all eco 1 hw

If an additional worker can produce an additional 20 units of output which can be sold for $4 per unit, what is the maximum wage that this perfectly competitive firm should pay to hire this worker? Select one: a. $80 b. $80 minus the firm's markup c. It depends on what the going wage rate is in the labor market. d. There is insufficient information to answer the question.

a. $80

If the nominal interest rate is 6% and the inflation rate is 9%, then the real interest rate is Select one: a. -3% b. 3% c. 6.67% d. 15%

a. -3%

Given the information below, calculate the GDP deflator in 2016. Select one: a. 114 b. 105 c. 95 d. 87

a. 114

Figure shows cost and demand curves for a monopolistically competitive producer of iced tea. What is the profit-maximizing output level? Select one: a. 22 cases b. 24 cases c. 30 cases d. 38 cases

a. 22 cases

If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is Select one: a. 57 utils b. 35 utils. c. 15 utils. d. unknown as more information is needed to determine the answer.

a. 57 utils

Which of the following statements is true? Select one: a. As output increases, average fixed cost becomes smaller and smaller. b. Average fixed cost does not change as output increases. c. The marginal cost curve intersects the average fixed cost curve at its minimum point d. When marginal cost is greater than average fixed cost, average fixed cost increases.

a. As output increases, average fixed cost becomes smaller and smaller.

Refer to Table 2-30. This table shows the number of labor hours required to produce a wristwatch and a bushel of rice in Japan and Thailand. If each country specializes in the production of the product in which it has a comparative advantage, who should produce wristwatches? Select one: a. Japan b. Thailand c. Neither d. Both

a. Japan

The narrowest official definition of the money supply is Select one: a. M1 b. M2 c. M3 d. L

a. M1

If the Federal Reserve decided to include virtual money like Bitcoins in its measure of the money supply, what would be the effect on M1 or M2? Select one: a. M1 would rise. b. M1 would fall. c. M1 would rise and M2 would remain constant. d. M2 would rise but M1 would remain constant.

a. M1 would rise.

If inflation in the United States is lower than inflation in other countries, what will be the effect on net exports for the United States? Select one: a. Net exports will rise as U.S. exports increase. b. Net exports will rise as U.S. imports increase. c. Net exports will decrease as U.S. exports decrease. d. Net exports will decrease as U.S. imports decrease.

a. Net exports will rise as U.S. exports increase.

Which of the following is consistent with the graph depicted above? Select one: a. The government begins running a budget surplus. b. The government begins running a budget surplus. c. An increase in government spending crowds out private expenditures. d. Technological change increases the profitability of new investment.

a. The government begins running a budget surplus.

Under autarky, domestic producer surplus is represented by the area Select one: a. above the supply curve and below the equilibrium price. b. above the supply curve and below the demand curve. c. below the demand curve and above the equilibrium price. d. above the demand curve and below the supply curve.

a. above the supply curve and below the equilibrium price.

Which of the following is a possible solution when a scarce resource is subject to the tragedy of the commons? Select one: a. access to the commons can be restricted through community norms and laws b. offer subsidies to consumers c. force people to move away from the commons d. persuade people to use less of the scarce resource through an advertising campaign

a. access to the commons can be restricted through community norms and laws

Refer to Table 2-1. Assume that Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 30 calzones would appear Select one: a. along Tomaso's production possibilities frontier. b. inside Tomaso's production possibilities frontier. c. outside Tomaso's production possibilities frontier. d. at the horizontal intercept of Tomaso's production possibilities frontier.

a. along Tomaso's production possibilities frontier.

Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease? Select one: a. an increase in the price of white wine grapes b. a decrease in the price of white wine grapes c. an increase in the demand for red wine grapes d. an increase in the price of red wine

a. an increase in the price of white wine grapes

The "Buy American" provision in the 2009 stimulus package required that stimulus money be spent only on U.S.-made goods, effectively acting as a quota of zero imports when stimulus money was being spent. In the U.S. steel market, the "Buy American" provision in the 2009 stimulus package would Select one: a. convert some consumer surplus to deadweight loss. b. transfer some deadweight loss to producer surplus. c. transfer some producer surplus to consumer surplus. d. reduce the producer surplus received by foreign manufacturers.

a. convert some consumer surplus to deadweight loss.

The endowment effect suggests that that people Select one: a. have a strong attachment to their property, regardless of whether they paid to acquire it. b. have a strong sense of fairness. c. are concerned about the welfare of others. d. act in ways to distort market prices.

a. have a strong attachment to their property, regardless of whether they paid to acquire it.

In the graph above, suppose the economy in Year 1 is at point A and is expected in Year 2 to be at point B. Which of the following policies could Congress and the president use to move the economy to point C? Select one: a. increase government purchases b. decrease government purchases c. increase income taxes d. sell Treasury bills

a. increase government purchases

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is Select one: a. inelastic. b. elastic. c. unit elastic. d. perfectly inelastic.

a. inelastic.

Free trade ________ living standards by ________ economic efficiency. Select one: a. raises; increasing b. lowers; decreasing c. raises; equalizing d. lowers; eliminating

a. raises; increasing

Arnold Kim began blogging about Apple products during his fourth year of medical school. Kim's Website, MacRumors.com, became so successful that he decided to give up his medical career and work full time on his Website, despite the nearly $200,000 he had invested in his education. In making his decision, the $200,000 he spent on his education Select one: a. should be ignored since it represents a sunk cost. b. should be considered since it is money he has spent and needs to recoup. c. should be ignored only if Kim can earn more than $200,000 by running his Website. d. should be considered since it is money he could have used to invest in his Website.

a. should be ignored since it represents a sunk cost.

The difference between technology and technological change is that Select one: a. technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs. b. technology is carried out by firms producing physical goods but technological change is an intellectual exercise into seeking ways to improve production. c. technology is product-centered, that is, developing new products with our limited resources while technological change is process-centered in that it focuses on developing new production techniques. d. technology involves the use of capital equipment while technological change requires the use of brain power.

a. technology refers to the processes used by a firm to transform inputs into output while technological change is a change in a firm's ability to produce a given level of output with a given quantity of inputs.

If the quantity of walkie-talkies supplied increases by 5 percent when price increases by 12 percent, then Select one: a. the supply of walkie-talkies is inelastic. b. the supply of walkie-talkies is elastic. c. the walkie-talkie supply curve will shift to the right. d. the walkie-talkie supply curve will shift to the left.

a. the supply of walkie-talkies is inelastic.

Which of the following describes what the Fed would do to pursue an expansionary monetary policy? Select one: a. use open market operations to buy Treasury bills b. use open market operations to sell Treasury bills c. use discount policy to raise the discount rate d. raise the reserve requirement

a. use open market operations to buy Treasury bills

Select one: a. $30 b. $140 c. $240 d. $12

b. $140

Refer to Table 19-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the below table, nominal GDP for this simple economy equals Select one: a. $7,400. b. $6,400. c. $5,800. d. 2,440 units.

b. $6,400.

Trina's Tropical Fish Store sells goldfish for $2 each and angelfish for $10 each. What is the opportunity cost of buying a goldfish? Select one: a. 5 angelfish b. 1/5 of an angelfish c. $10 d. $2

b. 1/5 of an angelfish

Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes. If he now produces 30 bird houses and 15 wind chimes, what is the opportunity cost of producing an additional 10 wind chimes? Select one: a. 2 bird houses b. 15 bird houses c. 30 bird houses d. 45 bird houses

b. 15 bird houses

The price elasticity of supply of hot dog buns is estimated to be 1.5. Holding everything else constant, this means that a 10 percent decrease in the price of hot dog buns will cause the quantity of hot dog buns supplied to decrease by Select one: a. 1.5 percent. b. 15 percent. c. approximately 25 percent. d. approximately 5 percent.

b. 15 percent.

Table 10-6 lists Jay's marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. Select one: a. 1 burger and 2 cans of Pepsi b. 2 burgers and 3 cans of Pepsi c. 3 burgers and 1 can of Pepsi d. 3 burgers and 2 cans of Pepsi

b. 2 burgers and 3 cans of Pepsi

Figure 2-11 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. Refer to Figure 2-11. What is the opportunity cost of producing 1 bolt of cotton in Pakistan? Select one: a. 3/8 of a pound of cashews b. 5/8 of a pound of cashews c. 1 3/5 pounds of cashews d. 150 pounds of cashews

b. 5/8 of a pound of cashews

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. The figure shows the impact of this tariff. The tariff revenue collected by the government equals the area Select one: a. D + E + F. b. E. c. B + D + E + F. d. C + B + D + E + F.

b. E.

Assume that Honduras has a comparative advantage in producing bananas and exports bananas to Brazil. We can conclude that Select one: a. Honduras also has an absolute advantage in producing bananas relative to Brazil. b. Honduras has a lower opportunity cost of producing bananas relative to Brazil. c. Brazil has an absolute disadvantage in producing bananas relative to Honduras. d. Labor costs are higher for banana producers in Brazil than in Honduras.

b. Honduras has a lower opportunity cost of producing bananas relative to Brazil.

Which of the following is a positive economic statement? Select one: a. The standard of living in the United States should be higher. b. If the price of iPhones falls, a larger quantity of iPhones will be purchased. c. The government should revamp the health care system. d. The U.S. government should not have bailed out U.S. auto manufacturers.

b. If the price of iPhones falls, a larger quantity of iPhones will be purchased.

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers? Select one: a. It is elastic. b. It is perfectly elastic. c. It is perfectly inelastic. d. The price elasticity coefficient is 0.

b. It is perfectly elastic.

What is moral hazard? Select one: a. It refers to the private, self-interested actions that people pursue, which when taken collectively leads to a loss in economic surplus. b. It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off. c. It refers to the situation in which one party to a transaction takes advantage of knowing more than the other party to the transaction. d. It refers to the actions people take before they enter into a transaction so as to mislead the other party to the transaction.

b. It refers to the actions people take after they have entered into a transaction that makes the other party to the transaction worse off.

Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. Identify the area that represents the loss. Select one: a. P2 deP1 b. P3cbP1 c. P3caP0 d. 0P1 bQ1

b. P3cbP1

Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation? Select one: a. The demand for digital music players is greater than the supply of digital music players. b. Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price c. The price of digital music players will rise in response to the shortage; as the price rises the quantity demanded will increase and the quantity supplied will decrease. d. The shortage will cause a decrease in the equilibrium price of digital music players

b. Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price

Health clubs typically experience an increase in one-year memberships in January, but many new customers cancel their memberships before the end of the year. Which of the following is the best explanation for this behavior? Select one: a. Some health club members suffer minor injuries that prevent them from working out. b. Some people are overly optimistic about their future behavior. c. Some people fail to treat their membership fees as sunk costs. d. Some members receive utility from activities they believe are popular.

b. Some people are overly optimistic about their future behavior.

Select one: a. Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. b. Tom will receive $12 of consumer surplus from buying one shirt. c. Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts. d. Harriet will receive $25 of consumer surplus since she will buy no shirts.

b. Tom will receive $12 of consumer surplus from buying one shirt.

When Roxanne, a U.S. citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is Select one: a. both a U.S. and an Italian import. b. a U.S. import and an Italian export. c. a U.S. export and an Italian import. d. neither an export nor an import for either the United States or Italy.

b. a U.S. import and an Italian export.

Contractionary monetary policy on the part of the Fed results in Select one: a. an increase in the money supply, an increase in interest rates, and an increase in GDP. b. a decrease in the money supply, an increase in interest rates, and a decrease in GDP. c. an increase in the money supply, a decrease in interest rates, and an increase in GDP. d. a decrease in the money supply, a decrease in interest rates, and a decrease in GDP.

b. a decrease in the money supply, an increase in interest rates, and a decrease in GDP.

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is Select one: a. a neutral good. b. a normal good c. a necessity. d. a complement. Feedback

b. a normal good

What is the term that describes a situation in which one party to an economic transaction has less information than the other party? Select one: a. inefficient market hypothesis b. asymmetric information c. unequal market structure d. monopsony

b. asymmetric information

If the marginal cost curve is below the average variable cost curve, then Select one: a. average variable cost is increasing. b. average variable cost is decreasing. c. marginal cost must be decreasing. d. average variable cost could either be increasing or decreasing.

b. average variable cost is decreasing.

Many economists ________ protectionism because it ________ consumers and ________ jobs in domestic industries that use protected products. Select one: a. support; benefits; creates b. criticize; causes losses to; eliminates c. support; lowers prices for; raises wages for d. criticize; unfairly rewards; relocates

b. criticize; causes losses to; eliminates

Economic costs of production differ from accounting costs in that Select one: a. economic costs include expenditures for hired resources while accounting costs do not. b. economic costs add the opportunity costs of a firm using its own resources while accounting costs do not. c. accounting costs include expenditures for hired resources while economic costs do not. d. accounting costs are always larger than economic cost.

b. economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.

If, when a firm doubles all its inputs, its average cost of production decreases, then production displays Select one: a. diminishing returns. b. economies of scale. c. diseconomies of scale. d. declining fixed costs.

b. economies of scale.

Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. The figure shows the impact of this tariff. With the tariff in place, the United States Select one: a. exports 16 million pounds of coffee. b. imports 16 million pounds of coffee. c. imports 31 million pounds of coffee. d. exports 42 million pounds of coffee.

b. imports 16 million pounds of coffee.

If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is Select one: a. negative b. less than 8 chairs. c. more than 8 chairs. d. zero.

b. less than 8 chairs.

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that Select one: a. people with health insurance are less likely to be overweight than people without health insurance. b. people with health insurance are more likely to be overweight than people without health insurance c. people with health insurance are equally likely to be overweight as people without health insurance. d. there is no correlation between having health insurance and being overweight.

b. people with health insurance are more likely to be overweight than people without health insurance

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that Select one: a. people with health insurance are less likely to be overweight than people without health insurance. b. people with health insurance are more likely to be overweight than people without health insurance. c. people with health insurance are equally likely to be overweight as people without health insurance. d. there is no correlation between having health insurance and being overweight.

b. people with health insurance are more likely to be overweight than people without health insurance.

The machines that workers have to work with are considered Select one: a. human capital. b. physical capital. c. entrepreneurship. d. financial capital.

b. physical capital.

Which of the following is an example of a nonexcludable product? Select one: a. college education b. public library c. public transportation d. internet service for your home computer

b. public library

In the figure below, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to Select one: a. lower interest rates. b. raise interest rates. c. lower income taxes. d. raise income taxes.

b. raise interest rates.

Economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility frontier Select one: a. shifting outward. b. shifting inward. c. becoming steeper. d. becoming flatter.

b. shifting inward.

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe Select one: a. is maximizing total utility. b. should buy more apples and fewer oranges. c. should buy more oranges and fewer apples. d. should buy fewer oranges and fewer apples.

b. should buy more apples and fewer oranges.

Suppose a decrease in the supply of bottled water results in a decrease in revenue. This indicates that Select one: a. the demand for bottled water is inelastic in the price range considered. b. the demand for bottled water is elastic in the price range considered. c. the supply of bottled water is inelastic in the price range considered. d. the supply of bottled water is elastic in the price range considered.

b. the demand for bottled water is elastic in the price range considered.

The demand curve for canned peas is downward sloping. If the price of canned peas, an inferior good, rises, then Select one: a. the income effect which causes you to reduce your canned peas purchases is smaller than the substitution effect which causes you to increase your purchases, resulting in a net increase in quantity demanded. b. the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded. c. both the income and substitution effects reinforce each other to decrease the quantity demanded. d. the income and substitution effects offset each other but the price effect of an inferior good leads you to buy more canned peas.

b. the income effect which causes you to increase your canned peas purchases is smaller than the substitution effect which causes you to reduce your purchases, resulting in a net decrease in quantity demanded.

Health insurance companies impose deductibles on policies and co-payments on claims Select one: a. to increase sales. b. to reduce moral hazard problems. c. to reduces sunk costs. d. to increase prices.

b. to reduce moral hazard problems.

Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers? Select one: a. $100 b. $124.40 c. $220 d. $240

c. $220

Select one: a. $2 b. $5 c. $7 d. $22

c. $7

Figure shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. If the market price is $30, the firm's profit-maximizing output level is Select one: a. 0. b. 130. c. 180. d. 240.

c. 180.

If real GDP per capita measured in 2009 dollars was $6,000 in 1950 and $48,000 in 2018, we would say that in 2018, the average American could buy ________ times as many goods and services as the average American in 1950. Select one: a. 1/8 b. 4 c. 8 d. 12

c. 8

Which one of the following about a monopoly is false? Select one: a. A monopoly could make profits in the long run. b. A monopoly could break even in the long run. c. A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. d. A monopoly status could be temporary.

c. A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly.

The figure contains information about the short run cost structure of a firm. In the figure above which letter represents the average variable cost curve? Select one: a. A b. B c. C d. D

c. C

If potential GDP is equal to $600 billion, what does the long-run aggregate supply curve look like? Select one: a. It is a horizontal line at $600 billion of GDP. b. It is a vertical line at a level of GDP below $600 billion. c. It is a vertical line at $600 billion of GDP. d. It is a vertical line at a level of GDP above $600 billion.

c. It is a vertical line at $600 billion of GDP.

What is a network externality? Select one: a. It refers to having a network of suppliers and buyers for a good or service. b. It refers to lobbying to form a public enterprise. c. It refers to a situation in which a product's usefulness increases with the number of people using it. d. It refers to a product that requires connection to a network for it to be useful.

c. It refers to a situation in which a product's usefulness increases with the number of people using it.

Figure shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches. If the firm represented in the diagram is currently producing and selling Qa units, what is the price charged? Select one: a. P0 b. P1 c. P2 d. P3 Feedback

c. P2

Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-11. Does either China or South Korea have an absolute advantage and if so, in what product? Select one: a. South Korea only has an absolute advantage in wheat. b. China only has an absolute advantage in wheat. c. South Korea has an absolute advantage in both products. d. China only has an absolute advantage in digital cameras.

c. South Korea has an absolute advantage in both products.

Which of the following is a factor of production that generally is fixed in the short run? Select one: a. raw materials b. labor c. a factory building d. water

c. a factory building

What do economists call the situation where a hired manager does not have the same interests as the owners of the business? Select one: a. conquest and control b. a financial problem c. a principal-agent problem d. a financial intermediary problem

c. a principal-agent problem

Which of the following would definitely cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons? Select one: a. an increase in demand and an increase in supply b. an increase in supply c. an increase in supply and an increase in demand greater than the increase in supply d. a decrease in demand and an increase in supply

c. an increase in supply and an increase in demand greater than the increase in supply

In the graph below, suppose the economy is initially at point A. The movement of the economy to point Bas shown in the graph illustrates the effect of which of the following policy actions by Congress and the president? Select one: a. an increase in transfer payments b. an increase in interest rates c. an increase in the marginal income tax rate d. an open market purchase of Treasury bills

c. an increase in the marginal income tax rate

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? Select one: a. zero, since she will no longer be earning a salary b. it depends on the "going rate" for home-care providers c. at least $125,000 d. the value she attributes to the satisfaction she receives from taking care of her parents

c. at least $125,000

As a form of business, a partnership Select one: a. has limited liability. b. has only one owner. c. cannot issue stock. d. has the most government rules and regulations affecting it.

c. cannot issue stock.

If total utility increases at a decreasing rate as a consumer consumes more coffee, then marginal utility must Select one: a. remains constant. b. increase also. c. decrease d. be negative.

c. decrease

A tariff is a tax imposed by a government on Select one: a. exports. b. services. c. imports. d. luxury items.

c. imports.

Conceptually, the efficient level of carbon emissions is the level for which Select one: a. the marginal benefit of reducing carbon emissions is maximized. b. the marginal cost of reducing carbon emissions is minimized. c. the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions. d. the marginal benefit of reducing carbon emissions is minimized and the marginal cost of reducing carbon emissions is maximized

c. the marginal benefit of reducing carbon emissions is equal to the marginal cost of reducing carbon emissions.

Most people would prefer to drive a luxury car that has all the options, but more people buy less expensive cars even though they could afford the luxury car because Select one: a. car buyers are irrational. b. the total utility of less expensive cars is greater than that of luxury cars. c. the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars. d. luxury cars cost a lot more than non-luxury cars.

c. the marginal utility per dollar spent on the less expensive car is higher than that spent on luxury cars.

Who controls a sole proprietorship? Select one: a. stockholders b. bondholders c. the owner d. all of these

c. the owner

Marginal analysis involves undertaking an activity Select one: a. until its marginal costs start declining. b. only when its marginal benefits are positive. c. until its marginal benefits equal marginal costs. d. only if its marginal costs are greater than its marginal benefits.

c. until its marginal benefits equal marginal costs.

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded Select one: a. will increase by 45 percent. b. will increase by 5 percent. c. will decrease by 45 percent. d. will decrease by 5 percent.

c. will decrease by 45 percent.

If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years? Select one: a. 270% b. 50% c. 5% d. 2.7%

d. 2.7%

Refer to Table 20-5. Consider the following values of the consumer price index for 2017 and 2018. The inflation rate for 2018 was equal to Select one: a. 215% b. 21.5% c. 8% d. 3.9%

d. 3.9%

Select one: a. A+B+C+D b. A+B+C c. A+B d. A

d. A

Which of the following contributes to the efficiency of markets? Select one: a. Governments play an active role in the day-to-day operations of markets. b. Markets are able to bring about an equitable distribution of goods and services. c. Markets promote equal standards of living. d. Markets promote competition and voluntary exchange.

d. Markets promote competition and voluntary exchange.

Which of the following is a normative economic statement? Select one: a. Rising global demand for coal has led to increases in the price of coal. b. With rising mortgage rates and rising unemployment rates, the number of unsold homes has increased. c. The state of Texas is considering increasing funds for light-rail development to promote the use of public transportation. d. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

d. Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.

If government purchases are $400 million, taxes are $700 million, and transfers are $200 million, which of the following is true? Select one: a. Public saving is $500 million. b. The budget deficit is $100 million. c. The budget deficit is $500 million. d. Public saving is $100 million.

d. Public saving is $100 million.

Which of the following statements is true? Select one: a. Economic efficiency would be increased if the United States eliminated all of its trade restrictions, but only if all other countries eliminated their trade restrictions too. b. The U. S. economy would gain from the elimination of its tariffs but not from the elimination of its quotas. c. Eliminating its tariffs and quotas unilaterally would not benefit the United States because this would remove the leverage it would have to persuade other countries to eliminate their trade restrictions. d. The U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

d. The U.S. economy would gain from the elimination of tariffs and quotas even if other countries do not reduce their tariffs and quotas.

An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run? Select one: a. The price level will fall, and the level of GDP will rise. b. The price level will fall, and the level of GDP will fall. c. The price level will rise, and the level of GDP will fall. d. The price level will rise, and the level of GDP will be unaffected.

d. The price level will rise, and the level of GDP will be unaffected.

For steak and cheese sandwiches and grilled chicken sandwiches, the table contains the values of the marginal utility (MU) and marginal utility per dollar (MU/P) for Mabel Jarvis. Mabel has $14 to spend on steak and cheese sandwiches and grilled chicken sandwiches. Which of the following statements is false? Select one: a. The price of steak and cheese sandwiches is $4. The price of grilled chicken sandwiches is $2. b. If Mabel maximizes her utility she will buy three grilled chicken sandwiches. c. If Mabel maximizes her utility she will buy two steak and cheese sandwiches. d. We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility.

d. We do not have enough information to determine how many sandwiches Mabel will buy to maximize her utility.

In the figure below, suppose the economy is initially at point A. The movement of the economy to point Bas shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve? Select one: a. an increase in income taxes b. a decrease in the required reserve ratio c. an open market purchase of Treasury bills d. an open market sale of Treasury bills

d. an open market sale of Treasury bills

In economics, money is defined as Select one: a. the total value of one's assets in current prices. b. the total value of one's assets minus the total value of one's debts, in current prices. c. the total amount of salary, interest, and rental income earned during a year. d. any asset people generally accept in exchange for goods and services.

d. any asset people generally accept in exchange for goods and services.

Suppose the demand curve for hybrid cars shifts to the right. This will cause a relatively small increase in the price of hybrid cars if Select one: a. demand is elastic and supply is inelastic. b. demand is inelastic and supply is perfectly inelastic. c. both demand and supply are inelastic. d. both demand and supply are elastic.

d. both demand and supply are elastic.

If there is pollution in producing a product, then the market equilibrium price Select one: a. is too high and equilibrium quantity is too low. b. and equilibrium quantity are too low. c. and equilibrium quantity are too high. d. is too low and equilibrium quantity is too high.

d. is too low and equilibrium quantity is too high.

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced. Select one: a. bowed out b. bowed in c. non-linear d. linear

d. linear

Contractionary fiscal policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________. Select one: a. higher; higher b. higher; lower c. lower; higher d. lower; lower

d. lower; lower

In economics, the term "free rider" refers to Select one: a. a person who evades taxes. b. a supervisor who delegates menial time-consuming activities to others. c. one who volunteers their services. d. one who waits for others to produce a good and then enjoys its benefits without paying for it.

d. one who waits for others to produce a good and then enjoys its benefits without paying for it.

Consider the stock of ocean tuna which is massively overfished. It is rational for an individual to exploit the resource rather than to conserve the stock because Select one: a. the marginal private benefit of harvesting tuna is higher than the marginal social benefit of harvesting it. b. the marginal private benefit of harvesting tuna is lower than the marginal social benefit of harvesting it. c. the marginal social cost of harvesting the fish is lower than the marginal private cost. d. the marginal private cost of harvesting the fish is lower than the marginal social cost.

d. the marginal private cost of harvesting the fish is lower than the marginal social cost.

If the number employed is 190 million, the working-age population is 230 million, and the number unemployed is 10 million, then the unemployment rate is Select one: a. 5%. b. 5.2%. c. 8%. d. 10%.

a. 5%.

Between 2017 and 2018, the CPI of a small nation rose from 182 to 185. If household incomes rose by 3% during that period of time, which of the following is true? Select one: a. The purchasing power of household income rose between 2017 and 2018. b. The purchasing power of household income fell between 2017 and 2018. c. The purchasing power of household income remained constant between 2017 and 2018. d. The CPI cannot be used to determine how the purchasing power of household income changes over time.

a. The purchasing power of household income rose between 2017 and 2018.

An increase in public saving has what impact on the market for loanable funds? Select one: a. The supply of loanable funds increases. b. The demand for loanable funds increases. c. The supply of loanable funds decreases. d. The demand for loanable funds decreases.

a. The supply of loanable funds increases.

When aggregate expenditure is more than GDP, which of the following is true? Select one: a. There was an unplanned decrease in inventories. b. Firms spent less on capital goods than they planned. c. Households bought fewer new homes than they planned. d. All of the above must be true when aggregate expenditure is more than GDP.

a. There was an unplanned decrease in inventories.

The "ability-to-pay" principle of taxation is the normative idea that Select one: a. an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals. b. each individual should voluntarily contribute according to her ability to pay taxes. c. progressive taxes are more equitable than regressive taxes. d. two individuals earning the same income should have equal ability to pay, all else constant.

a. an equitable tax system is one in which high income individuals should bear a greater burden of taxes than low income individuals.

Using the market for loanable funds, which of the following has the potential to raise the real interest rate? Select one: a. an increase in the demand for loanable funds b. an increase in the quantity of loanable funds demanded c. an increase in the supply of loanable funds d. an increase in the quantity of loanable funds supplied

a. an increase in the demand for loanable funds

Why does a monopoly cause a deadweight loss? Select one: a. because it stops producing output at a point where price is above marginal cost b. because it appropriates a portion of consumer surplus for itself c. because it increases producer surplus at the expense of consumer surplus d. because it does not produce some output for which demand exceeds supply

a. because it stops producing output at a point where price is above marginal cost

Consumers benefit from monopolistic competition by Select one: a. being able to choose from products more closely suited to their tastes. b. paying the lowest possible price for the product. c. paying the same price as everyone else. d. being able to purchase high-quality products at low prices.

a. being able to choose from products more closely suited to their tastes.

Governments grant patents to Select one: a. compensate firms for research and development costs. b. encourage competition. c. encourage low prices. d. encourage firms to reveal secret production techniques.

a. compensate firms for research and development costs.

The purchase or building by a corporation of a facility in a foreign country is called Select one: a. foreign direct investment. b. foreign portfolio investment. c. foreign capital depreciation. d. globally-directed investment.

a. foreign direct investment.

A student who just graduated from college but has not found a job would most likely be Select one: a. frictionally unemployed. b. structurally unemployed. c. cyclically unemployed. d. seasonally unemployed.

a. frictionally unemployed.

If the size of the underground economy is large, Select one: a. government agencies have difficulty measuring nominal and real GDP. b. it is relatively easy to gather productivity data on many businesses. c. measuring nominal GDP is relatively easy, but measuring real GDP is difficult. d. measuring real GDP is relatively easy, but measuring nominal GDP is difficult.

a. government agencies have difficulty measuring nominal and real GDP.

The output of U.S. citizens who work in Canada would be included in the Select one: a. gross domestic product of Canada. b. gross national product of Canada. c. gross domestic product of the United States. d. gross national product of Canada and the gross national product of the United States.

a. gross domestic product of Canada.

Perfect competition is characterized by all of the following except Select one: a. heavy advertising by individual sellers. b. homogeneous products. c. sellers are price takers. d. a horizontal demand curve for individual sellers.

a. heavy advertising by individual sellers.

Refer to Table 20-2. Assume the market basket for the consumer price index has two products—bread and milk—with the following values in 2013 and 2018 for price and quantity: The Consumer Price Index for 2018 equals: Select one: a. 118 b. 116 c. 86 d. 85

b. 116

Inflation tends to ________ during the expansion phase of the business cycle and ________ during the recession phase of the business cycle. Select one: a. increase; decrease b. decrease; increase c. decrease; decrease further d. increase; increase further

a. increase; decrease

When consumers are less confident about their jobs or incomes, they are more likely to Select one: a. reduce purchases of durable goods than nondurable goods. b. reduce purchases of nondurable goods and increase purchases of durable goods. c. increase investment spending and decrease consumption spending. d. increase consumption spending and decrease investment spending.

a. reduce purchases of durable goods than nondurable goods.

A rapid increase in the price of oil will tend to Select one: a. shift short-run aggregate supply to the left. b. shift long-run aggregate supply to the left. c. shift long-run aggregate supply to the right. d. shift aggregate demand to the right.

a. shift short-run aggregate supply to the left.

Which of the following would you expect to result in faster economic growth? Select one: a. the invention of new computers that increase labor productivity b. a decrease in the average level of education in the economy c. a decrease in the stock of capital per worker d. a decrease in research and development spending

a. the invention of new computers that increase labor productivity

The minimum point on the average variable cost curve is called Select one: a. the shutdown point. b. the break-even point. c. the loss-minimizing point. d. the point of diminishing returns.

a. the shutdown point.

Knowledge capital is nonrival in the sense that Select one: a. two people can use the same knowledge to develop and produce a product. b. firms do not compete to be the first to develop new technologies. c. no single company can be excluded from the benefits of new technologies. d. firms can benefit from the research and development of rival firms without paying for that benefit.

a. two people can use the same knowledge to develop and produce a product.

Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the profit-maximizing quantity? Select one: a. 320 units b. 480 units c. 560 units d. 640 units

b. 480 units

Figure above shows the demand and cost curves facing a monopolist. To maximize profit, the firm will produce at output level Select one: a. Q1. b. Q2. c. Q3. d. Q4.

b. Q2.

Larry and Mike are equally skilled construction workers employed by the Brown and Root Company. Larry's job is riskier because he typically works on a scaffold 1,000 feet above ground. Larry's higher wage rate is the result of Select one: a. economic discrimination. b. a compensating differential. c. a negative feedback loop. d. a higher marginal revenue product.

b. a compensating differential.

Which of the following government policies would most likely result in an increase in economic growth? Select one: a. a decrease in the life of a patent from 20 years to 15 years b. a decrease in the interest rate at which the government provides student loans c. a decrease in government spending on grants issued through the National Institutes of Health d. decreased copyright protection on music and movies

b. a decrease in the interest rate at which the government provides student loans

If inventories decline by more than analysts predict they will decline, this implies that Select one: a. actual investment spending was greater than planned investment spending. b. actual investment spending was less than planned investment spending. c. actual investment spending was equal to than planned investment spending. d. there is no relationship between actual investment spending and planned investment spending.

b. actual investment spending was less than planned investment spending.

Which of the following will prevent firms from engaging in price discrimination? Select one: a. yield management b. arbitrage c. transactions costs d. odd pricing

b. arbitrage

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise. How can you convince your manager that you are worth more money than you are currently being paid? Select one: a. by threatening to quit if he refuses to give you a raise b. by showing your manager that your marginal revenue product has increased since your last wage increase c. by explaining to him how difficult it is for you to save enough money to go to college d. by convincing him that you are a dedicated worker and ready to take on more responsibilities at the shop

b. by showing your manager that your marginal revenue product has increased since your last wage increase

If a firm could practice perfect price discrimination, it would Select one: a. allow resale of its product. b. charge every buyer a different price. c. charge a price based on the quantity of a product bought. d. use odd pricing.

b. charge every buyer a different price.

Technological improvements are more likely to occur if Select one: a. the economy is centrally planned. b. entrepreneurs are compensated with higher profits for taking risks. c. economic decisions are made by politicians rather than entrepreneurs. d. companies face little competition in their markets.

b. entrepreneurs are compensated with higher profits for taking risks.

Collusion between two firms occurs when Select one: a. the firms independently pursue strategies that could hurt each other. b. firms explicitly or implicitly agree to adopt a uniform business strategy. c. announce that each will match its rival's market price. d. firms act altruistically to bring about the economically efficient outcome.

b. firms explicitly or implicitly agree to adopt a uniform business strategy.

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements. This will Select one: a. increase GDP and increase well-being in the economy b. increase GDP and decrease well-being in the economy. c. decrease GDP and increase well-being in the economy. d. decrease GDP and decrease well-being in the economy.

b. increase GDP and decrease well-being in the economy.

Assume price exceeds average variable cost over the relevant range of demand. If a monopolistically competitive firm is producing at an output where marginal revenue is $23 and marginal cost is $19, then to maximize profits the firm should Select one: a. continue to produce the same quantity. b. increase output. c. decrease output. d. shut down.

b. increase output.

Suppose that homemakers are included as employed in the labor force statistics, rather than being counted as out of the labor force. This would Select one: a. increase the measured unemployment rate. b. increase the measured labor force participation rate. c. decrease the number of persons in the labor force. d. decrease the number of persons in the working-age population.

b. increase the measured labor force participation rate.

Deflation will Select one: a. increase aggregate demand. b. increase the quantity of real GDP demanded. c. decrease aggregate demand. d. decrease the quantity of real GDP demanded.

b. increase the quantity of real GDP demanded.

If a firm shuts down in the short run Select one: a. its loss equals zero. b. its loss equals its fixed cost. c. is makes zero economic profit. d. its total revenue is not large enough to cover its fixed cost.

b. its loss equals its fixed cost.

If inflation increases unexpectedly, then Select one: a. borrowers pay a higher real interest rate than they expected. b. lenders receive a lower real interest rate than they expected. c. lenders gain and borrowers gain. d. neither borrowers nor lenders lose.

b. lenders receive a lower real interest rate than they expected.

Figure shows cost and demand curves for a monopolistically competitive producer of iced tea. Based on the diagram, one can conclude that Select one: a. some existing firms will exit the market. b. new firms will enter the market. c. the industry is in long-run equilibrium. d. firms achieve productive efficiency.

b. new firms will enter the market.

In periods when prices are falling, on average, Select one: a. real GDP will grow slower than nominal GDP. b. real GDP will grow faster than nominal GDP. c. real GDP will grow as fast as nominal GDP. d. one cannot calculate real GDP.

b. real GDP will grow faster than nominal GDP.

By offering training to workers whose firms laid them off because of competition from foreign firms, the federal government is attempting to reduce Select one: a. frictional unemployment. b. structural unemployment. c. cyclical unemployment. d. seasonal unemployment.

b. structural unemployment.

Which of the following is most likely to be able to sustain economic growth in an economy? Select one: a. sustained increases in the labor force participation rate b. technological change c. increases in capital per hour worked d. accumulations of economic resources

b. technological change

f an increase in autonomous consumption spending of $25 million results in a $100 million increase in equilibrium real GDP, then Select one: a. the MPC is 0.25. b. the MPC is 0.75. c. the MPC is 0.8. d. the MPC is 2.5.

b. the MPC is 0.75.

If a firm has excess capacity, then Select one: a. the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales. b. the firm is not producing its minimum efficient scale of output. c. the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity. d. the firm's quantity supplied exceeds its quantity demanded.

b. the firm is not producing its minimum efficient scale of output.

Suppose that nominal GDP in 2016 was less than real GDP in 2016. Given this information, we know for certain that Select one: a. the price level in 2016 was greater than the price level in the base year. b. the price level in 2016 was less than the price level in the base year. c. real GDP in 2016 was less than real GDP in the base year. d. real GDP in 2016 was greater than real GDP in the base year.

b. the price level in 2016 was less than the price level in the base year.

If labor productivity growth slows down in a country, this means that the growth rate in ________ has declined. Select one: a. labor force participation b. the quantity of goods or services that can be produced by one hour of work c. the working-age population d. nominal GDP

b. the quantity of goods or services that can be produced by one hour of work

According to the law of one price, identical products should sell for the same price everywhere if Select one: a. consumers have knowledge of the prices charged for products in different markets. b. transactions costs are zero. c. firms can prevent consumers from engaging in arbitrage. d. there are no tariffs or other restrictions on imports or exports.

b. transactions costs are zero.

If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the fifth unit is Select one: a. $5. b. $12.50. c. $25. d. $125.

c. $25.

Consider the data shown below for Vicuna, a country that produces only two products: oranges and shirts. Refer to Table 19-13. Real GDP for Vicuna for 2013 using 2015 as the base year equals Select one: a. $4,620. b. $5,100. c. $5,650. d. $5,850.

c. $5,650.

Suppose a monopolistically competitive firm's output where marginal revenue equals marginal cost is 66 units and the price corresponding to this quantity is $18. If the average total cost at this output is $16.55, then its total profit is Select one: a. $1,188. b. $1,092.30. c. $95.70. d. $1.45.

c. $95.70.

In the figure above, LRAS1 and SRAS1 denote LRAS and SRAS in year 1, while LRAS2 and SRAS2 denote LRAS and SRAS in year 2. Given the economy is at point A in year 1, what is the growth rate in potential GDP in year 2? Select one: a. 8% b. 9.1% c. 10% d. 12%

c. 10%

According to the "Rule of 70," how many years will it take for real GDP per capita to double when the growth rate of real GDP per capita is 5%? Select one: a. less than 1 year b. 5 years c. 14 years d. 35 years

c. 14 years

Which of the following headlines would be more closely related to what macroeconomists study than what microeconomists study? Select one: a. Avocado prices rise due to a late frost in California. b. The United Auto Workers sign a contract raising wages and benefits 7% over the next 3 years. c. Real GDP grows by 2.3% in the second quarter. d. Airlines raise ticket prices in response to rising fuel costs.

c. Real GDP grows by 2.3% in the second quarter.

How will an increase in labor productivity affect equilibrium in the labor market? Select one: a. The supply of labor will increase and the equilibrium wage and quantity of labor will increase. b. The demand for jobs will increase and the equilibrium wage and quantity of labor will increase. c. The demand for labor will increase and the equilibrium wage and quantity of labor will increase. d. The demand for labor will decrease because fewer workers will be needed to produce the same output. The equilibrium wage and quantity of labor will decrease.

c. The demand for labor will increase and the equilibrium wage and quantity of labor will increase.

Figure illustrates the cost curves of a perfectly competitive firm. If the market price is P1 Select one: a. The firm will experience a loss and raise its price to P2. The firm will then break even. b. The firm will break even by producing a quantity of Q2. c. The firm will experience a loss since price is less than ATC. d. The firm may make a profit if it can increase the demand for its product.

c. The firm will experience a loss since price is less than ATC.

Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in the industry charges $21. Which of the following will happen? Select one: a. The firm's profits will increase. b. The firm's revenue will increase. c. The firm will not sell any output. d. The firm will sell more output than its competitors.

c. The firm will not sell any output.

Suppose the economy is at full employment and firms become more pessimistic about the future profitability of new investment. Which of the following will happen in the short run? Select one: a. Output will rise. b. Prices will rise. c. Unemployment will rise. d. The aggregate demand curve will shift to the right.

c. Unemployment will rise.

LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table shows the payoff matrix for profits earned by each company based on either offering or not offering the discount. Is there a dominant strategy for LimoZeenz and if so, what is it? Select one: a. No, its outcome depends on what AirPorter does. b. Yes, LimoZeenz should offer the mid-week discount. c. Yes, LimoZeenz should not offer the mid-week discount. d. Yes, LimoZeenz dominant strategy is to collude with AirPorter.

c. Yes, LimoZeenz should not offer the mid-week discount.

A cartel is Select one: a. a temporary storage facility for automobiles. b. a group of firms that enter into an informal agreement to fix prices to maximize joint profits. c. a group of firms that enter into a formal agreement to fix prices to maximize joint profits. d. an example of a group of firms that collectively regulate a competitive industry.

c. a group of firms that enter into a formal agreement to fix prices to maximize joint profits.

All of the following are components of aggregate expenditure except Select one: a. consumption spending. b. net export spending. c. actual investment spending. d. government spending.

c. actual investment spending.

Increases in real GDP would understate the well-being of a country over time if, over that time period, the Select one: a. crime rate increased. b. percentage of people addicted to illegal drugs increased. c. amount of pollution decreased. d. average hours worked per week increased.

c. amount of pollution decreased.

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If hiring another worker would increase output by five units per hour, then to maximize profits the firm should Select one: a. not change the number of workers it currently hires. b. lay off some of its workers. c. hire the additional worker. d. There is not enough information to answer the question.

c. hire the additional worker.

A monopoly differs from monopolistic competition in that Select one: a. a monopoly has market power while a firm in monopolistic competition does not have any market power. b. a monopoly can never make a loss but a firm in monopolistic competition can. c. in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure. d. a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

c. in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.

If real GDP in a small country in 2017 is $8 billion and real GDP in the same country in 2018 is $8.3 billion, the growth rate of real GDP between 2017 and 2018 Select one: a. is 3.0%. b. is 3.6%. c. is 3.75%. d. cannot be determined from the information given.

c. is 3.75%.

If the quantity of goods and services produced in the economy decreases, Select one: a. it may be possible for real GDP to increase. b. real GDP would certainly increase. c. it may be possible for nominal GDP to increase. d. nominal GDP would certainly increase.

c. it may be possible for nominal GDP to increase.

If the firm's average total cost curve is ATC1, the firm will Select one: a. suffer a loss. b. break even. c. make a profit. d. face competition.

c. make a profit.

The price of a seller's product in perfect competition is determined by Select one: a. the individual seller. b. a few of the sellers. c. market demand and market supply. d. the individual demander.

c. market demand and market supply.

Real GDP will increase Select one: a. only if the price level rises. b. only if the price level falls. c. only if the quantity of final goods and services produced rises. d. if either the price level rises or the quantity of final goods and services produced rises.

c. only if the quantity of final goods and services produced rises.

Since lower-income people spend a larger proportion of their incomes on groceries than do higher-income people, if grocery stores were required by law to charge a 10-cent fee for disposable bags, this fee could be considered a Select one: a. proportional tax. b. progressive tax. c. regressive tax. d. income tax.

c. regressive tax.

Suppose the labor force stays constant, and the working-age population stays constant, but a greater number of persons who were unemployed become employed. The labor force participation rate will Select one: a. increase. b. decrease. c. remain constant. d. not change in a way that can be predicted.

c. remain constant.

A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until Select one: a. the original firm is driven into bankruptcy. b. the firm's demand curve is perfectly elastic. c. the firm's demand curve is tangent to its average total cost curve. d. the firm exits the market.

c. the firm's demand curve is tangent to its average total cost curve.

All of the following are true statements about the multiplier except Select one: a. the multiplier rises as the MPC rises. b. the smaller the MPS, the larger the multiplier. c. the multiplier is a value between zero and one. d. the multiplier effect occurs when autonomous expenditure changes.

c. the multiplier is a value between zero and one.

Consider the data below (in billions of dollars) for an economy: Gross domestic product for 2013 (in billions of dollars) for this economy equals Select one: a. $2,200. b. $1,600. c. $1,400. d. 4920

d. 4920

LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table shows the payoff matrix for profits earned by each company based on either offering or not offering the discount. Let's suppose the game starts with each firm offering the mid-week discount so that LimoZeenz earns a profit of $6,000 and AirPorter earns a profit of $12,000. Is there an incentive for any one firm to stop offering the mid-week discount? Select one: a. No, neither firm has an incentive to stop offering the discount. b. Yes, both firms have an incentive to stop offering the discount. c. Yes, AirPorter has an incentive to stop offering the discount, but LimoZeenz does not. d. Yes, LimoZeenz has an incentive to stop offering the discount, but AirPorter does not.

d. Yes, LimoZeenz has an incentive to stop offering the discount, but AirPorter does not.

Table shows the payoff matrix for Walmart and Target from every combination of pricing strategies for the popular PlayStation 4. At the start of the game each firm charges a low price and each earns a profit of $7,000. Is the current strategy in which each firm charges the low price and earns a profit of $7,000 a Nash equilibrium? If not, why and what is the Nash equilibrium? Select one: a. No, it is not a Nash equilibrium because each firm can do better by charging the high price. The Nash equilibrium occurs when each firm charges the high price and earns a profit of $10,000. b. No, the current situation is not a Nash equilibrium; it is a dominant strategy equilibrium. There is no Nash equilibrium in this game. c. No, the current situation is not a Nash equilibrium. The Nash equilibrium for each firm is to have the other charge a high price and for the firm in question charge a low price. d. Yes, the current situation is a Nash equilibrium.

d. Yes, the current situation is a Nash equilibrium.

The ________ shows the relationship between the price level and quantity of real GDP demanded. Select one: a. consumer price index b. aggregate expenditure line c. 45-degree line d. aggregate demand curve

d. aggregate demand curve

Investment, as defined by economists, would include the purchase of a Select one: a. corporate bond. b. government bond. c. share of stock in ExxonMobil. d. computer by an accounting firm.

d. computer by an accounting firm.

By offering more generous unemployment insurance programs, European countries can expect Select one: a. to pay less in taxes than in the United States. b. workers to gain new skills quickly in response to fluctuations in the labor market. c. shorter periods of unemployment for their workers. d. longer periods of unemployment for their workers.

d. longer periods of unemployment for their workers.

Developing countries with low saving rates and poor levels of health and education are likely to experience Select one: a. high levels of foreign direct investment. b. easy access to financial backing from banks. c. rapid growth in household incomes. d. low rates of growth in real GDP per capita.

d. low rates of growth in real GDP per capita.

The purchase by a foreign government of an airplane produced in the United States is included in U.S. Select one: a. consumption expenditures b. investment expenditures. c. government purchases. d. net exports.

d. net exports.

Which of the following is not a source of technological advancement for a producer? Select one: a. better trained workers b. more efficient physical capital c. higher skill level of managers d. outsourcing some aspect of production

d. outsourcing some aspect of production

Suppose in 2016, you purchase a house built in 2003. Which of the following would be included in the gross domestic product for 2016? Select one: a. the value of the house in 2016 b. the value of the house in 2003 c. the value of the house in 2016 minus depreciation d. the value of the services of the real estate agent

d. the value of the services of the real estate agent

Figure shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.At price P1, the firm would produce Select one: a. Q1 units b. Q3 units. c. Q5 units. d. zero units.

d. zero units.