Econ Exam 2
perfectly competitive firms are faced with a perfectly elastic demand curve. True False
True
the equilibrium price in a perfectly competitive market is also the marginal revenue for any firm that sells one additional unit True False
True
at Elliot's dog walking service, the only input is labor. Elliot's labor costs are $300 per day and his service walks 30 dogs per day. to walk 31 dogs per day, his labor costs would increase to $305 per day. if the price is $12 for the service, is it optimal to walk to thirty-first dog? Yes No
Yes
refer to the graph on page 268 in the first column suppose that the production of penicillin generates population of the Columbia River, which is gradually killing a valuable fish population. among other problems, fishermen in the area are experiencing a decline in their income. based on this information, the size of the negative externality from penicillin production is: a. $10,000 b. $65,000 c. $60,000 d. $70,000 e. 8 tons
a. $10,000
refer to the graph on page 268 in the textbook with government intervention in the market, equilibrium price and quantity of penicillin produced will be : a. $60,000 per ton; 8 tons per period b. $70,000 per ton; 8 tons per period c. $65,000 per ton; 7 tons per period d. $65,000 per ton; 8 tons per period e. $60,000 per ton; 7 tons per period
a. $60,000 per ton; 8 tons per period
Cameron is a newborn baby whose parents are thinking about vaccinating him against disease. The accompanying figure illustrates the marginal benefits and marginal costs of vaccinations for Cameron. Cameron's community derives benefits from Cameron being vaccinated, as illustrated by positive externality curve above. Given the information, the socially optimal number of vaccinations for Cameron to get is: a. 10 b. 0 c. 4 d. 8 e. 20
a. 10
refer to the second column on page 286 the privately optimal quantity of college for Cameron to attain is: a. 8 years b. 0 years c. 20 years d. 4 years e. 10 years
a. 8 years
refer to the table in the first column of page 308 if the market price of the output is $7, the profit-maximizing quantity of output is ___ units per period and profits at that level of output are ___ per period a. 9; $14 b. 9; $54 c. 3; $14.70 d. 7; $13
a. 9; $14
a market with a single producer which causes an inefficient level of production is: a. a monopoly b. a public good c. a private good d. externality
a. a monopoly
it takes country X 1 unit of labor to produce either a computer or a TV and it takes country Y 2 units of labor to produce a computer and 1 unit of labor to produce a TV. based on this information, country X has: a. an absolute and comparative advantage in producing computers b. a comparative and absolute advantage in producing TVs c. a comparative and absolute advantage in producing both goods d. an absolute advantage in producing both goods e. a comparative advantage in producing both goods
a. an absolute and comparative advantage in producing computers
monopolies occur for the following reasons except: a. anti-trust laws b. patents c. high start up costs d. control over resources
a. anti-trust laws
when a currency appreciates, the amount of exports in the country will: a. decrease b. increase c. not change
a. decrease
a monopolist faces a demand curve that is: a. downward sloping b. perfectly elastic c. upward sloping d. perfectly vertical
a. downward sloping
a local labor market for lawn-mowing workers is initially in equilibrium. if there is an influx of low-skill immigrants to the area, which of the following is likely to occur in the market for lawn-mowing workers? a. labor supply will increase, leading to lower wages b. labor demand will decrease, leading to lower wages c. both labor demand and labor supply will decrease, leading to higher wages d. both labor demand and labor supply will increase, leading to lower wages
a. labor supply will increase leading to lower wages
economic variables that are calculated in the current year prices are referred to as ___ variables, while variables that have been corrected to account for the effects of inflation are ___ variables a. nominal, real b. nominal, deflated c. real, deflated d. real, nominal
a. nominal, real
the exchange rate system in which government action keeps the exchange rate constant? a. pegged exchange rate b. adjustable exchange rate c. floating exchange rate
a. pegged exchange rate
which of these statement about interest rates and inflation is true? a. people who lend large sums of money prefer the inflation rate to be lower to earn a higher real interest rate b. people who lend large sums of money prefer the inflation rate to be higher to earn a higher real interest rate c. the real interest rate is equal to the nominal interest rate plus the inflation rate d. the real interest rate is equal nominal interest rate divided by the inflation rate
a. people who lend large sums of money prefer the inflation rate to be lower to earn a higher interest rate
if the marginal cost of one more gadget is more than the marginal revenue of one more gadget, then: a. producing that gadget will decrease profits b. producing that gadget will increase the equilibrium price c. producing that gadget will not affect profits d. producing that gadget will increase profits
a. producing that gadget will decrease profits
refer to the graph in the second column on page 286 if the community wants Cameron to obtain the socially optimal quantity of college, they would: a. provide a subsidy to Cameron to help pay for his schooling b. impose a tax on Cameron to help pay for his schooling c. impose a restriction on the number of years that Cameron can attend school d. do nothing because Cameron will choose the socially optimal quantity of education without their intervention
a. provide a subsidy to Cameron to help pay for his schooling
monopolies tend to: a. restrict output which leads to higher prices b. restrict output which leads to lower producer surplus c. find the productively efficient level of output d. increase production beyond the efficient level
a. restrict output which leads to higher prices
which of the following is an example of moral hazard? a. since her parents pay for college, Sally does worse in her classes than she would if she were paying for college herself b. Sam texts while driving even though it is against the law in his state c. Jill has car insurance, so she drives more carefully d. Joey cheats on his third grade spelling test
a. since her parents pay for college, Sally does worse in her classes than she would if she were paying for college herself
which of the following may help explain why college attendance rates grow during economic downturns a. the opportunity costs of attending college decrease during economic downturns b. firms have more resources to send employees to college c. the probability of being unemployed is higher for college grads d. the direct costs of attending college decrease during economic downturns
a. the opportunity costs of attending college decrease during economic downturns
the economic argument that it is in society's best economic interest for taxpayers to pay for health care of other people is: a. the positive externalities argument b. the positive marginal cost argument c. the moral obligation argument d. the positive marginal benefit argument
a. the positive externalities argument
Given this information, if the community wants Cameron to obtain the socially optimal number of vaccinations, they could: a. impose a tax on Cameron to help pay for the vaccinations b. provide a subsidy to Cameron to help pay for the vaccinations c. do nothing because Cameron's parents will choose the socially optimal quantity of vaccinations without community intervention d. impose a restriction on the number of vaccinations that Cameron can get
b. provide a subsidy to Cameron to help pay for the vaccinations
US and Indian workers are substitutes. what effect would an increase in the wages of Indian workers have on the demand for US workers, ceteris paribus. a. no effect on demand, because price changes affect quantity demanded, which would rise b. the demand would increase c. we cannot tell unless we know what happened to the price of US workers d. no effect on demand, because price changes affect quantity demanded, which would fall e. the demand would fall
b. the demand would increase
the reason the marginal revenue curve slopes downward for a monopolist is because: a. as the monopolist increases output, the demand for its products increases b. as a monopolist decreases its output, the price of every unit sold decreases c. as a monopolist increases its output the price of every unit sold decreases d. the monopolist can increase the market price by increasing output
c. as a monopolist increases its output, the price of every unit sold decreases
which is the largest component of GDP? a. investment b. government spending c. consumption d. net exports
c. consumption
suppose the price elasticity of demand for marijuana is -4. if the price of marijuana increased by 2 percent, the quantity demanded will: a. decrease by 0.5 percent b. decrease by 2 percent c. decrease by 8 percent d. increase by 8 percent
c. decrease by 8 percent
a period of real economic growth, where production and employment are both moving higher is known as: a. recession b. contraction c. expansion d. election cycle
c. expansion
the exchange rate system in which the forces of supply and demand determine the exchange rate is which of the following? a. pegged exchange rate b. adjustable exchange rate c. floating exchange rate
c. floating exchange rate
legalization would most likely ___ the supply of drugs in the market a. shift backwards b. decrease c. increase d. not change
c. increase
an increase in the demand for Euros relative to Mexican pesos will: a. decrease the price of Euros b. increase the price of Euros and increase the prices of pesos c. increase the prices of Euros and decrease the price of pesos d. increase the price of pesos
c. increase the price of Euros and decrease the price of pesos
ceteris paribus, if expanded health insurance coverage increases the demand for health care, we should expect to see the equilibrium price of health care __ and the equilibrium quantity of health care ___ a. increase; decrease b. decrease; increase c. increase; increase d. decrease; decrease
c. increase; increase
the value of the brick purchased by a contractor to build a fireplace in a new home is not counted in GDP because: a. business spending of any time is excluded from GDP b. this is a purely financial transaction c. it would be double counting since the value of the home is already counted in GDP d. the price of the brick would not be known to the contractor
c. it would be double counting since the value of the home is already counted in GDP
firm makes decisions in order to: a. minimize costs b. maximize production c. maximize their profits d. maximize their revenue
c. maximize their profits
when the private marginal benefit is less than the social marginal benefit, there is a(n): a. increase in the price level b. public good c. positive externality d. increase in total economic surplus
c. positive externality
if the CPI in a given year is 300, this means that a. the economy is experiencing hyper inflation b. prices have fallen since the base year c. prices are three times higher than the base year d. prices are 200 percent higher than in the base year
c. prices are three times higher than the base year
Which of the following is included in the economist's definition of investment? a. purchase of a rare coin or a deposit in a savings account b. purchase of four bitcoins c. purchase of new machines, factories, or houses d. purchase of a share of a stock
c. purchase of new machines, factories or houses
the rate at which one currency is traded for another currency is: a. the market equilibrium b. real interest rate c. the exchange rate d. price level
c. the exchange rate
using the graph, closing the gap between MB(private) and MB(social) as years of health care increases implies that: a. there must be an error in the graph b. the positive externality associated with health care must grow as more health care is attained c. the positive externality associated with health care must shrink as more health care is attained d. the negative externality associated with health care must shrink as more health care is attained e. the negative externality associated with health care must grow as more health care is attained
c. the positive externality associated with health care must shrink as more health care is attained
the economic argument that it is in society's best economic interest for taxpayers (even those without children) to pay for the education of other people's children is: a. the positive marginal cost argument b. the positive marginal benefit argument c. the positive marginal externalities argument d. the moral obligation argument
c. the positive marginal externalities argument
ceteris paribus, if the supply of health care providers increases at the same time that there is an increase in the demand for health care, what can we predict about the equilibrium price and the quantity of health care services? a. price and quantity will both increase b. price will increase, but the effect on the equilibrium price is unknown c.quantity will increase, but the effect on the equilibrium price is unknown d. price and quantity will both decrease e. price will decrease, but the effect on the equilibrium quantity is unknown
c.quantity will increase, but the effect on the equilibrium price is unknown
refer to the graph in the second column on page 268 if the EPA reduces total methane emissions for the industry by 6 tons at the lowest possible cost, the cost of methane reduction for the industry would ___ per day a. $0 b. $400 c. $600 d. $300 e. $275
d. $300
the marginal cost of Elliot walking the thirty-first dog is ___ per day a. $19.52 b. $305 c. $9.63 d. $5
d. $5
in the monopoly described in the graph, the deadweight loss from the monopoly is __ per period a. $13.50 b. $4.50 c. $0 d. $9
d. $9
refer to the graph on bottom of page 285 using the graph, ___ is the number of years of education that is socially optimal a. 20 b. 12 c. 18 d. 13
d. 13
Given this information, the privately optimal number of vaccinations for Cameron to get is: a. 20 b. 0 c. 10 d. 8 e. 4
d. 8
when individuals do not have to pay for health care, then: a. the equilibrium quantity of health care decreases b. the demand of health care increases c. the demand of health care decreases d. the equilibrium price of health care decreases
d. the demand of health care increases
suppose the price level (as measured by the CPI) in successive years is 100, 90, 85, and 80. which of the following is true? a. the economy is experiencing constant inflation b. the economy is experiencing misinformation c. the economy is experiencing rising inflation d. the economy is experiencing deflation
d. the economy is experiencing deflation
refer to the graph at the bottom of the second column on page 260 using the graph a. the private optimal level of health care is 7.5 units b. the private optimal level of health care is 10 units c. the private optimal level of health care cannot be determined without knowing the dollar values on the vertical axis d. the private optimal level of health care is 7 units e. the private optimal level of health care is 6 units
d. the private optimal level of health care is 7 units
when production of a product causes negative externalities, we know that in the absence of government intervention, the producer's decision: a. will result in economic efficiency b. will result in an under production of the product from a social efficiency perspective c. will result in economic equity d. will result in economic inefficiency
d. will result in economic inefficiency
refer to the table at the top of page 269 suppose consumers are currently using 100 minutes per month. the negative externality is: a. $0.03 b. $0.04 c. $0.02 d. $0.00 e. $0.01
e. $0.01
suppose that Medical Marijuana Inc. is currently producing at a point where its private marginal cost of production is $15. at this level of production, social marginal cost is $25. at the current production level, marginal social benefit is $15. thus, the negative externality associated with their level of production is: a. $0 because marginal private cost and marginal social costs are equal b. $25 per unit c. $15 per unit d.$0 because marginal private cost and marginal social benefit are equal e. $10 per unit
e. $10 per unit
refer to the graph in the second column on page 308 in the monopoly describes in the accompanying graph, the profit maximizing quantity of output is __ per period, and the profit maximizing price is __ per period a. 3, $15 b. 9, $2 c. 9, $11 d. 6, $8 e. 6, $14
e. 6, $14
the profit maximizing level of output for firms occurs where: a. TR=MR b. TC=MC c. P=MC d. Q=P e. MC=MR
e. MC=MR
inflation is important because: a. it often affects the negotiation of wage contracts and the size of the cost of living allowances b. it affects the value of one's income c. it affects the real interest rate d. it affects the real return one earns on investments e. all answers are correct
e. all answers are correct
some consumers with health insurance change their lifestyles because the consequences of their lifestyle will not come at an explicit cost is an example of: a. free rider problem b. moral hazard c. tragedy of the commons d. imperfect information
b. moral hazard
determining the comparative advantage of a country requires that you look at the economic notion of: a. accounting and economic profit b. opportunity cost c. external costs d. ceteris paribus
b. opportunity cost
as industries get more competitive: a. overall output in the industry tends to be lower b. overall output in the industry tends to be higher c. it creates more deadweight loss d. the market price tends to increase
b. overall output in the industry tends to be higher
when the private marginal benefit is less than the social marginal benefit, there is a(n); a. public good b. positive externality c. increase in the price level d. increase in total economic surplus
b. positive externality
total revenue minus total cost is equal to: a. net cost b. profit c. marginal revenue d. rate of return
b. profit
which of the following is not a function of money? a. store of value b. protection against inflation c. unit of account d. medium of exchange
b. protection against inflation
what is the policy of limiting free trade between or among countries? a. terms of trade b. protectionism c. liberalism d. open borders
b. protectionism
when the purchasing power of a currency increases abroad: a. more exports can be purchased b. the currency depreciated c. fewer imports can be purchsed d. the currency appreciated
d. the currency appreciated
the consumer price index: a. changes the base period every five years b. measures the cost of an unchanging basket of goods and services c. measures the value of real output annually d. measure the cost of a changing basket of goods and services
b. measures the cost of an unchanging basket of goods and services
refer to graph at the bottom of page 285 the closing gap between MB(private) and MB(social) as years of education increases implies that: a. the private externality associated with education must shrink as the more years of education are attained b. the positive externality associated with education must grow as more years of education are attained c. the negative externality associated with education must grow as more years of education are attained d. there must be an error with the graph e. the negative externality associated with education must shrink as more years of education are attained
a. the positive externality associated with education must shrink as more years of education are attained
the calculation of gross domestic product would include: a. the purchase of a new automobile b. the services of a lawyer when he cleans his own apartment c. the money Alice receives when she sells her used bicycle to Fred d. unemployment compensation benefits received by a former steel worker
a. the purchase of a new automobile
refer to the graph at the bottom of the second column on page 360 given the situation depicted in the graph: a. without intervention, the market will generate too low level of health care from the social efficiency perspective b.without intervention, the market will generate the socially optimal level of health care c. without intervention, the market will generate too great a level of health care from a social efficiency perspective d. without intervention, the market won't generate any health care
a. without intervention, the market will generate too low level of health care from the social efficiency perspective
your income was $25,000 in 2009 and $25,500 in 2010. The CPI was 217.2 in 2009 and 220.2 in 2010. this means that: a. your real income has risen b. your real income has not changed c. your real income has fallen d. there is not enough information to determine what happened to your real income
a. your real income has risen
refer to the graph in the second column of page 268 if the EPA requires each firm to reduce its daily emissions by 2 tons, the total cost of the pollution reduction for the whole industry would be ___ per day a. $2605 b. $425 c. $2425 d. $275
b. $425
for Amelia's Recycling, the marginal cost of producing the first unit of output is $20, the marginal cost of producing the second output is $16, and the marginal cost of producing the third output is $14. Amelia's total cost of producing three units of output is: a. $16.67 b. $50 c. $60 d. $42
b. $50
if Elliot's price of the service is $12, what is the daily profit of walking 31 dogs? a. $5 b. $67 c. $72 d. $372
b. $67
refer to the graph in the second column on page 286 the socially optimal amount of college for Cameron to attain is: a. 4 years b. 10 years c. 8 years d. 0 years e. 20 years
b. 10 years
an individual who cannot be excluded from the benefits of a good even when the individual did not pay for the good is: a. a consumer b. a free rider c. a monopoly d. a thief
b. a free rider
when physicians have the incentive of higher incomes by prescribing more treatment, this will have an impact on the ___ of health care a. technological advancement b. demand c. supply
b. demand
goods or services with positive externalities associated with them: a. have lower social marginal benefits than private marginal benefits b. have higher social marginal benefits than private marginal benefits c. have higher social marginal costs than private marginal costs d. have lower social marginal costs than private marginal costs
b. have higher social marginal benefits than private marginal benefits
when demanders and suppliers do not know the true costs and benefits associated with a good or service, this is called: a. an illegitimate market b. imperfect information c. a positive externality d. an opportunity to earn economic profits
b. imperfect information
a good which is produced in a foreign country and sold to domestic consumers is a(n): a. export b. import c. trade deficit d. tariff
b. import
those that "lose" from international trade include: a. exporting firms b. import-competing firms c. workers who have comparative advantage in production d. all workers
b. import-competing firms
Which of the following are not counted as final goods and used in the GDP calculation? a. consumer goods b. intermediate goods c. investment goods d. exports
b. intermediate goods
gross domestic product is best defined as: a. total quantity of goods and services produced in a country during a period of time b. market value of all final goods and services produced in a country during a period of time c. unsavory goods produced in a country during a period of time d. total value of all goods that can be found in a country
b. market value of all final goods and services produced in a country during a period of time
refer to the graph on the middle of page 251 in the first column. suppose that the market for marijuana is shown in the accompanying graph, where MC(private) represents the private supply curve and MC(social) represents the social supply curve that reflects the full social marginal costs of marijuana. MB(social) is the demand curve and represents the private and social marginal benefits of marijuana. The gap between MC(social) and MC(private) represents: a. consumer surplus b.the negative externalities associated with marijuana production and consumption c. the difference between the private and social benefits of marijuana production and consumption d. producer surplus e. the difference between the market price of marijuana and actual private cost involved in producing marijuana
b. the negative externalities associated with marijuana production and consumption
when the value of imports exceeds the value of exports, then there is a: a. regional trade agreement b. trade deficit c. trade surplus d. tariff
b. trade deficit
when the value of exports exceeds the value of imports, there is a(n): a. terms of trade b. trade surplus c. trade deficit d. regional trade agreement
b. trade surplus
public goods are: a. over produced in the market b. under produced in the market c. sold at a price equal to marginal cost of the last unit produced d. produced at a level at which maximizes total economic surplus
b. under produced in the market
when the production of a product causes pollution, in the absence of a government intervention the producer's decision: a. will result in economic efficiency b. will result in economic inefficiency c. will result in economic equity d. will result in less than the socially optimal amount of the good being produced
b. will result in economic inefficiency
refer to the graph at the bottom of page 285 given the situation depicted in the graph: a. without intervention, the market will generate too great a level of education from a social efficiency perspective b. without intervention, the market will generate too low a level of education from a social efficiency perspective c. without intervention, the market will generate the socially optimal level of education d. without intervention, the market won't generate any education production
b. without intervention, the market will generate too low a level of education from a social efficiency perspective
suppose that Mercury Thermometers Inc. is currently producing at a point where its private marginal cost of production is $15. at this level of production, social marginal cost is $25. at the current production level, marginal social benefit is $15. thus, the negative externality associated with their level of production is: a. $25 b. $15 c. $10 d. $0 because marginal private cost and marginal social benefit are equal e. $0 because marginal private cost and social costs are equal
c. $10
refer to the table in the fist column of page 308 the marginal cost of producing the sixth unit of output is: a. $5 b. $5.16 c. $4 d. $36 e. $31
c. $4
refer to the graph on page 268 in the textbook the socially optimal quantity and price of penicillin is: a. $60,000 per ton; 8 tons per period b. $60,000 per ton; 7 tons per period c. $65,000 per ton; 7 tons per period d. $70,000 per ton; 8 tons per period e. $65,000 per ton; 8 tons per period
c. $65,000 per ton; 7 tons per period
refer to the graph on the middle of page 251 in the first column. from an efficiency standpoint, the socially optimal level of production is ___ ounces per week at a price of ___ per ounce. a. 400, $2000 b. 450, $2250 c. 400, $2500 d. 400, $2250 e. 450, $2750
c. 400, $2500
refer to the table at top of page 269 in the absence of government intervention, cell phone use will be a. 90 minutes per person per month b. between 70 and 80 minutes per person per month c. 80 minutes per person per month d. 70 minutes per person per month e. 60 minutes per person per month
c. 80 minutes per person per month
the official arbitrator of trade disputes is which of the following? a. European Union b. United Nations c. World Trade Organization d. North America Free Trade Agreement
c. World Trade Organization
when the market generates an inefficient allocation of goods and services, this is called: a. total economic surplus b. a monopoly c. a market failure d. a market shortage
c. a market failure
cost imposed on people outside of an economic transaction is: a. a public good b. a monopoly c. a negative externality d. a limit to market efficiency
c. a negative externality
someone who is unable to impact the market price is: a. a household b. a monopoly c. a price taker d. a price setter
c. a price taker
in 1 year, the US can produce 10 units of computer software or 5 units of computer hardware. in 1 year, China can produce 3 units of software and 3 units of hardware. based on this information: a. the US has comparative advantage in producing both goods b. China has comparative advantage and absolute advantage in producing both goods c. the US has the comparative advantage in producing hardware and China has the comparative advantage in producing software d. China has comparative advantage in producing hardware and the US has comparative advantage in producing software e. the US has comparative and absolute advantage in producing both goods
d. China has comparative advantage in producing hardware and the US has comparative advantage in producing software
if a newspaper headline indicates that US net exports were $190 billion in 2011, it likely means that: a. US imports exceeded US exports by $190 billion b. US imports were $190 billion and US exports were zero c. US exports were $190 billion and US imports were zero d. US exports exceeded US imports by $190 billion
d. US exports exceeded US imports by $190 billion
suppose that a cheese producer organization successfully lobbies for a tariff on cheese imported to the U.S. As a result, we would expect to see: a. no change in the equilibrium price or quantity of cheese in the US b. a decrease in the equilibrium price and an increase in the equilibrium quantity of cheese in the US c. an increase in the equilibrium price and a decrease in the equilibrium quantity in the US d. a decrease in the equilibrium price and quantity of cheese in the US e. an increase in the equilibrium price and quantity of cheese in the US
d. a increase in the equilibrium price and quantity of cheese in the US
in the calculation of GDP, which of the following purchases is included as household consumption expenditure? a. a new apartment building purchased by a landlord b. a new tractor purchased by a farmer c. a new calculator required for a statisician's job d. a new computer purchased by a college student
d. a new computer purchased by a college student
if new international trade markets for tractors are opened up and US workers have the comparative advantage in producing tractors, US workers are likely to be: a. worse off because demand for tractors will fall b. better off because demand for tractors will fall c. worse off because their wages may fall d. better off because demand for tractors will rise
d. better off because demand for tractors will rise
one feature of monopoly that leads to unfavorable consequences for society is that monopolies tend to: a. devote too many resources to production b. set marginal cost equal to price c. produce more output than a perfectly competitive firm d. charge a higher price than would a perfectly competitive firm
d. charge a higher price than would a perfectly competitive firm
a period of declining prices of goods and services is: a. inflation b. disinflation c. demand pull inflation d. deflation
d. deflation
refer to the graph at the top of page 251 in the first column. in the demand curve shown, the price of elasticity of demand between point A and pint B is: a. unit elastic b. perfectly inelastic c. perfectly elastic d. elastic e. inelastic
d. elastic
a good that is produced domestically and sold to a consumer in a different country is a(n): a. tariff b. trade surplus c. import d. export
d. export
from an economic perspective: a. we should not strive for efficiency when evaluating education activities b. government involvement in education helps eliminate the negative externalities associated with education c. there should be no government intervention in the education market d. government involvement in education is often justified because education is associated with positive externalities
d. government involvement in education is often justified because education is associated with positive externalities
from an economic perspective: a. there should be no government intervention in the health care market b. government intervention in health care helps eliminate the negative externalities associated with health care c. we should not strive for efficiency when evaluating health care activities d. government involvement in health care is often justified because health care is associated with positive externalities
d. government involvement in health care is often justified because health care is associated with positive externalities
legalization of drugs would most likely ___ the demand for drugs in the market a. shift backwards b. not change c. decrease d. increase
d. increase
the health care and health insurance industry is subject to the problem of: a. negative externalities b. free riders c. tragedy of the commons d. moral hazard
d. moral hazard
when the private marginal cost is less than the social marginal cost, there is a(n): a. quasi public good b. positive externality c. public good d. negative externality
d. negative externality
The GDP per capita is computed by dividing a country's: a. nominal GDP by its labor force b. nominal GDP by its population c. real GDP by its labor force d. real GDP by its population
d. real GDP by its population
a monopolist observes that at a given output level, marginal cost exceeds marginal revenue but total revenue exceeds total cost. to maximize profit, the monopolist should: a. maintain the current level of output b. go out of business c. expand the level of production d. reduce the level of production
d. reduce the level of production
which of the following is a tax on imports? a. protectionism b.trade deficit c. quota d. tariff
d. tariff
in the case of addicts (whose demand is relatively inelastic), drug prohibition will: a. reduce crime rates as users have less need to steal to finance their drug habit b. cause a relatively large decrease in the output that drug dealers are able to sell c. tend to decrease revenues of drug dealers due to decreased expenditures on drugs d. tend to increase the revenues of drug dealers due to increased expenditures on drugs
d. tend to increase the revenues of drug dealers due to increased expenditures on drugs
inflation occurs when: a. the purchasing power of money is increasing b. the purchasing power of money remains unchanged c. some prices are increasing but other prices are decreasing d. the average level of prices is increasing
d. the average level of prices is increasing
