Rationality implies that in order to get what they want, people will spend the most time and effort
a. making private market decisions
b. getting politically involved
c. investigating political candidates' platforms
d. debating social issues
e. writing to Congress
QUESTION 2In the long run in monopolistic competition, a firm will not produce the output level that minimizes average cost because
a. that output level is less than the profit-maximizing one
b. at that output level, MC is greater than MR
c. at that output level, P is greater than MR
d. demand is horizontal
e. that would leave the firm with excess capacity
QUESTION 3Rational ignorance suggests that voters may not spend much time examining candidates before an election because
a. politics is boring
b. each voter has virtually no chance of deciding the election
c. public choices are not important to society
d. candidates are chosen by the electoral college
e. candidates are usually so different that it is easy to determine which is better
QUESTION 4If the demand curve facing the Acme Awl Company is tangent to its average total cost curve, all of the following statements are true except one. Which is the exception?
a. Economic profit is zero.
b. A normal profit exists.
c. Marginal cost must exceed marginal revenue.
d. Acme has excess capacity.
e. Firms have no incentive to enter or leave this industry.
QUESTION 5If a citizen decides he has had enough of big government and launches a personal campaign to expose big spenders in Congress,
a. he is likely to have his taxes reduced dramatically
b. his taxes are not likely to fall very much
c. he will be thrown in jail
d. he is likely to get elected by other voters
e. he will get the support of many special-interest groups
QUESTION 6As new monopolistically competitive firms enter the market, the demand facing each firm __________, causing the price charged by each firm to __________. In the long run, each firm will earn a __________ profit.
a. falls; rise; positive
b. rises; fall; positive
c. falls; rise; normal
d. rises; fall; normal
e. falls; fall; normal
QUESTION 7Many eligible voters do not vote, and many who do vote don't read the biographies of candidates before they vote. These are examples of
a. the median-voter model
b. representative government
c. rational ignorance
d. stupidity
e. laziness
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