Which of the following statements concerning opportunity costs is false?
a. Opportunity costs are only expressed in money terms.
b. Every choice involves opportunity costs.
c. Opportunity costs are the highest-valued alternatives that must be forgone when a choice is made.
d. The concept of opportunity cost is used to demonstrate scarcity.
e. Economists refer to the forgone benefits of the next-best alternative as opportunity costs.
QUESTION 2When the existing firms in a monopolistically competitive industry earn above-normal profit:
a. new firms enter into the market, and entry continues until firms earn normal profit.
b. new firms have no incentive to enter the market.
c. new firms have an incentive to enter the market but are legally barred from doing so.
d. they increase their production and lower the price level.
e. their cost structure automatically changes, eliminating the additional profit.
QUESTION 3Which of the following statements is false?
a. Economists look at the factors that lead an individual to decide that a particular idea is in his or her best interest.
b. Economists do not ask whether a particular decision is in the individual's best interest.
c. Choices must be made because of scarcity.
d. A particular choice is made by an individual because that choice provides the greatest satisfaction.
e. None of these statements is false, they are all true.
QUESTION 4Which of the following statements about the monopolistically competitive market, in the long run, is true?
a. The resources are efficiently utilized.
b. The firms make above-normal profit in the long run.
c. The marginal-revenue curve coincides with the demand curve facing the firm.
d. The firms produce the output level that is less than the output corresponding to the minimum of average total cost.
e. The firms operate on the upward-sloping portion of the long run average cost curve.
QUESTION 5Choices need to be made because of all of the following, except limited _____.
a. resources
b. income
c. wants
d. time
e. availability of goods
QUESTION 6If a monopolistically competitive industry is in long-run equilibrium and suddenly the cost of resources increases, then:
a. the demand and average-revenue curves will shift to the right.
b. the demand and average-revenue curves will shift to the left.
c. some firms will eventually leave the industry.
d. new firms will eventually enter the industry.
e. the cost structure of the firm will shift down.
QUESTION 7To say that there is a scarcity of gold means that:
a. gold prices will fall in the future.
b. there is not enough gold to satisfy people's demand for it at a zero price.
c. there are very few substitutes for gold.
d. gold is very expensive.
e. the demand for gold is changing.
QUESTION 8In the short-run, a monopolistically competitive firm:
a. can earn only a normal profit.
b. will produce at the point where marginal revenue is greater than marginal cost, in order to maximize profits.
c. will produce at the point at which price equals minimum ATC, to maximize profits.
d. will charge a price equal to its marginal revenue.
e. will shut down temporarily if price is less than AVC.
QUESTION 9The basic economic problem is:
a. inflation.
b. unemployment.
c. poverty.
d. scarcity.
e. lack of money.
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