Principles of Macroeconomics

If you purchased a newly issued 30-year bond from Google with a face value of $3,000 and a coupon payment of 6 percent, Google would pay you

$180 per year for 30 years plus $3,000 at the end of the 30th year.

Figure 4-1 shows Kendra's demand curve for ice cream cones. Refer to Figure 4-1. Kendra's marginal benefit from consuming the first ice cream cone is

$3.50

Figure 4-1 shows Kendra's demand curve for ice cream cones. Refer to Figure 4-1. If the market price is $4.00, what is the maximum number of ice cream cones that Kendra will buy?

0

Table 2-9 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. Refer to Table 2-9. What is Japan's opportunity cost of producing one pound of rice?

0.04 units of a wristwatch

Table 2-7 shows the output per week of two people, Minnie and Mickey. They can either devote their time to making hats or making umbrellas. Refer to Table 2-7. What is Mickey's opportunity cost of making a hat?

1/10 of an umbrella

Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 7-3 illustrates the impact of the quota. Refer to Figure 7-3. Without the quota, the domestic price of peanuts equals the world price which is $2.00 per pound. What is the quantity of peanuts demanded by domestic consumers in the absence of a quota?

10 million pounds

Table 2-8 shows the output per month of two people, Wilma and Betty. They can either devote their time to making marble statues or making marble benches. Refer to Table 2-8. What is Betty's opportunity cost of making a bench?

2 statues

If a corporate bond with a face value of $20,000 pays yearly coupon payments of $500, what is the coupon rate?

2.5%

Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. Refer to Table 2-5. What is Finland's opportunity cost of producing one cell phone?

4 board feet of lumber

If a company pays a dividend of $2 to be received one year from now, dividends are expected to grow at a rate of 3 percent per year for the indefinite future, and the interest rate is 4 percent, the price of the company's stock should be ________ per share.

$200.00

What is the present value of $777 in one year if the current rate of interest is 7 percent?

$726.17

Table 2-6 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles. Refer to Table 2-6. What is Lucy's opportunity cost of making a wagon?

1 1/3 of a tricycle

Refer to Table 3-1. The table above shows the demand schedules for Kona coffee of two individuals (Luke and Ravi) and the rest of the market. At a price of $4, the quantity demanded in the market would be

150 lbs

In the United States in 2014, the percentage of people with some form of health insurance was about

90%

Consider the following statements: a. Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area. b. Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment. c. Manufacturers produce less of a particular cell phone when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives?

A only

Which of the following statements is true?

A stock can possibly pay dividends forever, but bonds have a fixed number of payments.

The provision of the Patient Protection and Affordable Care Act (ACA) which states that every firm with more than 200 full-time employees must offer health insurance to its employees and must automatically enroll them in the plan is the ________ provision.

Employer Mandate

Consumption spending is $4.5 billion, gross private domestic investment is $3 billion, and government expenditures are $2 billion. If GDP is $14 billion, which of the following could be true regarding exports and imports in the economy?

Exports are $15 billion, and imports are $10.5 billion

"Taxes are what we pay for a civilized society." This statement was made by

Oliver Wendell Holmes.

How are the fundamental economic decisions determined in Canada?

Individuals, firms, and the government interact in a market to make these economic decisions.

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Invisible hand

As a result of the 2007-2009 financial crisis, which two firms became bank holding companies, allowing them to engage in commercial banking activities?

Morgan Stanley and Goldman Sachs

The GDP deflator is equal to

Nominal GDP divided by real GDP multiplied by 100

Figure 7-1 shows the U.S. demand and supply for leather footwear. Refer to Figure 7-1. Under autarky, the producer surplus is area

S + V

In January, buyers of gold expect that the price of gold will fall in February. What happens in the gold market in January, holding everything else constant?

The demand curve shifts to the left.

Gross domestic product is calculated by summing up

The total market value of final goods and services produced in the economy during a period of time

When ________ in a market, the total net benefit to society is maximized.

a competitive equilibrium is achieved

U.S. factories produce ________ of the shoes New Balance sells in the United States.

about 25 percent

Gross revenue minus explicit costs equals

accounting profit

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

amount of pollution decreased

Under current tax law individuals do not pay taxes on health insurance benefits they receive from their employers. As a result,

individuals are encouraged to want generous health coverage that reduces their incentives to cut costs.

Which of the following is not directly counted in GDP?

intermediate goods

Refer to Figure 3-5. At a price of $15, the quantity sold

is 2 units.

When Airbnb customers in Malibu start paying hotel taxes, this will have the potential to ________ the equilibrium price in this market and, therefore, ________ efficiency.

raise; decrease

The Smoot-Hawley Tariff

raised average tariff rates by over 50 percent in the United States in 1930.

In 1930, the U.S. government attempted to help domestic firms that were harmed by the Great Depression by passing the Smoot-Hawley Tariff. In response to this tariff, other countries ________ and international trade ________.

raised their tariffs; collapsed

All of the following are shown on a firm's income statement except

rate of return for investors

Economist assume that rational people

respond to economic incentives

A future payment's present value is

the value in today's dollars of funds to be paid or received in the future.

Figure 4-1 shows Kendra's demand curve for ice cream cones. Refer to Figure 4-1. If the market price is $3.00, what is Kendra's consumer surplus?

$0.50

A very simple economy produces three goods: cameras, legal services, and books. The quantities produced and their corresponding prices for 2011 and 2016 are shown in the table above. Refer to Table 8-18. What is real GDP in 2016, using 2016 as the base year?

$11,790

Caroline is an artist. She purchases canvas, paints, brushes, and accessories for $75. She sells one of her original paintings to an art gallery for $1,500, even though an art lover would pay $4,500 for that painting. How much value does Caroline add?

$1425

Suppose your expenses for this term are as follows: tuition: $9,000, room and board: $1,500, books and other educational supplies: $1,000. Further, during the term, you can only work part-time and earn $3,000 instead of your full-time salary of $8,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?

$15,000

Refer to Table 8-6. Consider the table of production and price statistics for a small economy in 2013. If the economy only produces the four goods listed below, what is GDP for 2013?

$428,000

At a recent company meeting, Geraldine Erwin, sales manager of Dastoria, a flavored-beverage producer announced, "We have increased our sales by 8 percent in just six months." Suppose six months ago, its sales amounted to $452,000, what is the value of its sales today?

$488,160

Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. Refer to Figure 2-9. What is the opportunity cost of producing 1 snow cone in Iceland?

2/3 of a popsicle

In the United States in 2012, the CDC estimated that the total number of people with diabetes (both diagnosed and undiagnosed cases) was lowest for people in the age range of ________, and the percentage of people with diabetes was lowest for people in the age range of ________.

20-44; 20-44

Figure 4-1 shows Kendra's demand curve for ice cream cones. Refer to Figure 4-1. If the market price is $2.50, what is the maximum number of ice cream cones that Kendra will buy?

3

Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Refer to Figure 2-2. If Vidalia chooses to produce 60 dozen orchids, how many roses can it produce to maximize production?

50 dozen roses

A supply curve

A curve that shows the relationship between the price of a product and the quantity of the product supplied.

Which of the following statements is true?

A curved line has slopes that change at every point.

Assume there is a surplus in the market for hybrid automobiles. Which of the following statements correctly describes this situation?

The price of hybrid automobiles will fall in response to the surplus; as the price falls the quantity demanded will increase and the quantity supplied will decrease.

Refer to Figure 3-6. The figure above represents the market for coffee grinders. Compare the conditions in the market when the price is $15 and when the price is $21. Which of the following describes how the market differs at these prices?

At each price there is a shortage; the shortage is greater at $15 than at $21.

Refer to Figure 2-4. Consider the following events: a. a decrease in the unemployment rate b. an increase in technology with respect to both food and plastic production c. a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from W to Y?

B only

Rob Crusoe and Bill Friday spent their week-long vacation on a desert island where they had to find and prepare their own food. Rob and Bill spent one day each fishing and picking berries. The table lists the pounds of output Rob and Bill produced. Refer to Table 7-1. Use the table above to select the statement that accurately interprets the data in the table.

Bill has a comparative advantage in picking berries.

Which of the following is not an advantage of starting a new business as a partnership?

Business profits are only taxed once, not twice.?

How can the influence of a third variable be shown on a two-dimensional graph?

By allowing the position of the relationship line or curve to shift on a graph.

Torrie is thinking of starting up a small business selling hand-painted wine glasses. She is considering setting up her business as a corporation. What is one advantage to Torrie of setting up her business as a corporation?

By setting up the business as a corporation, Torrie would have the ability to share risk with shareholders.

Estonia and Morocco can produce both swords and belts. Each country has a total of 40 available labor hours for the production of swords and belts. Table 7-6 shows the output per hour of work, the production and consumption quantities without trade, and the production numbers with trade. Refer to Table 7-6. Which country has an absolute advantage in producing belts?

Estonia

Which of the following statements is true?

GDP accounting rules do not adjust for production that pollutes the economy.

Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment?

I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally; meaning they make the best decisions given their knowledge of the costs and benefits.

table 2-4 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-4. Which of the following statements is true?

Jack has a comparative advantage in garden cultivating and George in lawn mowing.

Of the following high-income countries, which has the highest mortality ratio for cancer?

Japan

Which of the following transactions would take place in the "underground economy"?

John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes.

In general, the costs tariffs and quotas impose on consumers are

Large in total but relatively small per person

Which of the following countries is not one of the top three exporting countries in the world?

South Korea

In September, buyers of silver expect that the price of silver will rise in October. What happens in the silver market in September, holding all else constant?

The demand curve shifts to the right.

Which of the following is a positive economic statement?

Unemployment insurance payments increase when the unemployment rate rises

Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one of the tickets is $36

Walter will receive $4 of consumer surplus from buying one ticket.

Which of the following statements is false?

Within each country, some individuals are made better off as a result of international trade, but one of the countries will be worse off overall.

Which of the following is the best example of a tariff?

a limit imposed on the number of sports utility vehicles that the United States can import from Japan

An increase in national income could by caused by which of the following?

an increase in GDP

An economic principle that explains why people pursue different occupations is

comparative advantage

The possible double taxation of income is a disadvantage for

corporations

The Pre-Existing Condition Insurance Plan is a federally administered part of the Affordable Care Act, and is designed for people with pre-existing medical conditions to obtain insurance. By offering health insurance to all U.S. citizens with pre-existing medical conditions, the Pre-Existing Condition Insurance Plan

eliminates asymmetric information for both the insurer and the insured.

Who receives the goods and services produced in the United States depends largely on

how income is distributed

A quota

makes domestic consumers worse off.

The person hired by a corporation's board of directors to ________ is known as the chief executive officer.

run the day-to-day operations of the corporation

A critical function of the government in facilitating the operation of a market economy is

setting up and enforcing private property rights.

Unlimited personal liability is a disadvantage for

sole proprietorships and partnerships.

Who selects the board of directors of a corporation?

stockholders

________ are the owners of a corporation.

stockholders

In many corporations, the managers of the corporation run the corporation, although the shareholders own the corporation. In this situation,

there is separation of ownership from control.

Congress passed the Freedom to Farm Act in 1996. What was the purpose of this Act?

to phase out price floors and return to a free market in agriculture

Which term refers to a legally established maximum price that firms may charge?

a price ceiling

Consider the following economic agents: a. the government b. consumers c. producers Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?

consumers, producers, and the government

To calculate GDP by the expenditure method, one must add

consumption spending, investment spending, government spending, and net exports.

Which of the following is part of an economic model?

data

The individual mandate provision of the ACA requires

every U.S. resident to have health insurance.

The provision of the Patient Protection and Affordable Care Act (ACA) which states that, with limited exceptions, every resident of the United States must have health insurance that meets certain basic requirements is the ________ provision.

individual mandate

Jack Dorsey is the Chief Executive Officer of Twitter as well as a member of Twitter's board of directors. Dorsey is therefore classified as an

inside director.

Mutual funds sell shares to investors and use the funds to

invest in a portfolio of financial assets.

The ability to exercise control over one's own resources within the confines of the law refers to

one's property rights

Refer to Table 2-1. Assume Dina's Diner only produces sliders and hot wings. A combination of 50 sliders and 50 hot wings would appear

outside Dina's production possibilities frontier.

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for coffee. What happens in this market if buyers expect the price of coffee to rise?

panel (C)

Dividends are

payments by a corporation to its shareholders

In economics, the total amount received for selling a good or service is referred to as

revenue

Comparative advantage means

the ability to produce a good or service at a lower opportunity cost than any other producer.

Which of the following is included in gross domestic product for an economy in a given year?

the value of final goods produced in that year

Depreciation is

the value of worn-out equipment, machinery, and buildings.

Each point on a demand curve shows

the willingness of consumers to purchase a product at different prices.

Whenever a buyer and a seller agree to trade, both must believe they will be made better off

whether the buyer and seller live in the same city or different countries.

Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchase. How much does Brett value his cell phone?

$180

Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 7-2 shows the impact of this tariff. Refer to Figure 7-2. The loss in domestic consumer surplus as a result of the tariff is equal to

$31.125 million.

Figure 5-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. Refer to Figure 5-1. The market equilibrium price is

$40

Figure 5-3 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. Refer to Figure 5-3. With insurance and a third-party payer system, what is the amount of the deadweight loss?

$5,000

Figure 4-1 shows Kendra's demand curve for ice cream cones. Refer to Figure 4-1. What is the total amount that Kendra is willing to pay for 2 ice cream cones?

$6.50

Figure 4-9 shows the market for cigarettes. The government plans to impose a unit tax in this market. Refer to Figure 4-9. The price buyers pay after the tax is

$8

Figure 4-1 shows Kendra's demand curve for ice cream cones. Refer to Figure 4-1. If the market price is $3.50, what is the maximum number of ice cream cones that Kendra will buy?

1

Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 7-2 shows the impact of this tariff. Refer to Figure 7-2. With the tariff in place, the United States produces

18 million pounds of coffee.

Figure 2-8 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. Refer to Figure 2-8. What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

2/3 of a ton of pineapples

Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. Refer to Table 4-4. If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor demanded?

360,000

Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour. Refer to Table 1-3. Using marginal analysis, how many hours should Ivan extend his hours of operations?

5 hours

In 2015, the average height of adult males in the United States was

5' 9.

Refer to Table 3-2. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. At a price of $10, the quantity demanded in the market would be

52 lbs

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C). Which of the following changes would cause the equilibrium to change to point B?

An increase in the wages of motorcycle workers and a decrease in the price of motorcycle insurance, a complement to motorcycles.

Which of the following accurately describes an effect of hurricane Katrina on GDP?

GDP would increase reflecting the costs of clean up.

Refer to Figure 3-3. The figure above shows the supply and demand curves for two markets: the market for original Michelangelo sculptures and the market for Ray Ban sunglasses. Which graph most likely represents which market?

Graph B represents the market for original Michelangelo sculptures and Graph A represents the market for Ray Ban sunglasses.

In the past two decades the United States lost its comparative advantage in automobiles to Japan. What factor was most responsible for the development of Japan's comparative advantage in automobiles?

Japanese firms excelled in process technology

Which of the following would be directly counted in GDP in 2016?

Kitchen cabinets purchased from Home Depot in 2016 to be installed in a house built in 1997

Madison and Austin own Cafe Ole'. Table 7-2 lists the number of empanadas and tacos Madison and Austin can each make in one hour. Refer to Table 7-2. Select the statement that accurately interprets the data in the table.

Madison has an absolute advantage in making empanadas and tacos.

Technological progress has made it possible for firms such as Apple and Alivecor to develop small electronic devices, including smartwatches, smartphones, and products that can be attached to the smartwatches and smartphones, to serve consumers who have become more health conscious and wish to monitor various health conditions. These firms are reacting to which of the three key economic ideas?

People respond to economic incentives

Which of the following describes the national security argument for protectionism?

Some goods should be insulated from foreign competition to ensure an adequate supply of these goods in the event of an international conflict.

In the 1980s, Japan agreed to limit the quantity of automobiles it would export to the United States. Why did the Japanese government agree to this trade restriction?

The Japanese government feared that the alternative would be a tariff or quota on imports of Japanese automobiles imposed by the U.S. government.

Which of the following is an example of spending on factors of production in the circular flow model?

The Lucky Ducky casino buys a new craps table for the casino floor.

Which of the following is an example of a "how much" decision?

The Pleasantville Movie Theater is only open in the evenings. The theatre's manager is debating whether to add daily matinee shows.

If the final expressions in a present value equation used to calculate the price of a bond you are considering buying are "[$75 / (1 + .04)6] + [$2,500 / (1 + .04)6]", which of the following is correct?

The coupon is $75, the interest rate you need is 4 percent, and the coupon will mature in 6 years.

Suppose a positive technological change in the production of disease-resistant corn caused the price of corn to fall. Holding everything else constant, how would this affect the market for wheat (a substitute for corn)?

The demand for wheat would decrease and the equilibrium price of wheat would decrease.

Refer to Figure 3-8. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C). If the price of motorcycle side cars (a complement to motorcycles) decreases, and the wages of motorcycle workers increase, how will the equilibrium point change?

The equilibrium point will move from C to B

The number of people who have gray hair is very high among residents living in Florida. A student concludes that living in Florida causes hair to turn gray. What is the flaw in this student's reasoning?

The student is drawing a false conclusion; he is confusing cause and effect

Fast food restaurants produce a range of menu items such as hamburgers, chicken sandwiches, salads, and french fries. What fundamental economic question are they addressing by offering this range of items?

What to produce?

Figure 4-9 shows the market for cigarettes. The government plans to impose a unit tax in this market. Refer to Figure 4-9. As a result of the tax, is there a loss in producer surplus?

Yes, because producers are not selling as many units now.

Pakistan has developed a comparative advantage in the production of clothing. The source of its comparative advantage in this product is

a large supply of unskilled workers.

Mrs. Lovejoy decides to invest in companies which she believes are producing its goods based on the preferences of consumers. Mrs. Lovejoy is investing in companies that are

allocatively efficient

Anything of value owned by a person or a firm is

an asset

Farmers can raise either goats or ostriches on their land. Which of the following would cause the supply of goats to decrease?

an increase in the price of ostriches

Which of the following is part of an economic model?

assumptions

Imports are goods and services bought domestically

but produced in other countries

Investment, as defined by economists, would not include which of the following? Ford

buys U.S. government bonds.

The Congressional Budget Office estimates that the Patient Protection and Affordable Care Act (ACA) will increase government spending

by about $2 trillion over 10 years

The market for smartwatches is becoming very competitive. The increase in competition in this market is an example of how the market responds to

changes in consumer tastes

Refer to Table 4-2. The table above lists the highest prices five consumers are willing to pay for a concert ticket. If the price of one ticket rises from $20 to $38

consumer surplus decreases from $62 to $12.

In the first half of 2011, automobile sales in the United States were lower than they were in the first half of 2010. The decrease in auto sales impacts GDP because new automobiles are counted as ________ when purchased by households and ________ when purchased by businesses.

consumption; investment

On a balance sheet, a company's accounts receivable are listed as

current assets

Refer to Table 3-2. The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. If the price of cashews rises from $4 to $6, the market quantity demanded would

decrease by 39 lbs.

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. The "Buy American" provision would ________ consumer surplus and ________ producer surplus for industries that produced protected products in the United States.

decrease; increase

The size of the underground economy would tend to decrease if the government of a country

decreased government regulations on businesses.

The U.S. work week has declined from 60 hours in 1890 to 40 hours today. The impact of the decline in working hours

decreases U.S. GDP and increases the well-being of a typical working person in the U.S.

All of the following take place in the direct finance market except

deposits from savers are accumulated and loans made to borrowers

Yolanda wants to expand her microbrewery business by buying out a competitor and is going to sell newly-issued corporate bonds to do so. This is an example of using ________ for her expansion plans.

direct finance

If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the

factor market

Health insurance plans which typically reimburse doctors and hospitals with payment for each service they provide are known as

fee-for-service plans.

All but one of the following statements is used to justify protectionism. Which statement is not used to justify protectionism?

free trade leads to higher prices for imported goods

If the size of the underground economy is large,

government agencies have difficulty measuring nominal and real GDP.

In the United States, out-of-pocket spending on health care per person

has been falling since 1965

Izzy Amador is a highly talented tattoo artist. She has chosen to specialize in tattoo art because of all of the following except__

her opportunity cost of pursuing another career is very low.

In comparing China to Canada, China's relatively ________ growth rate in GDP would make you more likely to take a job in China, and China's relatively ________ level of GDP would make you less likely to take a job in China.

high; low

Richard Causey, former chief accounting officer for Enron, pleaded guilty to falsely reported costs for Enron that were ________ than they actually were, resulting in reported accounting profits for Enron that were ________ than their actual level. The financial statements were falsified to mislead investors about the profitability of the firm.

higher,lower

The difference between the ________ for a good and the ________ is called consumer surplus.

highest price a consumer is willing to pay; price the consumer actually pays

Suppose that when the price of ice cream increases, Liza decreases her purchase of hot fudge. To Liza,

ice cream and hot fudge are complements.

Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. Refer to Figure 2-9. Which country has a comparative advantage in the production of snow cones?

iceland

Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 7-2 shows the impact of this tariff. Refer to Figure 7-2. With the tariff in place, the United States

imports 20 million pounds of coffee.

Skeeter's Skeeball Castle has seen its business slow down ever since Kerrie's Off-Key Karaoke opened up next door. Since the opening of Kerrie's Off-Key Karaoke, the opportunity cost of playing skeeball at Skeeter's has

increased

The law of demand implies, holding everything else constant, that as the price of yogurt

increases, the quantity of yogurt demanded will decrease.

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

marginal benefit; marginal cost

In a competitive market equilibrium the ________ equals the ________ of the last unit sold.

marginal benefit; marginal cost

An office supply store sells a ream of printer paper at a fixed price of $4.50. Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper?

marginal revenue

Disposable personal income equals personal income

minus personal tax payments

National income equals gross domestic product

minus the consumption of fixed capital

Subprime mortgages are

mortgages issued to borrowers with flawed credit histories.

The principle of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

opportunity cost

If real GDP increases we know for sure that

output has risen

Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that

people without health insurance will be less likely to be overweight than people with health insurance.

Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the market price of Marko's polo shirts is $18

producer surplus will equal $22.

Refer to Table 4-3. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the price of polo shirts increases from $15 to $20

producer surplus will rise from $13 to $28.

Which of the following contributed to the downfall of the Soviet Union in 1991?

public dissatisfaction with with low living standards and political repression; an ability to produce low-cost consumer goods that households wanted.

Tying the salaries of top managers to the firm's stock price or to the profitability of the firm allows a firm's board of directors to

reduce the principal-agent problem.

The Pre-Existing Condition Insurance Plan is a federally administered part of the Affordable Care Act, and is designed for people with pre-existing medical conditions to obtain insurance. By offering health insurance to all U.S. citizens with pre-existing medical conditions, the Pre-Existing Condition Insurance Plan

reduces, but does not eliminate, asymmetric information for both the insurer and the insured.

Firms

sell goods in the product market

When the price of a good rises, consumers buy a smaller quantity because of the ________ effect and the ________ effect.

substitution; income

Table 4-4 shows the demand and supply schedules for the low-skilled labor market in the city of Westover. Refer to Table 4-4. If a minimum wage of $10.00 is mandated there will be a

surplus of 40,000 units of labor.

Which of the following is one of the most widely followed stock indexes in the United States?

the Dow Jones Industrial Average

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock. In this situation, the CEO is ________ and the stockholders are ________.

the agent; the principals

According to the production possibilities model, if more resources are allocated to the production of physical and human capital, then all of the following are likely to happen except

the country's total production will fall.

Which of the following did not contributed to the overall decline in death rates in the United States since 1981?

the decline in the population

Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that

the demand for personal trainers has increased.

If the price of smartphones was to increase, then

the demand for smartphone apps would decrease.

Assume that both the demand curve and the supply curve for DVD players shift to the left but the supply curve shifts more than the demand curve. As a result,

the equilibrium price of DVD players will increase; the equilibrium quantity will decrease.

If a firm expects that the price of its product will be lower in the future than it is today

the firm has an incentive to increase supply now and decrease supply in the future

Which of the following is not a flow in the circular flow model?

the flow of profit and the flow of revenue

Which of the following is a factor of production?

the janitor at the local elementary school

Consumer surplus in a market for a product would be equal to the area under the demand curve if

the market price was zero

Which of the following is an example of an implicit cost a firm might incur?

the opportunity cost to investors of the funds invested in the firm

A tax is imposed on employers and workers that are used to fund Social Security and Medicare. This tax is sometimes referred to as

the payroll tax

One would speak of a movement along a supply curve for a good, rather than a change in supply, if

the price of the good changes

If a hospital knows that an insurance company will pay for most of a patient's bill, the hospital 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

the principle-agent problem

Refer to Figure 3-6. The figure above represents the market for coffee grinders. Assume that the price of coffee grinders is $50. At this price,

there is a surplus equal to 90 coffee grinders that will be eliminated when the price falls to $25

A firm's managers need information on the firm's revenue and costs as well as information on the value of a firm's assets and the amount of the firm's debts to answer three basic questions. Which of the following is not one of those three basic questions?

where to produce?

If a dollar today will likely have more purchasing power because of inflation, then a dollar a year from now ________ a dollar today.

will be less valuable than