Table 9-6
Production and
Consumption Production
Without Trade With Trade
Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production
and consumption quantities without trade, and the production numbers with trade.
Which country has an absolute advantage in producing clocks?
A) Denmark
B) Belize
C) both countries
D) neither country
Consider the following pricing strategies:
a. perfect price discrimination
b. charging different prices to different groups of customers
c. optimal two-part tariff
d. single-price monopoly pricing Which of the pricing strategies allows a producer to
capture the entire consumer surplus that would have gone to consumers under perfect
competitive pricing?
A) a, b, c, and d
B) a, b, and c only
C) a and b only
D) a and c only
When a firm’s long-run average cost curve is horizontal for a range of output, then that
range of production displays
A) increasing returns to scale.
B) constant returns to scale.
C) decreasing returns to scale.
D) constant average fixed costs.
Because of the slope of the aggregate demand curve, we can say that
A) a decrease in the price level leads to a lower level of real GDP demanded.
B) an increase in the price level leads to no change in the level of real GDP demanded.
C) a decrease in the price level leads to a higher level of real GDP demanded.
D) an increase in the price level leads to a higher level of real GDP demanded.
Firms in a small economy anticipated that inventories would grow over the past year by
$750,000, and over that year, inventories grew by exactly $750,000. This implies that
A) aggregate expenditure and GDP were equal that year.
B) there was an unplanned increase in inventories that year.
C) there was an unplanned decrease in inventories that year.
D) aggregate expenditure was greater than GDP that year.
Figure 3-2
A decrease in the expected future price of the product would be represented by a
movement from
A) A to B.
B) B to A.
C) S1 to S2.
D) S2 to S1.
If Finland has an absolute advantage in the production of two goods compared to
Latvia, Finland can still benefit from trade with Latvia.
The selling of a product for a price below its cost of production is called
A) fair competition.
B) dumping.
C) unfair competition.
D) operating at a loss.
Due to slowing growth in China and other developing countries, Caterpillar ________
the number of persons it employed in 2013 and this ________ the total number of
persons unemployed in the economy.
A) decreased; increased
B) decreased; decreased
C) increased; decreased
D) increased; increased
Monetary policy refers to the actions the Federal Reserve takes to manage
A) the money supply and income tax rates to pursue its economic objectives.
B) the money supply and interest rates to pursue its economic objectives.
C) income tax rates and interest rates to pursue its economic objectives.
D) government spending and income tax rates to pursue its economic objectives.
Table 23-4
Given the consumption schedule in the table above, the marginal propensity to save is
A) 0.3.
B) 0.4.
C) 0.5.
D) 0.6.
Even when the demand for one good is high, the price of the good is also affected by
supply. The textbook illustrates this by comparing the price of two items that were
auctioned on the same day. Which of the following describes the results of the auction?
A) A letter written by Abraham Lincoln sold for a higher price than a letter written by
John Wilkes Booth.
B) A letter written by Abraham Lincoln was sold for a higher price than a letter written
by Adam Smith.
C) A letter written by John Wilkes Booth sold for a higher price than a letter written by
Lee Harvey Oswald.
D) A letter written by John Wilkes Booth sold for a higher price than a letter written by
Abraham Lincoln.
Companies in the sharing economy have the potential to lower the equilibrium price in
their market, and by doing so increase efficiency. This would have a tendency to
A) increase producer surplus and increase deadweight loss.
B) increase consumer surplus and decrease deadweight loss.
C) decrease consumer surplus and decrease producer surplus.
D) maximize consumer surplus and minimize producer surplus.
In February, market analysts predict that the price of titanium will rise in March. What
happens in the titanium market in February, 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 left.