The minimum wage

a.  imposes a price ceiling on the wages of various categories of low skill workers

b.  increases the demand for low-skill workers 

c.  makes it easier for low-skill workers to find jobs

d.  increases the earnings of some low skill workers while reducing the employment and training opportunities available to others 

when a nuclear powered electrical plant is permitted to dump radioactive waste at no cost into a recreational waterway lowering the calue boaters receive from the waterway, the

a.  firm's cost of producing electricity will be higher than the community's true oportunity 

b.  firm will tend to produce too little electricity from the viewpoint of economic efficientcy 

c.  community generally recieves an external benefit from the production of electricity 

d. firm's cost of producing electricity will be lower than the community's true opportunity cost

Vaccinations against communicable diseases might be deemed a public sector function because

a.  the vaccinations impose external costs on those who are not vaccinated

b.  communicable diseases are harmful

c.  the vaccinations provide others with external benefits

d.  none of the above 

the absence of well defined and enforceable private property rights often

a. cause people to work together for one common good

b.  improves society because it aviods the selfish actions of private property owners

c.  causes difficulties for society due to externalities

d.  brings about efficiency by providing incentives to conserve resources 

 c.  causes difficulties for society due to externalities

Economic analysis suggests that bureaucrats and public sector managers have a strong incentive to

a.make sure that their budgets are as small as possible so more funds will be available for other gov't programs

b.  expand their budgets to sizes beyond what would be considered economically efficient

c.  ensure that their budgets are exactly the size that would be considered economically efficient

d.  economize on their spending and return unspent funds to the general treasury 

Which of the following is true

a.  when the gov't undertakes an activity, we can be assured that all voters will gain

b.  if a gov't activity is favored by most citizen, it must be productive

c. if most voters oppose a gov't agency, it must be counter productive

d.  when voters pay in proportion to benefits recieved, all  voters will gain if the gov't activity is productive. 

Suppose Microsoft announces it is cutting the prices of some of its software titles by %25.  Assuming that Microsoft is seeking to increase revenues, it must believe that the elsticity of demand for these products is

a. elastic

b. inelastic

c.  of unitary elastic

d.  perfectly inelastic 

the average fixed costs of a firm eaqual

a. implicit costs divided by output

b. explicit costs divided by output

c. total cost minus variable cost

d. total cost minus vaiable cost divided by output 

What is the shape of the average fixed cost curve for a normal firm in the short run?

a. U-shaped

b. a curve that constantly increases as output expands and eventually approaches infinity at high rates of output

c.  a vertical line

d. a curve that declines as output expands and approaches the horizontal axis when output is large 

Which of the following explains why business owners have a strong incentive to strive for operational efficiency?

a.  the recognize that perational efficiency promotes the public interest.

b. since the owner are residual income claimants, increased efficiency will mean a higher income for the owners.

c.  if production is not conducted efficiency,the firm will be unable to compete effectivley and will expirience losses that will reduce the wealth of the owners.

d.  both b and c are correct 

Libby has a business using no owned capital and makes an accounting profit of 52,000/yr.  Libby could have worked for Verizon Wireless with a pay of 35,000/yr. but she would not have had time to run her business.  The economic profit of Libby's business per yr. is

a. 87,000 

b. 35,000

c. 17,000 

d.-17,000 

Te firm that is a price taker can

a.  substantially change the market price of its product by  changing its level of production

b. sell all of its output at market price

c. sell some of its output at market price

d. decide what proce to charge for its product 

In the absence of gov't regulation, which of the following products would most closely fit the competitive price taker model?

a.  beer bc there are many consumers

b. cigarettes bc there are several alternative brands that look similar

c. milk bc there are many dairy farmers producing a virtually identical product

d. automobiles bc there are substantial econmies of scale in production 

In a constant cost industry, an increase in output that increases the demand for resources used by the industry

a. is likely to result in higher prices for a at least some resources

b. causes the firm's cost curves to shift downward

c. causes the demand curve for the industry to rise

d. is not likely to result in higher prices for resources 

In a price taker market, profits are

a. the result of the consumers being charged arbitrarily high prices

b. a reward for creating value

c. the result of barriers to entry into the market

d. a signal that fewer resources are needed in a market