Deadweight loss refers to
A) the opportunity cost to firms from producing the equilibrium quantity in a
competitive market.
B) the sum of consumer and producer surplus.
C) the loss of economic surplus when the marginal benefit equals the marginal cost of
the last unit produced.
D) the reduction in economic surplus resulting from not being in competitive
equilibrium.
If you put $100 into a bank account that earns five percent interest per year, what is the
formula you should use to determine the account’s future value in one year?
A) Future value equals the present value divided by the rate of interest.
B) Future value equals the present value multiplied by the rate of interest.
C) Future value equals the present value multiplied by one plus the rate of interest in
decimals.
D) All of these yield the same answer.
Figure 15-4
Figure 15-4 shows
the demand and cost curves for a monopolist. What is the price charged for the
profit-maximizing output level?
A) $13
B) $21
C) $27
D) $34
Which of the following would cause the dollar to appreciate?
A) an increase in the demand for dollars
B) a decrease in the demand for dollars
C) an increase in the supply of dollars
D) an increase in the demand for imports from foreign countries
If the CPI is currently 202, what does this tell you about inflation between last year and
this year?
A) There was deflation in the economy between this year and last year.
B) Inflation in the economy between this year and last year was 2%.
C) Inflation in the economy between this year and last year was 102%.
D) The CPI measures only the level of prices in a given year, not the percentage change
in prices from one year to the next.
Which of the following is an example of spending on goods and services in the circular
flow model?
A) Micah purchases a new wrench for his auto repair business.
B) Chester buys a first-class ticket from Atlanta to London for his long-awaited
vacation.
C) Toby buys a new lawn mower to use in his lawn care business.
D) Lily purchases a new massage table for use in her therapy center.
Suppose the Fed decreases the money supply. In response households and firms will
________ short term assets and this will drive ________ interest rates.
A) buy; up
B) buy; down
C) sell; up
D) sell; down
In April, market analysts predict that the price of titanium will fall in May. What
happens in the titanium market in April, holding everything else constant?
A) The supply curve shifts to the right.
B) The supply curve shifts to the left.
C) The quantity demanded and the quantity supplied of titanium increase.
D) The demand curve shifts to the right.
Figure 3-7
Assume that the graphs in this figure represent the demand and supply curves for used
clothing, an inferior good. Which panel describes what happens in this market as a
result of a decrease in income?
A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)
Table 1-1
Lydia runs a small nail salon in the town of New Hope. She is debating whether she
should extend her hours of operation. Lydia figures that her sales revenue will depend
on the number of hours the nail salon is open as shown in the table above. She would
have to hire a worker for those hours at a wage rate of $10 per hour.
What is Lydia’s marginal benefit if she decides to stay open for two hours instead of one
hour?
A) $25
B) $50
C) $75
D) $125
A market supply curve reflects the
A) external costs of producing a good or service.
B) external benefits of producing a good or service.
C) social costs of producing a good or service.
D) private costs of producing a good or service.
Figure 17-3
Panel D is appropriate when used to represent
A) the quantity of labor demanded by an input price taker.
B) the labor supply curve facing an input price taker.
C) the quantity of labor supplied by someone working a fixed number of hours.
D) the highly-skilled labor market supply curve.
In 2013, Caterpillar laid off employees who produced mining machinery at its South
Milwaukee plant. The laid-off employees who were not able to find jobs at another
factory due to a permanent decline in demand in the mining industry would be
considered
A) structurally unemployed.
B) frictionally unemployed.
C) seasonally unemployed.
D) cyclically unemployed.
Thailand’s experience with pegging the baht to the dollar failed because the baht was
________ relative to the dollar, and China’s experience with pegging the yuan to the
dollar has run into difficulties because the yuan has been ________ relative to the
dollar.
A) overvalued; overvalued
B) undervalued; overvalued
C) undervalued; undervalued
D) overvalued; undervalued
Assume the market for organic produce sold at farmers’ markets is perfectly
competitive. All else equal, as more farmers choose to produce and sell organic produce
at farmers’ markets, what is likely to happen to the equilibrium price of the produce and
profits of the organic farmers in the long run?
A) The equilibrium price is likely to increase and profits are likely to remain
unchanged.
B) The equilibrium price is likely to remain unchanged and profits are likely to
increase.
C) The equilibrium price is likely to decrease and profits are likely to decrease.
D) The equilibrium price is likely to increase and profits are likely to increase.
Figure 2-2
Figure 2-2 above
shows the production possibilities frontier for Mendonca, an agrarian nation that
produces two goods, meat and vegetables. What is the opportunity cost of one pound of
meat?
A) pound of vegetables
B) pounds of vegetables
C) 1.6 pounds of vegetables
D) 16 pounds of vegetables
Being the first to sell a particular good can give a firm advantages over other firms that
sell similar products. What is the name given to these advantages?
A) first-mover
B) first come, first served
C) follow the leader
D) first to market
Economists refer to the actions people take after they have entered into a transaction
that makes the other party to the transaction worse off as
A) bad faith.
B) economic inefficiency.
C) moral hazard.
D) market failure.
If the United States lifted the embargo on Cuban products, what would happen in the
U.S. market for Cuban cigars?
A) The supply curve would shift to the left.
B) The supply curve would shift to the right.
C) The demand curve would shift to the right.
D) The demand curve would shift to the left.