ECON: Chapter 7, 8, & 9
The table gives data about Northland's economy in 2018. What is the value of GDP in Northland in 2018? Consumption expenditure: $720B Wages: $652B Indirect taxes less subsidies: $148B Investment: $235B Net exports of goods and services: $54B Profit: $171B Government expenditure on goods and services: $282B
$1,291B
The table gives data about Northland's economy in 2018. What is the value of GDP in Northland in 2018? Consumption expenditure: $760B Wages: $688B Indirect taxes less subsidies: $155B Investment: $261B Net exports of goods and services: $52B Profit: $189B Government expenditure on goods and services: $298B
$1,371B
When Mark's produces its new profit-maximizing output, the number of haircuts it produces is $__ an hour. Mark's profit-maximizing price is $__ a haircut. Mark's economic profit is $__.
$3; $9; $0
Dave sells 4 gallons of milk at $5 per gallon. If he increases his sales to 5 gallons at the same price per gallon, calculate Dave's marginal revenue from selling milk.
$5
In 2015, the price of a coconut is $2.50 and the quantity produced is 300. In 2019, the price of a coconut is $3.00 and the quantity produced is 350. 2015 is the base year. What is real GDP in 2019?
$875
GDP in the United States increased between 2018 and 2019. Which of the following could NOT account for this increase? A. Our disposable income increased. B. We paid lower prices for our goods and services and production remained constant. C. We produced more goods and services and prices remained relatively constant. D. A combination of producing more goods and services and paying higher prices for our goods and services occurred.
B. We paid lower prices for our goods and services and production remained constant.
Which of the following is included in the measure of U.S. GDP? A. the flour purchased by Interstate Bakeries and used to make Wonder Bread B. a loaf of Wonder Bread produced and sold in the United States C. a loaf of Wonder Bread produced in Canada by Canadians D. a loaf of Wonder Bread produced in Mexico by American workers
B. a loaf of Wonder Bread produced and sold in the United States
Which of the following statements about the business cycle is true? a. The expansion stage of the business cycle is not the usual condition of the economy. B. An expansion ends when the economy reaches a recession. Your answer is not correct. C. A business cycle is periodic but irregular. D. During an expansion, real GDP is equal to potential GDP.
C. A business cycle is periodic but irregular.
Which of the following is an example of investment? A. a person investing $ 250 a month in the stock market B. a student increasing his human capital by attending college C. a firm adding unsold output to inventory D. a person depositing $ 100 a week to her savings account
C. a firm adding unsold output to inventory
Which of the following is an example of investment? A. a person money adding money to his retirement fund B. a person's annual medical checkup C. the purchase of new buses by Greyhound D. a student increasing his human capital by attending college
C. the purchase of new buses by Greyhound
In 2008, J was $1.0 trillion, R was $2.0 trillion, Z was −$1 trillion, Q was $12.0 trillion, and U was $4.0 trillion. Calculate saving and consumption expenditure.
Consumption expenditure is $8.0 trillion. Saving is $2.0 trillion.
Which of the following is an example of a price-discriminating monopoly?
IMAX charges $6 per movie ticket for children younger than 8, and $8.50 per movie ticket for adults
Which of the following is an example of regulation?
The Surface Transportation Board influences the prices on interstate railroads.
In 2014, U.S. exports of goods and services are $2,335 billion and imports of goods and services are $2,899 billion. What is the value of net exports?
The value of net exports in 2014 is −564 billion dollars.
There is one newspaper publisher in the town of Sparta, and it is a monopoly. The table shows the total revenue and total cost schedules of the publisher. What is the publisher's profit-maximizing output?
The publisher's profit-maximizing output is 120 newspapers per day.
The figure shows the flows of expenditure and income on Lotus Island. In 2016, R was $5 billion; W was $36 billion; U was $13 billion; J was $17 billion; and Z was $6 billion. Calculate total expenditure and total income.
Total expenditure is $72B. Total income is $72B.
The National Collegiate Athletic Association (NCAA) controls the market for college athletes. It sets the amounts paid to these athletes below what they would be in a competitive market and ensures that colleges do not violate the rules that it lays down. Is the NCAA a natural monopoly, a legal monopoly, or neither?
a legal monopoly that oversees all college athletics in areas such as rule making and national championships
Sugar purchased from Angelo's bakery to make pies and cakes is an example of ____. (final good, an intermediate good, or neither.)
an intermediate good
Perfect competition is a market in which no advantage is established to firms; and buyers and sellers _____ about prices.
are well informed
Sue's Surfboards is the sole renter of surfboards on Big Wave Island. If marginal revenue is positive at the actual number of surfboard rentals made each hour, then _______.
at that quantity the demand for surfboard rentals is elastic
f the monopoly is regulated, what is the consumer surplus? Question content area bottom left The consumer surplus generated by _______ cost pricing rule is _______.
a marginal; $80 million per month
Which of the following is included in the measure of U.S. GDP? a. hyundai imported into the US b. 2013 Grand Am produced and sold as a new car in US in 2013 c. tires purchased by GM and installed on a Cadillac d. GM car assembled in Mexico
b. 2013 Grand Am produced and sold as a new car in US in 2013
What is or is not included in the measurement of GDP? a. We include a measure of political freedom and social justice in GDP b. The underground economy, which is not included in GDP is the part of the economy that is hidden from the view of the government. c. We include a measure of good health and life expectancy in GDP d. The underground economy, which is included in GDP is difficult to describe but easy to measure.
b. The underground economy, which is not included in GDP is the part of the economy that is hidden from the view of the government.
How can GDP increase at a rate of 4.6 percent if consumption expenditure increased at a rate of 6.7 percent? a. Z is net exports and R is government expenditure on goods and services b. U is government expenditure on goods and services and J is investment c. J is investment and V+W is consumption expenditure d. V is consumption expenditure and Z is net exports e. W is government expenditure on goods and servcies and V is consumption expenditure
b. U is government expenditure on goods and services and J is investment
It is possible for GDP to increase by only 4.6 percent when consumption expenditure grew at a 6.7 percent rate because _______. a. total expenditure does not equal total income b. the sum of investment and net exports grew at a negative rate c. there is a measurement error d. the sum of investment and exports increased, but by less than 2.1 percent e. intermediate goods are included in the measurement of GDP
b. the sum of investment and net exports grew at a negative rate
Which of the following is an example of a single-price monopoly? a. Electric companies charge a higher electricity price per unit during peak times of the day. b. Safeway sells most of its products at a higher price than Kroger. c. DeBeers sells diamonds of the same quality to all its customers at the same price. d. Glaxo can raise the price of some of its drugs due to an increase in demand.
c. DeBeers sells diamonds of the same quality to all its customers at the same price.
Which of the following statements describes a firm in a perfectly competitive market? a. produces as much as it can and either makes a profit or incurs a loss in the short run but breaks even in the long run b. faces a perfectly inelastic demand for its product, so it can select the price that maximizes its profit c. is a price taker and produces the quantity that maximizes its profit in both the short run and the long run d. can influence the price that it charges in the short run but not in the long run
c. is a price taker and produces the quantity that maximizes its profit in both the short run and the long run
in the short run, a firm
can make a positive economic profit, incur an economic loss, or make zero economic profit
legal monopoly is a market in which _____ by the granting of a public franchise, government license, patent, or copyright.
competition and entry are restricted
A barrier to entry is any constraint that protects a firm from _____.
competitors
Perfect price discrimination is the price discrimination that extracts the entire _____ surplus by charging the _____ price that _____ are willing to _____ for each unit.
consumer; highest; consumers; pay
Sammie's Shiny Shoes is a firm that operates in a competitive market. The number of firms in the shoe-shining market increases. What decision will Sammie's make in the short run?
cut back on the number of shoes he shines
Marginal cost pricing rule is a rule that sets price _____ marginal cost to achieve _____ output.
equal to; an efficient;
Average cost pricing rule is a rule that sets price _____ average _____ cost to enable a regulated firm to avoid economic loss.
equal to; total
The industry that produces portable CD players is in long-run equilibrium. Some firms will _______ the market, and the market supply curve will shift _______.
exit; leftward
When do net exports of goods and services increase?
exports of goods and services increase by more than imports of goods and services increase
The market supply curve in the short run is
horizontal at the shutdown price and upward sloping at prices above the shutdown point
Perfect competition is a market in which each firm is selling _____ product;
identical
The industry that produces portable CD players is in long-run equilibrium. Then the demand for portable CD players decreases permanently. Firms in the market will _______
incur an economic loss
In long-run equilibrium, each firm is
making zero economic profit
Perfect competition is a market in which there are _____ firms,
many;
Checking account is an example of ___. (final good, an intermediate good, or neither.)
neither an intermediate nor final good
Monopoly is a market in which one firm sells a good or service that has _____ substitutes and _____ blocks the entry of new firms.
no close; a barrier
Omar is a potato farmer and the world potato market is perfectly competitive. The market price is $23 a basket. Omar sells 700 baskets a week and his marginal cost is $24 a basket. Is Omar maximizing profit? Why or why not?
not maximizing profit because marginal cost is greater than marginal revenue
Rick is an oyster farmer and the world oyster market is perfectly competitive. The market price is $19 a crate. Rick sells 400 crates a week and his marginal cost is $24 a crate. Rick is ______
not maximizing profit because marginal cost is greater than marginal revenue
Perfect competition is a market in which there are many buyers; ____ ______ to the entry of new firms into the industry;
no barriers;
a. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase profit. b. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes. c. A barrier to entry exists, but the good has some close substitutes. d. A museum offers discounts to students and seniors. e. A firm can sell any quantity it chooses at the going price. f. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand. The firm described in _____ can price discriminate because _____.
statement b; a personal service cannot be resold
a. Coca-Cola cuts its price below that of Pepsi-Cola in an attempt to increase profit. b. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes. c. A barrier to entry exists, but the good has some close substitutes. d. A museum offers discounts to students and seniors. e. A firm can sell any quantity it chooses at the going price. f. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand. The firm described in _______ is a natural monopoly. The firm described in _______ is a monopoly and it may be a legal monopoly.
statement f; statement b
The graph shows the demand curve for the good that a firm produces. How do we know that the firm is a perfectly competitive firm?
the firm can vary the quantity it sells without affecting the price it receives for the good it produces
What is gross national product?
the market value of all the final goods and services produced anywhere in the world in a given time period by the factors of production supplied by the residents of that country
A natural monopoly is a monopoly that arises because one firm can meet the entire market demand at a lower average _____ cost than two or more firms could.
total
When some firms exit an industry in which firms are incurring economic losses, the market supply curve shifts _______ and the market price _______.
leftward; rises
