5 Written Questions

1. the study of individual choice under scarcity and its implications for the behaviour of prices and quantities in individual markets
2. a situation in which people cannot achieve their goals because of an inability to make credible threats or promises
3. a technological relationship between inputs and output
4. the smallest quantity of output that will achieve minimum long-run average cost
5. a good or service that, to at least some degree, is nonrival but excludable

5 Matching Questions

1. marginal product
2. short-run shutdown point
3. ultimate barganing game
4. deadweight loss
5. normative economics

1. a the increase in total output caused by an increase of one unit in the variable factor of production, holding technology and all other inputs constant
2. b economic statements that reflect subjective value judgments and are based on ethical positions
3. c one in which the first player has the power to confront the second player with a take-it-or-leave-it offer
4. d a firm's minimum average variable cost; if price drops below minimum average variable cost, the firm will minimize its losses by shutting down
5. e reduction in economic surplus that results from adoption of that policy

5 Multiple Choice Questions

1. a situation in which long-run average cost does not change as scale changes
   1. comparative advantage
   2. positive economics
   3. opportunity cost
   4. constant returns to scale
2. the difference between a firm's total revenue and the sum of its explicit and implicit costs
   1. economic rent
   2. economic profit
   3. economic efficiency
   4. normal profit
3. total cost of undertaking n units of an activity divided by n
   1. price floor
   2. average cost
   3. private good
   4. head tax
4. the study of the performance of national economies and the policies that governments use to try to improve that performance
   1. macroeconomics
   2. elastic
   3. market power
   4. economic rent
5. one person has an absolute advantage over another if he or she takes fewer hours to perfom a task than the other person
   1. head tax
   2. absolute advantage
   3. collective good
   4. average cost

5 True/False Question

1. dominant strategy → one that yields a higher payoff no matter what the other players in a game choose
   

   True        False

2. The Rational Spending Rule → a series of mutually offsetting investments in performance enhancement that is stimulated by a positional externality
   

   True        False

3. nominal price → dollar price of a good relative to the average dollar price of all other goods and services
   

   True        False

4. price ceiling → a maximum allowable price, specified by law
   

   True        False

5. inferior good → a good whose demand curve shifts leftward when the incomes of buyers increase
   

   True        False