital.
resources are used inefficiently.
not all resources are equally productive in all activities.
The “big tradeoff” refers to the fact that the government makes decisions between
equality and distribution.
equality and production.
equality and efficiency.
consumption and efficiency.
Because of the existence of comparative advantage, the total output of goods is higher
when each producer
produces several different goods.
produces at the midpoint of its PPF.
makes both intermediate and final goods.
specializes in the production of a particular good.
Economic growth is enhanced by all of the followings except
the existence of the market.
investment in human capital.
capital accumulation.
technological change.
If the marginal benefit of computers consumed is greater then the marginal cost of
computers produced, this implies that
there is the optimal output of computers from social viewpoint.
there is the optimal output of computers from producers’ viewpoint
there should be more output of computers produced.
there should be less output of computers produced.
A drop in the price of a compact disc shifts the demand curve for prerecorded tapes
leftward. From that you know compact discs and prerecorded tapes are
complements.
substitutes.
inferior goods.
normal goods.
Which of the following does not shift the supply curve rightward?
A technological advance.
A decrease in the wages of labor used in production of the good.
A fall in the prices of a substitute in production.
An increase in the price of the good.
Leather belts and leather shoes are substitutes in production. If style changes increase
the demand for leather belts, the supply curve of leather shoes will shift
leftward and the equilibrium price of leather shoes will rise.
leftward and the equilibrium price of leather shoes will fall.
rightward and the equilibrium price of leather shoes will fall.
rightward and the equilibrium price of leather shoes will rise.
If the cross elasticity of demand between goods A and B is positive,
A and B are substitutes.
A and B are complements.
the demands for A and B are both price elastic.
the demands for A and B are both price inelastic.
Following Question 16 above, if a price ceiling is set at $8, then it will cause
of social deadweight loss.
$18
$17
$15
$13
Which of the following situations is not the obstacle to efficiency?
equality on income distribution
import quota
subsidies on production
public goods
Suppose the government imposes a $1 tax on frisbees. The price of a risbee does not
change
with a perfectly elastic supply for frisbees.
with a perfectly elastic demand for frisbees.
with a downward-sloping supply curve for frisbees.
with a downward-sloping demand curve for frisbees.
rises; increases
rises; decreases
falls; increases
alls; decreases
If there are no speculative markets in inventories, which of the following combination
would yield the smallest price fluctuation?
Small supply shifts and inelastic demand
Small supply shifts and elastic demand
Small supply shifts and perfectly elastic demand
Large supply shifts and inelastic demand
A backward labor supply curve results from the fact that
there is a positive substitution effect on the labor supplied.
there are a negative substitution effect and a positive income effect.
there are a large negative substitution effect and a small positive income effect.
a positive income effect is large enough to dominate a negative substitution effect.
The law of diminishing returns implies that, with the use of capital fixed, as the use of
labor rises,
total product will fall eventually.
the marginal product of labor will fall eventually.
the total product of labor will fall below the marginal product of labor.
the production process will become technologically inefficient eventually.
If a monopolist can perfectly price discriminate, then
it will charge just two different prices in two different markets.
it will not give a discount to those who buy in bulk.
the deadweight loss is larger than if it cannot price discriminate.
there will be no consumer surplus.
Relative to perfect competition, a single-price monopolist that maximizes its profits
would offer a greater quantity at a lower price if
it can exploit economies of scale or scope.
it earns zero profit.
there are no barriers to entry.
it sets marginal revenue equal to marginal cost.
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