51) A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.   52) If a perfectly competitive firm maximizes short-run profits, its marginal revenue will be positive and less than its price.   53) A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output.   54) Unlike a perfectly competitive firm, a monopolistic […]

    81) Companies use flexible benefits programs in order to: A) simplify benefits administration. B) give employees options to select the benefits most meaningful to them. C) motivate employees to higher productivity and quality by rewarding performance. D) give management options in selecting benefits to offer employees, which lowers the cost of the benefits program.   82) Which term refers to individual employee accounts […]

  72. Castleberry Products manufactures three product lines: A, B, and C. The following information is available for each product line:    A   B   C   Total Sales $500,000   $350,000   $400,000   $1,250,000 Variable costs   175,000      240,000     200,000        615,000 Contribution margin 325,000   110,000   200,000   635,000 Fixed costs   120,000      120,000 […]

  21) Some policymakers have argue that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption. All else equal, if the government decided to impose a tax on soda, the equilibrium quantity of soda would ________ and the equilibrium price of soda would ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease     22) The 2005, 24 […]

    21) Economists have used ________ and ________ in experiments designed to determine whether consumers care about fairness when they make decisions. A) Giffen goods; luxury goods B) the income effect; the substitution effect C) the ultimatum game; the dictator game D) network externalities; the endowment effect   22) Traditionally, economists have considered culture, customs, and religion as A) very important influences on the […]

    37) Suppose two countries use different combinations of inputs, such as labor and capital, to produce the same product. This implies all of the following except that A) the two countries use different technologies to produce the product. B) the inputs are not equally productive in the two countries. C) the prices of the inputs are not the same in the countries. D) […]

  51.Whenthesocialcostcurveisaboveaproduct’ssupplycurve, a.thegovernmenthasintervenedinthemarket. b.anegativeexternalityexistsinthemarket. c.apositiveexternalityexistsinthemarket. d.thedistributionofresourcesisunfair. 52.Supposethegovernmentimposesataxinacertainmarketinordertointernalizeanexternality.This typeof policyisbasedonwhichoftheTenPrinciplesofEconomics? a.Peoplefacetrade-offs. b.Peoplerespondtoincentives. c.Marketsareusuallyagoodwaytoorganizeeconomicactivity. d.Thecostofsomethingiswhatyougiveuptogetit. 53.Whenapolicysucceedsingivingbuyersandsellersinamarketanincentivetotakeintoaccounttheexternaleffectsoftheiractions,thepolicyissaidto a.equalizeprivatevalueandprivatecost. b.equalizeprivatecostandexternalcost. c.externalizetheactionsofthebuyersandsellers. d.internalizetheexternality. 54.Supposethatasteelfactoryemitsacertainamountofairpollution,whichconstitutesanegativeexternality.Ifthemarketdoesnotinternalizetheexternality, a.thesupplycurvewouldadequatelyreflectthemarginalsocialcostofproduction. b.consumerswillberequiredtopayahigherpriceforsteelthantheywouldhaveiftheexternalitywereinternalized. c.themarketequilibriumquantitywillnotbethesociallyoptimalquantity. d.producerswillproducelesssteelthantheyotherwisewouldiftheexternalitywereinternalized. 55.Whenproducersoperateinamarketcharacterizedbynegativeexternalities,ataxthatforcesthemtointernalizetheexternalitywill a.givesellerstheincentivetoaccountfortheexternaleffectsoftheiractions. b.increasedemand. c.increasetheamountofthecommodityexchangedinmarketequilibrium. d.restricttheproducers’abilitytotakethecostsoftheexternalityintoaccountwhendecidinghowmuchtosupply. 56.WhenMoniquedrivestoworkeverymorning,shedrivesonacongestedhighway.WhatMoniquedoesnotrealizeisthatwhensheentersthehighwayeachmorningsheincreasesthetraveltimeofallotherdriversonthehighway. a.increasesthesocialcostabovetheprivatecost. b.lowersthesocialcostbelowtheprivatecost. c.increasesthesocialvalueabovetheprivatebenefit. d.decreasesthesocialvaluebelowtheprivatebenefit. 57.An optimaltaxonpollution wouldresultinwhichof thefollowing? a.Producerswillchoosenottoproduceanypollution. b.Producerswillinternalizethecostofthepollution. c.Producerswillmaximizeproduction. d.Thevaluetoconsumersatmarketequilibriumwillexceedthesocialcostofproduction. 58.Whichofthefollowingstatementsiscorrect? a.Internalizinganegativeexternalitywillcauseanindustrytodecreasethequantityitsuppliestothemarketanddecreasethepriceofthegoodproduced. b.Internalizinganegativeexternalitywillcauseanindustrytodecreasethequantityitsuppliestothemarketandincreasethepriceofthegoodproduced. c.Internalizinganegativeexternalitywillcauseanindustrytoincreasethequantityitsuppliestothemarketanddecreasethepriceofthegoodproduced. d.Internalizinganegativeexternalitywillcauseanindustrytoincreasethequantityitsuppliestothemarketandincreasethepriceofthegoodproduced. 59.Anegativeexternalitywillcauseaprivatemarkettoproduce a.lessthanissociallydesirable. b.morethanissociallydesirable. c.exactlythequantitythatissociallydesirable. d.lessthanthesamemarketwouldproduceinthepresenceofapositiveexternality. 60.Privatemarketsfailtoreachasociallyoptimalequilibriumwhennegativeexternalitiesarepresentbecause a.socialcostsequalprivatecostsattheprivatemarketsolution. b.privatecostsexceedsocialcostsattheprivatemarketsolution. c.socialcostsexceedprivatecostsattheprivatemarketsolution. d.theyinternalizeexternalities.    

  31) Relative to free trade, when a tariff is imposed in a market for an imported good, A) the consumer surplus in that market increases. B) the producer surplus in that market decreases. C) the total surplus in that market decreases. D) tariff revenue decreases. E) deadweight loss decreases. 32) Of the following, who gains because of tariffs and why? A) domestic producers of […]

  20.2   How Economic Inequality Arises   1) Workers who have invested in education and training A) are more likely to find jobs that are not rewarding. B) have a higher value of marginal product. C) have a more difficult time finding a job because their wage rate is higher. D) have identical supply curves to otherwise similar workers who have not invested in education […]

  21. If a company has a positive contribution margin but net operating income is low or negative, what are some ways of increasing net operating income? A. Increase sales priceB. Increase sales volumeC. Decrease variable costsD. All of these are ways to increase net operating income   22. Assuming a company has a positive contribution margin, which of the following changes will cause net operating income to increase? A. A decrease in variable […]