Econ 2301 Final

Which of the following is true? Poverty could be eliminated but scarcity could not. Scarcity could be eliminated but poverty could not. Both scarcity and poverty could be eliminated. Neither scarcity nor poverty could be eliminated.

Poverty could be eliminated but scarcity could not.

Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is:

The benefit to his grades from studying for an hour.

If a country wanted to maximize the value of its output, each job should be carried out by the person who:

has a comparative advantage in that activity.

A price-discriminating monopolist will tend to charge a higher price to senior citizens if it believes that senior citizens:

have a greater willingness to pay than other demanders

under a progressive tax system

higher marginal taxes are imposed on higher incomes

A monopolist would charge ____ prices and produce ____ output than would exist under perfect competition.

higher; less

a perfectly competitive firm faces a demand curve that is

horizontal and perfectly elastic

Economics is primarily the study of:

how choices are made because of scarcity.

EXPANSIONARY fiscal policy, other things being equal, will tend to:

increase interest rates

CONCRETIONARY fiscal policy, other things being equal, will tend to:

increase investment. increase net exports. (Both B and C)

Assume a perfectly competitive firm sells its output for $250 per unit. At its current 2,000 units of output, marginal cost is $180 and increasing, and average variable cost is $160. Assuming it wants to maximize its profits, it should:

increase output

If the demand for the output produced by a firm's laborers increased, it would

increase the firm's demand for labor.

The rule of rational choice:

involves "marginal thinking."

The long run:

is a period in which there are no fixed costs.

A price-taking firm will tend to expand its output as long as price exceeds average variable cost and:

its marginal cost is less than the market price

a perfectly competitive firm has no influence over price because

its output is insignificant relative to the market as a whole

a key element to preserving a monopoly is

keeping potential rivals out of the market

A basic characteristic of the firms in an oligopoly market structure is that they are:

large and interdependent

economic profits are

less than accounting profits if implicit costs are greater than zero

Relative to a perfectly competitive industry with the same cost and demand, a single-price monopolist produces ________ output and has a ________ price.

less; higher

What is NOT a function of the Federal Reserve System?

limiting the national debt

*Which of the following measures is associated with an EXPANSIONARY fiscal policy?

lowering taxes

The unemployment rate may underestimate the true extent of unemployment if:

many part-time employees would like to work full-time, but are unable to get the additional work.

Profit-maximizing monopolists choose a level of output such that:

marginal revenue equals marginal cost

Economists assume that the goal of a firm is to:

maximize profits.

A profit-maximizing firm in a perfectly competitive market will always produce a quantity of output that:

maximizes the amount by which total revenue exceeds total cost.

The marginal benefit of a slice of pizza is the:

maximum amount that a consumer is willing to pay for the slice.

Opportunity costs:

may or may not involve costs paid out-of-pocket.

The branch of economics that focuses on the conduct of affairs within narrowly defined units, such as households or business firms, is called:

microeconomics

The poverty rate in the United States is defined as the proportion of the population that fails to earn a ____ absolute income standard. Poverty rates in the United States have largely ____ since the year 2000.

minimum; risen

If the firms in an oligopoly collude, the results will represent what other type of industry?

monopoly

The "law of supply" states that, other things remaining the same, firms produce

more of a good the higher its price.

U.S public utilities are often

regulated natural monopolies

Comparative advantage reflects

relative opportunity cost.

A major advantage of automatic stabilizers is that they:

require no legislative action by Congress to take effect.

Economic choices or tradeoffs are the result of:

scarcity

Net exports are a ____ proportion of GDP and have recently been ____ for the United States.

small; negative.

The relationship between the wage rate and the quantity of labor that workers wish to supply is called:

the market supply curve for labor.

the cost imposed on a firm from changing listed prices are called

the menu costs of inflation

Scholars argue that government activity should be considered when evaluating the measured income distribution because:

the middle and higher-income quintiles have benefited more than the poor from state-subsidized airports, airlines, operas, and museums.

Monopoly results in a welfare loss because:

the monopolist restricts output below the socially efficient level.

The total labor force consists of:

the number of employed persons plus the number of unemployed persons. #EP + # UNEP

the labor force equals

the number of employed plus the number of unemployed persons. #EP + #UNEP

The unemployment rate is calculated as:

the number of unemployed persons divided by the number of employed plus unemployed persons. (#UNEP / #EP) + #UNEP

Deflation exists whenever:

the overall price level falls.

inflation exists when

the overall price level is rising

economists usually use the term "recession" to refer to

two or more consecutive quarters of declining real GDP

*in both perfect competition and monopoly, a firm

will be characterized by both b. and c.

*A monopolist who is unable to price discriminate:

will be characterized by both b. and d.

A monopolist who is able to price discriminate by charging two different groups different prices:

will set prices so that both group's demand curves are elastic at the prices charged.

The price of a ticket to the latest Broadway musical is $80. You will purchase a ticket only if:

your expected marginal benefit from viewing the musical exceeds $80.

The price of any productive resource is ____ related to ____ the final good or service:

directly; demand for

Positive incentives do not:

discourage consumption.

Price ____ occurs when producers charge different customers different prices for the same good or service.

discrimination

Federal funds market rate is:

the rate charged on loans provided to meet reserve requirement.

The federal government funds deficit spending by:

issuing bonds

Typically, the budget deficit is financed by:

issuing debt.

If a perfectly competitive firm's marginal revenue was less than its marginal cost,

it would contract its output (but not raise its price) in order to increase its profits.

A market situation where a small number of sellers compose the entire industry is called:

oligopoly

Interdependence among firms is characteristic of:

oligopoly markets.

A special interest issue is best described as:

one in which a large number will each suffer small costs and a small number will each receive large benefits.

All decisions of the Federal Reserve are subject to approval by:

only the Board of Governors of the Federal Reserve.

If the Fed buys a U.S. government bond from a member of the public,

the banking system has more reserves and the money supply tends to grow.

to internalize a positive externality

the consumers of a good could receive a subsidy equal to the external benefit resulting from the production or consumption of the good.

when a firm makes zero economic profit, it means that

the firm is covering the total opportunity costs of its resources

The unemployment rate is the number of people classified as unemployed as a percentage of:

the labor force

The additional benefit received as a result of undertaking an action is:

the marginal benefit.

The relationship between the wage rate and the quantity of labor that employers wish to hire is called:

the market demand curve for labor

In the production possibilities frontier shown above, a movement from point C to point D could most likely be caused by

unemployment

When perfectly competitive firms in an industry are earning positive economic profits,

we would expect entry into the industry.

Which of the following is not an example of a factor of production? an office building a products price the land plowed by farmers in order to grow corn the chief executive officer of a large corporation a worker on an assembly line producing compact disc players

a product's price

Which of the following is true for a typical firm in a typical cartel?

"If I alone cheat, I'm better off; if everyone cheats, I'm worse off."

The function of an entrepreneur is to:

Bear the business risks. Organize the other factors of production. Innovate.

Which of the following is an example of a public good? Telephone service Clean air A city-owned bus Electricity generated by a city-owned public utility

Clean air

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n)

Comparative advantage in production.

Marginal analysis involves:

Comparing the additional benefit from an action to the additional cost.

Whenever the price of Good A increases, the demand for Good B increases as well. Goods A and B appear to be:

Complements

An economy's resources:

Consist of land, labor, capital, and entrepreneurial skills.

Ceteris paribus, an increase in the price of a good will cause the

Consumer surplus derived from the good to decrease

Economics is different from a "hard" science like physics because:

Economists cannot easily control all the variables that might influence human behavior.

A PERFECTLY ELASTIC SUPPLY curve is

Horizontal

To achieve a high standard of living, a nation should:

Promote economic growth.

One of the most important determinants of economic growth is:

The savings rate.

In a competitive economy with no government sector

There will be too few public goods produced

The LARGEST single source of revenue for the federal government is the:

personal income tax.

in the long run, economic profits are

possible for a monopolist but not for a perfectly competitive firm

the aim of antitrust policy is to

prevent firms from acquiring or exercising undue market power

a monopolist firm is a

price maker that faces the market demand curve

The horizontal demand curve facing an individual firm in a perfectly competitive market:

is a reflection of the firm's small size relative to the total market.

Economics

is a science concerned with reaching generalizations about human behavior, like sociology or psychology.

*a firm facing a horizontal demand curve

is characterized by all of the above

*pure monopoly

is characterized by all the above

the demand curve facing a monopolist

is less elastic than a perfectly competitive firms demand curve

Kathryn chooses to go to college full-time rather than to work. Kathryn:

is not part of the labor force

the natural rate of unemployment

is the sum of both frictional and structural unemployment when they are at a maximum.

The key feature of an oligopoly is that there

are only a few sellers.

____ facilitates joint profit maximization for the oligopoly.

collusion

A monopolist can sell 6 units per day at $8 per unit, or 7 units per day at $7 per unit. Its marginal revenue for the seventh unit of output is:

$1

The official poverty rate for the United States for a family of four is approximately:

$20,000

*which of the following people is structurally unemployed

* Clem, a skilled corset maker, lost his job when his factory shut down due to a permanent reduction in the demand for corsets.

* Which of the following is true for a monopolist but not for a perfectly competitive firm?

* a. and b. are true for a monopolist but not for a perfectly competitive firm.

* high barriers to entry are generally found in

* both c and d

*Which of the following shifts the demand curve for oranges?

*A decrease in the price of a pound of bananas, a substitute in consumption for oranges

*Which of the following would not be counted as a final good for inclusion in GDP?

*A sheet of glass purchased by General Motors for the side window of a new car

*Which of the following is an example of moral hazard?

*An individual drives less cautiously after obtaining automobile insurance.

Fantastic Cuts Hair Salon knows that a 15% increase in the price of their haircuts will result in a 5% decrease in the number of haircuts sold. What is the elasticity of demand facing Fantastic Cuts?

0.33

In the production possibilities frontier (Chart), what is the opportunity cost to society of the movement from point A to point C?

100 baseballs

Wages are approximately ____ higher in union jobs than in comparable nonunion jobs.

15%

If the elasticity of supply of a good was 2, how much would the price have to increase to lead to an increase in output of 6 percent?

3%

A country will roughly double its GDP in twenty years if its annual growth rate is:

3.5 percent.

According to Okun's law, a 2 percent increase in cyclical unemployment reduces output by almost:

4%

In recent years, economists have come to believe that full employment in the U.S. economy occurs at an unemployment rate between:

4.5% and 5.5%

Approximately ____ of national income goes to wages and salaries for labor services.

75 percent

If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:

A 40% increase in purchases by customers.

Effective free market ethical systems must provide for all of the following EXCEPT: Clearly defined rules and regulations. Meaningful punishments for rule breakers. A clearly defined moral foundation. Adequate market oversight and policing. Enough freedom for creativity and competition.

A clearly defined moral foundation

Which of the following is most likely to be an example of asymmetric information? A soft drink purchased in a vending machine A car wash to benefit the local high school band A collectible baseball card purchased on eBay Wireless service that includes unlimited minutes and texting

A collectible baseball card purchased on eBay

A downward sloping straight-line production possibilities curve implies:

A constant opportunity cost.

What would cause the U.S. money supply to expand?

A decrease in reserve requirements

Which of the following would increase the quantity of LCD TVs demanded but would not increase the demand for LCD TVs?

A decrease in the current price of LCD TVs

A theory can best be defined as:

A deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.

An example of a capital resource is: stock in a computer software company. the funds in a CD account at a bank. a bond issued by a company selling electric generators. a dump truck. an employee of a moving company.

A dump truck.

The completely private ownership of property and the exclusive use of the market system to direct and coordinate economic activity are most characteristic of:

A market economy

Which of the following policies would be most effective in promoting monthly water conservation? A $100 flat fee for any household that uses over 1500 gallons A per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons A $125 fee for all households in addition to a $0.50 per gallon fee for all consumption A $200 fee for all households with zero charge per gallon of consumption A $50 fee for all households with zero charge per gallon of consumption

A per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons

Which of the following is an example of an unintended consequence? First time tax credits that cause more home sales A price ceiling on gasoline that causes a gas shortage Increased parking fines that lead to fewer violators Increased taxes on cigarettes and liquor that lead to less smoking & drinking

A price ceiling on gasoline that causes a gas shortage

A hypothesis is:

A testable proposition.

If there is initially a federal budget surplus, and taxes rise, while transfer payments fall:

AD decreases and the budget surplus increases.

If there is initially a federal budget DEFICIT , and taxes FALL while transfer payments RISE:

AD increases and the budget deficit increases. EXPANSIONARY

When economic profits in an industry are zero and implicit costs are positive:

Accounting profits will be greater than zero. resources will not tend to either enter or leave the industry, other things equal

If there is initially a federal budget DEFICIT, and taxes RISE, while transfer payments FALL:

Aggregate Demand (AD) decreases and the budget deficit decreases. CONTRACTIONARY

Which of the following is an example of an individual motivated by self-interest? A student volunteering at a soup kitchen An attorney providing free legal service to low income families A young person volunteering for the Peace Corps A man buying a new Camaro

All of the answers are correct

Which of the following is NOT an example of a resource? A forest A river A John Deere tractor The chef at the city's best café

All of the answers are resources

*Which of the following combinations of changes would have a CONTRACTIONARY effect on aggregate demand (AD)?

An increase in taxes and a decrease in government purchases.

Which of the following would cause the demand for carpenters to increase? A decrease in immigration An increase in the demand for housing An increase in the price of lumber A decrease in the productivity of carpenters

An increase in the demand for housing

Which of the following changes would tend to increase measured income inequality? An increasing proportion of retired people in the population. An increase in the number of divorced people. An increasing proportion of high income earning women marry high income earning men. Young workers begin making up a larger proportion of the labor force.

An increase in the number of divorced people

What would be most likely to cause a reduction in the supply of Nintendo video games?

An increase in the price of computer chips used to make Nintendo games

Which of the following is most likely a topic of discussion in a microeconomics course? A decrease in the share of national income paid to the government in taxes An increase in the price of lumber used to construct houses An increase in the rate of inflation An increase in the number of jobless individuals filing unemployment claims The size of the national debt

An increase in the price of lumber used to construct houses

What would NOT shift the supply curve for swordfish?

An increase in the price of swordfish

Which of the following will NOT result in a leftward shift of the market demand curve for labor? A decrease in labor productivity A decrease in demand for the firm's product An increase in the wage rate A decrease in the price of the firm's product

An increase in the wage rate

Which of the following is false? An increase in labor productivity will shift the demand curve for labor to the right. An increase in wage will lead to an increase in the supply of labor. A decrease in the nonwage income of workers would shift the labor supply curve to the right. If job conditions deteriorate, it would lead to a reduction, or leftward shift, in the labor supply curve. If the demand for labor increased faster than the supply, the real wages of workers would rise.

An increase in wage will lead to an increase in the supply of labor.

Pollution damages the environment we live in. An economist would advise that we reduce air pollution:

As long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction.

If people are self-interested

As their preferences for leisure time increases, they are likely to work less. as the wages they are offered increases, they are likely to work more

What is a correct way to describe equilibrium in a market?

At equilibrium, quantity demanded equals quantity supplied.

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade

Belarus should export linen to Russia.

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much."

Bill's statement is positive, and Bob's statement is normative.

Opportunity cost includes

Both monetary and non-monetary costs

What is true of a competitive market?

Buyer and sellers have little market power

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

Buyers and sellers.

Sellers may choose NOT to sell in certain markets because

Buyers are unable to accurately perceive the quality of their goods and are, therefore, less willing to pay an appropriate price for them.

An economic hypothesis is tested:

By comparing the hypothesis's predictions to real-world data.

Public goods are those that are consumed

By the paying and nonpaying public alike

Ethics Is a branch of philosophy. Are moral rules or standards governing human conduct. Are rules or standards governing human conduct, but not necessarily moral rules. The moral principles of an individual person. Can be defined in any of the ways above.

Can be defined in any of the above ways

Marginal thinking is best demonstrated by:

Choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.

The main COMPONENTS of spending, which can cause changes in aggregate demand (AD), are:

Consumption, investment, government purchases, and net exports.

The main components of spending, which can cause changes in aggregate demand, are:

Consumption, investment, government purchases, and net exports.

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

Contains positive statements only.

what are creditors harmed by unexpected inflation

Creditors are paid back money with less spending power than when it was originally loaned out.

If an unregulated monopolist operates in a market, then:

Customers will pay higher prices than if the market were competitive. Customers will purchase fewer units of output than if the market were competitive. Society will not be allocating its resources efficiently. (All the above)

CONTRACTIONARY fiscal policy consists of:

DECREASE government purchases, INCREASE taxes, DECREASE transfer payments

Negative incentives:

Decrease benefits or increase costs.

If government policy makers were worried about the inflationary potential of the economy, what WOULD be a correct fiscal policy change?

Decrease government purchases of goods and services.

A combination of an increase in the discount rate and an open market sale of government securities by the Fed would:

Decrease the money supply.

If the elasticity of demand for bangles is equal to 1, moving along the DEMAND curve for bangles, an increase in price will:

Decrease the quantity demanded and leave total revenue unchanged.

As the number of firms in an oligopoly ____, the oligopoly becomes more ____.

Decreases; like a monopoly Increases; like perfect competition (Both B and D)

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded. It appears that:

Demand is elastic and total revenue will increase

A market economy depends on market mechanisms to:

Determine the most efficient way of using resources.

Household income after taxes is called:

Disposable personal income.

As an additional consumer obtains the benefits of a public good such as national defense, the benefits to existing consumers:

Do not change

If a negative externality results from the refining of oil, the cost of production as seen by the oil refinery:

Does not include the external cost

Adding the value of a good or service twice by counting the intermediate goods and services in GDP is known as:

Double counting.

What would break a positive ethic Having lustful daydreams about your best friend's girlfriend (or boyfriend) Driving two miles per hour over the speed limit Cursing your instructor when you're alone at home at 3 AM answering these stupid questions Spending the day sleeping & watching TV instead of studying for your classes

Driving two miles per hour over the speed limit

*Which of the following statements is NOT correct?

Economic growth is best measured by the annual percentage change in nominal GDP per capita.

Economic profits will exist Whenever total revenues exceed accounting costs. Whenever a firm is being operated efficiently. Whenever a firm is a monopolist. As a result of firms exiting an industry.

Economic profits are not sure to exist in any of the above cases

A price cut will increase the total revenue a firm receives if the demand for its product is:

Elastic

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

Elastic

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.

Elastic

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles. The demand for shoes from The Shoe Emporium appears to be:

Elastic.

Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is exhibiting traits of:

Entrepreneurship

If the supply curve for a product is vertical, then the elasticity of supply is

Equal to zero

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk:

Equals $2.00.

At the equilibrium price for gasoline:

Everyone with the desire and the income to buy gasoline at that price can do so. All sellers willing and able to sell gasoline at that price can do so.

which of the following statements is true? Externalities can never refer to costs borne by the seller. Both external costs and external benefits can never exist for the same good. Externalities can never lead to under-production of a specific good. External benefits can never exceed external costs

Externalities can never refer to costs borne by the seller

Cost-benefit analysis can determine the optimal amount of all the following EXCEPT Regulations Market inspectors Severity of punishments Fairness of rules Inspections

Fairness of rules

Real gross domestic product is the total value of all:

Final goods and services adjusted for inflation.

Which of the following would most likely feature elastic demand heart surgery a required textbook fresh green beans

Fresh green beans

A surplus will result whenever the

Government imposes a price floor above the equilibrium price

What is NOT considered a factor contributing to economic growth?

Growth in the money supply relative to the growth of final goods and services

If Don paints the outside of his house a horrendous color:

He probably has lowered the value of his home and the value of his neighbors' homeshe is unlikely to bear all the social costs of his actions.

In the long run, the most important source of increase in a nation's standard of living is a:

High rate of economic growth.

What government policies is NOT likely to encourage per capita economic growth?

High taxes on companies that spend a lot on capital formation

Which of the following is a characteristic of perfect competition Substantial barriers to entry Homogeneous products Few sellers Each firm has significant control over the market

Homogeneous products

A supply schedule shows

How many units producers are willing and able to sell at various prices

The supply curve shows

How the quantity produced varies with price

EXPANSIONARY fiscal policy consists of:

INCREASED government purchases, DECREASED taxes, INCREASED transfer payments.

Which of the following best illustrates the fallacy of composition? If Mr. Smith had more money, he could buy more scarce goods; if the Adams family had more money, it could buy additional goods. If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods. If other variables are not held constant, economists may not observe the relationship between price and quantity demanded that is expected. Aggregate consumption may not behave in the same manner as the consumption of a particular individual.

If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods.

According to the rule of 70,

If a country is growing at 14% per year, its output will double in approximately 5 years. If a country is growing at 10% per year, its output will double in approximately 7 years. If a country is growing at 2% per year, its output will double in approximately 35 years. (All of the above are true)

The marginal benefit to you of drinking bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25.

If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents.

GDP equals $5 trillion. If consumption equals $3.5 trillion, investment equals $1 trillion, and government spending equals $1.5 trillion, then:

Imports exceed exports by $1 trillion.

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:

In the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

You lose $20 from your wallet and decide to miss an hour from work in order to search for it. To an economist, this means that: You estimate the expected cost of searching for one hour to be greater than $20. You must earn more than $20 per hour. In your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage. You are irrational, since it is always a waste of time to search for lost money. You place no value on your time.

In your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage.

The longer the time period considered, the elasticity of supply tends to

Increase

If government policy makers were worried about the inflationary potential of the economy, what would NOT be a correct fiscal policy change?

Increase government purchases of goods and services.

Assume that the government is considering plans to increase aggregate demand (AD) in order to reduce unemployment. What would be effective?

Increase government purchases of goods and services. Decrease taxes <p> Increase transfer payments.</p> (All of the Above)

To offset the effect of a steep fall in net exports on the economy, the government might:

Increase government purchases.

Contractionary fiscal policy, other things being equal, will tend to:

Increase investment. Increase net exports.

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

Values and information

Elasticity of demand will ____ as the availability of substitutes ____.

Increase; Increases Decrease; Decreases

Which of the following does NOT contribute to increased worker productivity? Technological advances Increased capital formation Improvements in workers' skills Increased labor supply

Increased labor supply

If the elasticity of supply of bangles is equal to 1, moving along the SUPPLY curve for bangles, an increase in price will:

Increases the quantity supplied and increases total revenue

The demand schedule for a good

Indicates the quantities that will be purchased at alternative market prices

Specialization is a way for

Individuals to make the best use of resources by devoting themselves to one primary productive activity

Which of the following is most likely to be a fixed cost for a business Payment for raw materials used in manufacturing goods Interest payments on a loan used to finance the construction of a building Shipping charges for the delivery of products Wages paid to temporary workers

Interest payments on a loan used to finance the construction of a building

The law of demand refers to

Inverse relationship between the price of a good and the quantity demanded

Which of the following is true with regard to production possibilities curves? Underutilized resources or those not being put to their best uses are illustrated by output combinations along the production possibilities curve. Economic growth means a movement along an economy's production possibilities curve in the direction of producing more consumer goods. Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future. From a point inside the production possibilities curve, in order to get more of one thing, an economy must give up something else.

Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future.

The purchase of a new scanner by a computer graphics business is included in which expenditure category of GDP?

Investment

The long-run production period:

Is a time when all inputs are variable. Varies in length according to how capital goods are specialized. Is likely longer for a steel manufacturer than for a retailer who sells watches off a cart at the local mall. (All of the above)

An implicit cost

Is characterized by an opportunity cost and does not require an outlay of money

If a positive externality results from the consumption of higher education, then the marginal benefit students receive from education:

Is less than the marginal social benefit

Output per capita:

Is measured by GDP per capita. Is total output (GDP) divided by the number of persons among whom it will be distributed. Is one measure of the average level of economic well-being in a country (All of the above)

A firm which owns its own equipment and is earning positive economic profits

Is probably earning positive accounting profits

A nation has a comparative advantage in the production of cars over another nation if:

It can produce cars at a lower opportunity cost than the other country.

Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because:

It is a proposition that can be tested.

*If there are economies of scale throughout the relevant output range of production, which is false?

It would typically result from a firm's possession of an exclusive patent

Which of the following countries are lacking an abundance of natural resources? Australia Japan Brazil United States Canada

Japan

In its original role as lender of last resort, the Fed was supposed to:

Keep the money supply from drying up during economic panics.

If the demand for apples is highly elastic and the supply is highly inelastic, then if a tax is imposed on apples it will be paid:

Largely by the sellers of apples

Which of the following is a characteristic of a monopoly A large number of sellers Homogeneous products Larger barriers to entry Price taking firms

Larger barriers to entry

*a monopolist will operate at the quantity where

MR = MC and charge a price corresponding to demand at that level. Marginal revenue equals marginal cost

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

Macroeconomics

*Which of the following did NOT result in economic growth?

Many citizens emigrating from a nation when a politically repressive regime takes office

Which of the following best explains the source of CONSUMER surplus for Good A? Many consumers pay prices that are greater than the equilibrium price of Good A. Many consumers would be willing to pay more than the market price for some units of Good A. Many consumers think the market price of Good A is greater than its cost. Many consumers of Good A place a value on it that is less than the market price.

Many consumers would be willing to pay more than the market price for some units of Good A.

Which of the following serve as the language of the market system? Monetary and fiscal policies Morals Market prices Governments

Market prices

The ability to produce at a lower opportunity cost than someone else is referred to as:

comparative advantage.

When economists speak of markets, they primarily mean:

Mechanisms that coordinate actions of buyers and sellers.

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

Mike can wash a car faster and has comparative advantage in washing cars

Mike is able to complete a tax return in two hours earning a fee of $100. As an alternative, he could pitch in at a volunteer car wash washing four cars in one hour. His roommate Joe would take four hours to complete a tax return earning a $100 fee and also can wash four cars in one hour. Both individuals could benefit if

Mike worked on tax returns for eight hours and paid Joe $10 for each car he washed.

More efficient positive market ethics will generally help improve all of the following challenges EXCEPT: Positive externalities of a market Negative externalities of a market Moral externalities of a market Consumer surplus of a market Producer surplus of a market

Moral externalities of a market

an economic profit of zero implies

Normal profit. The firm is covering both explicit and implicit costs. The firm's revenues are sufficient to compensate the money and time that the owners put into the business. (All of the above)

Ethical rules based on morals or concepts of fairness are called

Normative ethics

If the production of a particular good involves significant external benefits, to force the externality to be internalized the government might:

Offer a subsidy for production of the good in order to increase production.

If we know someone pays all their taxes and gives money to charity, we know that

Only that they pay their taxes and give money to charity

*Which of the following is most frequently used when the Fed is attempting to adjust the money supply?

Open market operations

Which of the following explains why people tend to dedicate their resources to one primary activity, that is, to specialize rather than generalize? Opportunity costs Negative incentives Positive thinking Fallacy of composition

Opportunity costs

Improvements in and greater stocks of land, labor, capital, and entrepreneurial activity will shift the production possibilities curve:

Outward, such that more goods and services can be produced.

An externality occurs when:

People other than those making the demand and supply decisions share the benefits or the costs of an activity.

The elasticity of supply is defined as the ____ change in quantity supplied divided by the ____ change in price.

Percentage, Percentage

Plagiarism is unethical because

Plagiarism might result in stealing profits from the original writer Plagiarism can decrease the value of honest students' diplomas Plagiarism can make it more difficult for instructors to assess the quality of students' writings Plagiarism is a type of fraud (All of the above are reasons)

A change in which of the following variables does NOT cause a change in demand? prices of unrelated goods incomes of demanders the number of demanders tastes of demanders expectations of demanders

Prices of unrelated goods

The free rider problem suggests that competitive markets will tend to:

Produce less than the optimal quantity of a public good

When a person possesses a comparative advantage in the production of one good or service, it:

Promotes greater self-sufficiency.

Which of the following statements best summarizes the essence of public choice analysis?

Public choice analysis applies economic principles to political science issues.

*The price of music downloads decreases, which of the following is most likely to happen

Quantity demanded will increase

If the demand is perfectly inelastic, what would happen to the quantity demanded if there is a tiny increase in price?

Quantity demanded will remain the same

Each point on the supply curve shows

Quantity supplied at that price

The difference between a change in quantity supplied and a change in supply is that a change in:

Quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes.

Advantages of specialization do not include

Reduced interdependence

A good economic theory:

Relies on simplifying assumptions in order to explain economic behavior.

Economists believe that individuals act as if they are motivated by self-interest and:

Respond in predictable ways to changing circumstances.

Economic goods are:

Scarce products that are created from scarce resources.

Which of these conditions are most likely to motivate honest people to become corrupt? Reading that Bernie Madoff was sentenced to life in prison after stealing billions of dollars Having your boyfriend (or girlfriend) elope with someone who is rich Seeing a film of Bonnie and Clyde being shot by machine guns Seeing your boss and fellow workers get rich by lying and cheating

Seeing your boss and fellow workers get rich by lying and cheating

From an ECONOMICIST perspective, which of the following observations is not true? Self-interest is purely monetary in nature. Self-interest can include benevolence. Self-interest is a good predictor of human behavior in most situations. Self-interest is not the same as selfishness.

Self-interest is purely monetary in nature.

If there is a surplus, ____ will be frustrated by their inability to exchange at the current price, and they will compete the prices ____ as a result.

Sellers; Down.

Which of the following will NOT contribute to higher wage rates for labor? Increased unionization and decreased nonunionization of employees in the economy A rapid increase in the demand for labor Significantly relaxed immigration standards Increases in technological advances Higher education levels of workers

Significantly relaxed immigration standards

Government purchases, under the expenditure approach to GDP accounting, do not include:

Social Security benefit payments to retirees

Someone earning $150,000 per year will pay the same amount of ____________ as someone earning $150,000,000 per year:

Social Security tax.

Whenever the price of Good A decreases, the demand for Good B increases. Good A and B appear to be:

Substitutes

The market supply schedule reflects the total quantity

Supplied at each price by all of the producers

An upward sloping supply curve shows that

Suppliers are willing to increase production of their goods if they receive higher prices for them

In free markets which allows a high level of unethical corruption:

Suppliers will be forced to be corrupt or to leave the market

Which of the following is not an example of the use of the problem solving perspective provided by economics? An investor considers the tax consequences of selling stocks in order to buy bonds (which she believes offer a better return). A rancher recognizes that raising more cattle this year will damage his pasture and limit next year's herd size. The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember. An economics student considers the scarcity of available study time for studying the other subjects that she should be studying before deciding to study economics this evening.

The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember.

If a company offers a medical and dental care plan that offers benefits to all of the members of each employee's family for a given monthly premium, an employee who is a mother of five children and who has bad teeth who elects that plan would be an illustration of:

The adverse selection problem

Graphically, consumer surplus is measured by:

The area below the demand curve, but above the market price.

Economics is concerned with:

The choices people must make because resources are scarce. Human decision makers and the factors that influence their choices. The allocation of limited resources to satisfy virtually unlimited desires (All of the above)

What factors contribute to economic growth?

The construction of new factories An increase in the proportion of the population that is college-educated

Assume that coffee and tea are substitutes for each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, then most probably:

The demand for tea will increase.

Consumer surplus is:

The difference between what consumers are willing to pay and what they are required to pay for a good.

Market failure occurs when:

The economy fails to allocate resources efficiently on its own.

The fallacy of composition is:

The erroneous view that what is true for the individual will also be true for the group.

If a student enrolls in an additional course at the university, an economist would conclude that:

The expected marginal benefit of an additional course must exceed the expected marginal cost of the course.

Human capital is:

The expertise or knowledge possessed by workers.

The opportunity cost of an item is

The highest valued alternative you give up to get that item

Which of the following is a statement of positive economics? The income tax reduces after-tax incomes of the rich. A reduction in tax rates makes the after-tax distribution of income fairer. Tax rates ought to be reduced so that people will work more.

The income tax reduces after-tax incomes of the rich.

The practice of potential buyers offering lower prices for a product of uncertain quality than they would for a product of certain quality is known as:

The lemon problem

Don Keene promotes boxing matches. He makes $6,500 per fight. Which cost is most relevant to a decision as to whether to promote one more fight?

The marginal cost of promoting all boxing matches during the year

*Graphically which of the following is true for a monopoly?

The marginal revenue curve lies below the demand curve and is steeper than the demand curve.

The U.S. government establishing a policy that it will bail out troubled financial institutions and a resulting increase in the number of bank failures is an example of:

The moral hazard problem

Which of the following statements is true? The opportunity cost of a decision is equal to the total values of the foregone alternatives. The opportunity cost of a decision is the value of the best foregone alternative. Some economic decisions have zero opportunity cost. The opportunity cost of attending college is the same for all students at the same university but may differ among students at different universities.

The opportunity cost of a decision is the value of the best foregone alternative.

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why doesn't Sergei make his own clothes?

The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career.

Price elasticity of demand is defines as

The percentage change in quantity demanded divided by the percentage change in price. %CQD / %CP

Ceteris paribus, if the vacancy rate in an apartment complex increased from 5% to 20% over the past two years, we would expect to see

The price decrease leading to an increase in quantity demanded.

When there is an excess quantity demanded of a product at the current price, then:

The price will tend to rise.

Macroeconomic topics do not usually include:

The profit maximizing decisions of an individual manufacturer.

Which of the following affects the rate of economic growth?

The quality of available resources. The quantity of available resources. Technological change. (All of the above)

The Book Nook reduces prices by 20%. If the dollar value of The Book Nook's sales remain constant, it indicates that:

The quantity of books sold increases by 20%

Assume a price floor is imposed at the current equilibrium price in the market for lettuce. If the demand for lettuce then increases:

The quantity of lettuce supplied will increase

A shortage currently exists in the market for strawberries. Which of the following statements is correct? The quantity of strawberries supplied exceeds the quantity demanded and the market price is below the equilibrium price. The quantity of strawberries supplied exceeds the quantity demanded and the market price is above the equilibrium price. The quantity of strawberries demanded exceeds the quantity supplied and the market price is below the equilibrium price. The quantity of strawberries demanded exceeds the quantity supplied and the market price is above the equilibrium price. The quantity of strawberries demanded exceeds the quantity supplied and the market price equals the equilibrium price.

The quantity of strawberries demanded exceeds the quantity supplied and the market price is below the equilibrium price.

Entrepreneurship is:

The resource that organizes the other factors of production in order to produce goods and/or services.

Interpret the following statement: "Demand exceeds the available quantity of apartment housing. If the price of apartment rentals were increased, demand would decrease and an equilibrium could be achieved."

The statement is incorrect because it confuses "demand" with "quantity demanded."

Which of the following best resembles a perfectly competitive market The stock market The book publishing industry The steel industry The used car industry

The stock market

Which of the following represents a NORMATIVE statement? A decrease in price leads to an increase in quantity demanded. The temperature outside is 90 degrees. The study of economics is more important than the study of history. People will buy less butter at $1.50 per pound then they will at $1.00 per pound. Normally, as an economy develops, the nation's birth rate tends to fall.

The study of economics is more important than the study of history.

Say you enroll in an 8 A.M. economics class, and you only come to campus to attend your economics class. The cost of coming to the economics class that day would then include:

The value of the time it took to drive to campus. The cost of the gasoline it took to get to campus. (Both A and B)

Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy?

Their positive statements help us UNDERSTAND the economy's response to a particular policy, while their normative statements reflect THEIR value judgments.

Perfect competition implies that

There are many firms in the industry. All firms are producing the same identical product. All firms are price takers. (All of the above answers are correct)

Which of the following is true of resources? Their availability is unlimited. They are the inputs used to produce goods and services. Increasing the amount of resources available could eliminate scarcity. They are inputs used to produce goods and services and increasing the amount of resources available could eliminate scarcity.

They are the inputs used to produce goods and services.

*Which of the following statements is NOT true with regard to automatic stabilizers?

They require legislative action.

Which of the following statements are true regarding profit-maximizing firms? They will attempt to maximize the difference between total revenues and total costs. They will use more of a resource as long as the marginal resource cost (MRC) is greater than the marginal revenue product (MRP). They will only produce where MRP is positive and MRC is negative.

They will attempt to maximize the difference between total revenues and total costs.

"As a rational person, you would expect individuals to always avoid actions that are illegal."

This is a false statement because it is expected that individuals will consider the consequences of their actions and that some will choose to commit illegal acts anyway.

Economists believe that in regards to criminal behavior

Those choosing to commit criminal acts weigh the expected marginal benefits rather than the expected marginal costs

Tom is a castaway who washes up on a remote island. He can kill eight birds per hour or catch ten fish per day. The natives on the island can kill ten birds per day or catch twenty fish per day. According to comparative advantage,

Tom should kill more birds and fish less, then trade birds for fish

Which of the following is NOT correct? Trade is good for nations. Trade is based on absolute advantage. Trade allows for specialization. Trade allows individuals to consume outside of their individual production possibilities curve.

Trade is based on absolute advantage.

If a good that features a positive externality is produced in an unregulated free market, the good will be:

Under-produced and under-priced

If there are significant external costs associated with the production of a product, it can be said that the private cost of production to the firm ____ the cost to society associated with this product and output should ____ to move toward the efficient situation.

Understates; Decreases

What best defines rational behavior

Undertaking activities whenever the marginal benefit exceeds the marginal cost

*Which of the following is most likely to be an inferior good

Used clothing

Ethics violators like embezzlers, frauds, tax cheats and bank robbers

Usually follow most rules and other ethics most of the time. Not only injure individuals and companies, but also often hurt entire markets. Often use rational cost-benefit analysis when deciding whether to cheat. May feel so ashamed and guilty of their crimes that they are driven to suicide. (All of the above may be true of ethics violators.)

Which of the following is most likely an example of CORRELATION but NOT an example of CAUSATION? In the U.S., more pizza is consumed on Super Bowl Sunday than any other day of the year. The cost of advertising during the first half of the Super Bowl is greater than the cost of advertising in the second half. Usually, if I eat a chili dog and drink a beer before a game, my teams wins. Generally speaking winning football teams tend to average more rushing yards than losing football teams.

Usually, if I eat a chili dog and drink a beer before a game, my teams wins.

A worker's contribution to the firm's revenue is measured directly by the worker's:

Value of marginal product.

Which of the following does NOT specify positive ethical rules? Webster's Dictionary Robert's Rules of Order Hoyle's Rules of Games The San Marcos Land Development Code The Amy Vanderbilt Complete Book of Etiquette

Websters dictionary

*Which of the following is NOT true?

What one trader gains from a trade, the other must lose.

When would YOU expect economic profits in an industry to be zero?

When firms have no incentives to enter or exit.

The determination of which goods are public depends on

Whether it is possible to exclude additional users from consuming the good if they do not pay for it.

Which of the following are NOT very important to maintaining effective market ethics? A willingness by the vast majority of market participants to obey the ethics and report violators The number of inspectors or police The severity of punishments for cheating Whether people understand the reasons for the rules or regulations Whether the likely penalties for cheating are greater than the rewards

Whether people understand the reasons for the rules or regulations

In a market economy how do we determine who will get the goods and services that have been produced?

Whoever can afford it

In economics, the demand for a good refers to the amount of the good people

Will buy at various prices

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000. The price of the new sport utility vehicle is $22,000. If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle. You will not purchase the new sport utility vehicle at this time if you are acting rationally. If you do not purchase the new sport utility vehicle, your net loss will be $2,000. If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000

You will not purchase the new sport utility vehicle at this time if you are acting rationally.

If your company is in the range of output where it experiences economies of scale, you know:

a 5 percent increase in all inputs will increase output by more than 5 percent.

What product would not be included in current U.S. GDP?

a Ford Mustang produced last year and sold this year

*In which of the following industry models are the individual firms not price takers?

a and b

*Which of the following would be an example or result of EXPANSIONARY fiscal policy in action?

a budget deficit

An example of physical capital is: $100 bill. a stock certificate. a chainsaw. a cheeseburger. a gold coin

a chainsaw

a cartel is

a group of oligopolists who try to behave like a single monopolist and split the benefits among themselves.

The Organization of Petroleum Exporting Countries is an example of:

a periodically successful cartel

Frictional unemployment occurs when:

a worker decides to quit to see a different job

underemployment occurs when

a worker is over-qualified and possesses more skills than his job demands.

An industry characterized by only a few firms in the market is called:

an oligopoly

Ceteris paribus, if the cost of feeding and housing a family were to increase, it would increase a family's level of ____ poverty.

absolute

*A major macroeconomic goal of nearly every society is:

all the above

*Overt cartels are relatively because

all the above

*When setting prices, the monopolist may choose to charge alternative customers different prices based on:

all the above

*in the expansion phase of the business cycle

all the above

The real core of most economic problem is to:

allocate limited resources among competing uses.

For a profit-maximizing monopolist, the price of a product is:

always greater than marginal revenue

when economics of scale exist, a decrease in the level of output will lead to

an increase in cost per unit

If the Fed sells bonds, the SHORT-RUN impact of this policy will tend to include:

an increase in real interest rates.

What would NOT cause a change in the supply of milk?

an increase in the price of milk

perfect competition is the term used to describe

an industry in which numerous price-taking firms produce identical products.

People will gather information on consumption alternatives:

as long as the marginal benefit to them of acquiring additional information exceeds the marginal cost to them.

If a regulatory board wanted to make sure that a natural monopoly earned a normal rate of return, it should set price which is equal to:

average total cost

If a regulatory commission wishes to allow a firm to earn a normal rate of return, it should set price equal to:

average total cost

the sum of AVC and AFC equals

average total cost

If average fixed cost and average variable cost are summed together, the result is: AFC + AVC =

average total cost.

Assuming fixed costs are positive, over a range of output in which average total costs were constant,

average variable cost would be rising as output increases

With regard to the income quintile (20% of the population) listings below, which one indicates the greatest degree of income inequality? ...Low F ....................High F (a) 18% 19% 20% 21% 22% (b) 2% 4% 6% 8% 80% (c) 5% 10% 15% 25% 45% (d) 4% 11% 16% 30% 38%

b

oligopoly firms

base their pricing and output decisions on the likely responses of rival firms

Which of the following is NOT part of an argument that unions lead to increased productivity? Reduction in worker turnover Improved morale Employees with more motivation Benefits from featherbedding More effective communication in areas of discontent

benefits from featherbedding

*predatory pricing

both c and d

When a monopolist is able to price-discriminate:

both its profits and output tend to increase.

The GDP deflator represents a somewhat ____ measure of prices that the CPI and the GDP deflator tends to be ____ volatile than the CPI.

broader; less

cyclical unemployment arises when

business activity in the macroeconomy declines

In a market system, decisions about how to allocate resources are made:

by individuals and firms interacting in markets coordinated by market prices.

An economic hypothesis:

can be tested using empirical analysis.

The reason why national defense is commonly provided by the government, while food is not, is that food:

can easily be withheld from those who refuse to pay for it.

Specialization

can lead to an increase in overall production.

The area between the market price and the demand curve provides a measure of:

consumer surplus.

The largest single expenditure component of GDP is:

consumption.

Prices communicate information about relative availability of products. For example, a decrease in the price of corn signals to consumers and producers that:

corn is relatively more abundant than before.

An important and often ignored opportunity cost is the:

cost of missed market opportunities when funds are invested in a firm.

Negative externalities are:

costs incurred by individuals other than buyers and sellers.

Fixed costs are best defined as

costs that do not vary with output

A CONTRACTIONARY fiscal policy is implemented in order to:

create or expand a budget surplus

During an inflationary period, those most likely to suffer reduced wealth are those who are holding their wealth in:

currency

When unemployment rises above the natural rate it reflects the existence of ____ unemployment.

cyclical

If the economy is operating with full employment, which of the following is essentially eliminated?

cyclical unemployment

the type of unemployment that occurs because of a recession is called

cyclical unemployment

A forestry worker who is out of work because of the temporarily low demand for wood products associated with a recession is defined as:

cyclically unemployed.

The amount of poverty in the United States ____ in the 1960s and ____ from 2000 to 2010.

decreased; increased

Given a fixed nominal interest rate on a loan, unanticipated inflation:

decreases the burden of paying off the loan.

Cartel members have a collective interest in ____ industry output and a private interest in ____ their own output.

decreasing; increasing

The demand curve of a monopolist is:

downward sloping and above the marginal revenue curve.

In a perfectly competitive industry, the industry demand curve is ____, while in a monopolistic industry, the industry demand curve is ____

downward sloping; downward sloping

The key characteristic of oligopoly markets is "interdependence among firms." This means that:

each firm must consider how its decisions will affect its competitors

If a perfectly competitive industry is neither expanding nor contracting, we would typically expect that:

economic profits to be zero the price of the good will be stable

barriers that prevent the entry of new firms may arise because

economies of scale exist over a substantial range of industry demand.the government protects some firms from competition.

A natural monopoly is likely to arise when:

economies of scale exist over the relevant range of demand.

Demand is said to be ____ when the quantity demanded changes by a bigger percent than the percent change in price.

elastic

If the government imposed a tax on each child born, you would expect that:

fewer children would be born.

the perfectly competitive model assumes that

firms can enter and exit the industry with relative ease

The perfectly competitive model assumes that:

firms can enter and exit the industry with relative ease.

Tom is a castaway who washes up on a remote island. He can catch eight birds per day or catch ten fish per day. The natives on the island can catch ten birds per day or catch twenty fish per day. The natives have a comparative advantage in:

fishing.

economists use the term "business cycle" to refer to

fluctuations in economic activity, measured by GDP or unemployment

Not all similarly skilled workers are included in unions. As a result, wages for unionized workers tend to be ____ than for nonunion workers. Additionally, as a significant number of skilled workers seek work in the nonunion sector, the supply curve for nonunion labor shifts to the ____, thereby ____ wages for nonunion workers.

higher; right; reducing

In the typical CPI shopping basket, which of the categories below represents the largest percentage of consumer spending?

housing

Fundamentally, economics is concerned with:

how limited resources are allocated to satisfy unlimited wants.

Additions to human capital can be made through:

improved education and on-the-job training.

If a perfectly competitive firm is operating in the short run and seeks to maximize profit, the firm should:

increase output whenever market price exceeds marginal cost

If a profit-maximizing monopolist finds that marginal cost is increasing and exceeds marginal revenue, it will:

increase price and decrease output.

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a date. This offer will likely:

increase the opportunity cost of going on the date.

Lower wages will

increase the quantity of labor demanded.

improvements in the productivity of labor will tend to

increase wages

If the demand for software engineers ____ more slowly than does supply, wages of software engineers will ____

increase; fall

Since 1980, the proportion of income received by the top 5 percent of Americans has:

increased substantially.

If the long-run industry supply curve in a perfectly competitive market slopes upward, then very likely input prices will ____ as industry output expands.

increases

total variable cost

increases as production increases

given a fixed nominal interest rate on a loan, unanticipated deflation

increases the burden of paying off the loan

The fact that some resources and skills cannot be easily adapted from their current uses to alternative uses is the basic reason for the law of

increasing opportunity cost.

If perfectly competitive industry B is currently realizing economic profits, we would expect that:

industry output will rise, good B will fall in price, and economic profits will tend to disappear.

Ceteris paribus, when nominal GDP falls:

interest rates will tend to fall.

The "law of demand" states that, other things remaining the same, the quantity demanded of any good is:

inversely related to its price.

The prosperity of a nation today is typically measured by its:

output per capita. OPC

If firms meet together to decide on prices and outputs, it is called:

overt collusion

constant returns to scale indicate that a firm is experiencing

per unit costs of production that remain stable as the scale of output expands.

when economies of scale exist

per unit production costs decline as output expands

When economies of scale exist:

per unit production costs decline as output expands.

monopoly is at the other end of the spectrum from

perfect competition

The practice of selling a product to different customers at different prices when marginal cost is the same is known as:

price discrimination

When a monopolist is able to sell its product at different prices to different customers, it is likely engaging in:

price discrimination

For a time, either R. J. Reynolds or Phillip Morris raised prices of cigarettes twice a year by about 50 cents per carton. The other firms in the industry later raised their prices by the same amount. Economists call this:

price leadership.

a perfectly competitive firm is a

price taker

The index of leading economic indicators usually turns downward:

prior to economic contractions.

The total social costs of production are:

private costs plus external costs. PC + EC = TSC

When the economy goes into a ____, the amount of taxes collected by the government ____ automatically.

recession; falls

an unanticipated period of deflation will

redistribute income form borrowers to lenders

If a profit-maximizing firm finds that price exceeds average variable cost and marginal cost is greater than marginal revenue, it should:

reduce output, but continue producing in the short run

A DECREASE in net taxes (taxes minus transfer payments) would do what in the SHORT-RUN?

reduce unemployment

the market supply curve for labor

shows the relationship between the wage rate and the quantity of labor that workers are willing to supply.

The ceteris paribus assumption is used in economic analyses in order to:

simplify the analysis of a complex world.

Under conditions of oligopoly, economies of large-scale production mean that:

small firms are at a disadvantage in competing with relatively large firms.

The most important automatic stabilizer (The one with the biggest impact on the economy) is:

the tax system

The presence of negative externalities leads to a misallocation of societal resources because:

there are some costs associated with production that the producer fails to take into consideration.

Production possibilities frontiers can shift outward if

there is an increase in technology.

If input costs remain the same as industry output expands, what would you expect to be the long-run impact of an increase in demand on an industry currently in long-run equilibrium?

there will be more firms but the price will remain the same

The primary benefit of the automatic stabilizers is:

they require no new legislative action, so there is no legislative lag before these tools respond to fluctuations in the business cycle.

Why does the government allow some markets to be monopolized by granting patents?

to promote technological progress

An EXPANSIONARY monetary policy is likely to INCREASE real output more than just temporarily

when the economy is operating at less than full capacity.

discouraged workers are defined as those

who have given up looking for a job and are not counted as unemployed.

Which of the following statements is most consistent with the rule of rational choice? "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." "Police forces should be enlarged until virtually all crime is eliminated." "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."

"When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects."

*If the government sought to END a recession, which of the following would be an appropriate policy?

*DECREASE taxes and INCREASE transfer payments.

*If unemployment is the most significant problem in the economy, which of the following actions WOULD be an appropriate fiscal policy response?

*Decrease taxes Increase government purchases (Both A and C)

*Which of the following best illustrates the free-rider problem?

*Some homeowners in a mountain resort area refuse to contribute toward paving the area's only access road.

*which of the following is true

*The expansions and contractions of real world business cycles last varying lengths of time and often differ in magnitude

*Which of the following is characteristic of a perfectly competitive market?

*There is free entry into and exit from the market.

*which of the following groups would not tend to loss form unexpected inflation

*Those whose wages have cost of living adjustment clauses in their contracts

*Which of the following is a rival good that is non-excludable?

*common resource

*Which of the following is most likely to be a fixed cost for a business?

*interest payments on a loan used to finance the construction of a building

*Which of the following observations concerning phases of a business cycle is NOT correct?

*maximum amount of unemployment occurs exactly at the trough

*which of the following is false

*none of the above. they are all true

*Which of the following describes the historical record of the business cycle in the United States?

*periods of contraction seem to have gotten shorter over time

*Which of the following is NOT potentially a barrier to entry into a product market?

*the absence of economies of scale in the product market

*Which of the following observations concerning leading economic indicators is true?

*they provide warnings of likely downturns

*Which of the following groups of people would be included in the official unemployment rate?

*workers temporarily laid off from jobs to which they expect to return

How does a change in taxes primarily affect aggregate demand (AD)?

A tax change alters disposable income and consumption spending.

Given a constant rate of growth of real GDP, what would lead to an increasing real GDP per capita?

A rate of population growth that is less than the rate of growth of real GDP

What will NOT contribute to increasing the stock of capital of a nation?

A reduction in taxes on the wealthy

What will NOT increase the rate of growth in an economy?

A reduction in the rate of savings

How does a change in taxes primarily affect aggregate demand?

A tax change alters disposable income and consumption spending.

The imposition of a price ceiling on a market often results in

A shortage

Which of the following lies primarily within the realm of microeconomics? An empirical analysis of the relationship between the growth of the money supply and the rate of inflation An economic model forecasting the impact of a tax increase on consumer spending and national output A study of supply and demand conditions in the market for orange juice A model forecasting the impact of a change in interest rates on the level of investment in the economy

A study of supply and demand conditions in the market for orange juice

Which of the following is the best example of an investment in human capital? An increase in the number of hours worked per week by workers in a job employing low-skilled labor The purchase of company stock by a worker A summer internship at a law firm filled by someone attending law school Payments into a retirement pension plan by a skilled laborer The purchase of a vehicle by an employee in order to commute to work

A summer internship at a law firm filled by someone attending law school

Which of the following is correct? "Theory" and "hypothesis" are interchangeable terms meaning the same thing. A hypothesis may result from a tested and confirmed theory. A theory may result from a tested and confirmed hypothesis. A hypothesis is a theory whose formulation relies on mathematics.

A theory may result from a tested and confirmed hypothesis.

There are several factors that nearly everyone agrees have contributed to economic growth in some or all countries. They do not include which of the following? Growth in the quantity and quality of labor resources used Increase in the use of inputs provided by the land Growth in physical capital inputs Technological advances

All of the above are included

During a RECESSION, total public assistance payments and unemployment compensation payments automatically INCREASE while income taxes automatically DECREASE. What BEST describes the effect of these changes on aggregate demand (AD)?

Aggregate demand (AD) will be more than it would be without these automatic stabilizers.

During an EXPANSIONARY economy, public assistance payments and unemployment compensation payments automatically DECREASE while income taxes automatically INCREASE. What BEST describes the effect of these changes on aggregate demand?

Aggregate demand will be less than it would be without these automatic stabilizers. Aggregate demand will be greater than it was before the expansion. (Both A and D)

A free market lacking clear ethical rules, adequate oversight and meaningful punishments for rule breakers might suffer: Decrease in market demand. Decrease in market supply. Decrease in equilibrium price. Total market collapse.

All of the above

A student has a chance to see Green Day in concert. The student also has a major economics exam in the morning. If the student goes to the concert: She may receive a lower grade on the economics exam. The opportunity cost of the concert is the value of the time spent studying. The decision involves a trade-off

All of the above

Which of the following is a resource exchanged in the factor markets? Land capital labor entrepreneurship

All of the above

Which of the following is likely in a monopolized market A price that exceeds marginal cost A price that exceeds marginal revenue A welfare loss due to the restriction of output The potential for continued profitability in the long run

All of the above

Which of the following is generally true of monopoly Average revenue equals price. Price exceeds marginal cost. Marginal revenue is less than price. Output is restricted relative to the socially efficient level.

All of the above are generally true of monopoly.

Resources and goods are free to move across state lines. If Oregon producers choose to specialize in producing honey and California producers choose to specialize in growing almonds, then we could reasonable conclude that: California has a comparative advantage in producing almonds. Oregon has a comparative advantage in producing honey. The opportunity cost of growing almonds is lower in California than in Oregon. The opportunity cost of producing honey is lower in Oregon than in California.

All of the above are true

Which of the following is false? The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. If demand is elastic, it means the quantity demanded changes by a relatively larger amount than the price change. If demand is inelastic, it means the quantity demanded changes by a relatively smaller amount than the price change.

All of the above are true

Which of the following is true? By putting unemployed resources to work or by putting already employed resources to better uses, we could expand output in an economy. To generate increased economic growth, a society would produce fewer consumer goods and more capital goods in the present. If the production possibility curve is concave from below (that is, bowed outward from the origin), it reflects increasing opportunity costs of producing additional amounts of a good. Increases in a society's output do not make scarcity disappear.

All of the above are true

Which of the following is true? The government may be able to overcome the free rider problem with public goods by providing the public goods and imposing taxes to pay for them. The nature of public goods is such that the government cannot accurately assess the benefits and costs of those affected. National defense and flood control are illustrations of public goods. Just as in the case of external benefits, public goods tend to be underprovided by the private sector.

All of the above are true

Which of the following is true? People specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. The primary reason people pursue their comparative advantage is their self-interest. One advantage of specialization is that workers acquire greater skill from repetition. If a person, a region, or a country can produce a good or service at a lower opportunity cost than others, we say that they have a comparative advantage in the production of that good or service.

All of the above are true.

Which of the following is true? Voluntary trades give both parties more in value than what they give up. Without the ability to trade, people would not tend to specialize in those areas where they had a comparative advantage. People can gain by specializing in the production of the good in which they have a comparative advantage. Voluntary trade directly increases wealth by making both parties better off, and it is the prospect of wealth-increasing exchange that leads to productive specialization.

All of the above are true.

Which of the following is an example of market failure? Overuse of highways that leads to traffic congestion Reduced levels of vaccinations which increase illness and disease Substantial foreclosures caused by sub-prime lending

All of the answers are examples of market failure.

Which of the following would reflect self-interested behavior? A worker pursuing a higher paying job and better working conditions. A consumer seeking a higher level of satisfaction with her current income. Donating a cell phone to a woman's shelter. Mother Theresa using her Nobel Prize money to care for the poor.

All of the answers would reflect self-interested behavior.

In perfect competition, at the firm's profit maximizing short run output, which of the following is true? Marginal revenue equals marginal cost. Price equals marginal cost. Average revenue equals marginal revenue. It could be earning either economic profits or losses.

All the above

Which of the following is characteristic of an oligopolistic industry? Either homogeneous or differentiated products Few firms Interdependence Large barriers to entry

All the above

Which of the following is true about the long run operations of perfectly competitive firms? They produce with productive efficiency. They produce with allocative efficiency. They earn zero economic profits. They earn a fair rate of return

All the above

Which of the following are reasons why most owners of companies want their employees to act ethically? Because they care about the well-being of their customers To enhance productivity To maximize public good will toward the company To avoid large fines and expensive lawsuits

All the above are reasons why

The term "ceteris paribus" means that:

All variables except those specified are constant.

The importance of the ceteris paribus assumption is that it:

Allows one to analyze the relationship between two variables apart from the influence of other variables.

How does a change in income taxes primarily affect aggregate demand (AD)?

An income tax change alters disposable income and consumption spending.

*Which one of the following will determine the size of the production possibilities curve?

Amount of labor Amount of capital Entrepreneurship (All of the above)

A warranty offered by a seller is one way to overcome

An adverse selection problem

Depreciation is:

An allowance for the replacement of capital.

Which of the following best illustrates the concept of "derived demand"? An increase in the wages of autoworkers leads to an increase in the demand for robots in automobile factories. An auto firm decides to supply more minivans when there is a decrease in the demand for station wagons. An increase in the price of gasoline leads to an increase in the demand for small cars. An automobile firm faces an increase in the demand for cars it supplies to the market, which leads to an increase in the demand for auto workers.

An automobile firm faces an increase in the demand for cars it supplies to the market, which leads to an increase in the demand for autoworkers.

Which of the following is true? An advanced market economy would tend to use both labor intensive and capital intensive production methods. An economy in which labor is relatively scarce would tend to use capital intensive production methods. An increase in the availability of labor relative to capital in an economy would tend to increase how labor intensive the production processes in that economy would be.

An economy in which labor is relatively scarce would tend to use capital intensive production methods. An increase in the availability of labor relative to capital in an economy would tend to increase how labor intensive the production processes in that economy would be. (Both b and c are true)

Which of the following is an example of a capital resource? Redwood trees Unskilled labor Stocks and bonds An oil rig

An oil rig

An explicit cost is

An opportunity cost of an out of pocket expense

Which of the following is false of perfectly competitive firms A perfectly competitive market is approximated most closely in highly organized markets for securities and agricultural commodities. The perfectly competitive model does not require any knowledge on the part of individual buyers and sellers about market demand and supply curves. Because perfectly competitive firms are price takers, each firm's demand curve remains unchanged even when the market price changes. In a perfectly competitive market, marginal revenue is constant and equal to the market price.

Because perfectly competitive firms are price takers, each firm's demand curve remains unchanged even when the market price changes.

The opportunity cost of going to college includes

Both tuition and the value of the students time

Economic profits will take into account

Both implicit and explicit costs.

Which of the below is true? A binding price ceiling reduces the quantity exchanged on the market, but a price floor increases the quantity exchanged on the market. A price ceiling increases the quantity exchanged on the market, but a price floor decreases the quantity exchanged on the market. Both price floors and price ceilings generally reduce the quantity exchanged in the market. Both price floors and price ceilings generally increase the quantity exchanged in the market.

Both price floors and price ceilings generally reduce the quantity exchanged in the market.

Without government intervention, society is likely to get too little production of:

Both private goods that generate external benefits and public goods

If the price of tennis rackets were to increase, we would expect

The demand for tennis balls to decrease

In order for a market's ethics to be effective, all of the following must occur, EXCEPT The ethics must be clearly defined. There must be clear penalties for ethics violators. Everyone must agree to take part in the market. There must be enough police or inspectors to find most violations. Police or inspectors must be unbiased.

Everyone must agree to take part in the market

The problem of scarcity:

Exists because resources are limited relative to wants.

Which of the following is true? In the product markets, firms are buyers and households are sellers. In the factor markets, firms are sellers and households are buyers. Firms receive money payments from households for labor, land, capital, and entrepreneurship.

None of the above are true

The tendency of those who are insured to take more risks is a problem of

Moral hazard

Public goods are characterized by:

Nonrivalry in consumption. nonexcludability of nonpayers

In free market economics

Most market exchanges will result in all parties "winning."

The main difference between GDP and GNP is that GNP excludes:

Net income of foreigners.

A decrease in consumer incomes will: Decrease the demand for an inferior good. Decrease the supply of an inferior good. Increase the demand for a normal good. Increase the supply of a normal good.

None of the above

To an economists, a decrease in supply means a: Rightward shift of the supply curve. Movement up along a supply curve. Downward shift of the supply curve. Movement down along the supply curve.

None of the above

Which of the following individuals are considered officially unemployed A lawyer temporarily working as an assistant in a law firm A computer technician who has not worked for 10 months and gave up looking 4 months ago A full time student who feels that he is taking too many classes to work

None of the above

Which of the following is true of perfectly competitive firms? It is difficult for entrepreneurs to become suppliers of a product in a perfectly competitive market structure. A perfectly competitive firm has a perfectly elastic supply curve. In a perfectly competitive market, an individual seller can change his price and it will not alter the output he sells.

None of the above

Which of the following would likely be an example of a monopolistic industry Fast-food restaurants Wireless phone service Auto manufacturing

None of the above

For a perfectly competitive firm, which of the following is always true Price = Marginal Revenue only Average Total Cost = Marginal Revenue only Average Revenue = Demand only Price = Marginal Revenue = Demand

Price = Marginal Revenue = Demand

You are a member of Congress when the economy is in a RECESSION. If your goal is to achieve a fully employed labor force, what fiscal policy scenarios SHOULD you follow?

RAISE government purchases, REDUCE taxes, and/or INCREASE transfer payments. EXPANSIONARY

When economists refer to economic behavior, they mean that:

Rational people try to anticipate the likely consequences of their actions.

If population is expanding at a faster rate than a country's real output:

Real per capita output would decrease. The production possibilities curve for the country as a whole will be shifting outward.

When the economy goes into a ____, the AMOUNT of unemployment compensation and welfare payments ____ automatically.

Recession; Increase

Some political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent. The economic way of thinking indicates that legislation of this type would:

Reduce the after-tax cost of raising children and therefore increase the birth rate.

Improvements in literacy stimulate economic growth by:

Reducing the barriers to the flow of information. Improving the flow of resources to more productive uses. Imparting skills, which raises labor productivity. (All of the above)

Which of the following is true about perfect competition? Since a perfectly competitive seller can sell all he wants at the market price, her demand curve is horizontal at the market price over the entire range of output that she could possibly produce. Because perfectly competitive markets have many buyers and sellers, each firm is so small in relation to the industry that its production decisions have no impact on the market. Because consumers believe that all firms in a perfectly competitive market sell identical (homogeneous) products, the products of all the firms are perfect substitutes. Perfectly competitive markets have easy entry and exit.

Since a perfectly competitive seller can sell all he wants at the market price, her demand curve is horizontal at the market price over the entire range of output that she could possibly produce. Because perfectly competitive markets have many buyers and sellers, each firm is so small in relation to the industry that its production decisions have no impact on the market. Because consumers believe that all firms in a perfectly competitive market sell identical (homogeneous) products, the products of all the firms are perfect substitutes. Perfectly competitive markets have easy entry and exit. (All of the above are true about perfect competition)

Costs that accrue to the total population are called ____ costs. Costs incurred by the producer or consumer who makes the decision are called ____ costs.

Social, Private

Which people are more likely to break ethical rules Someone who is old Someone who is rich Someone who is ignorant Someone who is very well educated Someone who is poor

Someone who is ignorant

When there is an excess quantity supplied of a product at the current price, then:

The market price must be above equilibrium price. The market price will tend to fall.

The view that those whose preferences represent the middle position on an issue will tend to determine the outcome of an election is called:

The median voter model

The expenditure approach to GDP accounting includes all except:

Wages.

Because of scarcity

We must sacrifice valuable alternatives to obtain more goods and services we desire

Given a constant rate of growth of real GDP, what would cause a fall in real GDP per capita?

a rate of population growth that is greater than the rate of growth of real GDP

Ceteris paribus, in which of the following cases would we expect economic profits to be greatest?

an unregulated monopolist who is able to price discriminate.

Firms will continue to enter a competitive industry until:

any economic profits have been competed away

In a fully employed economy, invention and discovery:

are achieved through sacrifices in current consumption.

extractive industries such as farming mining or lumbering typically

are considered to be increasing cost industries

Rational choices:

are made based on expectations of the additional benefits and additional costs involved.

In a typical cartel agreement, the cartel maximizes profit when it:

behaves as a monopolist.

An individual has a comparative advantage in production if that individual:

can produce at the lowest opportunity cost.

Economists believe that oligopolists like American Airlines and the Kellogg Company:

carefully watch and anticipate the pricing and advertizing moves of their competitors.

Automatic stabilizers in the United States are:

changes in government transfer payments and tax revenues that vary automatically and inversely to business cycle changes.

price discrimination refers to

charging different prices to different groups without a basis for doing so because of differences in production costs.

Which landmark legislation made it illegal to engage in predatory pricing and also prohibited mergers if it led to weakened competition?

clayton act

The period of declining growth in real GDP, between the peak of the business cycle and the trough, is called the:

contractionary phase

Unemployment rises in ____, and falls in ____.

contractions; expansions

If the price of a good decreases, then, in the market for the type of labor that is used to produce it:

employment will decrease.

for a perfectly competitive firm, average revenue is

equal to marginal revenue at all levels of output. equal to price at all levels of output

The maximum possible profit that could be earned by a cartel is:

equal to the monopoly profit

A firm sells grapefruit in a PERFECTLY COMPETITIVE MARKET at a price of $1.50 per pound. The firm's marginal revenue:

equals $1.50

There are two types of costs associated with production: ____ costs that require monetary payments, and ____ costs that do not.

explicit; implicit

To obtain the greatest gains from trade, a country should specialize in and ____ those goods for which it has a comparative advantage and ____ those goods for which other countries have a comparative advantage.

exports; imports

Economic resources are also known as:

factors of production.

Identify the chain of events in creating a theory:

formulate a hypothesis, gather data, evaluate the results, support or refute the hypothesis, tentatively accept theory.

An individual who VOLUNTARILY leaves one job and spends a period of time seeking another is considered:

frictionally unemployed.

Economics is a social science that primarily explores how:

goods and services are produced and distributed in a world with limited resources.

Public goods are:

goods which cannot be easily financed through the market system.

Budget surpluses exist when:

government tax revenues exceed its spending.

If labor is the only variable input, an additional worker increases output from 72 to 78 units, and the product price is $6, the marginal revenue product from an additional worker:

is $36

*Which of the following is an appropriate fiscal policy response to high inflation?

none of the above

In free market economies,

most market exchanges will result in all parties "winning."

A market economy without any ethics would have:

no value.

If the costs of producing of a good, like a university education, that produces positive externalities, are mostly paid by students and their families, then society will:

produce too little of the good since the marginal private benefit to students is less than the marginal social benefit.

When a firm evaluates the contribution of a worker to its ____, it must calculate the worker's contribution to revenue, minus the worker's ____.

profits; wage

When the money supply decreases, other things being equal,

real interest rates rise and investment spending falls.

Since the 1980s the proportion of income received by the top (richest) 5 percent of Americans has ____, and the measured income of Americans in the lowest (poorest) fifth has ____.

risen; fall

a competitive firm facing a perfectly elastic demand curve can

sell all of its output at the market price

A competitive firm facing a perfectly elastic demand curve can:

sell all of its output at the market price.

What was the first important law regulating monopoly that prohibited "restraint of trade"?

sherman act

If new entry occurs in a perfectly competitive industry, the demand curve for each existing firm will:

shift down

If the market demand curve in a perfectly competitive industry shifts right, the demand curve for each existing firm will:

shift up

A federal program aimed at retraining the unemployed workers of the declining coal and steel industries is designed to reduce which type of unemployment?

structural

Fred has lost his factory job, replaced by welding robots, and soon plans to go to technical school to learn computer repair because he cannot find a similar job to the one he lost. The type of unemployment facing Fred is:.

structural.

Economics is most importantly concerned with:

studying how we allocate scarce resources to satisfy unlimited wants

an example of in-kind income is

subsidized housing

Which of the following observations is true? Sunk costs are irrelevant for any future action. Sunk costs should not be ignored when making decisions. Sunk costs are often hidden. Sunk costs can be recovered using corrective measures.

sunk costs are irrelevant for any future actions

The government's fiscal policy is its plan to regulate aggregate demand (AD) by manipulating:

taxation and spending

The first formal acknowledgement of the primary macroeconomic goals of price stability, high employment, and promoting economic growth in the United States came with passage of the:

the Employment Act of 1946

Which of the following countries has the greatest degree of income inequality Canada France The United States Japan

the United States

If the United States exports cars to France and imports cheese from Switzerland, then:

the United States has a comparative advantage in producing cars, and Switzerland has a comparative advantage in producing cheese.

In the long-run equilibrium, perfectly competitive firms earn zero economic profit because of

the ability of firms to enter and exit.

the marginal cost of good is

the addition to total cost from producing one more unit of output

The marginal cost of a good is:

the addition to total cost from producing one more unit of output.

Marginal revenue is:

the addition to total revenue from selling one more unit of output.

The rule of rational choice suggests that you will engage in more of an activity if:

the additional benefit received as a result of the activity exceeds the additional cost incurred.

The marginal product of labor measures:

the amount of output an individual worker contributes to a firm's total output.

an example of an oligopoly is

the automobile indusrty

in a perfectly competitive industry, influence over price is exerted by

the forced of supply and demand

AD will shift to the right, other things being equal, when:

the government budget deficit increases because government purchases rose.

The opportunity cost of an action is equal to:

the highest valued alternative sacrificed as a result of the action.

*A natural gas monopoly currently sells 100 cubic feet of gas at $1.10 per cubic foot. To sell one more cubic foot, the natural gas company must lower the price of gas to $1.09. Which of the following best describes the marginal revenue of the 101st cubic foot of natural gas?

the marginal revenue is less than $1.09

When labor is a firm's only variable input in its production process, a profit-maximizing firm will continue to employ additional workers as long as:

the marginal revenue product of labor > the marginal resource cost. MRP of Labor > MRC

The primary reason that money is demanded is for:

transaction purposes.

What is not a leading economic indicator

unemployment rate

When PERFECTLY COMPETITIVE firms are earning zero accounting profits,

we would expect exit from the industry.