Economics Today 16th Edition

72 Miller Economics Today, 16th Edition 43) Which one of the following is an example of a normative statement? A) Public school teachers are not paid enough. B) The average public school teacher earns less than the average truck driver. C) The average public school teacher earns more than the average truck driver. D) Students

Chapter 1 The Nature of Economics 41 3) Economics is an empirical science, which means that economists A) must use laboratory experiments to test their theories. B) evaluate a model or theory by whether its assumptions are consistent with the real world. C) try to prove their models are true by referring to logic. D)

Chapter 1 The Nature of Economics 61 85) The combination of psychology and economics to determine individual decision making is known as A) b ehavioral economics. B) pyschomics. C) the rule of thumb. D) positive analysis. Answer: ADiff: 2Topic: 1.5 Economics as a ScienceAACSB: Analytic skillsQuestion Status: Previous Edition Answer: ADiff: 2Topic: 1.5 Economics as a ScienceAACSB: Analytic

Chapter 1 The Nature of Economics 1.1 The Power of Economic Analysis 1) The economic way of thinking will help you A) make decisions in financing your home. B) decide whether the U.S. government should encourage or discourage immigration. C) make better decisions concerning your education. D) all of the above Answer: DDiff: 1Topic: 1.1 The Power of

Chapter 1 The Nature of Economics 21 84) An example of a microeconomic decision is a situation in which A) the Federal Reserve considers how much to increase the money supply during the coming month in an effort to constrain the rate of inflation. B) Congress and the president seek to reach a compromise

304 Miller Economics Today, 16th Edition 81) The aggregate demand curve shows A) a direct relationship between changes in the price level and changes in real GDP. B) real GDP does not change as the price level changes. C) an inverse relationship between the price level and real GDP. D) an inverse relationship between changes

322 Miller Economics Today, 16th Edition 15) When the price level is below the level at which the aggregate demand curve crosses the long run aggregate supply curve, A) there will be no price level change. B) there will be pressures that will lead to a shift of either the aggregate demand or the

Chapter 10 Real GDP and the Price Level in the Long Run 10.1 Output Growth and the Long Run Aggregate Supply Curve 1) The aggregate supply curve A) shows what each producer is willing and able to produce at each income level. B) relates planned aggregate production to price level. C) b ecomes vertical if there is excess

284 Miller Economics Today, 16th Edition 7) The sum of all planned expenditures for the entire economy at each possible price level is A) aggregate supply. B) effective demand. C) aggregate demand. D) actual expenditures by consumers. Answer: CDiff: 1Topic: 10.2 Total Expenditures and Aggregate DemandAACSB:Analytic skillsQuestion Status: Previous Edition Answer: CDiff: 1Topic: 10.2 Total

Chapter 11 Classical and Keynesian Macro Analyses 417 37) If the U.S. government were to relax its restrictions on offshore oil well drilling and open drilling in Alaskan national parks, the result to aggregate supply would be to A) cause a shift in the SRAS to the left. B) cause a shift in the

Chapter 11 Classical and Keynesian Macro Analyses 399 22) According to the above figure, what will the price level be in the new long run equilibrium? A) 115 B) 110 C) 100 D) Less than 100 Answer: ADiff: 2Topic: 11.3 Output Determination Using Aggregate Demand and Aggregate Supply: Fixed versus Changing PriceLevels in

Chapter 11 Classical and Keynesian Macro Analyses 359 86) Saving is not a problem in the classical model because A) the classical economists assume that saving was beneficial to people for retirement. B) saving would be spent by consumers eventually. C) interest rates are flexible, and savings were channeled into investment. D) savers and investors

Chapter 11 Classical and Keynesian Macro Analyses 379 21) Keynes suggested that the short run aggregate supply (SRAS) curve A) is vertical. B) is horizontal. C) slopes downward. D) is not a relevant concept. Answer: BDiff: 3Topic: 11.2 Keynesian Economics and the Keynesian Short Run Aggregate Supply CurveAACSB:Analytic skillsQuestion Status: Previous Edition Answer: BDiff: 3Topic:

Chapter 11 Classical and Keynesian Macro Analyses 11.1 The Classical Model 1) Whom among the following was a classical economist? A) Adam Smith B) A. C. Pigou C) David Ricardo D) all of the above Answer: DDiff: 1Topic: 11.1 The Classical ModelAACSB:Question Status: Previous Edition Answer: DDiff: 1Topic: 11.1 The Classical ModelAACSB:Question Status: Previous Edition Answer: D Diff: 1 Topic:

Chapter 12 Consumption, Real GDP, and the Multiplier 12.1 Some Simplifying Assumptions in a Keynesian Model 1) Which of the following is NOT a simplifying assumption in the simple Keynesian model? A) Net investment and gross investment are equal. B) All profits are distributed to the business owners. C) Real disposable income equals government purchases of

Chapter 12 Consumption, Real GDP, and the Multiplier 531 13) If the multiplier is 4, the marginal propensity to consume (MPC) must be A) 0.25. B) 0.5. C) 0.75. D) 1. Answer: CDiff: 2Topic: 12.6 The MultiplierAACSB:Analytic skillsQuestion Status: Previous Edition Answer: CDiff: 2Topic: 12.6 The MultiplierAACSB:Analytic skillsQuestion Status: Previous Edition Answer: C Diff: 2 Topic: 12.6

Chapter 12 Consumption, Real GDP, and the Multiplier 495 8) In the Keynesian model, planned investment is inversely related to A) the interest rate. B) the level of income. C) the wage rate. D) the tax rate. Answer: ADiff: 1Topic: 12.3 Determinants of InvestmentAACSB:Analytic skillsQuestion Status: Previous Edition Answer: ADiff: 1Topic: 12.3 Determinants of InvestmentAACSB:Analytic

Chapter 12 Consumption, Real GDP, and the Multiplier 455 43) According to the above figure, autonomous consumption equals A) $0. B) $5,000. C) $20,000. D) $5,000. Answer: BDiff: 2Topic: 12.2 Determinants of Planned Consumption and Planned SavingAACSB:Analytic skillsQuestion Status: Previous Edition Answer: BDiff: 2Topic: 12.2 Determinants of Planned Consumption and Planned SavingAACSB:Analytic skillsQuestion Status:

Chapter 12 Consumption, Real GDP, and the Multiplier 515 36) Suppose autonomous consumption is $1 trillion, investment spending is $1.5 trillion, and the marginal propensity to consume is 0.75. Show the graph for the C I curve. What is the equilibrium level of real GDP? Explain its meaning. Answer: In the below figure, the

Chapter 13 Fiscal Policy 603 8) In the United States economy, the progressive income tax and unemployment compensation are both A) destabilizers. B) discretionary presidential effectors. C) automatic stabilizers. D) time lag factors. Answer: CDiff: 1Topic: 13.4 Automatic StabilizersAACSB:Analytic skillsQuestion Status: Previous Edition Answer: CDiff: 1Topic: 13.4 Automatic StabilizersAACSB:Analytic skillsQuestion Status: Previous Edition Answer: C Diff: 1 Topic: 13.4

586 Miller Economics Today, 16th Edition 69) Supply side economists argue cuts in tax rates A) always reduce tax revenues. B) may increase tax revenues. C) always increase budget deficits. D) have no effect on tax revenues. Answer: BDiff: 1Topic: 13.2 Possible Offsets to Fiscal PolicyAACSB:Analytic skillsQuestion Status: Previous Edition Answer: BDiff: 1Topic: 13.2 Possible

Chapter 13 Fiscal Policy 13.1 Discretionary Fiscal Policy 1) When the government deliberately alters its level of spending and/or taxes in order to achieve specific national economic goals, it is exercising A) monetary policy. B) discretionary fiscal policy. C) a Ricardian policy. D) a laissez faire policy. Answer: BDiff: 1Topic: 13.1 Discretionary Fiscal PolicyAACSB:Analytic skillsQuestion Status: Revised Answer:

566 Miller Economics Today, 16th Edition 74) Which of the following statements about fiscal policy is true? A) Real Gross Domestic Product (GDP) can be increased above its long run equilibrium only in the short run. B) Real Gross Domestic Product (GDP) can never be increased above its long run equilibrium, even for a brief

Chapter 14 Deficit Spending and the Public Debt 14.1 Public Deficits and Debts: Flows versus Stocks 1) In the current year, a nation s government spending equals $1.5 trillion and its revenues are $1.9 trillion. Which of the following is true? A) The nation s national debt equals $0.4 trillion. B) This nation has a current

Chapter 14 Deficit Spending and the Public Debt 637 29) Suppose that initially there is no public debt. Using the above table, what is the public debt as a percentage of GDP in Year 4? A) 5.8 percent B) 7.8 percent C) 3.6 percent D) 2.0 percent Answer: CDiff: 2Topic: 14.3 Evaluating the Rising

Chapter 15 Money, Banking, and Central Banking 695 42) If the transactions approach to measuring money is used, then the money supply consists of A) currency only. B) transaction deposits only. C) currency and transaction deposits only. D) currency, checkable and debitable deposits, and traveler s checks. Answer: DDiff: 1Topic: 15.3 Defining MoneyAACSB:Analytic skillsQuestion Status: Previous

Chapter 15 Money, Banking, and Central Banking 675 16) Checkable and debitable accounts in commercial banks and other financial institutions are classified as money because A) they are not liabilities of the banks. B) they sometimes earn an interest income for the depositor. C) they are generally acceptable in the payment of debt. D) b anks hold currency

Chapter 15 Money, Banking, and Central Banking 753 105) The reserve ratio is 10 percent. Depositors regularly keep 10 percent of their deposits as cash. If the Fed buys $1 million of U.S. government securities, excess reserves A) increase by $800,000. B) increase by $810,000. C) increase by $900,000. D) increase by $1 million. Answer:

Chapter 15 Money, Banking, and Central Banking 15.1 The Functions of Money 1) In a barter system, we would expect to see A) many different units of money. B) money and goods exchanged for each other. C) wide spread financial institutions. D) goods traded directly for other goods and services. Answer: DDiff: 1Topic: 15.1 The Functions of MoneyAACSB:Analytic

790 Miller Economics Today, 16th Edition 88) Travis always carries $100 in his wallet to pay for groceries. This is an example of the A) precautionary demand for money. B) asset demand for money. C) transactions demand for money. D) wealth demand for money. Answer: CDiff: 1Topic: 16.1 The Demand for MoneyAACSB:Analytic skillsQuestion Status:

810 Miller Economics Today, 16th Edition 23) Refer to the above figure. Suppose point A is the original equilibrium. If there is an increase in the money supply, the new short run equilibrium is given by point A) A. B) B. C) C. D) D. Answer: BDiff: 2Topic: 16.3 Effects of an Increase in

848 Miller Economics Today, 16th Edition 43) Suppose there is an increase in the money supply, but that people s demand for money balances increases by a greater amount at the same time. The net effect would be A) a lower price level in the long run. B) no change in aggregate demand or

Chapter 16 Domestic and International Dimensions of Monetary Policy 16.1 The Demand for Money 1) What are the two features of money that distinguish it from all other goods in the economy? A) Money is government issued and it is redeemable for gold or silver. B) Money is accepted as a medium of exchange and

830 Miller Economics Today, 16th Edition 34) According to the quantity theory of money and prices, a 10 percent increase in the money supply ultimately leads to A) a 10 percent increase in real GDP. B) a 10 percent increase in real national output. C) a 10 percent increase in the price level. D) a 10

942 Miller Economics Today, 16th Edition 19) If the price of bubble gum changed in the market from 1 cent to 1.5 cents and Joe s Market didn t change the price it charges for the bubble gum, this behavior is likely due to A) discretionary policy. B) economic laziness. C) large menu costs.

Chapter 17 Stabilization in an Integrated World Economy 17.1 Active versus Passive Policymaking 1) Active policy making refers to A) actions taken by policy makers in response to or in anticipation of some change in the overall economy. B) policy making that is carried out in response to a rule. C) relying on policies that act as

926 Miller Economics Today, 16th Edition 67) Adding the assumption of pure competition and complete flexibility of all prices and wages to the rational expectations hypothesis yields a theory that provides support for A) passive policy making. B) active policy making. C) discretionary policy making. D) unemployment reducing policy making. Answer: ADiff: 2Topic: 17.3 Rational Expectations, the

886 Miller Economics Today, 16th Edition 55) We observe the duration of unemployment falling and wage rates rising. It is likely that A) the government has initiated expansionary fiscal policy but the policies haven t taken effect yet. B) summer has arrived. C) aggregate demand has increased. D) aggregate supply has increased. Answer: CDiff: 2Topic: 17.2 The

Chapter 18 Policies and Prospects for Global Economic Growth 18.1 Labor Resources and Economic Growth 1) According to the text, population growth in many poor countries does not generally result in increased labor resources because A) many people do not join the labor force. B) many people join the labor force. C) many people work two

Chapter 18 Policies and Prospects for Global Economic Growth 993 15) Which of the following is NOT a criticism that has been leveled at the World Bank? A) Too many loans go to nations capable of privately financing their projects. B) Since 1990, the World Bank has loaned mostly to African countries, to

Chapter 18 Policies and Prospects for Global Economic Growth 977 33) Explain the meaning of the term dead capital , and discuss why its existence retards economic growth. Answer: Dead capital means a capital resource without a clearly defined owner. Although deadcapital is often used in production the lack of clearly defined title of ownership

78 Miller Economics Today, 16th Edition 14) The responsiveness of demand to changes in income holding the good s relative price constant is A) price elasticity of demand. B) income elasticity of demand. C) elasticity of supply. D) cross price elasticity of demand. Answer: BDiff: 1Topic: 19.6 Income Elasticity of DemandQuestion Status: Previous Edition Answer:

Chapter 19 Demand and Supply Elasticity 21 14) If a one percent increase in the price of bananas leads to a one percent decrease in the quantity of bananas demanded, then the demand for bananas is A) elastic. B) inelastic. C) unit elastic. D) perfectly inelastic. Answer: CDiff: 2Topic: 19.2 Price Elasticity RangesAACSB: Reflective thinking

Chapter 19 Demand and Supply Elasticity 19.1 Price Elasticity 1) The price elasticity of demand is a measure of A) the responsiveness of the quantity demanded of a good to a changes in the price of the good. B) the quantity demanded of a good at a given price. C) the demand for a product holding prices

Chapter 19 Demand and Supply Elasticity 41 29) In the above figure, along the section of the demand curve between point a and point b, demand is A) elastic. B) inelastic. C) unit elastic. D) unit inelastic. Answer: ADiff: 1Topic: 19.3 Elasticity and Total RevenuesAACSB:Analytic skillsQuestion Status: Previous Edition Answer: ADiff: 1Topic: 19.3 Elasticity and

Chapter 19 Demand and Supply Elasticity 61 45) In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1? A) when there are very few close substitutes for the item B) when there are very few producers of the item C) when

142 Miller Economics Today, 16th Edition 51) A point inside a production possibilities curve indicates A) resources are not being used efficiently. B) resources are being used very efficiently. C) opportunity costs are constant. D) an output combination that is unobtainable with the current resource and technology levels Answer: ADiff: 2Topic: 2.5 The Choices Society FacesAACSB: Analytic

Chapter 2 Scarcity and the World of Trade Offs 2.1 Scarcity 1) Scarcity arises because A) resources are finite and are inadequate to meet all human wants and needs. B) import taxes depress the rate of growth of goods and services production. C) international companies are slow to explore for new resources. D) many countries waste goods

102 Miller Economics Today, 16th Edition 92) Briefly explain the factors of production and give an example of each. Answer: The resources, which are the inputs used in the production of the things that wewant,used in production are called factors of production. There are five factors ofproduction. Land encompasses all the nonhuman

176 Miller Economics Today, 16th Edition 22) Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears. This best demonstrates the concept of A)

122 Miller Economics Today, 16th Edition 23) The curve that represents all possible combinations of goods that can be produced is called A) the production possibilities curve. B) the resource allocation curve. C) the efficiency curve. D) the supply curve. Answer: ADiff: 1Topic: 2.4 The World of Trade OffsAACSB:Question Status: Previous Edition Answer: ADiff: 1Topic:

530 Miller Economics Today, 16th Edition 10) A major difference between a monopolist and a perfectly competitive firm is that A) the monopolist is certain to earn economic profits. B) the monopolist s marginal revenue curve lies below its demand curve. C) the monopolist engages in marginal cost pricing. D) the monopolist charges the highest

162 Miller Economics Today, 16th Edition 7) How is economic growth shown by the production possibilities curve? A) By shifting the curve to the right. B) By moving the curve to the left. C) By moving up the existing curve. D) By changing the shape of the curve from a straight line to one that

Chapter 20 Consumer Choice 115 92) What is utility analysis? What is the goal of this analysis? Answer: Utility analysis is the analysis of consumer decision making based on utilitymaximization. Economists assume individuals act so as to maximize their utility. Thegoal of the analysis is to explain and predict consumer behavior. An

Chapter 20 Consumer Choice 175 2) According to the substitution effect, if the price of a product goes down A) the consumer will buy more of the good at the lower price than at a higher price, creating a downward sloping demand curve. B) the consumer will buy more of the good at a

194 Miller Economics Today, 16th Edition 11) Suppose that indifference curve I1lies to the left of indifference curve I2. We can conclude that A) some, but not all, points on indifference curve I1will correspond to higher utility than points along indifference curve I2. B) some, but not all, points on indifference curve I1will correspond

Chapter 20 Consumer Choice 20.1 Utility Theory 1) In economics, another term for satisfaction is A) income elasticity. B) price elasticity. C) utility. D) marginal productivity. Answer: CDiff: 1Topic: 20.1 Utility TheoryQuestion Status: Previous Edition Answer: CDiff: 1Topic: 20.1 Utility TheoryQuestion Status: Previous Edition Answer: C Diff: 1 Topic: 20.1 Utility Theory Question Status: Previous Edition 2) The amount of pleasure or

Chapter 20 Consumer Choice 135 48) J ill likes lobsters but she does not eat lobsters in every meal. How can utility theory explain this? Answer: Even though Jill likes lobsters, she is probably facing diminishing marginal utility fromlobster consumption over a given period of time. Her marginal utility from eating morelobsters within a

Chapter 21 Rents, Profits, and the Financial Environment of Business 273 194) What is the difference between accounting profits and economic profits? Which of the two concepts is more appropriate for explaining decisions made by entrepreneurs? Explain. Answer: The difference between accounting profits and economic profits is implicit costs, whichrepresent the opportunity costs

Chapter 21 Rents, Profits, and the Financial Environment of Business 21.1 Economic Rent 1) Pure economic rent is A) a payment to a resource owner over and above what is necessary to keep the resource in its current use. B) a payment to a resource owner just sufficient to keep its supply constant. C) the inverse of

Chapter 21 Rents, Profits, and the Financial Environment of Business 233 6) Accounting profit can be calculated as A) total revenue explicit costs. B) total revenue implicit costs. C) total revenue explicit costs implicit costs. D) total revenue fixed costs. Answer: ADiff: 1Topic: 21.2 Firms and ProfitsQuestion Status: New Answer: ADiff: 1Topic: 21.2 Firms and ProfitsQuestion Status:

292 Miller Economics Today, 16th Edition 83) Present value is A) unrelated to the rate of interest. B) lower the longer the time horizon. C) not expressed in today s dollars. D) opposite the time value of money. Answer: BDiff: 1Topic: 21.3 InterestAACSB:Analytic skillsQuestion Status: Previous Edition Answer: BDiff: 1Topic: 21.3 InterestAACSB:Analytic skillsQuestion Status: Previous

Chapter 21 Rents, Profits, and the Financial Environment of Business 253 99) All of the following are characteristics of a proprietorship EXCEPT A) the business is owned by one individual. B) one person is responsible for all the debts of the firm. C) one person gets all of the profits. D) the firm can form

Chapter 22 The Firm: Cost and Output Determination 331 55) As the amount of a variable input increases, while all other inputs are held constant, total product will A) always increase. B) always decrease. C) initially decrease and then increase. D) initially increase and then decrease. Answer: DDiff: 1Topic: 22.2 The Relationship Between Output and

386 Miller Economics Today, 16th Edition 6) In the above figure, the long run cost curve between points C and D illustrates A) diseconomies of scale. B) diminishing marginal product. C) constant returns to scale. D) economies of scale. Answer: CDiff: 1Topic: 22.7 Why the Long Run Average Cost Curve IsUShapedAACSB:Analytic skillsQuestion Status: Revised Answer:

Chapter 22 The Firm: Cost and Output Determination 371 113) In the above table, what is the average total cost to produce 3 units of output? A) $33.33 B) $53.33 C) $55 D) $20 Answer: BDiff: 2Topic: 22.4 Short Run Costs to the FirmAACSB:Analytic skillsQuestion Status: New Answer: BDiff: 2Topic: 22.4 Short Run Costs

Chapter 22 The Firm: Cost and Output Determination 22.1 Short Run versus Long Run 1) Economists generally define the short run as being A) that period of time in which at least one of the firm s inputs, usually plant size, is fixed. B) that period of time in which all inputs are variable. C) any

Chapter 22 The Firm: Cost and Output Determination 351 Q TFC TVC TC 0 $90 $ 0 $ 90 1 90 25 115 2 90 32 122 3 90 42 132 4 90 64 154 5 90 95 185 19) Refer to the above table. At an output of 4 units, average variable costs are A) $16. B) $22.

460 Miller Economics Today, 16th Edition 35) A firm should never produce any output if A) P AVC. B) P ATC. C) AR ATC. D) MR MC. Answer: ADiff: 1Topic: 23.6 The Short Run Break Even Price and the Short Run Shutdown PriceQuestion Status: Revised Answer: ADiff: 1Topic: 23.6 The Short Run Break Even

420 Miller Economics Today, 16th Edition 12) A firm in a perfectly competitive market maximizes profits when it finds A) the price at which total revenue minus total cost is the greatest. B) the quantity at which total revenue minus total cost is the greatest. C) the quantity at which total revenue equals total

Chapter 23 Perfect Competition 495 58) If the costs of production do not increase as output increases in the long run in a perfectly competitive industry, then this is a A) constant return to scale industry. B) constant competitive industry. C) constant cost industry. D) constant price industry. Answer: CDiff: 2Topic: 23.9 The Long Run

440 Miller Economics Today, 16th Edition 53) What does a perfectly competitive firm do to maximize profits? Answer: The perfect competitor cannot influence market price, so it must find the rate ofproduction that maximizes its profits. The profit maximizing output is the output atwhich marginal revenue equals marginal cost. If marginal revenue

Chapter 23 Perfect Competition 23.1 Characteristics of a Perfectly Competitive Market Structure 1) Which of the following is NOT a characteristic of a perfectly competitive market? A) The products sold by the firms in the market are homogeneous. B) There are many buyers and sellers in the market. C) It is difficult for a firm to

480 Miller Economics Today, 16th Edition 9) Using a graph, show a short run equilibrium for the industry and the firm. Explain the graph. Answer:In the above figure, the industry demand and supply curves intersect vertically above Q,where Q is quantity produced and sold at price P. The firm takes P as

550 Miller Economics Today, 16th Edition 11) In the above figure, the total cost of producing the profit maximizing level of output is shown by rectangle A) 0P1AQ1. B) 0P5EQ5. C) 0P4HQ4. D) 0P2BQ1. Answer: DDiff: 1Topic: 24.5 Costs and Monopoly Profit MaximizationAACSB:Analytic skillsQuestion Status: Previous Edition Answer: DDiff: 1Topic: 24.5 Costs and Monopoly Profit

590 Miller Economics Today, 16th Edition 36) Selling a product at different prices when the price difference is unrelated to costs is a practice known as A) price fixing. B) price monopolization. C) price discrimination. D) price differentiation. Answer: CDiff: 2Topic: 24.7 On Making Higher Profits: Price DiscriminationQuestion Status: Previous Edition Answer: CDiff: 2Topic: 24.7 On

Chapter 24 Monopoly 24.1 Definition of a Monopolist 1) Monopoly producers face A) many competitors producing the same product. B) only a few competitors producing the same product. C) at least one competitive producer of the same product. D) no competitive producers of the same product. Answer: DDiff: 1Topic: 24.1 Definition of a MonopolistAACSB:Analytic skillsQuestion Status: Previous Edition Answer:

Chapter 25 Monopolistic Competition 25.1 Monopolistic Competition 1) Which of the following is NOT a characteristic of monopolistic competition? A) Product differentiation B) Barriers to entry into the market C) Advertising D) A significant number of sellers Answer: BDiff: 1Topic: 25.1 Monopolistic CompetitionQuestion Status: Previous Edition Answer: BDiff: 1Topic: 25.1 Monopolistic CompetitionQuestion Status: Previous Edition Answer: B Diff: 1 Topic:

Chapter 25 Monopolistic Competition 629 14) In the above figure, the monopolistically competitive firm s profit maximizing output is A) 1,000 units. B) 300 units. C) 900 units. D) 700 units. Answer: DDiff: 1Topic: 25.2 Price and Output for the Monopolistic CompetitorAACSB:Analytic skillsQuestion Status: Previous Edition Answer: DDiff: 1Topic: 25.2 Price and Output for

668 Miller Economics Today, 16th Edition 26) A good that people must actually consume before they can determine qualities is called A) a credence good. B) a search good. C) an experience good. D) a persuasive good. Answer: CDiff: 1Topic: 25.4 Brand Names and AdvertisingQuestion Status: Previous Edition Answer: CDiff: 1Topic: 25.4 Brand Names and

706 Miller Economics Today, 16th Edition 94) The number of firms in an oligopolistic industry A) must be less than 10. B) must be less than 20. C) must be small enough that firms are interdependent. D) must be large enough for firms to be independent. Answer: CDiff: 1Topic: 26.1 OligopolyQuestion Status: Previous Edition Answer: CDiff: 1Topic:

Chapter 26 Oligopoly and Strategic Behavior 26.1 Oligopoly 1) Which of the following does NOT help explain why oligopolies exist? A) Economies of scale B) Mergers C) Product homogeneity D) Barriers to entry Answer: CDiff: 1Topic: 26.1 OligopolyQuestion Status: Previous Edition Answer: CDiff: 1Topic: 26.1 OligopolyQuestion Status: Previous Edition Answer: C Diff: 1 Topic: 26.1 Oligopoly Question Status: Previous Edition 2) Which

Chapter 26 Oligopoly and Strategic Behavior 743 6) A Battle of the Sexes outcome occurs when A) firms earn highest profits by adopting different product formats. B) firms earn highest profits by trying to coordinate but cannot agree on how to do so. C) firms earn highest profits by adopting either male or female

726 Miller Economics Today, 16th Edition 65) A game in which any gains one player makes are offset by equal losses by another player is known as a A) zero sum game. B) positive sum game. C) negative sum game. D) cooperative game. Answer: ADiff: 1Topic: 26.2 Strategic Behavior and Game TheoryQuestion Status: Previous Edition Answer:

780 Miller Economics Today, 16th Edition 39) Refer to the above figure. If the government uses rate of return regulation for the natural monopolist, the firm will charge price A) P5and sell Q1units. B) P2and sell Q1units. C) P3and sell Q3units. D) P1and sell Q4units. Answer: CDiff: 3Topic: 27.2 Regulating Natural MonopoliesAACSB:Analytic skillsQuestion Status: New Answer:

Chapter 27 Regulation and Antitrust Policy in a Globalized Economy 817 19) Which of the following is exempt from antitrust laws? A) Professional football B) Petroleum companies C) Airlines D) Hospitals Answer: DDiff: 1Topic: 27.5 Antitrust PolicyAACSB:Analytic skillsQuestion Status: New Answer: DDiff: 1Topic: 27.5 Antitrust PolicyAACSB:Analytic skillsQuestion Status: New Answer: D Diff: 1 Topic: 27.5 Antitrust Policy A ACSB: A nalytic skills Question

Chapter 27 Regulation and Antitrust Policy in a Globalized Economy 27.1 Forms of Industry Regulation 1) U.S. government regulation of social and economic activity A) only began after World War II. B) costs less now than it did in the 1980s. C) has increased steadily since 1970. D) is confined to antitrust law. Answer: CDiff: 1Topic:

800 Miller Economics Today, 16th Edition 9) Which of the following is an example of an agency concerned with social regulation? A) Federal Communications Commission B) Securities and Exchange Commission C) Consumer Product Safety Commission D) Federal Energy Regulatory Commission Answer: CDiff: 1Topic: 27.4 Incentives and Costs of RegulationAACSB:Analytic skillsQuestion Status: Previous Edition Answer: CDiff:

854 Miller Economics Today, 16th Edition 91) Ajax has just discovered that the marginal revenue product generated by the last worker hired was $125 while the marginal factor cost was $85. What should Ajax do? A) Leave the level of production unchanged. B) Increase the amount produced. C) Reduce the amount produced. D) Collect more information

Chapter 28 The Labor Market: Demand, Supply and Outsourcing 28.1 Labor Demand for a Perfectly Competitive Firm 1) For a perfectly competitive firm, the value of the marginal product of labor falls as more workers are hired because of the diminishing A) output price. B) marginal physical product of labor. C) price of labor. D) marginal

894 Miller Economics Today, 16th Edition 47) A decrease in the supply of labor could be caused by A) wage rates falling in another industry. B) b etter working conditions. C) more job flexibility. D) increased wage rates in another industry. Answer: DDiff: 2Topic: 28.3 Wage Determination in a Perfectly Competitive Labor MarketAACSB:Analytic skillsQuestion Status: Previous Edition Answer: DDiff:

910 Miller Economics Today, 16th Edition 14) A profit maximizing monopolist will hire labor up to the point where A) marginal revenue product equals the price of the product. B) marginal revenue product is greater than the wage rate. C) marginal revenue product equals than the wage rate. D) marginal revenue product is less than

874 Miller Economics Today, 16th Edition 12) The price elasticity of demand for a variable input will be greater A) the fewer substitutes there are for the final product. B) the easier it is for a particular input to be substituted for by other inputs. C) the lower the price elasticity of supply of

Chapter 29 Unions and Labor Market Monopoly Power 965 56) In the above figure, which wage rate yields the highest union employment? A) W1B) W2C) W3D) W2W1 Answer: ADiff: 2Topic: 29.2 Union Goals and StrategiesAACSB:Analytic skillsQuestion Status: Previous Edition Answer: ADiff: 2Topic: 29.2 Union Goals and StrategiesAACSB:Analytic skillsQuestion Status: Previous Edition Answer: A Diff: 2 Topic: 29.2

Chapter 29 Unions and Labor Market Monopoly Power 983 22) A firm that is a monopolist in the output market and a monopsonist in the input market A) will hire the same amount of labor as if perfect competition prevailed in both markets, but pay a lower wage. B) will restrict the level of

Chapter 29 Unions and Labor Market Monopoly Power 29.1 Industrialization and Labor Unions 1) The earliest unions in the United States were A) industrial unions. B) craft unions. C) public sector unions. D) military unions. Answer: BDiff: 1Topic: 29.1 Industrialization and Labor UnionsAACSB:Analytic skillsQuestion Status: Previous Edition Answer: BDiff: 1Topic: 29.1 Industrialization and Labor UnionsAACSB:Analytic skillsQuestion Status:

Chapter 29 Unions and Labor Market Monopoly Power 945 97) A labor union composed of workers in the same industry is called A) a craft union. B) an industrial union. C) a company shop. D) a guild. Answer: BDiff: 1Topic: 29.1 Industrialization and Labor UnionsQuestion Status: Previous Edition Answer: BDiff: 1Topic: 29.1 Industrialization and Labor

Chapter 3 Demand and Supply 229 47) Two goods are substitutes when A) an increase in the price of one reduces the demand for the other. B) an increase in the price of one raises the demand for the other. C) the two goods are used together. D) the two goods have the same price. Answer:

Chapter 3 Demand and Supply 3.1 Demand 1) The law of demand states that A) consumers have unlimited demands for a good. B) a higher price will lead to increased sales. C) the price can never be too high for some consumers. D) quantity demanded will vary inversely with the price of the good. Answer: DDiff: 1Topic: 3.1

Chapter 3 Demand and Supply 209 3) A demand curve A) slopes down because of the inverse relationship between price and quantity demanded. B) slopes up because of the direct relationship between price and quantity demanded. C) can slope up or down depending on the tastes of the consumer. D) is vertical for necessities, upward

Chapter 3 Demand and Supply 249 131) What is the difference between a normal good and an inferior good? How does this relate to the demand curve? Answer: A normal good is one for which demand increases as income increases, and an inferiorgood is one for which demand decreases as income decreases. Hence,

Chapter 3 Demand and Supply 269 39) Which of the following is a non price determinant of supply? A) the price of related goods consumers may buy B) technological advances in production C) consumers incomes D) the number of consumers Answer: BDiff: 2Topic: 3.6 Shifts in SupplyAACSB: Analytic skillsQuestion Status: Previous Edition Answer: BDiff: 2Topic: 3.6 Shifts

286 Miller Economics Today, 16th Edition 34) When there is a shortage, I. there is a tendency for price to increase. II. there is an excess quantity demanded. A) I only B) II only C) Both I and II D) Neither I nor II Answer: CDiff: 1Topic: 3.7 Putting Demand and Supply TogetherAACSB: Analytic skillsQuestion

Chapter 30 Income, Poverty, and Health Care 1041 23) The idea that the Lorenz curve should be along the 45 degree line is consistent with A) the productivity standard. B) the egalitarian principle. C) the conservative principle. D) none of the above. Answer: BDiff: 2Topic: 30.3 Theories of Desired Income DistributionAACSB:Analytic skillsQuestion Status: Previous

Chapter 30 Income, Poverty, and Health Care 1021 87) Regarding income distribution and the distribution of wealth, A) wealth is a stock concept and income a flow concept. B) a stock is evaluated at a given moment in time; a flow is evaluated during a period of time. C) income, a flow, can be

Chapter 30 Income, Poverty, and Health Care 30.1 Income 1) The Lorenz curve shows A) the demand for jobs. B) the supply of jobs. C) the elasticity of jobs. D) the distribution of income. Answer: DDiff: 1Topic: 30.1 IncomeQuestion Status: Previous Edition Answer: DDiff: 1Topic: 30.1 IncomeQuestion Status: Previous Edition Answer: D Diff: 1 Topic: 30.1 Income Question Status: Previous Edition 2)

Chapter 30 Income, Poverty, and Health Care 1057 30.5 Health Care 1) Which of the following is considered a third party within the medical services industry? A) The patient B) The private insurance company C) The for profit hospital D) The medical provider, i.e. physician Answer: BDiff: 1Topic: 30.5 Health CareQuestion Status: Previous Edition Answer: BDiff:

1092 Miller Economics Today, 16th Edition 87) Which of the following is the main reason for externalities? A) The full cost of a transaction is not borne by the buyer/seller of the product. B) Police enforcement of scalping is not uniformly enforced. C) the lack of organized exchanges for all goods and services D) The

1128 Miller Economics Today, 16th Edition 30) Which of the following is a true statement? A) Externalities cannot be solved by market solutions and always require government action. B) Externalities would never be a problem if people were willing to comply with government regulations. C) Voluntary agreements can solve externality situations by making the party

Chapter 31 Environmental Economics 31.1 Private versus Social Costs 1) Which of the following statements best defines private costs? A) They are internal in the sense that the firm or household must explicitly take them into account. B) They are costs borne by people other than those who commit the action. C) They are synonymous with social

1112 Miller Economics Today, 16th Edition 21) Refer to the above figure. The marginal benefit of pollution abatement is curve A) (1). B) (2). C) (3). D) (4). Answer: DDiff: 1Topic: 31.3 PollutionAACSB:Analytic skillsQuestion Status: Previous Edition Answer: DDiff: 1Topic: 31.3 PollutionAACSB:Analytic skillsQuestion Status: Previous Edition Answer: D Diff: 1 Topic: 31.3 Pollution A ACSB: A nalytic skills Question Status: Previous Edition 22)

Chapter 32 Comparative Advantage and the Open Economy 609 10) Since the 1930s, overall tariff rates in the United States have A) increased. B) decreased. C) remained unchanged. D) b ecome very unstable, changing week to week. Answer: BDiff: 1Topic: 32.6 Ways to Restrict Foreign TradeAACSB: Dynamics of the global economyQuestion Status: Previous Edition Answer: BDiff: 1Topic: 32.6 Ways

Chapter 32 Comparative Advantage and the Open Economy 32.1 The Worldwide Importance of International Trade 1) Since World War II, world trade has A) decreased in importance as nations turn inward due to security concerns. B) increased, but not as dramatically as annual world real GDP has climbed. C) risen sharply, outpacing gains in annual world

Chapter 32 Comparative Advantage and the Open Economy 569 Maximum Feasible Hourly Production Rates of Either Computers or Bicycles Using All Available Resources Product United States Mexico Computers 8 10 Bicycles 4 2 64) Refer to the above table. Assuming constant opportunity costs, the opportunity cost of producing a computer in the United States is ________ while

Chapter 32 Comparative Advantage and the Open Economy 589 4) Which of the following is consistent with international trade theory? A) The United States needs trade restrictions to stay competitive. B) The United States has been falling behind Europe and Japan because its economy is too open. C) The standard of living within a country

Chapter 33 Exchange Rates and the Balance of Payments 649 International Transactions 1. U.S. resident buys a German camera $300 2. U.S. resident buys stock in a German company 20,000 3. U.S. resident purchases insurance from a German company 1,500 4. U.S. resident sends a present to someone in Germany 200 5. German buys a U.S.

Chapter 33 Exchange Rates and the Balance of Payments 669 33) Which of the following will lead to a depreciation of the U.S. dollar against the British pound? A) An increase in British demand for U.S. imports B) An increase in U.S. interest rates C) A decrease in British demand for U.S. assets D) A

Chapter 33 Exchange Rates and the Balance of Payments 33.1 The Balance of Payments and International Capital Movements 1) The balance of payments is A) the value of goods and services bought and sold in the world market. B) a summary record of a country s economic transactions with foreign residents and governments. C) a summary record

686 Miller Economics Today, 16th Edition 102) Use the above figure. At equilibrium, the exchange rate is A) 1 euro $1.25. B) $0.80 1.25 euro. C) $1 1.25 euro. D) $1 8 euros. Answer: CDiff: 2Topic: 33.2 Determining Foreign Exchange RatesAACSB: Dynamics of the global economyQuestion Status: Previous Edition Answer: CDiff: 2Topic: 33.2 Determining Foreign

322 Miller Economics Today, 16th Edition 41) An increase in the equilibrium quantity of good X can be caused by A) an increase the price of inputs utilized in producing good X. B) an increase in the price of good X. C) a technological improvement in the process of producing good X. D) a reduction

Chapter 4 Extensions of Demand and Supply Analysis 4.1 The Price System and Markets 1) An economic system in which relative prices change to reflect changes in supply and demand for different commodities is known as a A) socialist system. B) communist system. C) queuing system. D) market system. Answer: DDiff: 1Topic: 4.1 The Price System and

382 Miller Economics Today, 16th Edition 21) The adverse effects of rent controls include A) keeping rental rates too high in a normal market. B) excessive construction of new rental housing. C) reduced incentive to construct new rental housing. D) increased incentives for people to purchase their own homes. Answer: CDiff: 2Topic: 4.5 The Policy of

Chapter 4 Extensions of Demand and Supply Analysis 395 9) The effect of legislation establishing a minimum wage above the market clearing wage is A) unemployment. B) a shortage of labor. C) higher wages for all workers. D) a shift of the demand for labor curve. Answer: ADiff: 1Topic: 4.7 Price Floors in the

362 Miller Economics Today, 16th Edition 32) Price ceilings often generate A) market clearing prices. B) rapid increases in supply to meet the excess demand. C) equilibriums that utilize rationing by price. D) b lack markets. Answer: DDiff: 2Topic: 4.4 The Policy of Government Imposed Price ControlsAACSB: Analytic skillsQuestion Status: Previous Edition Answer: DDiff: 2Topic: 4.4 The Policy of

342 Miller Economics Today, 16th Edition 115) When supply increases and at the same time demand decreases, we A) can predict that both equilibrium price and quantity will increase. B) can predict that both equilibrium price and quantity will decrease. C) cannot predict equilibrium quantity, but know that equilibrium price will decrease. D) cannot predict

Chapter 5 Public Spending and Public Choice 427 61) An effluent fee is a A) subsidy given to the producer of a positive externality. B) charge to a polluter that gives the right to discharge pollution into the air. C) fine imposed on a polluter for dumping illegal pollution. D) charge for a public good. Answer:

Chapter 5 Public Spending and Public Choice 5.1 What a Price System Can and Cannot Do 1) Which of the following terms describes the situation in which too few or too many resources go to a specific economic activity because of external benefits or costs? A) an technologically inefficient market B) a market failure C) a

Chapter 5 Public Spending and Public Choice 483 24) In the above figure, if a Medicare subsidy that had previously been paid by the government has now been eliminated, the result will be A) an increase in the price received by producers, from P0to Ps. B) a decrease in the price received by producers,

Chapter 5 Public Spending and Public Choice 447 9) The legal system in the United States tends A) to support monopolies. B) to actively discourage unionization. C) to discourage the entry of new firms into industries. D) to promote competition. Answer: DDiff: 1Topic: 5.3 The Other Economic Functions of GovernmentAACSB: Analytic skillsQuestion Status: Previous Edition Answer: DDiff:

Chapter 5 Public Spending and Public Choice 467 94) Explain why ensuring economic stability is an economics function of government? Answer: Our economy sometimes faces the problems of high unemployment and rising prices.Perhaps most importantly, the federal government attempts to guide the overall pace ofeconomic activity, attempting to maintain steady growth, high

534 Miller Economics Today, 16th Edition 37) Dynamic tax analysis assumes A) all of the present tax rates will be in place for a minimum of twenty years. B) changes in the tax rates have no effect on the tax base. C) changes in the tax rates have no effect on tax revenue. D) changes

518 Miller Economics Today, 16th Edition 19) Eight years ago you purchased an asset for $100,000 that has yielded a nominal capital gain of $30,000. If you sold the asset today, your inflation adjusted capital gains would be zero due to inflation over the last eight years. The capital gains tax is 28

Chapter 6 Funding the Public Sector 6.1 Paying for the Public Sector 1) The fact that every dollar that the government spends or transfers must ultimately be provided by the taxes and user charges it collects plus government borrowing is known as the A) government balance sheet constraint. B) government budget constraint. C) tax collection constraint

Chapter 7 The Macroeconomy: Unemployment, Inflation, and Deflation 41 36) Which of the following statements is true about the seasonally adjusted unemployment rate? A) The seasonally adjusted unemployment rate is the sum of the frictional unemployment rate, structural unemployment rate, and cyclical unemployment rate. B) The seasonally adjusted unemployment rate shows how the unemployment

Chapter 7 The Macroeconomy: Unemployment, Inflation, and Deflation 61 2005 Market Basket 2005 2010 Commodity Quantity Price Price A 50 3 4 B 75 2 3 50) Refer to the above table. You are given information on Jane s consumption for 2005 and 2010. Using 2005 as the base year, compute the price index for 2010. The

Chapter 7 The Macroeconomy: Unemployment, Inflation, and Deflation 21 87) A discouraged worker is someone who A) has been fired. B) is unemployed. C) is not in the labor force. D) is employed. Answer: CDiff: 1Topic: 7.1 UnemploymentAACSB:Analytic skillsQuestion Status: Previous Edition Answer: CDiff: 1Topic: 7.1 UnemploymentAACSB:Analytic skillsQuestion Status: Previous Edition Answer: C Diff: 1 Topic: 7.1 Unemployment A ACSB: A nalytic

Chapter 7 The Macroeconomy: Unemployment, Inflation, and Deflation 7.1 Unemployment 1) Which of the following is true of unemployment? A) It is defined as the number of people actively looking for work who do not have jobs. B) The result is that the economy operates inside its production possibilities curve. C) There are psychological consequences associated

Chapter 7 The Macroeconomy: Unemployment, Inflation, and Deflation 79 26) The nominal rate of interest is A) the interest rate observed in today s market. B) the interest rate observed in the market minus the inflation premium. C) not influenced by inflation. D) a value that depends upon the stock market. Answer: ADiff: 1Topic: 7.5 Anticipated

Chapter 8 Measuring the Economy s Performance 157 85) Net investment refers to A) the change in the capital stock after subtracting out depreciation. B) the change in inventories over a 1 year period. C) the change in investment spending and the change in government expenditures on infrastructure. D) exports minus imports. Answer: ADiff: 1Topic: 8.3 Two

176 Miller Economics Today, 16th Edition 51) Disposable personal income is A) the total of factor payments to owners of resources. B) the dollar value of all final goods and services produced in a country in a year. C) the amount of monetary payments households actually receive before paying personal income taxes. D) the amount of

Chapter 8 Measuring the Economy s Performance 137 107) Define and explain gross domestic product. Answer: Gross domestic product is the total market value of all final goods and services producedby factors of production located within a country s borders. GDP does not countintermediate goods but counts only final goods and services.

Chapter 8 Measuring the Economy s Performance 8.1 The Simple Circular Flow 1) The simple circular flow of income shows that the total income in an economy equals A) total profits earned by firms. B) all taxes paid by households. C) the total amount of money supplied by the government. D) total expenditures. Answer: DDiff: 2Topic: 8.1 The

Chapter 8 Measuring the Economy s Performance 117 25) Why might a homemaker be upset with the way Gross Domestic Product (GDP) is calculated? A) Because the government always underestimates the dollar value of the household services produced at home and outside the market that are included in the Gross Domestic Product (GDP) statistic B)

Chapter 9 Global Economic Growth and Development 9.1 How Do We Define Economic Growth? 1) An increase in growth rates will cause the production possibilities curve to A) shift inward. B) b ecome steeper. C) b ecome flatter. D) shift outward. Answer: DDiff: 1Topic: 9.1 How Do We Define Economic Growth?AACSB:Analytic skillsQuestion Status: Previous Edition Answer: DDiff: 1Topic: 9.1 How Do

250 Miller Economics Today, 16th Edition 4) A system of private property rights A) enhances economic growth by creating incentives to the Fed to maintain stable prices. B) enhances economic growth by increasing the probability that a person can gain from making investments today. C) retards economic growth by serving the interests of the wealthy

Chapter 9 Global Economic Growth and Development 235 18) According to economist Paul Romer, economies that wish to experience growth must A) invest most of their savings in national defense. B) invest in knowledge. C) drastically lower their standards of living. D) b ecome command economies. Answer: BDiff: 1Topic: 9.4 New Growth Theory and the Determinants of GrowthAACSB:Analytic

Chapter 9 Global Economic Growth and Development 215 80) What is the real GDP after four years if Country X s average annual growth rate is 8.6 percent and the initial real GDP was $2,756.0 million? A) $2,993.0 million B) $3,833.5 million C) $1,077.5 million D) $3,250.4 million Answer: BDiff: 3Topic: 9.1 How Do We