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© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 99. It costs a furniture company $8,750 to produce 25 tables. The company’s total […]

Ten Principles of Economics 81 6. Trade between the United States and Guatemala a. benefits both the United States and Guatemala. b. is a losing proposition for the United States because Guatemalan labor is less expensive than U.S. labor. c. […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 47. According to Adam Smith, the success of decentralized market economies is primarily due […]

Ten Principles of Economics 161 65. In the short run, which of the following is not correct? a. Increasing the money supply increases the demand for goods and services. b. Increasing the money supply encourages firms to hire more workers. […]

192 Ten Principles of Economics Scenario 1-5 Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on […]

Ten Principles of Economics 181 43. Variations in the standard of living across countries are due almost entirely to differences in each nation’s total output of goods and services. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Difficulty: Moderate […]

Ten Principles of Economics Multiple Choice – Section 00: Introduction 1. The English word that comes from the Greek word for “one who manages a household” is a. market. b. consumer. c. producer. d. economy. ANSWER: d POINTS: 1 DIFFICULTY: […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25. A worker in Vietnam can earn $6 per day making cotton cloth on […]

Ten Principles of Economics 21 19. The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that a. equality refers to uniform distribution of those benefits and efficiency refers […]

Ten Principles of Economics 121 88. The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its […]

Ten Principles of Economics 41 59. Consider Mandy’s decision to go to college. If she goes to college, she will spend $20,000 on tuition, $10,000 on room and board, and $2,000 on books. If she does not go to college, […]

Externalities 2623 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 40. Suppose planting flowering shrubs creates a positive externality equal to $7 […]

Externalities 2683 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 43. Suppose that Company A’s railroad cars pass through Farmer B’s corn […]

Externalities 2719 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4. Sheryl sits on her patio and plays her guitar while her […]

Externalities 2643 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 79. Which of the following require firms to pay to pollute? (i) […]

Externalities 2663 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multiple Choice – Section 03: Private Solutions to Externalities 1. Externalities can […]

Externalities Multiple Choice – Section 00: Introduction 1. In a market economy, government intervention a. will always improve market outcomes. b. reduces efficiency in the presence of externalities. c. may improve market outcomes in the presence of externalities. d. is […]

Externalities 2603 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Multiple Choice – Section 02: Public Policies toward Externalities 1. Refer to […]

Externalities 2543 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 81. If we know that the supply curve for good x fails […]

Externalities 2523 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 42. Negative externalities occur when one person’s actions a. cause another person […]

Externalities 2563 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 122. One drawback to industrial policy is that a. technology spillovers are […]

Externalities 2503 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 9. The supply curve for a product reflects the a. willingness to […]

Public Goods and Common Resources 2795 42. The difference between specific knowledge and general knowledge is that a. the creation of general knowledge is usually more profitable for the creator. b. specific knowledge is excludable, while general knowledge is not […]

Public Goods and Common Resources 2815 80. Refer to Table 11-3. If the marginal cost of police protection is constant at $72 per person-hour, what is the efficient level of police protection to provide? a. 9 person-hours b. 18 person-hours […]

Public Goods and Common Resources 2775 Multiple Choice – Section 02: Public Goods 1. Because public goods are a. excludable, people have an incentive to be free riders. b. excludable, people do not have an incentive to be free riders. […]

Public Goods and Common Resources Multiple Choice – Section 00: Introduction 1. For private goods allocated in markets, a. prices guide the decisions of buyers and sellers and these decisions lead to an efficient allocation of resources. b. prices guide […]

Public Goods and Common Resources 2895 13. You and your friends watch a movie in your bedroom. For you and your friends, the enjoyment that you get from watching the movie is not rival in consumption. a. True b. False […]

2914 Public Goods and Common Resources 7. Are common resources excludable? Are they rival in consumption? ANSWER: No, common resources are not excludable. Yes, they are rival in consumption. POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.50 – LO: 11-1 […]

Public Goods and Common Resources 2855 32. Three business people meet for lunch at an Indian restaurant. They decide that each person will order an item off the menu, and they will share all dishes. They will split the cost […]

Public Goods and Common Resources 2875 74. Many species of animals are common resources, and many must be protected by law to keep them from extinction. Why is the cow not one of these endangered species even though there is […]

Public Goods and Common Resources 2755 39. Which of the following goods is excludable but not rival in consumption? a. a congested toll road b. fire protection in a small town c. a tornado siren d. whales in the ocean […]

The Costs of Production 3357 Scenario 13–22 Suppose that a small hair styling salon had revenues of $150,000 in a given year. The owner spent $10,000 on utilities, $60,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and […]

The Costs of Production 3223 79. Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie’s annual opportunity cost […]

The Costs of Production 3283 78. Refer to Figure 13-3. Assuming that the firm depicted produces cookies, which of the statements below is most consistent with the shape of the total cost curve? a. Producing an additional cookie is always […]

The Costs of Production 3263 39. Refer to Table 13-2. What is the marginal product of the fourth worker? a. 300 units b. 200 units c. 100 units d. 50 units ANSWER: d POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: […]

The Costs of Production 3323 2. In his book, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith described a visit he made to a a. car factory. b. pin factory. c. washing machine factory. […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 57. There is general agreement among economists that the long-run time period exceeds one […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 37. Bubba is a shrimp fisherman who used $2,000 from his personal savings account […]

The Costs of Production 3243 121. Refer to Scenario 13–13. Christine could earn $6,000 per year preparing taxes. In calculating the economic profit of her cookie jar business, the $6,000 that Christine gives up is counted as part of her […]

The Costs of Production 3303 34. If a firm experiences constant returns to scale at all output levels, then its long-run average total cost curve would a. slope downward. b. be horizontal. c. slope upward. d. slope downward for low […]

The Costs of Production Multiple Choice – Section 00: Introduction 1. Analyzing the behavior of the firm enhances our understanding of a. what decisions lie behind the market supply curve. b. how consumers allocate their income to purchase scarce resources. […]

Firms in Competitive Markets 3471 102. Refer to Scenario 14-2. To maximize its profit, the firm should a. increase its output. b. continue to produce 1,000 units. c. decrease its output but continue to produce. d. shut down. ANSWER: a […]

Firms in Competitive Markets Multiple Choice – Section 00: Introduction 1. A firm has market power if it can a. maximize profits. b. minimize costs. c. influence the market price of the good it sells. d. hire as many workers […]

Firms in Competitive Markets 3611 16. A firm‘s incentive to compare marginal revenue and marginal cost is an application of the principle that rational people think at the margin. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Easy […]

Firms in Competitive Markets 3391 36. Which of the following statements regarding a competitive market is not correct? a. There are many buyers and many sellers in the market. b. Because of firm location or product differences, some firms can […]

Firms in Competitive Markets 3491 145. Susan quit her job as a teacher, which paid her $36,000 per year, in order to start her own catering business. She spent $12,000 of her savings, which had been earning 10 percent interest […]

Firms in Competitive Markets 3591 89. In the transition from the short run to the long run, the number of firms in a competitive industry is a. fixed. b. increasing at a constant rate. c. decreasing. d. able to adjust […]

Firms in Competitive Markets 3571 50. Which of the following statements is not correct? a. In a long–run equilibrium, marginal firms make zero economic profit. b. To maximize profit, firms should produce at a level of output where price equals […]

Firms in Competitive Markets 3627 64. If some resources used in the production of a good are only available in limited quantities, then the long run market supply curve will be perfectly elastic. a. True b. False ANSWER: False POINTS: […]

Firms in Competitive Markets 3551 13. Refer to Figure 14–11. The figure above is for a firm operating in a competitive industry. If there were eight identical firms in the industry, which of the following price-quantity combinations would be on […]

Firms in Competitive Markets 3451 64. Refer to Table 14–14. Suppose that due to a decrease in the market demand for bread the market price of bread drops to $2.75 per loaf. At this new price, what is Bob’s profit–maximizing […]

Firms in Competitive Markets 3411 77. Firms operating in competitive markets produce output levels where marginal revenue equals a. price. b. average revenue. c. total revenue divided by output. d. All of the above are correct. ANSWER: d POINTS: 1 […]

Firms in Competitive Markets 3531 219. When determining whether to shut down in the short run, a competitive firm should ignore (i) fixed costs. (ii) variable costs. (iii) sunk costs. a. (iii) only b. (i) and (iii) only c. (ii) […]

Firms in Competitive Markets 3431 25. Refer to Table 14-7. If the firm is maximizing profit, how much profit is it earning? a. $0.50 b. $7.50 c. $10 d. There is insufficient data to determine the firm’s profit. ANSWER: d […]

Firms in Competitive Markets 3511 182. Refer to Figure 14-5. When market price is P2, a profit-maximizing firm’s losses can be represented by the area a. (P4 – P2) × Q2. b. (P2 – P1) × (Q2-Q1). c. At a […]

Monopoly 3841 42. Refer to Scenario 15-6. How much additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $150 per ticket? a. $25,000 b. $50,000 c. $75,000 […]

Monopoly 3781 188. A reduction in a monopolist‘s fixed costs would a. decrease the profit–maximizing price and increase the profit-maximizing quantity produced. b. increase the profit-maximizing price and decrease the profit-maximizing quantity produced. c. not effect the profit-maximizing price or […]

Monopoly 3661 33. A fundamental source of monopoly market power arises from a. perfectly elastic demand. b. perfectly inelastic demand. c. barriers to entry. d. availability of “free” natural resources, such as water or air. ANSWER: c POINTS: 1 DIFFICULTY: […]

Monopoly 3721 74. Refer to Figure 15-4. The demand curve for a monopoly firm is depicted by curve a. A. b. B. c. C. d. D. ANSWER: b POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.72 – LO: 15-2 NATIONAL […]

Monopoly 3921 78. In many countries, the government chooses to “internalize” the monopoly by owning monopoly providers of goods and services. (In some cases these firms are “nationalized,” and the government actually buys or confiscates firms that operate in monopoly […]

Monopoly 3801 23. A monopoly market a. always maximizes total economic well–being. b. always minimizes consumer surplus. c. generally fails to maximize total economic well-being. d. generally fails to maximize producer surplus. ANSWER: c POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING […]

Monopoly 3881 23. One problem with government operation of monopolies is that a. a benevolent government is likely to be interested in generating profits for political gain. b. monopolies typically have rising average costs. c. the government typically has little […]

Monopoly 3901 23. A monopolist produces an output level where marginal revenue equals marginal cost and charges a price where marginal cost equals average total cost. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.72 […]

Monopoly 3741 Table 15-4 A monopolist faces the following demand curve: Price Quantity $30 0 $25 2.5 $20 5 $15 7.5 $10 10 $5 12.5 $0 15 110. Refer to Table 15-4. If the monopolist produces 10 units, what is […]

3932 Monopoly 31. Refer to Table 15-22. The marginal revenue becomes negative with the production of which unit of output? ANSWER: 70th POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.71 – LO: 15-1 NATIONAL STANDARDS: United States – BUSPROG: Analytic […]

Monopoly 3821 57. Refer to Scenario 15-4. The profit–maximizing monopolist will earn profits of a. $6,400. b. $3,200. c. $1,600. d. $800. ANSWER: c POINTS: 1 DIFFICULTY: Difficulty: Challenging LEARNING OBJECTIVES: ECON.MANK.15.73 – LO: 15-3 NATIONAL STANDARDS: United States – […]

Monopoly 3861 81. If a monopolist can practice perfect price discrimination, the monopolist will a. eliminate consumer surplus. b. eliminate deadweight loss. c. maximize profits. d. All of the above are correct. ANSWER: d POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING […]

Monopoly 3681 74. Refer to Figure 15-2. Which of the following reasons describes the fundamental barrier to entry for the monopoly in the figure? a. monopoly resources b. government regulation c. the production process d. Both a and b are […]

Monopoly Multiple Choice – Section 00: Introduction 1. A competitive firm a. and a monopolist are price takers. b. and a monopolist are price makers. c. is a price taker, whereas a monopolist is a price maker. d. is a […]

Monopoly 3761 Table 15–13 The following table gives information on the price, quantity, and total cost of production for a monopolist. Price Output Total Costs $5 0 $3 $4 5 $8 $3 10 $20 $2 15 $33 $1 20 $53 […]

Monopoly 3701 32. For a monopoly firm, which of the following equalities is always true? a. price = marginal revenue b. price = average revenue c. price = total revenue d. marginal revenue = marginal cost ANSWER: b POINTS: 1 […]

Measuring a Nation’s Income Multiple Choice – Section 00: Introduction 1. Macroeconomists study a. the decisions of individual households and firms. b. the interaction between households and firms. c. economy-wide phenomena. d. regulations imposed on firms and unions. ANSWER: c […]

5810 Measuring a Nation’s Income 82. You find that your paycheck for the year is higher this year than last. Does that mean that your real income has increased? Explain carefully. ANSWER: Real income is nominal income adjusted for general […]

Measuring a Nation’s Income 5771 5. GDP does not reflect a. the value of leisure. b. the value of goods and services produced at home. c. the quality of the environment. d. All of the above are correct. ANSWER: d […]

Measuring a Nation’s Income 5751 57. Refer to Table 23-5. In 2017, this country’s a. real GDP was $900, and the GDP deflator was 138.9. b. real GDP was $1250, and the GDP deflator was 128.0. c. real GDP was […]

Measuring a Nation’s Income 5731 14. Which of the following statements about nominal GDP and real GDP is correct? a. Nominal GDP is a better gauge of economic well-being than real GDP. b. Real GDP is a better gauge of […]

Measuring a Nation’s Income 5691 46. Which of the following items is counted as part of government purchases? a. The federal government pays the salary of a Navy officer. b. The state of Nevada pays a private firm to repair […]

Measuring a Nation’s Income 5651 84. The government of a country, which has adopted American GDP accounting conventions, reported that seasonally adjusted GDP in quarter 3 was $48 billion at an annual rate. This means that the seasonally-adjusted market value […]

Measuring a Nation’s Income 5611 3. Which of the following is a way to compute GDP? a. total income earned. b. total expenditures on final goods. c. add up the market values of all final goods and services. d. All […]

Measuring a Nation’s Income 5791 27. The government computes measures of income other than GDP because these other measures usually tell different stories about overall economic conditions. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.15.112 […]

Measuring a Nation’s Income 5711 88. In the economy of Talikastan in 2015, consumption was $3000, exports were $400, GDP was $5000, imports were $500, and investment was $1400. What were Talikastan’s government purchases in 2015? a. $60 b. $500 […]

Measuring a Nation’s Income 5671 6. Consumption consists of spending by households on goods and services, with the exception of a. purchases of intangible services. b. purchases of durable goods. c. purchases of new houses. d. spending on education. ANSWER: […]

232 Measuring the Cost of Living 16. Refer to Scenario 24-6. Using 2011 as the base year, what is the inflation rate in 2011? ANSWER: The inflation rate is 20%. POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.15.118 – LO: 24-1 […]

Measuring the Cost of Living 61 116. Refer to Table 24-6. If the base year is 2009, then the economy’s inflation rate in 2010 is a. 20 percent. b. 25 percent. c. 30 percent. d. 120 percent. ANSWER: a POINTS: […]

Measuring the Cost of Living 221 71. In the late 1970s, U.S. nominal interest rates were high and real interest rates were low, but in the late 1990s, U.S. nominal interest rates were low and real interest rates were high. […]

Measuring the Cost of Living 181 105. If the nominal interest rate is 4 percent and the real interest rate is 7 percent, then the inflation rate is a. -3 percent. b. 0.75 percent. c. 3 percent. d. 11 percent. […]

Measuring the Cost of Living 201 11. The Bureau of Labor Statistics determines which prices are most important to the typical consumer by surveying consumers. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.15.118 – LO: […]

Measuring the Cost of Living 161 63. Refer to Table 24–13. Suppose Olivia’s 2009 clothing expenditure in 2010 dollars amounts to $1,440. Then X, the consumer price index for 2009, has a value of a. 120. b. 130. c. 140. […]

Measuring the Cost of Living 81 158. The consumer price index tries to gauge how much incomes must rise to maintain a. an increasing standard of living. b. a constant standard of living. c. a decreasing standard of living. d. […]

Measuring the Cost of Living 121 10. Which of the following statements is true? a. Even if we know the values of the consumer price index for the years 2009 and 2010, we cannot calculate the inflation rate for 2010 […]

Measuring the Cost of Living 101 200. An important difference between the GDP deflator and the consumer price index is that a. the GDP deflator reflects the prices of goods and services bought by producers, whereas the consumer price index […]

Measuring the Cost of Living 141 23. Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost a. $0.27, so tennis balls were cheaper in 1975. b. $0.27, so tennis balls […]

Production and Growth 6111 24. In one day Portal Computer Company made 400 laptops with 1200 hours of labor. What was its productivity? a. 1/3 laptop per hour b. 3 hours per laptop c. 1200 laptops d. 400 laptops ANSWER: […]

Production and Growth 6171 11. The traditional view of the production process is that capital is subject to a. constant returns. b. increasing returns. c. diminishing returns. d. diminishing returns for low levels of capital, and increasing returns for high […]

Production and Growth 6131 72. Megan is a landscaper. Which of the following are included in her physical capital? a. her knowledge of landscaping learned in college and her landscaping equipment b. her knowledge of landscaping learned in college, but […]

Production and Growth 6091 34. The United Kingdom is a. an advanced economy, and over the past century its rate of economic growth has been higher than that of the United States. b. an advanced economy, and over the past […]

Production and Growth 6191 57. The catch-up effect refers to the idea that a. saving will always catch-up with investment spending. b. it is easier for a country to grow fast and so catch-up if it starts out relatively poor. […]

Production and Growth 6265 15. Why do we refer to physical capital as a produced factor of production? ANSWER: Physical capital originates as an output from the production process, and is subsequently used as an input into the production process. […]

Production and Growth 6251 49. Economists generally believe that inward-oriented policies are more likely to foster growth than outward-oriented policies. a. True b. False ANSWER: False DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.123 – LO: 25-3 NATIONAL STANDARDS: United States – […]

Production and Growth 6151 121. Amy discovers a way to produce water heaters so they are less expensive and use less natural gas. Amy’s discovery is a. physical capital. If Amy’s discovery leads to lower natural gas prices, it has […]

Production and Growth 6211 104. If a newly elected government takes actions that makes its country’s courts more efficient and less corrupt, then a. producers will have greater confidence that they will benefit from their efforts. b. producers are likely […]

Saving, Investment, and the Financial System 6459 89. A government budget deficit affects the supply of loanable funds, rather than the demand for loanable funds, because a. in our model of the loanable funds market, we define “loanable funds” as […]

Saving, Investment, and the Financial System 6319 80. Nastech Pharmaceuticals announced it has developed a nasal spray that would reduce hunger cravings. Other things the same we would expect a. the demand for existing shares of stock in this company […]

Saving, Investment, and the Financial System 6499 4. When a firm wants to borrow directly from the public to finance the purchase of new equipment, it does so by selling shares of stock. a. True b. False ANSWER: False POINTS: […]

Saving, Investment, and the Financial System 6379 22. Which of the following equations represents GDP for an open economy? a. Y = C + I + G + NX b. NX = I – G c. I = Y – […]

Saving, Investment, and the Financial System 6399 63. A budget surplus a. occurs when the government has debt equal to zero. b. causes government debt to increase. c. exists when government spending is greater than tax revenues. d. reduces the […]

Saving, Investment, and the Financial System Multiple Choice – Section 00: Introduction 1. When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures a. capital investment. b. investment in human capital. […]

Saving, Investment, and the Financial System 6339 121. Bay City Mining, Inc. has a price of $20 a share, outstanding shares of 2.5 million, retained earnings of $1 million dollars, and a dividend yield of 2 percent. It has a […]

Saving, Investment, and the Financial System 6519 61. Suppose that you are a broker and people tell you the following about themselves. What sort of bond would you recommend to each? Defend your choices. a. “I am in a high […]

6530 Saving, Investment, and the Financial System 17. and are the two most important financial intermediaries. ANSWER: Banks, Mutual Funds Mutual Funds, banks POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.126 – LO: 26-1 NATIONAL STANDARDS: United States – BUSPROG: […]

Saving, Investment, and the Financial System 6359 161. Index funds a. buy all the stocks in a given stock index. b. promise to beat the market by a certain percentage known as an index. c. provide a return that is […]

Saving, Investment, and the Financial System 6299 37. Two bonds have the same term to maturity. The first was issued by a state government and the probability of default is believed to be low. The other was issued by a […]

Saving, Investment, and the Financial System 6439 48. Suppose the government were to replace the income tax with a consumption tax so that interest on savings was not taxed. The result would be that the interest rate a. and investment […]

Saving, Investment, and the Financial System 6479 122. For an imaginary economy, when the real interest rate is 7 percent, the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500. Currently, the nominal […]

Saving, Investment, and the Financial System 6419 6. Other things the same, when the interest rate rises, a. people would want to lend more, making the supply of loanable funds increase. b. people would want to lend less, making the […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 23. Refer to Figure 27–3. Suppose Paul begins with $900 in wealth. Starting from […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 61. Tami knows that people in her family die young, and so she buys […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 194. If the interest rate is 4%, in which of the following cases is […]

The Basic Tools of Finance Multiple Choice – Section 00: Introduction 1. Most financial decisions involve two related elements: a. advice and consent. b. investment and taxes. c. time and risk. d. saving and consumption. ANSWER: c POINTS: 1 DIFFICULTY: […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 156. According to the rule of 70, if the interest rate is 5 percent, […]

The Basic Tools of Finance 6561 38. You put $150 in the bank two years ago and forgot about it. The bank sends you a notice that you now have $169.34 in your account. What interest rate did you earn? […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 102. Suppose interest of 5% for two years can be earned on $1,000 saved […]

Thinking Like an Economist 383 2. Which of the following is not an example of a graph of a single variable? a. a pie chart b. a bar graph c. a time-series graph d. a scatterplot ANSWER: d POINTS: 1 […]

Thinking Like an Economist Multiple Choice – Section 00: Introduction 1. Which of the following is not correct? a. Economists use some familiar words in specialized ways. b. Economics has its own language and its own way of thinking, but […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 133. Draw a production possibilities frontier showing increasing opportunity cost of hammers in terms […]

Thinking Like an Economist 323 230. Refer to Figure 2-13. Which of the following combinations of points are both efficient and attainable for this economy? a. G, H b. F, I, L c. F, G, H, I, L d. J, […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 118. Refer to Figure 2-2. If households are buyers in the markets represented by […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 22. A circular-flow diagram is a visual model of the economy. a. True b. […]

Thinking Like an Economist 283 158. A production possibilities frontier shifts outward when a. the economy experiences economic growth. b. the desires of the economy’s citizens change. c. at least one of the basic principles of economics is violated. d. […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 38. An example of a price that changes only infrequently is the price of […]

Thinking Like an Economist 475 24. Refer to Figure 2-14. What is the opportunity cost of moving from point R to point Q? ANSWER: 80 bushels of apples POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.6 – LO: 2-1 NATIONAL […]

Thinking Like an Economist 403 50. A relatively steep demand curve indicates that a. quantity demanded will adjust only slightly to a price change. b. quantity demanded will adjust significantly to a price change. c. quantity demanded will not adjust […]

Thinking Like an Economist 303 194. Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines, then it will produce a. 0 engines and 40 tvs. b. 10 engines and 35 tvs. c. […]

Thinking Like an Economist 343 10. Normative statements are not a. descriptive. b. prescriptive. c. claims about how the world should be. d. made by economists speaking as policy advisers. ANSWER: a POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.7 […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 81. The effects of borrowing by the federal government would be studied by a […]

Thinking Like an Economist 243 79. In the circular-flow diagram, another name for goods and services produced by firms is a. factors of production. b. output. c. inputs. d. resources. ANSWER: b POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.6 […]

Unemployment 7033 130. The Bureau of Labor Statistics’ household survey and establishment survey both yield the same results about total employment. a. True b. False ANSWER: False DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.136 – LO: 28-1 NATIONAL STANDARDS: United States […]

Unemployment 6833 67. President Bigego is running for re-election against Senator Pander. Bigego proclaims that more people are working now than when he took office. Pander says that the unemployment rate is higher now than when Bigego took office. You […]

Unemployment Multiple Choice – Section 00: Introduction 1. To maintain their standard of living, most people rely on a. government assistance. b. their personal savings. c. their labor earnings. d. rental income. ANSWER: c DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.135 […]

Unemployment 6973 6. Suppose that efficiency wages become more common in the economy. Imposing efficiency wages a. increases the quantity demanded and decreases the quantity supplied of labor. b. decreases the quantity demanded and increases the quantity supplied of labor. […]

Unemployment 6913 28. Wanda quit her job because she was unhappy at work. Arnold was fired from his landscaping job because his company was downsizing. Who is eligible for unemployment insurance benefits? a. both Wanda and Arnold b. Wanda but […]

Unemployment 6893 194. Which of the following is not an explanation for the existence of unemployment in the long run? a. it takes time for workers to search for the jobs that are best suited for them b. minimum–wage laws […]

Unemployment 6933 23. Refer to Figure 28-3. If the government imposes a minimum wage of $4, how many workers will be unemployed? a. 0 b. 3,000 c. 4,000 d. 7,000 ANSWER: a POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.138 […]

Unemployment 6853 111. Refer to Table 28-2. The labor–force participation rate of Aridia in 2012 was a. 50%. b. 53.3%. c. 56.25%. d. 88.9%. ANSWER: c POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.136 – LO: 28-1 NATIONAL STANDARDS: United […]

Unemployment 7013 70. Data on the unemployment rate in the U.S. since 1960 show that the economy always has some unemployment and that the amount changes from year to year. a. True b. False ANSWER: True DIFFICULTY: Difficulty: Easy LEARNING […]

Unemployment 7053 190. It is only among the least skilled and least experienced members of the labor force that minimum-wage laws cause unemployment. a. True b. False ANSWER: True DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.138 – LO: 28-3 NATIONAL STANDARDS: […]

Unemployment 6813 27. Who of the following would be included in the Bureau of Labor Statistics’ “unemployed” category? a. Miguel, who is on temporary layoff b. Reta, who worked only 15 hours last week c. Marisa, who neither has a […]

Unemployment 6993 9. The natural rate of unemployment is closely associated with the short–run ups and downs of economic activity. a. True b. False ANSWER: False DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.141 – LO: 28-0 NATIONAL STANDARDS: United States – […]

Unemployment 6953 14. When a union raises the wage above the equilibrium level, it a. reduces both the quantity of labor supplied and the quantity of labor demanded. b. reduces the quantity of labor supplied and raises the quantity of […]

Unemployment 6873 152. Which of the following is not a commonly–cited explanation for the dramatically increasing labor–force participation rates for women from 1950 to the present? a. availability of reliable birth control b. invention of household labor-saving devices such as […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 25. Treasury Bonds are a. liquid, but not a store of value. b. a […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 66. Which of the following is not included in M1? a. a $5 bill […]

The Monetary System Multiple Choice – Section 00: Introduction 1. You use U.S. currency to pay the owner of a restaurant for a delicious meal. The currency a. has no intrinsic value. The exchange is an example of barter. b. […]

7310 The Monetary System © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. © 2015 Cengage Learning. All Rights Reserved. May not be […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 75. Refer to Table 29-3. If all banks in the economy have the same […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 44. An open-market sale a. increases the number of dollars and the number of […]

The Monetary System 7151 Multiple Choice – Section 02: The Federal Reserve System 1. Which of the following institutions is a central bank? a. the Bank of Japan b. the Bank of England c. the Federal Reserve System d. All […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34. If the reserve requirement is 10 percent, a bank desires to hold no […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 15. When the Fed purchases $1000 worth of government bonds from the public, the […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 60. The Fed increases the reserve requirement, but it wants to offset the effects […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 100. Refer to Scenario 29-2. Suppose that the Bank of Tazi changes the reserve […]

Money Growth and Inflation Multiple Choice – Section 00: Introduction 1. Over the past 80 years, prices in the U.S. have risen on average about a. 2 percent per year. b. 4 percent per year. c. 3.6 percent per year. […]

Money Growth and Inflation 7489 58. Given a nominal interest rate of 5 percent, in which of the following cases would you earn the highest after–tax real rate of interest? a. Inflation is 3 percent; the tax rate is 15 […]

Money Growth and Inflation 7529 60. According to the classical dichotomy, what changes nominal variables? What changes real variables? ANSWER: The classical dichotomy argues that nominal variables are determined primarily by developments in the monetary system such as changes in […]

Money Growth and Inflation 7509 5. In the 1990s, U.S. prices rose at about the same rate as in the 1970s. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.15.151 – LO: 30-0 NATIONAL STANDARDS: United […]

Money Growth and Inflation 7389 96. Economic variables whose values are measured in goods are called a. dichotomous variables. b. nominal variables. c. classical variables. d. real variables. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.15.148 – LO: 30-1 […]

Money Growth and Inflation 7409 137. The principle of monetary neutrality implies that an increase in the money supply will a. increase real GDP and the price level. b. increase real GDP, but not the price level. c. increase the […]

Money Growth and Inflation 7541 19. The quantity equation is expressed as _____. The rate at which money changes hands is known as _____. ANSWER: M x V = P x Y, velocity POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.15.148 […]

Money Growth and Inflation 7449 218. If the real interest rate is 6 percent and the price level is falling at a rate of 2 percent, what is the nominal interest rate? a. 4 percent b. 6 percent c. 8 […]

Money Growth and Inflation 7429 177. During the 2008 financial crisis velocity decreased. This means that the rate at which money changed hands a. decreased. Other things the same, a decrease in velocity decreases the price level. b. decreased. Other […]

Money Growth and Inflation 7469 12. The shoeleather cost of inflation refers to a. the redistributional effects of unexpected inflation. b. the time spent searching for low prices when inflation rises. c. the waste of resources used to maintain lower […]

Money Growth and Inflation 7369 60. Open-market purchases by the Fed a. make the price level and value of money fall. b. make the price level rise, and make the value of money fall. c. make the price level and […]

Money Growth and Inflation 7349 20. In the long run, money demand and money supply determine a. the value of money and the real interest rate. b. the value of money but not the real interest rate. c. the real […]

Aggregate Demand and Aggregate Supply 8209 21. Misperceptions theory helps explain what feature of the aggregate demand and aggregate supply model? ANSWER: why the short run aggregate-supply curve slopes upward POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.167 – LO: […]

Aggregate Demand and Aggregate Supply 8155 82. Which of the following would cause stagflation? a. aggregate demand shifts right b. aggregate demand shifts left c. aggregate supply shifts right d. aggregate supply shifts left ANSWER: d POINTS: 1 DIFFICULTY: Easy […]

Aggregate Demand and Aggregate Supply 8075 22. A candidate for political office announces the following policies which, he says, economics clearly demonstrates will lead to higher output in the long run: 1. increase immigration from abroad 2. make trade more […]

Aggregate Demand and Aggregate Supply 8115 6. Which of the following would cause prices and real GDP to rise in the short run? a. an increase in the expected price level b. an increase in the money supply c. a […]

Aggregate Demand and Aggregate Supply 8175 120. According to the “In the News” article, macroprudential tools a. allow a central bank to alter lending for specific industries. b. allow a central bank to alter taxes. c. limit a central bank’s […]

Aggregate Demand and Aggregate Supply 8195 54. Stagflation results from continued decreases in aggregate demand. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.15.169 – LO: 33-5 NATIONAL STANDARDS: United States – BUSPROG: Analytic TOPICS: DISC: […]

Aggregate Demand and Aggregate Supply 7975 33. Which of the following is correct concerning recessions? a. They come at fairly regular and predictable intervals. b. They are associated with comparatively large increases in investment spending. c. They are any period […]

Aggregate Demand and Aggregate Supply 8095 63. Other things the same, if the price level is lower than expected, then some firms believe that the relative price of what they produce has a. decreased, so they increase production. b. decreased, […]

Aggregate Demand and Aggregate Supply 7995 40. The model of aggregate demand and aggregate supply a. is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between […]

Aggregate Demand and Aggregate Supply 8035 91. Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to a. decrease consumption, shown as a movement to the left along a given aggregate-demand curve. […]

Aggregate Demand and Aggregate Supply 8135 42. Refer to Optimism. In the long run, the change in price expectations created by optimism shifts a. long–run aggregate supply right. b. long–run aggregate supply left. c. short–run aggregate supply right. d. short-run […]

Aggregate Demand and Aggregate Supply 8055 131. If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would a. rise, making aggregate demand shift right. b. rise, making aggregate […]

Aggregate Demand and Aggregate Supply 8015 45. Other things the same, when the price level falls, interest rates a. rise, which means consumers will want to spend more on homebuilding. b. rise, which means consumers will want to spend less […]

Aggregate Demand and Aggregate Supply Multiple Choice – Section 00: Introduction 1. Which of the following explains why production rises in most years? a. increases in the labor force b. increases in the capital stock c. advances in technological knowledge […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 69. According to a 2009 article in The Economist, the multiplier effect and crowding–out […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 71. If the MPC is 0, then the multiplier is a. 0. b. 1. […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 194. The Fed can influence the money supply by a. changing how much it […]

8454 The Influence of Monetary and Fiscal Policy on Aggregate Demand 22. If the Federal Reserve’s goal is to stabilize aggregate demand, then in response to an increase in money demand, the Federal Reserve will _____ the money supply. ANSWER: […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 51. Explain the logic according to liquidity preference theory by which an increase in […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 155. The Fed is concerned about stock market booms because the booms a. increase […]

The Influence of Monetary and Fiscal Policy on Aggregate Demand 8403 Figure 34-7 31. Refer to Figure 34-7. The aggregate-demand curve could shift from AD1 to AD2 as a result of a. an increase in government purchases. b. a decrease […]

The Influence of Monetary and Fiscal Policy on Aggregate Demand 8343 Figure 34-6. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 113. According to liquidity preference theory, an increase in the price level shifts the […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 112. If Congress increases taxes to balance the federal budget, then to prevent unemployment […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 71. Refer to Figure 34-2. Assume the money market is always in equilibrium, and […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 34. According to liquidity preference theory, the money-supply curve is a. upward sloping. b. […]

The Influence of Monetary and Fiscal Policy on Aggregate Demand Multiple Choice – Section 00: Introduction 1. Shifts in the aggregate-demand curve can cause fluctuations in a. neither the level of output nor the level of prices. b. the level […]

742 Interdependence and the Gains from Trade 7. Refer to Scenario 3-1. Which if any good(s) does Greg have an absolute advantage producing? ANSWER: Greg has an absolute advantage in both the production of ice cream and cake. POINTS: 1 […]

Interdependence and the Gains from Trade 707 19. Refer to Table 3-37. Iceland should export a. coolers and import radios. b. radios and import coolers. c. both goods and import neither good. d. neither good and import both goods. ANSWER: […]

Interdependence and the Gains from Trade 647 171. Refer to Figure 3-17. Suppose Maxine decides to increase her production of tarts by 5. What is the opportunity cost of this decision? a. 2/5 pie b. 2 pies c. 5/2 pies […]

Interdependence and the Gains from Trade 667 207. Refer to Figure 3-21. Suppose Uzbekistan decides to increase its production of bolts by 10. What is the opportunity cost of this decision? a. 1/2 nail b. 2 nails c. 5 nails […]

Interdependence and the Gains from Trade 627 136. Refer to Table 3-30. Varick has a comparative advantage in the production of a. wheat. b. cloth. c. both goods. d. neither good. ANSWER: b POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: […]

Interdependence and the Gains from Trade 587 57. Refer to Table 3-20. Brad has a comparative advantage in the production of a. wheat and Theresa has a comparative advantage in the production of beef. b. beef and Theresa has a […]

Interdependence and the Gains from Trade 687 245. Which of the following is not correct? a. Economists are generally united in their support of free trade. b. The conclusions of Adam Smith and David Ricardo on the gains from trade […]

Interdependence and the Gains from Trade 567 16. Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in […]

Interdependence and the Gains from Trade Multiple Choice – Section 00: Introduction 1. People who provide you with goods and services a. are acting out of generosity. b. do so because they get something in return. c. have chosen not […]

Interdependence and the Gains from Trade 507 31. Refer to Table 3-6. Which of the following represents Zimbabwe’s and Portugal’s production possibilities frontiers when each country has 60 minutes of machine time available? a. Zimbabwe Portugal b. Zimbabwe Portugal c. […]

Interdependence and the Gains from Trade 527 67. Refer to Table 3-17. If the production possibilities frontier is a straight line, then “?” must be a. 180. b. 200. c. 220. d. 240. ANSWER: b POINTS: 1 DIFFICULTY: Difficulty: Moderate […]

Interdependence and the Gains from Trade 547 99. Refer to Figure 3-7. If Bintu must work 2 hours to make each cup, then her production possibilities frontier is based on how many hours of work? a. 2 hours b. 4 […]

Interdependence and the Gains from Trade 727 37. Two countries can achieve gains from trade even if one country has an absolute advantage in the production of both goods. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Moderate […]

The Market Forces of Supply and Demand 875 8. Holding the nonprice determinants of supply constant, a change in price would a. result in either a decrease in supply or an increase in supply. b. result in a movement along […]

The Market Forces of Supply and Demand 855 Figure 4-5 146. Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand B to Demand C in the market for mattresses? a. a decrease […]

The Market Forces of Supply and Demand 935 6. Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at a. prices at and above the equilibrium price. b. […]

The Market Forces of Supply and Demand 1075 ANSWER: © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. © 2015 Cengage Learning. All […]

The Market Forces of Supply and Demand 915 83. Suppose there is a decrease in the price of corn. If corn is an input into the production of ethanol, we would expect the supply curve for ethanol to a. shift […]

The Market Forces of Supply and Demand 795 33. When we move along a given demand curve, a. only price is held constant. b. income and price are held constant. c. all nonprice determinants of demand are held constant. d. […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 83. Refer to Figure 4-20. If price is $25, then quantity demanded and quantity […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 122. If consumers often purchase muffins to eat while they drink their lattés at […]

The Market Forces of Supply and Demand 895 47. Which of the following events would cause a movement upward and to the right along the supply curve for mangos? a. The number of sellers of mangos increases. b. There is […]

The Market Forces of Supply and Demand 815 67. Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $15 is a. 0 units. b. 10 units. […]

The Market Forces of Supply and Demand 775 41. Which of the following characteristics is required for a perfectly competitive market? a. The goods offered for sale are exactly the same. b. There are so many buyers and sellers that […]

The Market Forces of Supply and Demand Multiple Choice – Section 00: Introduction 1. The two words most often used by economists are a. prices and quantities. b. resources and allocation. c. supply and demand. d. efficiency and equity. ANSWER: […]

The Market Forces of Supply and Demand 835 106. Two goods are substitutes when a decrease in the price of one good a. decreases the demand for the other good. b. decreases the quantity demanded of the other good. c. […]

© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 158. Refer to Figure 4-25. All else equal, the return of college students to […]

The Market Forces of Supply and Demand 1087 24. Refer to Table 4-15. Assuming these are the only four suppliers in this market and the function for market demand is QD=1000-100P, where QD is the quantity demanded and P is […]

The Market Forces of Supply and Demand 955 46. Which of the following would cause price to increase? a. an increase in supply b. a decrease in demand c. a surplus of the good d. a shortage of the good […]

The Market Forces of Supply and Demand 1055 62. Individual supply curves are summed vertically to obtain the market supply curve. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Difficulty: Easy LEARNING OBJECTIVES: ECON.MANK.15.19 – LO: 4-3 NATIONAL STANDARDS: […]

The Market Forces of Supply and Demand 1035 2. In a market economy, supply and demand determine both the quantity of each good produced and the price at which it is sold. a. True b. False ANSWER: True POINTS: 1 […]

Elasticity and Its Application 1197 188. Get Smart University is contemplating an increase in tuition to enhance revenue. If GSU feels that raising tuition would enhance revenue, it is a. ignoring the law of demand. b. assuming that the demand […]

Elasticity and Its Application 1217 226. Refer to Figure 5-5. Using the midpoint method, demand is unit elastic between prices of a. $20 and $40. b. $40 and$50. c. $40 and$60. d. $50 and$70. ANSWER: c POINTS 1 DIFFICULTY: Difficulty: […]

Elasticity and Its Application 1237 Figure 5-13 10. Refer to Figure 5-13. Between point A and point B, price elasticity of demand using the midpoint method is equal to a. 0.71. b. 0.85. c. 1.18. d. 1.40. ANSWER: b POINTS: […]

Elasticity and Its Application 1357 36. If a firm is facing elastic demand, then the firm should decrease price to increase revenue. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.23 – LO: 5-1 NATIONAL […]

Elasticity and Its Application 1157 © 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1158 Elasticity and Its Application Table 5-4 The following […]

Elasticity and Its Application 1337 32. In the early 1970s, OPEC’s goal was to a. decrease the world-wide price of oil so that the quantity demanded increased, thus raising total revenues for OPEC members. b. increase the world–wide price of […]

Elasticity and Its Application 1137 Table 5-1 Good Price Elasticity of Demand A 1.9 B 0.8 73. Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1? a. A is a luxury and […]

Elasticity and Its Application 1117 33. Suppose that Juan Carlos is filling out a survey that he received in the mail. The survey asks him what he would do if the price of his favorite toothpaste increased. Juan Carlos reports […]

Elasticity and Its Application 1297 54. A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00 each. At a price of $20.00, the t- shirt maker would be willing to supply 100 t-shirts. […]

Elasticity and Its Application 1277 14. Some firms eventually experience problems with their capacity to produce output as their output levels increase. For these firms, a. market power is substantial. b. supply is perfectly inelastic. c. supply is more elastic […]

Elasticity and Its Application 1317 89. If the price elasticity of supply is zero, then a. supply is more elastic than it is in any other case. b. the supply curve is horizontal. c. the quantity supplied is the same, […]

Elasticity and Its Application 1257 47. Food and clothing tend to have a. small income elasticities because consumers, regardless of their incomes, choose to buy relatively constant quantities of these goods. b. small income elasticities because consumers buy proportionately more […]

1376 Elasticity and Its Application 7. Suppose the price of natural gas, a typical fuel for heating homes, rises in January in Alaska. Would you expect the price elasticity of demand for natural gas to more inelastic immediately after the […]

Elasticity and Its Application 1177 148. Refer to Figure 5-3. Jenna says she would buy 10 gallons of gas per week regardless of the price. If this is true, then Jenna‘s demand for gas is represented by demand curve a. […]

Supply, Demand, and Government Policies 1595 130. Refer to Figure 6-27. Suppose a tax of $3 per unit is imposed on this market. How much will sellers receive per unit after the tax is imposed? a. $16 b. between $16 […]

Supply, Demand, and Government Policies 1615 170. Suppose that the demand for picture frames is highly inelastic, and the supply of picture frames is highly elastic. A tax of $1 per frame levied on picture frames will decrease the effective […]

1694 Supply, Demand, and Government Policies 12. Refer to Figure 6-31. If the government set a price floor at $17, would there be a shortage or surplus, and how large would be the shortage/surplus? ANSWER: A price floor set at […]

Supply, Demand, and Government Policies 1555 59. If the government removes a $2 tax on buyers of cigars and imposes the same $2 tax on sellers of cigars, then the price paid by buyers will a. not change, and the […]

Supply, Demand, and Government Policies 1455 105. Refer to Figure 6-6. In which of the following cases would sellers have to develop a rationing mechanism? a. a price ceiling set at $8 b. a price ceiling set at $6 c. […]

Supply, Demand, and Government Policies 1635 14. A price ceiling is a legal minimum on the price at which a good or service can be sold. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.15.27 – […]

Supply, Demand, and Government Policies 1675 133. Who bears the majority of a tax burden depends on whether the tax is placed on the buyers or the sellers. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: […]

Supply, Demand, and Government Policies 1535 17. If a tax is levied on the sellers of a product, then there will be a(n) a. downward shift of the demand curve. b. upward shift of the demand curve. c. decrease in […]

Supply, Demand, and Government Policies 1575 94. Refer to Figure 6-22. The price paid by buyers after the tax is imposed is a. $3.00. b. $3.50. c. $5.00. d. $6.00. ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.15.28 – […]

Supply, Demand, and Government Policies 1435 71. When a binding price floor is imposed on a market to benefit sellers, a. every seller in the market benefits. b. all buyers and sellers benefit. c. every seller who wants to sell […]

Supply, Demand, and Government Policies 1495 168. Refer to Table 6-5. Suppose the government imposes a price ceiling of $3 on this market. What will be the size of the shortage in this market? a. 0 units b. 30 units […]

Supply, Demand, and Government Policies 1515 208. The minimum wage has its greatest impact on the market for a. female labor. b. older labor. c. black labor. d. teenage labor. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.15.27 – […]

Supply, Demand, and Government Policies 1475 137. Refer to Figure 6-13. If the government imposes a price floor of $7 on this market, then there will be a. no surplus. b. a surplus of 10 units. c. a surplus of […]

Supply, Demand, and Government Policies 1415 33. When a binding price ceiling is imposed on a market to benefit buyers, a. every buyer in the market benefits. b. every buyer and seller in the market benefits. c. every buyer who […]

Supply, Demand, and Government Policies 1. Which of the following is not correct? a. Economists have two roles: scientist and policy adviser. b. As scientists, economists develop and test theories to explain the world around them. c. Economic policies rarely […]

Supply, Demand, and Government Policies 1655 74. In an unregulated labor market, the wage adjusts to balance labor supply and labor demand. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.15.27 – LO: 6-1 NATIONAL STANDARDS: […]

Consumers, Producers, and the Efficiency of Markets 1893 51. Refer to Figure 7-21. When the price is P1, area A represents a. total benefit. b. producer surplus. c. consumer surplus. d. None of the above is correct. ANSWER: d POINTS: […]

Consumers, Producers, and the Efficiency of Markets Multiple Choice – Section 00: Introduction 1. Which of the following statements is correct? a. Buyers always want to pay less and sellers always want to be paid more. b. Buyers always want […]

Consumers, Producers, and the Efficiency of Markets 1773 105. Which of the following will cause a decrease in consumer surplus? a. an increase in the number of sellers of the good b. a decrease in the production cost of the […]

Consumers, Producers, and the Efficiency of Markets 1833 64. Refer to Figure 7-11. If the supply curve is S and the demand curve shifts from D to D’, what is the increase in producer surplus due to new producers a. […]

Consumers, Producers, and the Efficiency of Markets 1813 30. Refer to Table 7-11. If the price is $1,l50, who would be willing to supply the product? a. Abby and Bobby b. Abby, Bobby, and Dianne c. Carlos, Dianne, and Evaline […]

Consumers, Producers, and the Efficiency of Markets 1933 125. Steak and chicken are substitutes. A sharp reduction in the supply of steak would a. increase consumer surplus in the market for steak and decrease producer surplus in the market for […]

Consumers, Producers, and the Efficiency of Markets 1753 65. You are offered a free ticket to see the Chicago Cubs play the Chicago White Sox at Wrigley Field. Assume the ticket has no resale value. Willie Nelson is performing on […]

Consumers, Producers, and the Efficiency of Markets 1953 29. All else equal, a decrease in demand will cause an increase in producer surplus. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.15.31 – LO: 7-2 NATIONAL […]

1972 Consumers, Producers, and the Efficiency of Markets Problems 1. What do economists call the highest amount a consumer will pay to purchase a good? ANSWER: The (maximum) willingness to pay. POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: ECON.MANK.15.30 – LO: […]

Consumers, Producers, and the Efficiency of Markets 1853 97. Refer to Figure 7-17. If the supply curve is S and the demand curve is D, what is total producer surplus at the equilibrium price? a. $202.50 b. $405 c. $810 […]

Consumers, Producers, and the Efficiency of Markets 1733 29. Refer to Table 7-2. If the market price is $3.80, a. David’s consumer surplus is $4.70 and total consumer surplus for the five individuals is $9.50. b. Megan’s consumer surplus is […]

Consumers, Producers, and the Efficiency of Markets 1793 137. Refer to Figure 7-8. If the government imposes a price floor of $100 in this market, then consumer surplus will decrease by a. $150. b. $325. c. $650. d. $675. ANSWER: […]

Consumers, Producers, and the Efficiency of Markets 1873 14. Total surplus is represented by the area below the a. demand curve and above the price. b. price and up to the point of equilibrium. c. demand curve and above the […]

Consumers, Producers, and the Efficiency of Markets 1913 88. Refer to Figure 7-26. At the equilibrium price, producer surplus is a. $600. b. $900. c. $1,200. d. $1,800. ANSWER: b POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: ECON.MANK.15.32 – LO: 7-3 […]

Application: The Costs of Taxation 2091 199. Refer to Figure 8-9. The per-unit burden of the tax on sellers is a. $20. b. $200. c. $300. d. $500. ANSWER: c POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.35 – LO: […]

Application: The Costs of Taxation 2111 238. Refer to Figure 8-12. Suppose a $3 per-unit tax is placed on this good. The amount of deadweight loss resulting from this tax is a. $7.50. b. $15.00. c. $22.50. d. $45.00. ANSWER: […]

Application: The Costs of Taxation 2171 35. The Laffer curve relates a. the tax rate to tax revenue raised by the tax. b. the tax rate to the deadweight loss of the tax. c. the price elasticity of supply to […]

Application: The Costs of Taxation Multiple Choice – Section 00: Introduction 1. In 1776, the American Revolution was sparked by anger over a. the extravagant lifestyle of British royalty. b. the crimes of British soldiers stationed in the American colonies. […]

Application: The Costs of Taxation 2151 63. Refer to Figure 8-17. Suppose the government imposes a $1 tax in each of the four markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the smallest in […]

Application: The Costs of Taxation 2051 115. Refer to Figure 8-4. The tax results in a loss of consumer surplus that amounts to a. $105. b. $140. c. $170. d. $210. ANSWER: c POINTS: 1 DIFFICULTY: Difficulty: Challenging LEARNING OBJECTIVES: […]

Application: The Costs of Taxation 2229 28. Refer to Figure 8-26. How much is producer surplus at the market equilibrium? ANSWER: Producer surplus is 0.5 x 80 x (4-0) = $160 at the market equilibrium. POINTS: 1 DIFFICULTY: Difficulty: Moderate […]

Application: The Costs of Taxation 2071 158. Refer to Figure 8-8. The tax causes consumer surplus to decrease by the area a. A. b. B+C. c. A+B+C. d. A+B+C+D+F. ANSWER: b POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.35 – […]

Application: The Costs of Taxation 2031 77. Refer to Figure 8-1. Suppose the government imposes a tax of P’ – P”’. The deadweight loss due to the tax is measured by the area a. J+K+L+M. b. J+K+L+M+N. c. I+Y. d. […]

Application: The Costs of Taxation 2191 69. In a 2012 Wall Street Journal column, economists Edward Prescott and Lee Ohanian claimed that, in order to promote faster economic growth, the government should a. increase tax rates on individuals with high […]

Application: International Trade 2265 36. Costa Rica allows trade with the rest of the world. We can determine whether Costa Rica has a comparative advantage in producing pharmaceuticals if we a. know whether Costa Rica imports or exports pharmaceuticals. b. […]

Application: International Trade 2305 72. Refer to Figure 9-5. Without trade, consumer surplus amounts to a. $810. b. $1,620. c. $3,240. d. $6,480. ANSWER: c POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: ECON.MANK.15.41 – LO: 9-2 NATIONAL STANDARDS: United States […]

Application: International Trade 2365 189. The nation of Aquilonia has decided to end its policy of not trading with the rest of the world. When it ends its trade restrictions, it discovers that it is importing incense, exporting steel, and […]

Application: International Trade 2345 145. A tariff on a product makes a. domestic sellers better off and domestic buyers worse off. b. domestic sellers worse off and domestic buyers worse off. c. domestic sellers better off and domestic buyers better […]

2464 Application: International Trade 64. What are the arguments in favor of trade restrictions, and what are the counterarguments? According to most economists, do any of these arguments really justify trade restrictions? Explain. ANSWER: Arguments mentioned in the text include […]

Application: International Trade 2405 Figure 9-22 The following diagram shows the domestic demand and domestic supply in a market. In addition, assume that the world price in this market is $40 per unit. 24. Refer to Figure 9-22. With free […]

Application: International Trade 2325 106. Refer to Figure 9-9. Consumer surplus in this market before trade is a. A. b. A + B. c. A + B + D. d. C. ANSWER: b POINTS: 1 DIFFICULTY: Difficulty: Moderate LEARNING OBJECTIVES: […]

Application: International Trade 2385 229. When a country abandons a no-trade policy, adopts a free-trade policy, and becomes an importer of a particular good, a. producer surplus increases and total surplus increases in the market for that good. b. producer […]

Application: International Trade 2445 16. If Belgium exports chocolate to the rest of the world, then Belgian chocolate producers benefit from higher producer surplus, Belgian chocolate consumers are worse off because of lower consumer surplus, and total surplus in Belgium […]

Application: International Trade Multiple Choice – Section 00: Introduction 1. An important factor in the decline of the U.S. textile industry over the past 100 or so years is a. foreign competitors that can produce quality textile goods at low […]

Application: International Trade 2425 11. Countries that restrict foreign trade are likely to a. forgo the additional surplus that trade allows, but will probably enjoy economies of scale. b. forgo the additional surplus that trade allows, but will be compensated […]

Application: International Trade 2285 33. When a country allows international trade and becomes an exporter of a good, a. domestic producers of the good become better off. b. domestic consumers of the good become worse off. c. the gains of […]