Let’s assume producers in Canada can make 200 units of beef or 50 units of oranges,
and U.S. producers can make 50 units of beef or 200 units of oranges per time period.
Therefore
A) U.S. producers have a comparative advantage in oranges.
B) Canadian producers have a comparative advantage in beef.
C) both countries could gain through specialization and exchange.
D) all of the above are true.
E) none of the above is true.
What’s another word for “marginal”?
A) Phenomenal
B) Additional
C) Sentimental
D) Detrimental
E) Magical
The government can turn a shortage of a good into a surplus by
A) imposing a sufficiently low ceiling price.
B) offering subsidies to producers.
C) persuading producers to increase the amount of the good available.
D) supporting the price of the good above the market clearing level.
The Illyrian economy has 1000 people in the labor force. 100 people don’t have jobs but
are searching for work, another 100 people would like to have jobs but quit searching
because of poor job prospects, and another 100 people don’t work and don’t want to
work. What’s the rate of unemployment?
A) 10 percent
B) 20 percent
C) 30 percent
D) 100 percent
E) None of the above.
Fill in the blanks: If a political scientist believes Brazil is on the brink of civil unrest,
which will significantly reduce next year’s coffee supply, he should ________ coffee
futures. Other things constant, he is more likely to profit from his decision when
________ people are aware of the possibility of the civil unrest.
A) sell; fewer
B) buy; fewer
C) sell; more
D) buy; more
The famous saying, “There is no such thing as a free lunch” means
A) we do not live in a free country.
B) the value of our dollar keeps declining.
C) people face tradeoffs.
D) people do not care about others enough.
Which of the following clearly restricts competition?
A) A firm sets price above marginal cost.
B) A firm sets price below marginal cost.
C) A firm sets price equal to marginal cost.
D) None of the above clearly restricts competition.
The demand for government regulation of sellers most often originates with
A) consumers.
B) economists.
C) politicians.
D) sellers.
Economic theory is most useful in explaining the operation of social systems
A) aimed at making a living.
B) directed toward the satisfaction of material wants.
C) in the world of business and finance.
D) in which participants characteristically don’t know one another personally.
E) in which people pursue selfish interests.
A maximum price set by law above the market-clearing price is called a
A) price cap.
B) price spike.
C) price floor.
D) price ceiling.
Selling a newspaper at retail for ten cents when it cost twenty cents wholesale may be
profitable if
A) people who come in to buy a newspaper often make other purchases also.
B) the wholesaler is also losing money.
C) there are no substitutes for newspapers available.
D) there is about to be a newspaper strike.
What leads thousands of profit seeking entrepreneurs to misread the signals of the
market-price system?
A) Poor budget policy on behalf of government officials
B) The globalization of the world economy
C) An artificial lowering of interest rates
D) A poor knowledge of the basic principles of supply and demand
Which is the most likely reason why more young people from low-income regions are
more likely to join the military, compared to those in high income regions?
A) They are more easily pressured by recruitment officers.
B) Their opportunity costs are relatively lower.
C) They are more patriotic than their richer counterparts.
D) They are, to put it bluntly, more foolish than their richer counterparts.
Which statement below is the best summary of the economic point of view?
A) Society is created and designed by the government.
B) Society is controlled by major business conglomerates.
C) Society is an unintended outcome of individuals pursuing their own projects.
D) All of the above.
E) None of the above.
According to your authors, the following is a necessary condition for a competitive
market:
A) Large numbers of buyers and sellers
B) Full and complete information
C) Freedom of entry
D) Identical products
E) All of the above.
It is useful to distinguish between the cost of obtaining and the cost of providing goods
because
A) costs always pertain to specific actions.
B) obtaining is more costly than providing.
C) providing is more costly than obtaining.
D) supply must equal demand.
Sellers turn so frequently to government in efforts to protect themselves from
competition because government
A) can be influenced by monetary payments.
B) can use coercion against competitors.
C) has rather consistently forced firms to compete when they preferred not to.
D) is charged with protecting the public interest.
E) is under the thumb of monopolists.
If business losses are the result of uncertainty in the real world, then
A) business profits are too.
B) profits must equal losses in the short run.
C) profits must equal losses in the long run.
D) losses could be eliminated if we could eliminate uncertainty in the real world, but
profits will still remain.
Suppose your college sharply raises tuition rates next year. Other things constant, what
is the least likely to occur?
A) The overall demand for courses at your college will fall.
B) Your college bookstore will sell fewer textbooks.
C) It will be easier to find parking at your college.
D) Fewer students will use your college library.
Suppose the price level is unchanged and real GDP rises. Then
A) nominal GDP must decrease.
B) nominal GDP must remain unchanged.
C) nominal GDP must increase.
D) none of the above are true.
The pressure on corporate executives to maintain the market price of their company’s
stock gives them an incentive to
A) engage in insider trading.
B) ignore the political consequences of what they do.
C) produce goods subject to rapid obsolescence.
D) pursue short-run profits at the expense of the company’s long-run welfare.
E) take account in their decisions of the probable long-run effects.
Suppose the price level decreases and real GDP remains the same. Then
A) nominal GDP must decrease.
B) nominal GDP must remain unchanged.
C) nominal GDP must increase.
D) none of the above are true.
Which of the following Latin American countries had the strongest growth rate between
1960 and 2011?
A) Argentina
B) Chile
C) Peru
D) Venezuela
Households in the former Yugoslavia were required to declare the number of radios and
television sets they owned, and to pay a monthly tax on each. From the perspective of
the free-rider problem, the radio and TV taxes attempted to
A) generate negative externalities on Yugoslav households.
B) generate positive externalities on Yugoslav households.
C) coerce households into paying for the radio and television broadcasts.
D) coerce households into listening less to radio and watching less television.
The quintile distribution of family income in the United States shows
A) the average incomes of 5-person families grouped by age, sex, race, education, and
similar factors.
B) the percentage of total family income received by each 5 percent of U.S. families
grouped by income.
C) the percentage of total income received by each 20 percent of U.S. families grouped
by income.
D) the percentage of total family income spent on food, clothing, shelter, medical care,
and essential services.
E) the percentage of total family income stemming respectively from wages, interest,
profit, rent, and welfare grants or other transfers.
It is important for a business firm to have a residual claimant because
A) income not claimed for accounting purposes is lost.
B) otherwise surplus profits would set off a process of “profit inflation.’
C) residuals account for as much as thirty percent of the wealth generated annually in
the United States.
D) some person must finally be liable for all corporate acts.
E) the claimant produces an effective incentive to consider all costs and benefits
relevant to a firm.
According to the text, because people in an urban-industrial society will always
disagree to some extent about who ought to have which rights,
A) it is unreasonable to expect negative externalities to be completely eliminated.
B) negative externalities cannot be reduced without government coercion.
C) negative externalities should not be thought of as the consequence of disagreement
over property rights.
D) there is no point in discussing the matter.
E) we must depend upon government to decide exactly what should be prohibited or
commanded.
According to the economic analysis of democracy, citizens do not acquire sufficient
information to vote intelligently because
A) money controls the media.
B) private concerns matter more to them than public affairs.
C) they are apathetic about government.
D) they know their vote doesn’t really matter.
E) the country is a republic, not a democracy.
An effective minimum wage tends to
A) increase the supply of unskilled labor.
B) decrease the demand for unskilled labor.
C) create a surplus of unskilled labor.
D) accomplish all of the above.
E) accomplish none of the above.
Which of the statements below best explains how the use of money in an economy adds
to the wealth of the society using it? Money creates wealth
A) because it is capital.
B) by earning interest.
C) by making specialization less costly.
D) insofar as it is invested rather than consumed.
In the economic way of thinking, an example of “capital” might include
A) literacy.
B) natural resources.
C) knowledge.
D) stable rules of the game.
E) all of the above.