21. In Exhibit 0020, the opportunity cost of moving from point b to d is

a. 30 mufflers

b. 50 mufflers

c. 100 socks

d. 150 socks

e. 250 socks

22. A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building that he owns and currently rents to his brother for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What are his explicit costs?

a. $26,000

b. $66,000

c. $78,000

d. $52,000

e. $72,000

23. Marginal product is defined as

a. the increase in revenue that occurs when an additional unit of a resource is added

b. the increase in output that occurs when all resources are increased by the same proportion

c. the increase in output that occurs when an additional unit of a resource is added, holding all other resources constant

d. the amount of additional resources needed to increase output by one unit when all resources are increased by the same amount

e. the amount of additional money needed to increase output by one unit when all resources are held constant

24. Externalities are defined as

a. any transaction external to the firm

b. costs or benefits that fall on third parties

c. policies that firms undertake to sell products outside the country

d. managers' dealings with stockholders outside the firm

e. costs of maintaining plant and equipment to avoid the scrutiny of external auditors

25. An oligopoly is characterized by

a. few firms, which have control over market price

b. many firms and some barriers to entry

c. a large number of firms and no barriers to entry

d. a single firm and no barriers to entry

e. a single firm and significant barriers to entry

26. Which of the following is true when regulators require a natural monopolist to set price equal to marginal cost?

a. This policy results in a less than socially optimal allocation of resources.

b. The marginal cost of producing the last unit sold exceeds the consumers' marginal value for that last unit.

c. The monopolist will face recurring losses unless a subsidy is provided.

d. The monopolist will earn a normal profit.

e. The monopolist will earn more than a fair return.

27. Which of the following is not prohibited by the Clayton Act, even if it reduces competition?

a. merger accomplished through the acquisition of another firm's stock

b. merger accomplished through the acquisition of another firm's assets

c. price discrimination that cannot be justified on the basis of cost differences

d. exclusive dealing contracts

e. interlocking directorates

28. Which of the following is a leakage from the circular flow?

a. government purchases of goods and services

b. saving

c. transfer payments

d. exports

e. consumption expenditures

29. The resource market is different from the product market because

a. in the resource market, firms don't maximize profit

b. in the resource market, households don't maximize utility

c. in the resource market, firms are demanders and households are suppliers

d. supply and demand do not apply in the resource market

e. supply and demand do not apply in the product market

30. Which of the following is not an example of derived demand?

a. As more high school graduates go on to college, more professors are hired.

b. As consumers buy more computers, they demand more powerful computers as they become available.

c. As people let their hair grow longer, fewer people become barbers.

d. As people buy more tennis shoes instead of sandals, they buy more shoe laces.

e. Increased demand for overnight delivery speeds up orders for new delivery trucks.