A sharp increase in the divorce rate increases the number of lawyers hired to determine
divorce settlements. This will
A) increase GDP and increase well-being in the economy.
B) increase GDP and decrease well-being in the economy.
C) decrease GDP and increase well-being in the economy.
D) decrease GDP and decrease well-being in the economy.
Figure 4-5 Figure 4-5 shows the
market for apartments in Bay City. Recently, the government imposed a rent ceiling at
R0. What is the area that represents the producer surplus after the imposition of the
ceiling?
A) F + G
B) F
C) D + F + G
D) A + B + D + F + G
Figure 19-10
Under the Bretton Woods System of exchange rates, if the par exchange rate was $4 per
pound in the figure above, then which of the following is true?
A) The Bank of England would have to buy 0.7 million pounds per day with dollars.
B) There is a shortage of pounds equal to 0.7 million.
C) The Bank of England would have to sell 0.7 million pounds per day in exchange for
dollars.
D) The par exchange rate is below the equilibrium rate, causing a shortage of domestic
currency.
The stated interest rate on a loan is the
A) real interest rate.
B) nominal interest rate.
C) actual inflation rate.
D) expected inflation rate.
A firm’s demand for labor curve is also called its
A) marginal revenue product of labor curve.
B) marginal factor cost of labor curve.
C) marginal valuation curve.
D) marginal benefit of labor curve.
Figure 14-2
The
government of a developing country plans to award two firms, Gigacom and
Xenophone, the exclusive rights to share the market for high speed internet service.
Gigacom and Xenophone can both provide the service either via television cable lines
or via direct subscriber line (DSL). Suppose the government is considering a proposal
to delay one firm’s entry into the market on the grounds that it wants to prevent
“harmful” competition. Figure 14-2 shows the decision tree for this game. Now suppose
that the government delays Xenophone’s entry and Gigacom moves first, what is the
likely outcome in the market?
A) Both offer internet service via cable line; Xenophone earns a profit of $6 million and
Gigacom earns a profit of $9 million.
B) Both offer DSL internet service; Xenophone earns a profit of $8 million and
Gigacom earns a profit of $7 million.
C) Xenophone offers DSL internet service and earns a profit of $5 million while
Gigacom offer internet service via cable line and earns a profit of $6.5 million.
D) Xenophone offers internet service via cable line and earns a profit of $4 million
while Gigacom offers DSL internet service and earns a profit of $4.5 million.
If the total cost of producing 20 units of output is $1,000 and the average variable cost
is $35, what is the firm’s average fixed cost at that level of output?
A) $65
B) $50
C) $15
D) It is impossible to determine without additional information.
Table 4-6
The equations above describe the demand and supply for Aunt Maud’s Premium Hand
Lotion. The equilibrium price and quantity for Aunt Maud’s lotion are $20 and 30
thousand units. What is the value of economic surplus in this market?
A) $600 thousand
B) $1,050 thousand
C) $1,500 thousand
D) $2,100 thousand
Figure 7-1
Figure 7-1 represents the market for
vaccinations. Vaccinations are considered a benefit to society, and the figure shows both
the marginal private benefit and the marginal social benefit from vaccinations. At the
market equilibrium, the deadweight loss is equal to
A) $0.
B) $250,000.
C) $500,000.
D) $1,000,000.
In the 1950s, Walt Disney began to plan the development of a theme park that would
eventually become Disneyland. Disney hired an economist to help determine whether
the park would be a financial success. This economist surveyed managers of existing
amusement parks for advice. Many of these managers
A) believed that a theme park would be very successful because the Disney name
created a market among children and parents who had watched Disney cartoons and
movies such as Snow White.
B) recommended that the theme park be located in California because population in the
state would increase greatly in the future. Disney followed this advice.
C) recommended that Disney not build the park and leave the amusement park business
to those who knew what they were doing.
D) recommended that Disney first build an audience for his park by offering the ABC
television network a weekly program that would feature Disney movies, cartoons and
original programming. Walt Disney followed this advice. Both the television program
and Disneyland were financial successes.
Table 9-18
Looking at the table above, what is the rate of growth of real average hourly earnings
from 2012 to 2013?
A) 7.7%
B) 6.25%
C) 4%
D) -4%
Figure 5-9
Companies producing toilet paper bleach the paper to make it white. The bleach is
discharged into rivers and lakes and causes substantial environmental damage. Figure
5-9 illustrates the situation in the toilet paper market.
Let’s suppose the government imposes a tax of $50 per ton of toilet paper to bring about
the efficient level of production. What happens to the market price of toilet paper?
A) It rises by $50.
B) It rises by more than $50.
C) It rises by less than $50.
D) It remains the same because the tax is imposed on producers who create the
externality.
Jeremy is thinking of starting up a small business selling NASCAR memorabilia. He is
considering setting up his business as a sole proprietorship. What is one disadvantage to
Jeremy of setting up his business as a sole proprietorship?
A) As a sole proprietor, Jeremy would be taxed twice.
B) As a sole proprietor, Jeremy would not have control of the business.
C) As a sole proprietor, Jeremy would face unlimited liability.
D) As a sole proprietor, Jeremy would be subject to significant rules and regulations.
The approach economists use to analyze competition among oligopolists is called
A) marginal analysis.
B) game theory.
C) oligopoly theory.
D) competition among the few.