Use the figure below to answer the following questions.
Figure 12.3.1
Refer to Figure 12.3.1, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive industry. In the short run, if the market price of the good
is $10, the firm produces ________ units of output and ________.
A) 10; incurs an economic loss of $20
B) 10; incurs an economic loss of $40
C) less than 10; incurs an economic loss of $20
D) 10; makes an economic profit of $20
E) less than 10; incurs an economic loss of less than $20
Who benefits from imports?
A) domestic consumers
B) domestic producers
C) foreign consumers
D) domestic workers in the industry
E) Everyone benefits.
For a given real exchange rate, a change in the quantity of money
A) brings a change in the price level and a change in the exchange rate.
B) brings a change in the price level with no change in the exchange rate.
C) brings a change in the exchange rate with no change in the price level.
D) has no effect on the exchange rate or the price level.
E) has an unknown effect on the price level and the exchange rate.
“As fewer people buy computers, the demand for Internet service will decrease and the
price of Internet service will increase. The rise in the price of Internet service will
increase the supply of Internet service.” This statement is ________ because ________.
A) false; the decrease in the demand for Internet service creates a surplus and to
eliminate the surplus, supply increases
B) true; when the demand for Internet service increases, the supply of Internet service
increases so that the price of Internet service does not increase
C) true, when the demand for Internet service increases, the supply of Internet service
increases too so that no surplus occurs
D) true; the increase in the price of Internet service increases the supply of Internet
service to eliminate the shortage
E) false; a decrease in demand for Internet service does not increase the price of
Internet service and an increase in the price of Internet service does not increase the
supply of Internet service
Consider the budget line and indifference curve in Figure 9.3.1. If the price of good X is
$2 a unit, what is the price of good Y?
A) $0.37 a unit
B) $0.67 a unit
C) $1.50 a unit
D) $2.67 a unit
E) impossible to calculate without additional information
The budget line shows the boundary between those combinations of goods and services
that
A) have positive marginal utility and those that have negative marginal utility.
B) are available and those that are unavailable.
C) are desirable and those that are undesirable.
D) are affordable and those that are unaffordable.
E) are normal goods and those that are inferior goods.
Use the table below to answer the following questions.
Table 1A.4.1
Given the data in Table 1A.4.1, holding z constant, the graph of x and y
A) is a negatively sloped line.
B) is a positively sloped line.
C) reaches a maximum.
D) reaches a minimum.
E) does not have a constant slope.
Good A has a perfectly inelastic demand and an upward-sloping supply curve. Good B
has a perfectly inelastic supply and a downward-sloping demand curve. If the same
sales tax is imposed on the sellers of both good A and good B, the
A) price paid by buyers of good B rises by more than the price paid by buyers of good
A.
B) price paid by buyers of good A rises by more than the price paid by buyers of good
B.
C) price paid by buyers of good A rises by the same amount as the price paid by buyers
of good B.
D) quantity bought by buyers of good B decreases by more than the quantity bought by
buyers of good A.
E) quantity bought by buyers of good A decreases by more than the quantity bought by
buyers of good A.
Foreign currency is
A) the market for foreign exchange.
B) the price at which one currency exchanges for another currency.
C) foreign notes, coins and bank deposits.
D) foreign notes and coins only.
E) the purchasing power of foreign money.
Everything else remaining the same, an increase in the marginal propensity to import
________ the slope of the AE curve and ________ equilibrium expenditure.
A) decreases; increases
B) increases; increases
C) decreases; decreases
D) increases; decreases
E) does not change; does not change
Refer to Figure 14.2.1. If this firm in monopolistic competition is in short-run
equilibrium, then
A) rival firms will enter the industry.
B) all firms will exit the industry.
C) economic profit of all firms in the industry is zero.
D) it produces 60 units of output to maximize economic profit.
E) the firm’s profits can be expected to rise over time.
If the Canucks lower ticket prices and find that total revenue does not change, then the
price elasticity of demand for tickets is
A) zero.
B) greater than zero but less than 1.
C) equal to 1.
D) greater than 1.
E) negative.
A tariff is a tax that is imposed by the ________ country when an ________ good
crosses its international boundary.
A) exporting; imported
B) importing; exported
C) exporting; exported
D) importing; imported
E) importing or exporting; imported or exported
Refer to Figure 23.2.2. In Figure 23.2.2, a decrease in expected profit will result in a
movement from point E to
A) point F.
B) point G.
C) point H.
D) point I.
E) either point G or point H.
Danny has $12 to spend on two goods: pies and pop. The price of a pie is $4, and the
price of a can of pop is $2. To maximize his utility, Danny buys
A) 2 pies and 2 cans of pop.
B) 3 pies and no pop.
C) the combination that gives him the same marginal utility per dollar on pies as on
pop.
D) 6 cans of pop and no pie.
E) the combination that gives him the same total utility from pies as from pop.
Refer to Figure 28.4.1. The figure illustrates an economy’s Phillips curves. If the current
inflation rate is 4 percent, what is the natural unemployment rate?
A) 9 percent
B) 6 percent
C) 4 percent
D) 3 percent
E) cannot be determined without more information
Supply is inelastic if
A) a small percentage change in price results in a large percentage change in quantity
supplied.
B) a large percentage change in price results in a small percentage change in quantity
supplied.
C) the good is a normal good.
D) the good is an inferior good.
E) the good has many substitutes.
Complete the following sentence. Foreign borrowing
A) always leads to a lower level of consumption in the future for the debtor nation
because part of its future GDP is used to pay off the foreign debt.
B) always leads to a higher level of consumption in the future for the debtor nation
because foreign borrowing enables a greater than otherwise possible increase in the
nation’s capital stock.
C) could lead to higher consumption levels in the future, if the borrowing is used to
finance investment that generates economic growth.
D) could lead to lower consumption levels in the future, if the borrowing is used for
current consumption.
E) C and D
The argument that protection
A) penalizes poor environmental standards is true.
B) allows us to compete with cheap foreign wages is true.
C) is necessary for infant industries is true.
D) saves jobs is flawed.
E) prevents rich countries from exploiting poor countries is true.
Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to
produce the cars. Pacifica could be accused of
A) avoiding import quotas.
B) increasing its gains from trade.
C) dumping.
D) engaging in learning-by-doing.
E) exploiting a comparative advantage.
Leah consumes at a point on her budget line where her marginal rate of substitution is
less than the magnitude of the slope of her budget line. As Leah moves along her budget
line toward her best affordable point, she will move
A) down and left.
B) down and right.
C) up and left.
D) up and right.
E) straight up.
In a cartel, the incentive to cheat is significant because
A) each individual member has the incentive to restrict its own output to maximize
profit.
B) the marginal cost is equal to the cartel price at the profit-maximizing output level.
C) each firm has the incentive to lower its price to sell more than the allotted amount.
D) each firm has the incentive to cheat by raising its price to maximize profit.
E) price is less than marginal cost for each member of the cartel.
Demand-pull inflation can start
A) aggregate demand increases.
B) aggregate supply decreases.
C) input costs rise.
D) people incorrectly forecasting inflation.
E) unemployment that is above the natural rate.
The difference in the influence of a multiplier between the short run and the long run is
that
A) the multiplier effect is larger in the long run.
B) the multiplier effect is zero in the long run.
C) the multiplier effect is zero in the short run.
D) there is no multiplier effect in the short run.
E) the multiplier effect depends on potential GDP in the long run.
A monopoly can practise price discrimination when it
A) can segment the market according to the different prices the consumers are willing
to pay.
B) is a price taker.
C) has different marginal costs of production for different output levels.
D) has decreasing average variables cost.
E) produces a good with close substitutes.
If the present value of $500 to be received in one year is $463, the interest rate is
A) 5 percent per year.
B) 8 percent per year.
C) 10 percent per year.
D) 20.8 percent per year.
E) 37 percent per year.
International trade benefits the
A) exporting country but not the importing country.
B) importing country but not the exporting country.
C) government of the importing country.
D) government of the exporting country.
E) exporting country and the importing country.
Use the figure below to answer the following questions.
Figure 14.2.3
Refer to Figure 14.2.3. Which demand curve does this monopolistically competitive
firm face in the long run?
A) demand curve D1
B) demand curve D2
C) either demand curve D1 or D2
D) neither demand curve D1 nor demand curve D2
E) Any demand curve is possible, including D1 or D2.
Capital in year 2015 equals capital in year 2014
A) minus depreciation.
B) plus net investment plus depreciation.
C) plus gross investment.
D) plus net investment.
E) plus net investment minus depreciation.
Refer to Figure 13.3.1. If this market is a single-price monopoly, then
A) it is efficient because the monopoly is maximizing economic profit.
B) price is equal to marginal cost and the outcome is efficient.
C) price is less than marginal cost, and consumer surplus is less than in a perfectly
competitive market.
D) price is greater than the marginal cost and the outcome is inefficient.
E) the outcome is inefficient because the monopoly’s costs are too high.