Suppose buyers in the used car market are willing to pay $4,000 for a plum (high-quality) used car and $2,000 for a lemon (low-quality) used car. If buyers believe that 50% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car?
A) $2000
B) $3000
C) $3500
D) $4000
A) $2000
B) $3000
C) $3500
D) $4000
Answer:
Figure 7.2Figure 7.2 shows a monopolist’s demand curve. The marginal revenue from selling the third unit is
A) $6.
B) $8.
C) $10.
D) $44.
Answer:
Recall the Application about productivity in the nation of Latvia in the 1990s to answer the following question(s).
In the 1990s EU countries had ________ in the production of all products compared to Latvia.
A) an absolute advantage and a comparative advantage
B) an absolute advantage but not a comparative advantage
C) a comparative advantage but not an absolute advantage
D) neither an absolute advantage nor a comparative advantage
In the 1990s EU countries had ________ in the production of all products compared to Latvia.
A) an absolute advantage and a comparative advantage
B) an absolute advantage but not a comparative advantage
C) a comparative advantage but not an absolute advantage
D) neither an absolute advantage nor a comparative advantage
Answer:
The ________ determines the supply of money.
A) Congress
B) President
C) Federal Reserve
D) banking system
A) Congress
B) President
C) Federal Reserve
D) banking system
Answer:
If the number of people with the skills necessary to perform a job decreases, labor ________ shifts ________.
A) demand; left
B) demand; right
C) supply; left
D) supply; right
A) demand; left
B) demand; right
C) supply; left
D) supply; right
Answer:
In the United States, the temporary tax surcharge of 1968
A) had no impact on consumer spending.
B) decreased consumer spending by less than was originally estimated.
C) decreased consumer spending by more than was originally estimated.
D) actually increased consumer spending.
A) had no impact on consumer spending.
B) decreased consumer spending by less than was originally estimated.
C) decreased consumer spending by more than was originally estimated.
D) actually increased consumer spending.
Answer:
Net investment plus depreciation is equal to
A) gross depreciation.
B) gross domestic product.
C) gross exports.
D) gross investment.
A) gross depreciation.
B) gross domestic product.
C) gross exports.
D) gross investment.
Answer:
Recall the Application about the size of Wal-Mart to answer the following question(s). During 2008, Wal-Mart’s sales were approximately $374 billion, or roughly 2.6% of U.S. GDP, and its cost of sales was $286 billion.
What was the approximate value of Wal-Mart’s value added in 2008?
A) $88 billion
B) $ 286 billion
C) $ 374 billion
D) $ 661 billion
What was the approximate value of Wal-Mart’s value added in 2008?
A) $88 billion
B) $ 286 billion
C) $ 374 billion
D) $ 661 billion
Answer:
| Number of workers | Units of output |
| 0 | 0 |
| 1 | 25 |
| 2 | 55 |
| 3 | 95 |
| 4 | 125 |
| 5 | 150 |
Table 5.2
Which gives a firm’s production function. Assume that all non-labor inputs are fixed. Diminishing returns set in with the addition of the
A) third worker.
B) fourth worker.
C) fifth worker.
D) sixth worker.
Answer:
Suppose that there is only one seller in the computer industry. If the demand curve that the only seller in the industry faces is a straight-line, downward sloping curve, at which point would the seller’s total revenue be maximized?
A) at the highest point on the demand curve, where price is the highest
B) at a point high on the demand curve, where elasticity is elastic
C) at the midpoint of the demand curve, where elasticity is unitary
D) at a point low on the demand curve, but not at the very bottom
A) at the highest point on the demand curve, where price is the highest
B) at a point high on the demand curve, where elasticity is elastic
C) at the midpoint of the demand curve, where elasticity is unitary
D) at a point low on the demand curve, but not at the very bottom
Answer:
Medical doctors earn higher incomes than Ph.D.s in economics. This is partly because
A) medical doctors are more likely to face malpractice lawsuits.
B) the costs of receiving necessary medical education are higher.
C) a relatively small number of students are admitted to medical schools.
D) all of the above
A) medical doctors are more likely to face malpractice lawsuits.
B) the costs of receiving necessary medical education are higher.
C) a relatively small number of students are admitted to medical schools.
D) all of the above
Answer:
Figure 18.1
With a tariff, how much does the government collect for each glove imported into Duckland?
A) $0
B) between $2 and $3
C) between $8 and $10
D) more than $10
Answer:
The Motor Carrier Act of 1980 removed the government’s restriction on
A) entry into the trucking industry.
B) the size of trucks used to transport goods and services.
C) entry into the industry that produces delivery trucks.
D) entry into parcel delivery.
A) entry into the trucking industry.
B) the size of trucks used to transport goods and services.
C) entry into the industry that produces delivery trucks.
D) entry into parcel delivery.
Answer:
Which of the following is true in the long run for both monopoly and perfectly competitive industries?
A) There are low barriers to entry.
B) Firms can earn positive economic profits in the long run.
C) Firms produce at levels that are economically efficient.
D) Firms will go out of business if they cannot charge a price that is at least equal to average total cost.
A) There are low barriers to entry.
B) Firms can earn positive economic profits in the long run.
C) Firms produce at levels that are economically efficient.
D) Firms will go out of business if they cannot charge a price that is at least equal to average total cost.
Answer:
| Output (Q | Total Fixed Cost | Total Variable Cost |
| 0 | 20 | 0 |
| 1 | 20 | 5 |
| 2 | 20 | 7 |
| 3 | 20 | 10 |
| 4 | 20 | 15 |
| 5 | 20 | 21 |
Table 6.1
Table 6.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3,
A) the firm suffers a loss and is better off shutting down.
B) the firm suffers a loss but is better off producing the output level where MR = MC.
C) the market price is greater than the minimum average variable cost.
D) none of the above
Answer: