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Name: Class: Date: Chapter 01: The Art and Science of Economic Analysis True / False 1. Economics is best defined as the study of how individuals decide to use limited resources in an attempt to satisfy unlimited wants. a. True […]

Name: Class: Date: Chapter 01: The Art and Science of Economic Analysis 86. Which of the following would be a topic considered in the field of macroeconomics? a. The study of the amazing recent growth of the Chinese economy b. […]

Name: Class: Date: Chapter 10: Monopolistic Competition and Oligopoly c. earn no economic profit in the long run. d. take advantage of economies of scope. e. earn no economic profit in the short run. ANSWER: c 78. Bubba’s Baby Boutique […]

Name: Class: Date: Chapter 10: Monopolistic Competition and Oligopoly True / False 1. Firms may easily enter a monopolistically competitive market. a. True b. False ANSWER: True 2. Product differentiation helps explain the slope of the demand curve facing a […]

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website […]

Name: Class: Date: Chapter 11: Resource Markets a. $40 b. $60 c. $400 d. $1,000 e. $300 ANSWER: d 74. The following graph shows the demand and supply curves of a resource. The opportunity cost of the resource in equilibrium […]

People supply their resources to the highest-paying alternative, other things constant. As the price of a resource increases, each unit supplied buys more goods and services, so resource owners increase their quantity supplied. © 2015 Cengage Learning. All Rights Reserved. […]

Name: Class: Date: Chapter 11: Resource Markets c. third d. fourth e. fifth ANSWER: b 105. The following table shows the product price of a perfectly competitive firm and the output produced by the firm. From the table, it can […]

Name: Class: Date: Chapter 11: Resource Markets True / False 1. An increase in the demand for shoemakers will increase the demand for shoes. a. True b. False ANSWER: False 2. An increase in the price of a resource will […]

Name: Class: Date: Chapter 12: Labor Markets and Labor Unions True / False 1. Every individual has a labor supply curve in each market where there is a possible use for his or her labor. a. True b. False ANSWER: […]

Name: Class: Date: Chapter 12: Labor Markets and Labor Unions 76. The figure given below shows a backward-bending labor supply curve for an individual. In the figure below, if the wage rate is $9, how many hours per week will […]

employment. The supply of labor depends not only on the wage, but also on other factors, including (a) other sources of income, (b) job amenities, (c) the value of job experience, and (d) worker tastes. Market wages differ because of […]

At any given time, interest rates may differ across borrowers because of differences in risk, maturity, administrative costs, and tax treatment. © 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, […]

Name: Class: Date: Chapter 13: Capital, Interest, Entrepreneurship, and Corporate Finance True / False 1. If a person produces capital goods, she sacrifices the current production of consumer goods in order to obtain the capability of producing more goods and […]

Name: Class: Date: Chapter 13: Capital, Interest, Entrepreneurship, and Corporate Finance 82. As the interest rate increases, the opportunity cost of _____. a. saving decreases b. past consumption decreases c. saving increases d. current consumption increases e. borrowing decreases ANSWER: […]

Name: Class: Date: Chapter 14: Transaction Costs, Asymmetric Information, and Behavioral Economics below, the point I1 indicates: Figure 14.2 a. the optimal amount of information gathered. b. common knowledge. c. the opportunity cost of a consumer’s time. d. adverse selection. […]

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website […]

Name: Class: Date: Chapter 14: Transaction Costs, Asymmetric Information, and Behavioral Economics True / False 1. Firms emerge when the transaction costs of using a market are less than the cost of hierarchical control. a. True b. False ANSWER: False […]

monopolist was allowed to maximize profits. One problem with regulation is that the price that maximizes social welfare results in an economic loss, whereas the price that allows the firm to earn a normal profit does not maximize social welfare. […]

Name: Class: Date: Chapter 15: Economic Regulation and Antitrust Policy True / False 1. The average cost curve for a natural monopoly is downward sloping where it intersects the market demand curve. a. True b. False ANSWER: True 2. Public […]

Name: Class: Date: Chapter 15: Economic Regulation and Antitrust Policy a. consumers “capture” regulatory agencies so that regulations favor consumers. b. producers “capture” regulatory agencies so that regulations favor producers. c. regulators limit the market power of producers. d. a […]

fits of public choices are spread throughout the democracy. The combinations of benefits and costs yield four possible categories of distributions: (1) widespread benefits and widespread costs (traditional public- goods legislation), (2) concentrated benefits and widespread costs (special-interest legislation), (3) […]

Name: Class: Date: Chapter 16: Public Goods and Public Choice True / False 1. Taxing people according to their marginal valuations of a public good may be efficient, but it may not be fair if the ability to pay differs. […]

Name: Class: Date: Chapter 16: Public Goods and Public Choice a. Area bcde b. Area ihgl c. Area dfe d. Area aglo e. Area abeg ANSWER: a 85. The following graph shows the market for a good. Suppose the government […]

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website […]

Name: Class: Date: Chapter 17: Externalities and the Environment True / False 1. Private property rights are easily assigned to open-access resources. a. True b. False ANSWER: False 2. Pollution occurs because property rights to some open-access resources are well […]

Name: Class: Date: Chapter 17: Externalities and the Environment e. eab ANSWER: c 82. The optimal level of air quality will increase if: a. the cost of polluting increases. b. price of pollution reducing equipment increases. c. a new process […]

Name: Class: Date: Chapter 18: Poverty and Redistribution True / False 1. The most recent data on the distribution of income in the United States indicates households in the top fifth of the income distribution earn more than ten times […]

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website […]

Name: Class: Date: Chapter 18: Poverty and Redistribution d. dramatically increase Medicare payments to the elderly. e. promote economic growth and job creation. ANSWER: e 85. Which of the following is true of antipoverty programs? a. These programs never involve […]

Name: Class: Date: Chapter 19: International Trade c. h d. f, g, and h e. a, b, c, d, and e ANSWER: e 111. The following graph shows the demand for and the supply of a good in a country. […]

Name: Class: Date: Chapter 19: International Trade True / False 1. International trade increases world economic efficiency for the same reasons that domestic trade increases national economic efficiency. a. True b. False ANSWER: True 2. International trade equalizes the opportunity […]

Name: Class: Date: Chapter 19: International Trade a. c + h b. h c. c d. c + g e. g ANSWER: c 87. The following graph shows U.S. demand for and domestic supply of a good. Suppose the world […]

beneficiaries of restrictions know that they are winners and that they are well organized, but those who bear the cost of restrictions—mainly domestic consumers—fail to recognize their losses and thus do not object. The asymmetry of gains and losses explains […]

Name: Class: Date: Chapter 02: Economic Tools and Economic Systems True / False 1. Opportunity cost is the difference between the benefits and the costs of a choice. a. True b. False ANSWER: False 2. Opportunity cost is always measured […]

Name: Class: Date: Chapter 02: Economic Tools and Economic Systems a. g. b. b. c. h. d. i. e. e. ANSWER: a 103. The figure below shows the production possibilities frontier for Good A and Good B. In the figure […]

will adjust in the long run to equalize the cost of a basket of internationally traded goods. A given basket of internationally traded goods should, therefore, sell for about the same around the world (except for differences reflecting transportation costs […]

Name: Class: Date: Chapter 20: International Finance True / False 1. Because of the accounting techniques used, the balance of payments shows that debits equal credits only if exports equal imports. a. True b. False ANSWER: False 2. The balance […]

Name: Class: Date: Chapter 20: International Finance 88. The demand curve for foreign exchange: a. slopes downward. b. slopes upward. c. is horizontal, because no individual country can influence the price of foreign exchange. d. is vertical, because no individual […]

Name: Class: Date: Chapter 21: Economic Development True / False 1. In 2014, high-income economies with only about one-fifth of the world’s population produced more than half of the world’s output. a. True b. False ANSWER: True 2. On average, […]

Labor productivity, measured in terms of output per worker, is by definition low in low-income coun- tries, as it depends on the quality of the labor and other inputs that combine with labor, such as capital and natural resources. The […]

Name: Class: Date: Chapter 21: Economic Development b. Many bank depositors withdraw their funds at the first sign of economic problems. c. Banks cannot make loans for extended periods because they cannot rely on a continuous supply of deposits. d. […]

Name: Class: Date: Chapter 03: Economic Decision Makers e. the difference between the selling price and the purchase price of a share of stock. ANSWER: e 97. Which form of business organization accounts for the largest proportion of business sales […]

Name: Class: Date: Chapter 03: Economic Decision Makers True / False 1. The movement of households from rural to urban settings reduced the degree of specialization in household production. a. True b. False ANSWER: True 2. As the real wage […]

Demand is more elastic (a) the greater the availability of substitutes; (b) the more narrowly the good is defined; (c) the larger the share of the consumer’s budget spent on the good; and (d) the longer the time period consumers […]

Name: Class: Date: Chapter 06: Consumer Choice and Demand e. marginal utility of ice cream is negative ANSWER: c 85. Arnold is a utility-maximizing consumer. If he thinks his last dollar spent on playing golf yields less satisfaction than the […]

© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website […]

Name: Class: Date: Chapter 06: Consumer Choice and Demand True / False 1. Different people may have different tastes, but their tastes normally do not change rapidly over time. a. True b. False ANSWER: True 2. Marginal utility can be […]

scale, of the firm is fixed in the short run. Firms experience increasing marginal returns when increasing a variable resource, but only to a certain point. Eventually, the law of diminishing marginal returns takes hold, thus restricting a firm’s ability […]

Name: Class: Date: Chapter 07: Production and Cost in the Firm 4 36 12 5 42 6 6 46 4 a. second b. third c. fourth d. fifth e. sixth ANSWER: d 87. When diminishing marginal returns set in, total […]

Name: Class: Date: Chapter 07: Production and Cost in the Firm True / False 1. Implicit costs involve direct cash payments for the use of a resource. a. True b. False ANSWER: False 2. All other things constant, higher implicit […]

Name: Class: Date: Chapter 08: Perfect Competition b. $4,000 c. $5,200 d. $5,600 e. $6,000 ANSWER: d 77. The following figure shows the demand and the cost curves of a perfectly competitive firm. Total cost at the profit- maximizing output […]

their rate of output. Subtracting total cost from total revenue is one way to find the profitmaximizing output. Another way is to focus on marginal revenue and marginal cost. On a perfectly competitive firm’s demand curve, market price, marginal revenue, […]

Name: Class: Date: Chapter 08: Perfect Competition True / False 1. An industry consists of all firms that supply output to a particular market. a. True b. False ANSWER: True 2. If a perfectly competitive firm raises its price, its […]

Name: Class: Date: Chapter 09: Monopoly a. e × f b. d × f c. c × g d. a × f e. b × g ANSWER: b 107. If a monopolist that does not practice price discrimination is operating […]

demand curve is also the market demand curve. Since a monopolist that does not price discriminate can sell more only by lowering the price for all units, marginal revenue is less than the price. Where demand is price elastic, marginal […]

Name: Class: Date: Chapter 09: Monopoly True / False 1. Anything that prevents new firms from competing on an equal basis with existing firms in an industry is called a barrier to entry. a. True b. False ANSWER: True 2. […]

Name: Class: Date: Chapter 09: Monopoly level. In order to maximize profit it should: a. raise price and lower output. b. lower both price and output. c. raise both price and output. d. lower price and raise output. e. lower […]

Name: Class: Date: Chapter 04: Demand, Supply, and Markets True / False 1. The impact of a $200 increase in income on quantity of housing demanded would be called an income effect. a. True b. False ANSWER: False 2. The […]

Name: Class: Date: Chapter 05: Elasticity of Demand and Supply True / False 1. If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded. a. True b. False ANSWER: True 2. […]

Name: Class: Date: Chapter 04: Demand, Supply, and Markets a. increase the supply of corn. b. increase the supply of soybeans. c. decrease the supply of soybeans. d. decrease the supply of corn. e. decrease the demand for soybeans. ANSWER: […]

Name: Class: Date: Chapter 05: Elasticity of Demand and Supply a. Demand is elastic. b. Demand is inelastic. c. Demand is unit elastic. d. Demand is perfectly inelastic. e. Demand is perfectly elastic. ANSWER: c 82. Figure 5.5 shows the […]