Macro Test 1

An individual's well-being can be partly measured by:

- all are correct - Her disposable income - Goods and services that are provided by the government, such as healthcare and education. - Goods and services that are produced within the household, such as meals and childcare.

Which of the following is not an effect of a tax in a perfectly competitive market? a) Total surplus is lower b) Consumption of the good increases c) Producer surplus falls d) Consumer surplus falls

Consumption of the good increases

The GDP in current US$ for selected countries and the world are given below in $ billions (source: World Bank). Based on this information, which of the following statements is correct? US: 10,284.8 (2000), 18,036.6 (2015)UK: 1,635.4 (2000), 2,858.0 (2015)Japan: 4,887.5 (2000), 4,383.1 (2015) Nigeria: 46.4 (2000), 481.1 (2015) World: 33,547.6 (2000), 74,152.5 (2015)

Of the four countries, Nigeria was the only country that had a higher growth rate than that of the world over the 15 years

The country of Eden produces just two output goods: apples and snakeskin handbags. In 2014 the prices of apples and handbags were $10 and $24, respectively. In 2015, the prices increased to $12 and $25. The quantities produced of the two goods were 100 and 20, respectively, in both 2014 and 2015. Based on this information, which of the following is incorrect?

The economy of Eden grew between 2014 and 2015 in real terms.

Which of the following markets can generally be considered to be competitive? a) The market for tickets to a particular rock concert. b) The market for milk. c) Etsy, a platform where unique handicrafted products are offered for sale. d) The market for electricity provided to a particular U.S. residence.

The market for milk.

There are five students who are looking to buy one second-hand textbook each. Their willingness-to-pay are $50, $60, $80, $120, and $150, respectively. Based on this information, which of the following statements is correct?

a) The student with a willingness-to-pay of $150 is the richest. b) To sell three books, the maximum price that can be charged is $80. c) Their willingness-to-pay indicates an upward-sloping demand curve. d) If Norman is one of many identical sellers and his reservation price is $80, then he is guaranteed to sell his textbook.

Which of the following are classified as firms? a) Companies employing unpaid student interns as well as paid workers. b) Nationalised railways. c) Employee-owned cooperatives. d) Non-profit organisations.

a) Companies employing unpaid student interns as well as paid workers.

Which of the following statements regarding the labour market are correct? a) Wages are the prices in the labour market that determine the level of demand and supply. b) The labour market is not really a market as firms do not buy or sell workers. c) Firms are the supply side of the labour market. d) The labour market is always very competitive.

a) Wages are the prices in the labour market that determine the level of demand and supply.

Which term can be defined as "The equipment, buildings, and other durable inputs used in producing goods and services"? a) capital goods b) technology c) disposable income d) gross domestic product (GDP)

a) capital goods

Which term can be defined as "The curve that shows the number of units of output that would be produced at any given price"? a) supply curve b) demand curve c) market-clearing price d) competitive equilibrium

a) supply curve

An improvement in the technology of production leads to all of the following except a) a rise in the quantity sold b) an increase in supply c) an increase in demand d) a fall in the price of the good

an increase in demand

Imagine that the GDP per capita of a country had doubled every 100 years. You are asked to draw both linear and ratio scale graphs that plot GDP on the vertical axis, and the year on the horizontal axis. What will be the shapes of the curves?

b) On a linear scale graph, an upward-sloping curve with increasing slope (called convex shape); on a ratio scale graph, an upward-sloping straight line.

Consider the case where a government introduces a specific (per-unit) tax on cigarettes. As a result, the government succeeds in reducing the consumption level. Which of the following statements is correct? a) The tax rate should be determined so as to maximize tax revenue. b) The cost of collecting taxes must be considered when assessing the success of this policy. c) The more elastic the demand for cigarettes, the larger the tax revenue. d) This is a bad policy as it creates a deadweight loss.

b) The cost of collecting taxes must be considered when assessing the success of this policy.

When a market is in competitive equilibrium, which of the following properties will hold? a) there is deadweight loss b) the good is traded at the same price across all buyers and sellers c) the price will differ from the market-clearing price d) sellers can benefit by altering the price they are offering

b) the good is traded at the same price across all buyers and sellers

To generate competition between sellers, and force sellers to act as price-takers, we need all of the following except a) Sellers must act independently b) Many undifferentiated sellers c) Many buyers all wanting to buy the good and competing with each other d) Buyers don't know the sellers' prices

d) Buyers don't know the sellers' prices

Which of the following is not an explanation for capitalist institutions failing to create an economy bringing sustained growth in living standards ? a) Markets are not competitive b) Firms are owned and managed by people who survive because of their connections to government or their privileged birth c) Private property is not secure d) Public policy supporting private incentives for cost-reducing innovation

d) Public policy supporting private incentives for cost-reducing innovation

Which of the following variables has not followed the so-called 'hockey-stick' trajectory—that is, little to no growth for most of history followed by a sudden and sharp change to a positive growth rate?

inequality

Shifts in supply and demand are often referred to as

shocks

Which term can be defined as "The curve that shows the number of units of output that would be produced at any given price"?

supply curve

A fall in the mortgage interest rate would shift up the demand curve for new houses. T OR F

true

A market is in equilibrium if the actions of buyers and sellers have no tendency to change the price or the quantities bought and sold. True or false

true

For a price-taking firm, the marginal cost curve is

the supply curve

Which term can be defined as "An indicator of how much a person values a good, measured by the maximum amount he or she would pay to acquire a unit of the good"?

willingness to pay