ECON 4 Microeconomics Final Chaffey

Suppose the production of 12 tons of copper in the United States requires the same amount of resources as the production of 3 tons of aluminum. In Mexico, 12 tons of copper requires the same amount of resources as 2 tons of aluminum. Implicitly,

Mexico has a comparative advantage in producing copper

When a labor supply curve is backward-bending, the elasticity of labor supply in the backward-bending portion is

Negative

The labor supply curve will be positively sloped if the substitution effect of wages is

Stronger than the income effect of wages

Vertical Equity

The idea that taxpayers with a greater ability to pay taxes should pay larger amounts

Horizontal Equity

The idea that taxpayers with similar abilities to pay taxes should pay the same amount

The price of a stock will decrease, ceteris paribus, when

The interest rate increases

If an accountant makes $80,000, and after deductions pays $8,000 in taxes while an administrative assistant makes $35,000 and after deductions pays $2,000 in taxes, this is an example of

Vertical Equity

The present discounted value of $60,000 to be received at the end of three years when the interest rate is 10% is closest to

$45,079

If the interest rate is 8%, then the present discounted value of $100 to be received two years from now is closest to

$86.00

In Figure 35.1, what is the opportunity cost of motorcycles in Japan?

1/2 of a DVD player per motorcycle

In Omega, the lowest 40% of families receive approximately what percentage of income? (see Figure 33.1)

10%

Suppose Mr. Lee has total income of $120,000, has taxable income of $90,000, and pays $30,000 in taxes. Considering the information, what is Mr. Lee's EFFECTIVE tax rate?

25%

Using Figure 35.2, the opportunity cost of producing 1 pair of golf shoes in the United States is

3 baseballs

Suppose Mr. Lee has total income of $120,000, has taxable income of $90,000, and pays $30,000 in taxes. Considering the information, what is Mr. Lee's NOMINAL tax rate?

33.33%

If the elasticity of labor is 0.60, a 15% increase in the wage rate will induce a

4.0 percent decrease in the quantity of labor supplied

Suppose the Martin Microchip Corporation earns a profit of $20 per share of stock. If the prevailing interest rate is 10% and the stock is currently selling for $100 per share, what is the current price/earnings ratio?

5

Suppose a company's bond sold for $900 last month and this month the price is $1,200. The annual interest payment is $90. The current yield on this bond is

7.5%

The demand for labor and other factors of production typically decline in a recession because those factors

Are derived from the demand for final output, which also declines in a recession

Assume the United States and Canada have the same amount of resources. In a given time period, the United States can produce 3 tons of steel or 300 tons of wheat. Canada can produce 4 tons of steel or 400 tons of wheat. This means that

Canada has an absolute advantage in both steel and wheat

Suppose China can produce 200 TVs or 200 DVD players. South Korea can produce either 100 TVs or 200 DVD players. In terms of TV production, we can conclude that

China has a comparative advantage in TV production

There is an inverse relationship between the price of an existing bond and its

Current yield

If the area between the diagonal line of absolute equality and the Lorenz curve is greater for the United States than for Japan, we can conclude that

Distribution of income in Japan is closer to being equal than in the United States

If the Gini coefficient is greater for the United Kingdom than for Japan, we can conclude that the

Distribution of income in the United Kingdom is less equal than in Japan