ECON HW #7-#11, ECON Trial Exam, Social Responsibility, ECON HW #3-#6, ECON HW#1 & HW#2, Economics Terms

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1. What is corporate social responsibility

Socially responsible companies use their position and resources for something more than pleasing their shareholders and increasing their bottom line. They operate on a business model that focuses on social change, sharing its success with their local and global communities.

2. How stockholders and stakeholders differ?

Stockholders are the owners of the company. Stakeholder is a party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers, and suppliers.

4. Why firms engage in CSR?

To maximize profits, pressure from consumers.

101) Refer to Figure 22. If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax A) is greater under the more elastic supply curve S0. B) is greater under the less elastic supply curve S0. C) is greater under the less elastic supply curve S1. D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior.

102) What is the largest component of spending in the United States? A) consumption spending B) investment spending C) government spending D) net investment spending

104) Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP? A) GDP will decrease. B) GDP will increase. C) GDP will not change. D) GDP may increase or may decrease depending on inflation.

106) To examine how the total production of an economy has changed over time, it would be better to examine A) real GDP. B) nominal GDP. C) GDP at current prices. D) the GDP deflator.

109) If cyclical unemployment is eliminated in the economy, then A) the economy is considered to be at full employment. B) the unemployment rate is below the natural rate of unemployment. C) the unemployment rate is above the natural rate of unemployment. D) the economy is at less than full employment.

11. Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption? A) public goods B) private goods C) quasi-public goods D) common resources

111) If firms pay what are called "efficiency wages," they pay wages that A) motivate workers to increase their productivity. B) are lower than average to ensure maximum profit. C) will eventually lower the unemployment rate. D) are mandated by the government.

115) A good measure of the standard of living is A) real GDP per capita. B) nominal GDP per capita. C) total real GDP. D) total nominal GDP.

15. Insurance companies typically charge women lower prices than men for automobile insurance. Is this an example of price discrimination? A) No, because, on average, women have better driving records than men and the costs of insuring men are greater than the costs of insuring women. B) Yes, because the costs of selling insurance to men and women are the same. C) Yes, because insurance companies can prevent arbitrage; that is, women cannot transfer their insurance coverage to men. D) No, because there are too many insurance companies for any one company to have market power. A firm must possess market power in order to practice price discrimination.

16. Which of the following can a firm do in the long run but not in the short run? A) decrease the size of its physical plant B) reduce its rate of output by laying off workers C) increase its variable costs D) increase its use of raw materials

17. Which of the following statеments is truе? A) As output decreases, the аvеrage fixеd cost is incrеasing B) Avеrаge fixed cost does not change as output incrеases. C) The marginal cost curve intersects the average fixed cost curve at its minimum point. D) When mаrginal cost is greаter than average fixеd cost, average fixеd cost incrеases.

22) Typically, the lower the level of income per person in a country, the lower the level of spending per person on health care. This relationship between income and spending indicates that health care is a A) normal good. B) inferior good. C) luxury. D) necessity.

30) One reason for the success that firms have in getting the government to erect barriers to foreign competition is that jobs lost to foreign competition are easy to identify but jobs created by foreign trade are often hard to identify. Which of the following is a second reason? A) The costs that tariffs and quotas impose on consumers are large in total but relatively small per person. B) People who benefit from foreign trade tend not to vote in elections; people who are harmed by foreign trade are much more likely to vote. C) Firms that benefit from trade barriers have more money to lobby government officials to support the barriers than do firms that are harmed by trade barriers. D) The benefits from free trade are less than costs

37) The long-run average cost curve shows A) the lowest average cost of producing every level of output in the long run. B) where the most profitable level of output occurs. C) the average cost of producing where diminishing returns are not present. D) the plant size or scale that the firm should build.

4. When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance, the insurance market is said to face the problem of A) moral hazard. B) adverse selection. C) asymmetric information. D) economic irrationality.

42) Knowledge capital is nonrival in the sense that A) two people can use the same knowledge to develop and produce a product. B) firms do not compete to be the first to develop new technologies. C) no single company can be excluded from the benefits of new technologies. D) firms can benefit from the research and development of rival firms without paying for that benefit

43) Creative destruction means that A) firms develop new products that replace old products in the economy, thereby encouraging economic growth. B) economic growth can only be sustained if capital depreciates rapidly. C) knowledge capital can be created through a system of government subsidies for education and research and development. D) research and development should only be financed if research and development is incremental (a result of making small changes to existing products).

47) If firms sell exactly what they expected to sell, all of the following will be true except A) aggregate expenditure will be greater than GDP. B) there is no unplanned change in inventories. C) inventories will not change, and GDP and employment will remain stable. D) aggregate expenditure will be equal to GDP.

50) Refer to Figure 13. If the U.S. economy is currently at point N, which of the following could cause it to move to point K? A) Households expect future income to decline. B) Household wealth rises. C) The firm's cash flow rises as profits rise. D) Government expenditures increase.

51) Which of the following is a true statement about the multiplier? A) The multiplier rises as the MPC rises. B) The smaller the MPC, the larger the multiplier. C) The multiplier is a value between zero and one. D) The multiplier effect does not occur when autonomous expenditure decreases

53) All of the following are reasons why the wages of workers and the prices of inputs rise more slowly than the prices of final goods and services except A) unions are successful in pushing up wages. B) firms are often slow to adjust wages. C) contracts make prices and wages sticky. D) menu costs make some prices sticky.

57) Refer to Figure 16. Given the economy is at point A in year 1, what will happen to the unemployment rate in year 2? A) It will rise. B) It will fall. C) It will remain constant. D) not enough information to answer the question

58) In the dynamic aggregated demand and aggregate supply model, if AD shifts faster than AS A) inflation occurs. B) deflation occurs. C) stagflation occurs. D) disinflation occurs.

64) If an increase in income leads to a decrease in the demand for salami, then salami is A) an inferior good. B) a neutral good. C) a necessity. D) a normal good.

66) When a negative externality exists, the private market produces A) more than the economically efficient output level. B) less than the economically efficient output level. C) products at a low opportunity cost. D) products at a high opportunity cost.

71) To improve package delivery, one change UPS made involved taking better account of weather forecasts to avoid delays in flying packages. This is an example of A) positive technological change. B) increasing marginal returns. C) a reduction in fixed costs. D) diseconomies of scale.

8. If the quantity of walkie-talkies supplied increases by 5 percent when price increases by 12 percent, then A) the supply of walkie-talkies is inelastic. B) the supply of walkie-talkies is elastic. C) the walkie-talkie supply curve will shift to the right. D) the walkie-talkie supply curve will shift to the left.

83) Refer to Figure 17. The firm represented in the diagram A) makes zero economic profit. B) makes zero accounting profit. C) should exit the industry. D) should expand its output to take advantage of economies of scale.

85) Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes are superior to any other basketball shoes. Nike is attempting to A) differentiate Air Jordan basketball shoes from other types of basketball shoes. B) lower the marginal cost of producing Air Jordan basketball shoes. C) increase its profit by raising the price of Air Jordan basketball shoes. D) convince consumers that Air Jordan basketball shoes are no different from other basketball shoes favored by celebrities.

9. What is a market failure? A) It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost. B) It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost. C) It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event. D) It refers to a breakdown in a market economy because of widespread corruption in government.

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

HW Q5 Table 19-19 2015 2016 Nominal GDP $10,000 $12,000 Real GDP 9,500 10,500 Refer to Table 19-19. Given the information above, calculate the GDP deflator in 2016. Select one: a.114 b.105 c.95 d.87

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

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

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

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

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

If the size of the underground economy is large, Select one: A) government agencies have difficulty measuring nominal and real GDP. B) it is relatively easy to gather productivity data on many businesses. C) measuring nominal GDP is relatively easy, but measuring real GDP is difficult. D) measuring real GDP is relatively easy, but measuring nominal GDP is difficult.

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

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

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

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

The output of U.S. citizens who work in Canada would be included in the Select one: A) gross domestic product of Canada. B) gross national product of Canada. C) gross domestic product of the United States. D) gross national product of Canada and the gross national product of the United States.

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

This table shows the number of labor hours required to produce a wristwatch and a bushel of rice in Japan and Thailand. If each country specializes in the production of the product in which it has a comparative advantage, who should produce wristwatches? Japan Wrist watch Rice (bushels) 200 hrs 10 hrs Thailand 180 hrs 6 hrs Select one: a. Japan b. Thailand c. Neither d. Both

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

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

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

When consumers are less confident about their jobs or incomes, they are more likely to Select one: A) reduce purchases of durable goods than nondurable goods. B) reduce purchases of nondurable goods and increase purchases of durable goods. C) increase investment spending and decrease consumption spending. D) increase consumption spending and decrease investment spending.

Which of the following describes what the Fed would do to pursue an expansionary monetary policy? Select one: A) use open market operations to buy Treasury bills B) use open market operations to sell Treasury bills C) use discount policy to raise the discount rate D) raise the reserve requirement

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

1. The extra cost associated with undertaking an activity is called A) net loss. B) marginal cost. C) opportunity cost. D) foregone cost.

105) If GDP calculations included measurements of pollution and environmental damage, GDP values would most likely be A) greater than their values without these measurements. B) less than their values without these measurements. C) unchanged from their values without these measurements. D) meaningless, since GDP values without these measurements would no longer be of value.

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

110) If the federal government implements programs so that the unemployed are more quickly matched with jobs, then A) the natural rate of unemployment will increase. B) the natural rate of unemployment will decrease. C) the natural rate of unemployment will not change. D) the natural rate of unemployment could either increase or decrease.

118) In comparison to a government that runs a balanced budget, when the government runs a budget deficit, A) the equilibrium interest rate will fall. B) business investment will fall. C) household savings will fall. D) none of the above

119) The demand for durable goods A) has decreased over time. B) declines by a greater percentage than does GDP during a recession. C) declines by a smaller percentage than does GDP during a recession. D) rises by a greater percentage than does GDP during a recession

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

120) Typically, as an economy begins to emerge from a recessionary phase of the business cycle, A) unemployment falls immediately. B) unemployment continues to rise. C) inflation begins to fall. D) investment begins to fall.

15. If you have a question, you should A) ignore it. You are only wasting your time trying to find answers. B) ask mom. She always knows best C) sleep on it. The answer will come in dreams D) go for a walk and ask the first person you meet.

2. If, when you consume another piece of candy, your marginal utility is zero, then A) you want more candy. B) you have maximized your total utility from consuming candy. C) you have not yet reached the point of diminishing marginal utility. D) you should consume less candy

20) Suppose the demand curve for a product is represented by a typical downward-sloping curve. Now suppose the demand for this product decreases. Which of the following statements accurately predicts the resulting decrease in price? A) The more elastic the supply curve, the greater the price increase. B) The more elastic the supply curve, the smaller the price decrease. C) The increase in price is not affected by the elasticity of the supply curve. D) The decrease in price will always be proportional to the magnitude of the demand shift

21) Which of the following parties is likely to have the most information about the health of an individual who is trying to purchase a health insurance policy? A) the company that issues the health insurance policy B) the individual who is applying for the health insurance policy C) the employer of the individual who is trying to purchase the health insurance policy D) All parties in the health insurance market have access to the same level of information.

23) If a doctor knows that an insurance company will pay for most of a patient's bill, the doctor has more of an incentive to require additional medical procedures and tests, even if the patient may not require them. This is an example of A) moral hazard. B) the principle-agent problem. C) asymmetric information. D) adverse selection.

26) Leela sells homemade candles over the Internet. Her annual revenue is $64,000 per year, the explicit costs of her business are $17,000, and the opportunity costs of her business are $22,000. What is her economic profit? A) $17,000 B) $25,000 C) $42,000 D) $47,000

28) Refer to Figure 6. What is the area of domestic producer surplus after the imposition of a quota? A) B B) B + C C) B + E + I + J + M D) E + I + J + M

31) Refer to Table 2. Suppose Keira's income increases from $18 to $23 but prices have not changed. What is her utility maximizing bundle now? A) 6 cups of soup and 5 sandwiches B) 4 cups of soup and 5 sandwiches C) 5 cups of soup and 4 sandwiches D) 5 cups of soup and 5 sandwiches

35) If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced? A) Average cost increases as more is produced. B) Average cost will fall. C) Average cost could increase or decrease depending on what happens to variable cost. D) Average cost could increase or decrease depending on what happens to fixed cost.

39) Refer to Figure 9. Suppose the current price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium, the firm represented in the diagram A) will continue to produce the same quantity. B) will reduce its output to 1,100 units. C) will reduce its output to 750 units. D) will cease to exist.

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

40) Refer to Figure 10. Consider a typical firm in a perfectly competitive industry that makes short-run profits. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium? A) Panel A B) Panel B C) Panel C D) Panel D

41) Refer to Figure 11. Using the per-worker production function in the figure above, the largest changes in an economy's standard of living would be achieved by a movement from A) A to B to C. B) B to C to D. C) C to B to A. D) D to C to B.

5) Refer to Table 1. If the two countries specialize and trade, who should export wheat? A) There is no basis for trade between the two countries. B) China C) South Korea D) They should both be exporting wheat

5. What is the principal-agent problem? A) It is a problem caused by a person (principal) who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way. B) It is a problem caused by agents pursuing their own interests rather than the interests of the principals who hired them. C) It is a problem of the power system of boss and subordinate where the boss (principal) exerts influence over his subordinates (agents) using punishment or threat. D) It is a problem that exists when a person (principal) has more information about the task than the agent he hires to perform the task.

52) What impact does a decrease in the price level in the United States have on net exports and why? A) A decrease in the price level increases net exports because lower prices increase the value of the dollar. B) A decrease in the price level increases net exports by reducing the relative cost of American goods. C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. D) A decrease in the price level reduces net exports because lower prices increase American spending on imports.

54) Refer to Figure 14. Ceteris paribus, an increase in the expected future price level would be represented by a movement from A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to point A.

59) Monetary policy refers to the actions the A) President and Congress take to manage the money supply and interest rates to pursue their economic objectives. B) Federal Reserve takes to manage the money supply and interest rates to pursue its macroeconomic policy objectives. C) President and Congress take to manage government spending and taxes to pursue their economic objectives. D) Federal Reserve takes to manage government spending and taxes to pursue its economic objectives.

6. If diminishing marginal returns have already set in for Chance's Woodwork Company, and the marginal product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is A) negative. B) less than 8 chairs. C) more than 8 chairs. D) zero.

60) Fiscal policy refers to changes in A) state and local taxes and purchases that are intended to achieve macroeconomic policy objectives. B) federal taxes and purchases that are intended to achieve macroeconomic policy objectives. C) federal taxes and purchases that are intended to fund the war on terrorism. D) the money supply and interest rates that are intended to achieve macroeconomic policy objectives.

62) In economics, choices must be made because we live in a world of A) unemployment. B) scarcity. C) greed. D) unlimited resources

67) Carrie Bradshaw claims that when it comes to buying shoes, "price is no object." If this is true, then her demand for shoes is A) perfectly elastic. B) perfectly inelastic. C) unit elastic. D) horizontal.

68) Assume you set up a sole proprietorship and your lawyer tells you that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. This means a sole proprietorship A) faces limited liability. B) faces unlimited liability. C) has little chance of succeeding. D) is not a good type of business to set up.

7. Over the past twenty years, the number of small family farms has fallen significantly and in their place there are fewer, but larger, farms owned by corporations. Which of the following best explains this trend? A) diseconomies of scale in farming B) economies of scale in farming C) diminishing returns to labor in farming D) declining productivity

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

77) Leela and Chance are equally skilled construction workers employed by the Brown and Root Company. Leela's job is riskier because she typically works on a scaffold 1,000 feet above ground. Leela's wage rate is A) lower than Chance's, because Leela likes the view from above. B) higher than Chance's because Leela's job is more dangerous. C) same as Chance's because they are both employed by the same company. D) higher than Chance's because Leela is a friend of the company's owner.

79) If the nominal interest rate is 6% and the inflation rate is 2% then the real interest rate is A) 8%. B) 4%. C) 3%. D) 2%. E) 1%.

8. Blu-ray players were introduced to the market in 2006, and new technology has allowed for the cost of manufacturing the players to decline significantly since the initial introduction. How did this change in technology affect the market for Blu-ray players? A) the new technology caused a decrease in the demand for Blu-ray players. B) the new technology caused an increase in the supply of Blu-ray players and a decrease in price of Blu-ray players. C) the new technology caused an increase in the supply of Blu-ray players and an increase in price of Blu-ray players D) the new technology caused an increase in the quantity of Blu-ray players supplied.

8. The machines that workers have to work with are considered Select one: a. A) human capital. b. B) physical capital. c. C) entrepreneurship. d. D) financial capital.

8. What is the incentive for a firm to join a cartel? A) to be able to earn profits in the long run but not in the short run B) to be able to earn larger profits than if it was not part of the cartel C) to completely insulate itself from competition D) to produce a larger amount of output than if it was not part of the cartel

81) In the long run, a country will experience an increasing standard of living only if it experiences A) a high rate of consumption. B) continuous technological change. C) a high rate of labor force growth. D) a slow rate of population growth.

82) In August 2008, Ethan Nicholas developed the iShoot application for the Apple iPhone 3G, and within five months had earned $800,000 from this program. By May 2009, Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales. This example indicates that in a competitive market A) earning an economic profit in the long run is extremely easy. B) earning an economic profit in the long run is extremely difficult. C) it is impossible to earn an economic profit in either the short run or the long run. D) economic profits are only earned in the long run.

84) Refer to Figure 18. The diagram demonstrates that A) in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa. B) it is not possible for a monopolistic competitor to produce the productively efficient output level, Qa, because of product differentiation. C) it is possible for a monopolistic competitor to produce the productively efficient output level, Qa, if it is willing to lower its price from Pb to Pa. D) in the long run, the monopolistic competitor produces the minimum-cost output level, Qa, but in the short run its output of Qb is not cost minimizing.

88) A member of a cartel like OPEC has an incentive to A) argue for larger production quotas for each member of the cartel. B) agree to a low cartel production level and then produce more than its quota. C) abide by its individual production quota. D) support equal production quotas for each member

9. The demand for lobster is higher in the summer than in the spring. If the price of lobster is lower in summer than in spring then A) consumer's tastes for lobster are greater in spring than in summer B) the supply of lobster is lower in spring than in summer C) there is a surplus of lobster in summer and a shortage of lobster in spring. D) there are more substitutes for lobster in summer that there are in spring.

90) Refer to Table 19. What happens to the monopolist represented in the diagram in the long run? A) It will raise its price at least until it breaks even. B) If the cost and demand curves remain the same, it will exit the market. C) The government will subsidize the monopoly to enable it to break even. D) It will be forced out of business by more efficient producers.

94) Refer to Figure 21. Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the profit-maximizing quantity? A) 320 units B) 480 units C) 560 units D) 640 units

95) Refer to Figure 15. Suppose the firm represented in the diagram decides to act as a monopolist and charge a single price. What is the profit maximizing quantity produced and what is the price charged? A) Q = 240 units; P = $28 B) Q = 320 units; P = $24 C) Q = 480 units; P = $16 D) Q = 560 units; P = $12

96) In general, the labor supply curve A) slopes downward because firms will hire fewer workers at higher wages. B) slopes upward because as the wage rises the opportunity cost of leisure increases. C) is vertical at the equilibrium wage rate. D) is perfectly elastic at the equilibrium wage rate

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

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

Contractionary monetary policy on the part of the Fed results in Select one: A) an increase in the money supply, an increase in interest rates, and an increase in GDP. B) a decrease in the money supply, an increase in interest rates, and a decrease in GDP. C) an increase in the money supply, a decrease in interest rates, and an increase in GDP. D) a decrease in the money supply, a decrease in interest rates, and a decrease in GDP.

Deflation will Select one: A) increase aggregate demand. B) increase the quantity of real GDP demanded. C) decrease aggregate demand. D) decrease the quantity of real GDP demanded.

Figure the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. What is the opportunity cost of producing 1 bolt of cotton in Pakistan? Pakistan 150 Cashews (lbs) 240 Cotton (bolts) Indonesia 120 Cashews 320 Cotton Select one: a. A) 3/8 of a pound of cashews b. B) 5/8 of a pound of cashews c.C) 13/5 pounds of cashews d. D) 150 pounds of cashews

HW 9 Q1 Table 19-2 Product Quantity Price Shoes 40 $60.00 DVDs 100 18.00 Tomatoes 2,000 1.00 Ketchup 300 4.00 Refer to Table 19-2. Suppose that a simple economy produces only four goods and services: shoes, DVDs, tomatoes, and ketchup. Assume one half of the tomatoes are used in making the ketchup and the other half of the tomatoes are purchased by households. Using the information in the above table, nominal GDP for this simple economy equals Select one: a.$7,400. b.$6,400. c.$5,800. d.2,440 units.

HW 9 Q2 Year Oranges Produced Price of Oranges Shirts Produced Price of Shirts 2013 1,800 $0.90 110 $30.00 2015 2,000 1.00 110 35.00 Refer to above. Consider the data above (in billions of dollars) for an economy. Gross domestic product (in billions of dollars) for this economy equals during 2015 was Select one: a.$2,200. b.$5850. c.$2110. d.$7580.

HW11 Q14 In the figure above, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to Select one: A) lower interest rates. B) raise interest rates. C) lower income taxes. D) raise income taxes.

HW9 Q7 Table 20-2 Refer to Table 20-2. Assume the market basket for the consumer price index has two products—bread and milk—with the following values in 2013 and 2018 for price and quantity: The Consumer Price Index for 2018 equals Select one: a. 118 b. 115 c. 86 d. 85

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

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

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

If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books, the income elasticity of demand is Select one: a. -0.67. b. 0.67. c. 1.5. d. 2.

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

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

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

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

In periods when prices are falling, on average, Select one: A) real GDP will grow slower than nominal GDP. B) real GDP will grow faster than nominal GDP. C) real GDP will grow as fast as nominal GDP. D) one cannot calculate real GDP.

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

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

Suppose that nominal GDP in 2016 was less than real GDP in 2016. Given this information, we know for certain that Select one: A) the price level in 2016 was greater than the price level in the base year. B) the price level in 2016 was less than the price level in the base year. C) real GDP in 2016 was less than real GDP in the base year. D) real GDP in 2016 was greater than real GDP in the base year.

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

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

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

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

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

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

Which of the consequences above are positive statements and which are normative statements? A) a, b, and c are positive statements and d is a normative statement. B) a and b are positive statements, c and d are normative statement. C) Only a is a positive statement, b, c, and d are normative statements. D) a and c are positive statements, b and d are normative statements.

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

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

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

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

10. A positive externality causes A) the marginal social benefit to be equal to the marginal private cost at the market equilibrium. B) the marginal social benefit to be less than the marginal private cost at the market equilibrium. C) the marginal social benefit to exceed the marginal private cost at the market equilibrium. D) the marginal private benefit to exceed the marginal social cost at the market equilibrium

10. Which one of the following about a monopoly is false? A) A monopoly could make profits in the long run. B) A monopoly could break even in the long run. C) A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly. D) A monopoly status could be temporary.

103) Consumption expenditures do not include household purchases of A) medical care. B) education. C) new houses. D) durable goods.

107) If prices in the economy rise, then A) the purchasing power of a dollar rises. B) the purchasing power of a dollar stays constant. C) the purchasing power of a dollar declines. D) the purchasing power of a dollar cannot be determined

108) If an American firm opens a production facility in India, the total value of the production will be included in the A) gross domestic product of the United States. B) national income of the United States. C) gross domestic product of India. D) national income of India.

11. Because a monopoly's demand curve is the same as the market demand curve for its product A) the monopoly's marginal revenue equals its price. B) the monopoly is a price taker. C) the monopoly must lower its price to sell more of its product. D) the monopoly's average total cost always falls as it increases its output

113) If your nominal wage rises faster than the price level, we can say your real wage has ________ and the purchasing power of your income has ________. A) fallen; fallen B) fallen; risen C) risen; risen D) risen; fallen

116) Which of the following is an example of human capital? A) a computer B) a factory building C) a college education D) a software program

117) According to the "Rule of 70," it will take 4 years for real GDP per capita to double when the growth rate of real GDP per capita is A) 4 percent. B) 12.25 percent. C) 17.5 percent. D) 28 percent.

12. A good is considered to be rival if A) you can keep those who did not pay for the item from enjoying its benefits. B) you cannot keep those who did not pay for the item from enjoying its benefits. C) your consumption of the product reduces the quantity available for others to consume. D) it is jointly owned by all members of a community.

14) Some policymakers have argued that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption. All else equal, if the government decided to impose a tax on soda, the equilibrium quantity of soda would ________ and the equilibrium price of soda would ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease

15) Which of the following displays these two characteristics: nonrivalry and excludability? A) public goods B) private goods C) quasi-public goods D) common resources

16) Overuse of a common resource may be avoided by all of the following methods except A) charging for the use of a common resource. B) issuing tradable permits for the use of a common resource. C) government taking over ownership of all private common resources. D) setting quotas or legal limits on the quantity of the common resource consumed.

18) Suppose a frost destroys the tomato crop in California but farmers see an increase in their revenues. Which of the following best explains this? A) The decrease in supply led to huge price increases. B) Tomatoes are necessities. C) The demand for tomatoes is price inelastic. D) The cross-price elasticity between tomatoes and most other substitute vegetables is very low

19) Bringing oil to the market is a relatively long and costly process. The whole process from exploration to pumping significant amounts of oil can take years. What does this indicate about the price elasticity of supply for oil? A) The elasticity coefficient is likely to be very high and supply is inelastic. B) The elasticity coefficient is likely to be close to zero and supply is perfectly elastic. C) The elasticity coefficient is likely to be low and supply is highly inelastic. D) The elasticity coefficient is likely to be low and supply is highly elastic.

32) In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we change A) income and hold everything else constant. B) tastes and preferences and hold everything else constant. C) the price of the product and hold everything else constant. D) the price of a close substitute and hold everything else constant.

33) A network externality occurs when A) there is production cost savings from being networked with suppliers. B) there is production cost savings from being networked with buyers. C) the usefulness of a good is affected by how many other people use the good. D) the usefulness of a good is affected by celebrities who use the good.

34) Which of the following is a common mistake consumers commit when they make decisions? A) They take into account nonmonetary opportunity costs but ignore monetary costs. B) They are overly pessimistic about their future behavior. C) They fail to ignore sunk costs. D) They sometimes value fairness too much.

48) Investment spending will increase when A) the interest rate rises. B) the corporate income tax increases. C) business cash flow increases. D) firms become more pessimistic about earning future profits.

49) Refer to Figure 12. At point L in the figure above, which of the following is true? A) Aggregate expenditure is greater than GDP. B) The economy has achieved macroeconomic equilibrium. C) Actual inventories are greater than planned inventories. D) GDP will be increasing.

5. The marginal utility per dollar that Harold receives from oranges is greater than the marginal utility per dollar Harold receives from pears. To maximize his utility, what should Harold do? A) He should acquire less income so that he can spend less money on fruit. B) He should reduce his consumption of both oranges and pears so that he can buy a greater variety of goods. C) He should buy fewer pears and more oranges. D) He should buy fewer oranges and more pears

55) An increase in aggregate demand results in a(n) ________ in the ________. A) recession; long run B) expansion; long run C) expansion; short run D) recession; short run

6) All of the following are critical functions of the government in facilitating the operation of a market economy except A) protecting private property. B) enforcing property rights. C) ensuring an equal distribution of income to all citizens. D) enforcing contracts.

7. Income elasticity measures how a good's quantity demanded responds to A) change in the goods price. B) change in the price of another good. C) change in buyers' incomes. D) producers' incomes.

72) If in a perfectly competitive industry, the market price facing a firm is below its average total cost but above average variable cost at the output where marginal cost equals marginal revenue A) the industry supply will not change. B) new firms are attracted to the industry. C) some existing firms will exit the industry. D) firms are breaking even.

74 ) For which of the following firms is patent protection of vital importance? A) furniture producers B) software firms C) pharmaceutical firms D) auto makers

75) A profit maximizing monopoly's price is A) the same as the price that would prevail if the industry was perfectly competitive. B) less than the price that would prevail if the industry was perfectly competitive. C) greater than the price that would prevail if the industry was perfectly competitive. D) not consistently related to price that would prevail if the market was perfectly competitive.

76) Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours. Why is this the case? A) Telephone companies hope to discourage customers from calling long distance during the day to keep their labor costs down. B) The cost of making long-distance connections is higher during the day than in the evenings. C) Businesses who must call suppliers or customers during business hours have few alternatives and therefore have an inelastic demand during the workday compared to after-work hours. D) Increasingly, businesses who must call suppliers or customers during business hours resort to the internet, thereby reducing demand for long-distance calls. To make up for this fall in demand, telephone companies charge higher rates.

80) In a closed economy, what is the relationship between saving and investment? A) Saving is greater than investment. B) Investment is greater than saving. C) Investment is equal to saving. D) Investment may be greater or smaller than saving.

86) To maximize their profits and defend those profits from competitors, monopolistically competitive firms must A) lobby government to erect barriers to entry in their industries. B) limit foreign competition in their markets by encouraging the government to impose tariffs and other trade restrictions. C) differentiate their products. D) achieve economies of scale.

89) A monopoly differs from monopolistic competition in that A) a monopoly has all the power while a firm in monopolistic competition does have only half of market power. B) a monopoly can never make a loss but a firm in monopolistic competition can. C) in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure. D) a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve.

91) Refer to Figure 20. What is the area that represents producer surplus under a monopoly? A) the triangle 0P2E B) the triangle 0P3H C) the trapezium 0P1FH D) the rectangle P1P3HF

92) The Bay Area subway system, BART, offers senior citizens discounted fares for BART rides. This suggests that BART authorities believe that senior citizens have a ________ demand for subway rides. A) more income elastic B) less income elastic C) more price elastic D) less price elastic

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

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

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

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

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

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

HW 9 Q3 Table 19-13 Year Oranges Produced Price of Oranges Shirts Produced Price of Shirts 2013 1,800 $0.90 110 $30.00 2015 2,000 1.00 110 35.00 Consider the data shown above for Vicuna, a country that produces only two products: oranges and shirts. Refer to Table 19- 13. Real GDP for Vicuna for 2013 using 2015 as the base year equals Select one: a.$4,620. b.$5,100. c.$5,650. d.$5,850.

HW11 Q15 In the graph above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president? Select one: A) an increase in transfer payments B) an increase in interest rates C) an increase in the marginal income tax rate D) an open market purchase of Treasury bills

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

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

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

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

If the quantity of goods and services produced in the economy decreases, Select one: A) it may be possible for real GDP to increase. B) real GDP would certainly increase. C) it may be possible for nominal GDP to increase. D) nominal GDP would certainly increase.

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

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

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

Real GDP will increase Select one: A) only if the price level rises. B) only if the price level falls. C) only if the quantity of final goods and services produced rises. D) if either the price level rises or the quantity of final goods and services produced rises.

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

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

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

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

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

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent. This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________, so the two are ________. Select one: a. 0.8; substitutes b. -0.4; complements c. -0.8; complements d. 0.4; substitutes

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

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

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

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

structural unemployment

changes in the structure of the labor force make some skills obsolete. Workers do not have transferable skills and these jobs will never come back. Technological improvements; sometimes robots do it better

100) The political process is more likely to serve the interests of individuals whose preferences are in the middle, rather than individuals with preferences that are much to the left or right of the political center. This statement is best explained by which of the following? A) logrolling B) the voting paradox C) the Arrow impossibility theorem D) the median voter theorem

13. To affect the market outcome, a price floor A) must be set above the black market price. B) must be set above the legal price. C) must be set above the price ceiling. D) must be set above the equilibrium price

14. The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called A) producer surplus. B) the substitution effect. C) the income effect. D) consumer surplus.

17) Leela can sell seven motor homes per week at a price of $20,000. If she lowers the price of motor homes to $18,000 per week she will sell eight motor homes. What is the marginal revenue of the 8th motor home? A) $18,000 B) -$4,000 C) $144,000 D) $4,000

2. Which of the following is a normative economic statement? A) Rising corn prices have increased the price of corn-based ethanol. B) With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased. C) The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. D) Farmers should not be allowed to grow and sell genetically-modified crops.

24) Which of the following is not an advantage of starting a new business as a corporation? A) separation of ownership and business liability B) enhanced ability to raise funds C) ability to share risks D) possibility of double taxation

25) Which of the following is a characteristic of stock? A) Stock represents a promise to repay a fixed amount of funds. B) The face value or principal plus interest is repaid at a specified period of time. C) The length of coupon payments is fixed by the stated maturity period. D) Stock represents ownership in a firm

3) Which of the following statements is true about profit? A) Profit refers to the revenue received from the sale of a quantity of goods. B) Profit is calculated by multiplying price and quantity sold. C) The terms "accounting profit" and "economic profit" can be used interchangeably. D) Profit is the difference between revenue and cost.

36) Refer to Figure 7. Identify the curves in the diagram. A) E = average fixed cost curve; F = variable cost curve; G = total cost curve, H = marginal cost curve B) E = marginal cost curve; F = total cost curve; G = variable cost curve, H = average fixed cost curve C) E = average fixed cost curve; F = average total cost curve; G = average variable cost curve, H = marginal cost curve D) E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve.

44) By offering more generous unemployment insurance programs, European countries can expect A) to pay less in taxes than in the United States. B) workers to gain new skills quickly in response to fluctuations in the labor market. C) shorter periods of unemployment for their workers. D) longer periods of unemployment for their workers.

45) Developing countries with low saving rates and poor levels of health and education are likely to experience A) high levels of foreign direct investment. B) easy access to financial backing from banks. C) rapid growth in household incomes. D) low rates of growth in real GDP per capita

46) A policy that offers parents a tax reduction based on how much they are saving for their children's college education should ________ the equilibrium level of loanable funds and ________ the rate of long-term growth. A) decrease; increase B) increase; decrease C) decrease; decrease D) increase; increase

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

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

61) Antoine de Saint-Exupéry in "Little Prince" wrote: A) Row, row, row your boat - merely down the stream. B) Roots are not as sweet as fruits C) Can I be done already? D) Well, I must endure the presence of a few caterpillars if I wish to become acquainted with the butterflies

65) Arthur buys a new cell phone for $150. He receives consumer surplus of $150 from the purchase. What value does Arthur place on his cell phone? A) $0 B) $150 C) $225 D) $300

87) Refer to Table 3. What is the Nash equilibrium in this game? A) There is no Nash equilibrium. B) Baine increases its advertising budget, but Alistair does not. C) Alistair increases its advertising budget, but Baine does not. D) Both Alistair and Baine increase their advertising budgets.

9. A dominant strategy is A) an equilibrium where each firm chooses the best strategy, given the strategies of other firms. B) a strategy chosen by two firms that decide to charge the same price or otherwise not to compete. C) a strategy that is obviously the best for each firm that is a party to a business decision. D) a strategy that is the best for a firm no matter what strategies other firms use.

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

93) Some consumer electronics products such as plasma TVs, DVD players, and digital cameras, are introduced at very high prices but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of economies of scale and cheaper technologies). Which of the following is the best explanation for this observation? A) Less firms are likely to enter the consumer electronics market over time, forcing market prices down. B) Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait. C) Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods. D) After satisfying the demand for early adopters, firms lower price to attract the more price-sensitive consumers.

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

HW11 Q13 In the figure above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve? Select one: A) an increase in income taxes B) a decrease in the required reserve ratio C) an open market purchase of Treasury bills D) an open market sale of Treasury bills

HW9 Q8 Table 20-5 Year CPI 2017 207 2018 215 Refer to Table 20-5. Consider the following values of the consumer price index for 2017 and 2018. The inflation rate for 2018 was equal to Select one: a.215 percent. b.21.5 percent. c.8.0 percent. d.3.9 percent

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

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

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

Investment, as defined by economists, would include the purchase of a Select one: A) corporate bond. B) government bond. C) share of stock in ExxonMobil. D) computer by an accounting firm.

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

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

HW11 Q17 In the graph above, suppose the economy in Year 1 is at point A and is expected in Year 2 to be at point B. Which of the following policies could Congress and the president use to move the economy to point C? Select one: A) increase government purchases B) decrease government purchases C) increase income taxes D) sell Treasury bills

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

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

12) Refer to Figure 4. How much of the tax is paid by buyers? A) $2 B) $5 C) $7 D) $12

2) The economic analysis of minimum wage involves both normative and positive analysis. Consider the following consequences of a minimum wage: a. The minimum wage law causes unemployment. b. A minimum wage law benefits some groups and hurts others. c. In some cities such as San Francisco and New York, it would be impossible for low-skilled workers to live comfortably in the city without minimum wage laws. d. The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses.

10) Refer to Figure 3. What area represents consumer surplus after the imposition of the price floor? A) A + B + E B) A + B C) A + B + E + F D) A

intermediate goods, used goods, financial transactions, transfer payments

Things that DONT count in GDP

78) Gross domestic product understates the total production of final goods and services because of the omission of A) the underground economy. B) intermediate goods. C) inflation. D) exports.

The narrowest official definition of the money supply is Select one: A) M1. B) M2. C) M3. D) L.

5. What are areas of social responsibility that can be addressed by a corporation?

- Reducing carbon footprint. - Improving labor policies - Participating in fair-trade - Diversity, equity and inclusion - Charitable global giving - Community and virtual volunteering - Corporate policies that benefit the environment - Socially and environmentally conscious investments

112) The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price, and the CPI does not reflect this and ________ the cost of the market basket. A) change; overestimates B) change; underestimates C) do not change; overestimates D) do not change; underestimates

114) When actual inflation is less than expected inflation A) borrowers lose and lenders gain. B) borrowers gain and lenders lose. C) borrowers and lenders both gain. D) borrowers and lenders both lose.

14. With perfect price discrimination there is A) no deadweight loss. B) no producer surplus. C) one single price. D) an increase in consumer surplus

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

38) Refer to Figure 8. At price P1, the firm would produce A) Q1 units B) Q3 units. C) Q5 units. D) zero units.

6. Give an example of a firm implementing CSR. What area(s) of CSR does the particular firm address?

1. Patagonia: Patagonia gives 1% of all sales to environmental organizations globally. Their organization is considered the "The Activist Company," as calls to action are found directly within their website. In addition to serving as a link to action, Patagonia hosts a phenomenal blog that showcases some of the most impactful environmental efforts in some of the most beautiful places around the world. 2. TOMS: Their shoes are made from sustainable materials, and the company emphasizes transparency in its supply chain, so you know they are staying true to their word. But their impact extends into the realms of public safety, equal opportunity efforts, and beyond as well. Its social movement efforts are well-known and recently, TOMS has pledged to donate at least one-third of its annual net profits to its grant fund, which it distributes according to its annual investment plan.

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

2. Marginal analysis involves undertaking an activity Select one: a. Only if it makes you happy b.B) only when its marginal benefits are positive. c.C) until its marginal benefits equal marginal costs. d.D) only if its marginal costs are greater than its marginal benefits.

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

3. Corporate social responsibility is not a new thing. What drives firms' re-engagement in social responsibility now?

In short, consumers. Appreciation for socially-responsible business practices continues to increase as Millennials and Gen Z become the driving force of the economy. The purchasing perspective of these two generations has shifted consumer focus to social responsibility especially when it comes to the environment. There is no limit to the power of consumer pressure. Even large traditional companies heed consumer concerns.

natural rate of unemployment (NRU)

The amount of unemployment that exists when the economy is healthy. The economy is at full employment when there is no cyclical unemployment, only frictional and structural.

Anything of value owned by a person or a firm is Select one: a. an asset b. a liability c. wealth d. owner's yield

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

Assume both demand and supply increases. If the demand increases by more than supply, then new equilibrium Select one: a. A) both price and quantity will be higher. b. B) both price and quantity will be lower c. C) price will higher and quantity will be lower d. D) price will be lower and quantity will be higher

Assume that Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 30 calzones would appear Production choices for Tomaso's Trattoria Choice [ A B C D E] Quantity of Pizzas Produced [48 36 24 12 0] Quantity of Calzones Produced [0 15 30 45 60] Select one: a. A) along Tomaso's production possibilities frontier. b. B) inside Tomaso's production possibilities frontier. c. C) outside Tomaso's production possibilities frontier. d. D) at the horizontal intercept of Tomaso's production possibilities frontier.

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

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

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

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

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

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________. Select one: a. cross-price elasticity; positive number b. cross-price elasticity; negative number c. price elasticity of demand; number greater than 1 (in absolute value) d. price elasticity of demand; number less than 1 (in absolute value)

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

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

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

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

The graph above is for a good that is inferior. An increase in income would cause: Select one: a. A) A shift from D2 to D1 b. B) A shift from D1 to D2 c. C) A move from A to B d. D) A move from B to A

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

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

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

1. Govеrnments grаnt patеnts to enϲourage A) ϲompetition. B) resеаrch and dеvеlopment on nеw produϲts. C) low priϲes. D) less competion

27) Refer to Figure 5. The tariff causes domestic consumption of rice A) to fall by 27 million pounds. B) to fall by 11 million pounds. C) to rise by 6 million pounds. D) to rise by 16 million pounds.

70) Assume that you had a ticket for a basketball playoff game that you bought for $50, the maximum price you were willing to pay. If a friend of yours offers to buy the ticket for $100 but you decide not to sell it, how can your decision be explained? A) You expect to receive greater utility from attending the playoff game than you received from buying the ticket. B) by the endowment effect C) by the law of diminishing marginal utility D) The income effect from the increase in the price of the ticket from $50 to $100 was greater than the substitution effect.

73) If a typical monopolistically competitive firm is making short-run losses, then A) other more competitive firms will enter the market. B) as some firms leave, the remaining firms will experience an increase in the demand for their products. C) as some firms leave, the demand for the products of the remaining firms will become more elastic. D) the industry will eventually cease to exist.

97) Which of the following is an example of a compensating wage differential? A) Nurse anesthetists are paid less than anesthesiologists (who have medical degrees). B) Workers in a dynamite mine receive higher wages than if they worked in other jobs that require the same level of skills. C) In the market for lawyers, top graduates from the top programs earn starting salaries that are significantly higher than the starting salaries earned by lower-ranked graduates from the lower-ranked programs. D) Popular movie stars like George Clooney command much higher salaries than other talented but lesser-known actors.

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

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

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

Assume you set up a sole proprietorship and your lawyer tells you that as the owner you will face unlimited liability. What does that mean? Select one: a. you are liable for organizing the business b. you could stand to lose your personal wealth if the business goes bankrupt c. There is no legal responsibility of the business in case a customer sues, as the business is legally untouchable. d. None of these explain what unlimited liability means. Feedback

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

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

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

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

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

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

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

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

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

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

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

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

13. Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly? A) Each must lower its price to sell more output. B) Each sets a price for its product that will maximize its revenue. C) Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost. D) Each maximizes profits by producing a quantity for which price equals marginal cost.

18. A firm's primary interest when it hires an additional worker is A) the cost of hiring the additional worker. B) how the average output of the firm will be affected by this new worker. C) the extra revenue the firm realizes from hiring that worker. D) whether or not the new worker gets along with the firm's existing workers

19. Wage differentials between occupations can be explained by all of the following except A) the fact that some occupations require higher levels of human capital than others. B) the fact that some occupations are more desirable than others. C) the market power of different employers. D) the relative differences between demand and supply in various occupations

20. How does skim milk is made? A) Pasteurizing B) Churning the milk C) Ask the skinny cow D) I better get it right this time, I cannot afford to miss 3 points!

29) Which of the following statements is used to justify protectionism? A) Free trade leads to higher prices for imported goods. B) Free trade increases employment by protecting domestic firms. C) A country should not rely on other countries for goods that are critical to its national defense. D) Trade restrictions are not necessary to protect new firms since they can gain experience and become more productive without protection.

3. Assume both demand and supply decreases. If the supply decrease by more than demand, then new equilibrium Select one: a. A) both price and quantity will be higher. b. B) both price and quantity will be lower c. C) price will higher and quantity will be lower d. D) price will be lower and quantity will be higher

6. Barbara, the consummate hostess, proudly announced as she served dessert, "A port is often the perfect end to a meal, sipped with a piece of my scrumptious chocolate cake." Evidently, Barbara views port and chocolate cake as A) luxury items. B) necessities. C) complements. D) substitutes for other desserts.

63) A production possibilities frontier with a bowed-outward shape indicates A) the possibility of inefficient production. B) constant opportunity costs as more and more of one good is produced. C) increasing opportunity costs as more and more of one good is produced. D) decreasing opportunity costs as more and more of one good is produced

69) Countries gain from specializing in producing goods in which they have ________ and trading for goods in which other countries have ________. A) a comparative advantage; an absolute advantage B) an absolute advantage; an absolute advantage C) a comparative advantage; a comparative advantage D) an absolute advantage; a comparative advantage

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

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

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

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

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

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

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

Table shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Does either China or South Korea have an absolute advantage and if so, in what product? China One Digital Wheat (per lb) Camera 100 hrs 4 hrs South Korea 60 hrs 3 hrs Select one: a. A) South Korea only has an absolute advantage in wheat. b. B) China only has an absolute advantage in wheat. c. C) South Korea has an absolute advantage in both products. d. D) China only has an absolute advantage in digital cameras.

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

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

3. In a city with rent-controlled apartments, all of the following are true except Select one: a. A) apartments usually rent for rates lower than the market rate. b. B) apartments are often in shorter supply than they would be without rent control. c. C) it usually takes more time to find an apartment than it would without rent control. d. D) landlords have an incentive to rent more apartments than they would without rent control.

3. ________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. A) Comparative advantage B) Absolute advantage C) The mixed market system D) The production possibilities frontier model

56) Refer to Figure 15. Which of the points in the above graph are possible short-run equilibria but not long-run equilibria? Assume that Y1 represents potential GDP. A) A and B B) A and C C) C and D D) B and D

98) Refer to Scenario 1. Following the passage of comparable worth legislation, Unity College responds by placing salaries for all assistant professors at $80,000. Which of the following is the result of the legislation? A) The supply of English professors increases; the market for business professors is not affected. B) The demand for English professors decreases; the market for business professors is not affected. C) There will be a surplus in the market for English professors and a shortage in the market for business professors. D) There will be a surplus in the market for English professors and the market for business professors will not be affected.

99) Which of the following factors will not cause the labor demand curve to shift? A) increases in human capital B) changes in technology C) a change in the price of the product produced with labor D) the wage rate

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

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

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

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

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

The ________ shows the relationship between the price level and quantity of real GDP demanded. Select one: A) consumer price index B) aggregate expenditure line C) 45-degree line D) aggregate demand curve

The purchase by a foreign government of an airplane produced in the United States is included in U.S. Select one: A) consumption expenditures. B) investment expenditures. C) government purchases. D) net exports.

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

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

Who operates and controls a corporation in its day-to-day activities? Select one: a. The board of directors b. stockholders c. employers d. management

the multiplier effect

the additional shifts in aggregate demand that result when expansionary fiscal policy increases income and thereby increases consumer spending

GDP

the dollar value of all final goods and services produced within a country's borders in a given year

cyclical unemployment

the result of an economic downturn or recession. As demand for goods and services falls, the demand for labor falls and workers are laid off.

frictional unemployment

workers are temporarily unemployed or between jobs individuals are qualified workers with transferable skills but are not working; temporary unemployment; switch jobs; first enter the labor force;

7. Refer to Figure 2. The graph in this figure illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point E). Which of the following changes would cause the equilibrium to change to point A? A) a positive change in the technology used to produce apples and decrease in the price of oranges, a substitute for apples B) an increase in the wages of apple workers and a decrease in the price of oranges, a substitute for apples C) an increase in the number of apple producers and a decrease in the number of apple trees as a result of disease D) a decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples

An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run? Select one: A) The price level will fall, and the level of GDP will rise. B) The price level will fall, and the level of GDP will fall. C) The price level will rise, and the level of GDP will fall. D) The price level will rise, and the level of GDP will be unaffected.

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

Contractionary fiscal policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________. Select one: A) higher; higher B) higher; lower C) lower; higher D) lower; lower

1) Economic models do all of the following except A) portray reality in all its minute details B) answer economic questions. C) make economic ideas explicit and concrete for use by decision makers. D) simplify some aspect of economic life.

11) Suppose a price floor on sparkling wine is proposed by the Health Minister of the country of Leela Land. What will be the likely effect on the market for sparkling wine in Leela Land? A) Quantity demanded will decrease, quantity supplied will increase, and a surplus will result. B) Quantity demanded will increase, quantity supplied will decrease, and a surplus will result. C) Quantity demanded will decrease, quantity supplied will increase, and a shortage will result. D) Quantity demanded will increase, quantity supplied will decrease, and a shortage will result.

13) Governments can increase the consumption of a product that creates positive externalities by A) subsidizing the production of the product so that the supply is increased and market price is reduced. B) taxing the production and consumption of the product. C) convincing everyone to consume the product. D) assigning property rights to the producers of the product

A rapid increase in the price of oil will tend to Select one: A) shift short-run aggregate supply to the left. B) shift long-run aggregate supply to the left. C) shift long-run aggregate supply to the right. D) shift aggregate demand to the right.

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

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

Apple recently announced that the company is exploring the electric vehicle market, and is looking to produce vehicles as early as 2020. Assume Apple chooses to produce both traditional electric-engine vehicles and self-driving electric-engine vehicles. Figure 1 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. 4) Refer to Figure 1. Assume a technological advancement greatly reduces the cost to produce self-driving vehicles. This is best represented by the A) movement from E to F in Graph A. B) movement from G to H in Graph B. C) movement from K to L in Graph C. D) movement from H to J in Graph B.

HW 11 Q7 Which of the following is consistent with the graph depicted above? Select one: a.The government begins running a budget surplus. b.An expected recession decreases the profitability of new investment. c.An increase in government spending crowds out private expenditures. d.Technological change increases the profitability of new investment.

ECON HW #7-#11, ECON Trial Exam, Social Responsibility, ECON HW #3-#6, ECON HW#1 & HW#2, Economics Terms

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