A large farming operation which uses a potent fertilizer is located up river from a trout farmer. If property rights of the river exist and transactions costs are low, the amount of pollution will be ________.
A) efficient only if the trout farmer owns the river
B) inefficient if the farming operation owns the river
C) efficient if either the farming operation or the trout farmer own the river
D) always inefficient
Ques. 2The budget line can shift or rotate
A) only when income changes.
B) only when prices change.
C) when either income or prices change.
D) None of the above, because changes in income and prices do not shift or rotate the budget line.
Ques. 3If Bobby decides that his marginal utility per dollar spent on vanilla ice cream exceeds his marginal utility per dollar spent on chocolate ice cream, he should then
A) buy more chocolate ice cream and less vanilla ice cream.
B) buy more vanilla ice cream and less chocolate ice cream.
C) buy all the vanilla ice cream he can.
D) never buy chocolate ice cream.
Ques. 4In the figure above, a firm is operating at point A on the graph. At point A, the firm's average cost curve
A) has negative slope.
B) has positive slope.
C) is horizontal.
D) is vertical.
Ques. 5According to Utilitarian principles first discussed in the nineteenth century, fairness implies
A) equality of income.
B) equality of opportunity.
C) winner takes all.
D) maximizing consumption.
Ques. 6Which of the following statements about the Herfindahl-Hirschman Index is CORRECT?
I. It is the square of the percentage market share of each firm summed over the largest 50 firms (or summed over all the firms if there are fewer than 50 ) in a market.
II. A small index is indicative of a high degree of competition.
III. The index is used to measure the degree of competition.
A) I only
B) I, II only
C) I, III only
D) I, II, and III
Ques. 7An increase in the price of a firm's output increases the firm's demand for labor because the
A) marginal product of each worker increases.
B) value of marginal product of each worker increases.
C) value of marginal product curve becomes steeper.
D) value of marginal product curve becomes flatter.
Ques. 8If at a given moment, no matter what the price, producers cannot change the quantity supplied, the momentary supply
A) has zero elasticity.
B) has unit elasticity.
C) has infinite elasticity.
D) does not exist.
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