Which of the following is not an advantage to an insurance company of insuring a large
group of people for health insurance?
A) The characteristics of a large group are likely to reflect those of the entire
population.
B) It is easier to accurately predict the number of claims for a group than for an
individual.
C) When all group members pay the premium, the problem of moral hazard is reduced.
D) When all group members pay the premium, the problem of adverse selection is
reduced.
When a U.S. investor buys a bond issued in a foreign country,
A) the balance on the capital account decreases.
B) the balance on the current account decreases.
C) the balance on the financial account decreases.
D) the balance of trade decreases.
In response to already low interest rates doing little to stimulate the economy, the Fed
announced a new program in September 2011 under which it would purchase long-term
Treasury securities while selling an equal amount of shorter-term Treasury securities.
This policy was known as
A) inflation targeting.
B) Operation Twist.
C) securities-bubble deflating.
D) quantitative easing.
A public franchise
A) is a corporation that is owned by stockholders.
B) results from ownership of a key raw material.
C) is a government designation that a private firm is the only legal producer of a good
or service.
D) is an unregulated monopoly necessary for the public good.
Table 8-13
Consider the data shown above for Vicuna, a country that produces only two products:
oranges and shirts.
Nominal GDP for Vicuna for 2009 equals
A) $4,920.
B) $5,100.
C) $5,300.
D) $5,850.
All else equal, the desired increase in the supply of smart phones for Google would
cause the equilibrium price of the smart phones to ________ and the equilibrium
quantity of the smart phones to ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Consider the following statements:
a. Consumers buy more MP3 players from an electronics store that sells MP3 players at
a lower price than other rival electronics stores in the area.
b. Schools take steps to increase security since they believe it is more costly to allow
vandalism than to hire additional security guards.
c. Citrus growers produce more oranges when the selling price of oranges falls. Which
of the above statements demonstrates that economic agents respond to incentives?
A) a only
B) b only
C) c only
D) a and b
E) a, b, and c
Table 2-15
Table 2-15 shows the output per day of two gardeners, George and Jack. They can
either devote their time to mowing lawns or cultivating gardens. What is George’s
opportunity cost of cultivating a garden?
A) half a garden cultivated
B) two lawns mowed
C) two-thirds of a garden cultivated
D) one and a half lawns mowed
The firm’s gain in profit from hiring another worker is
A) the marginal revenue product of the extra worker.
B) the difference between marginal revenue product and the wage of the worker.
C) the extra output of the extra worker.
D) the reduction in costs from hiring another worker.
in the United States since 1900, life expectancy at birth has ________ and the death rate
has ________.
A) increased; increased
B) increased; decreased
C) decreased; increased
D) decreased; decreased
Which of the following characteristics of a farmers’ market make it a good example of a
perfectly competitive market?
A) Selling product at a farmers’ market was very profitable for farmers in the early
2000s. As result, many farmers sold their farms to larger firms.
B) Farmers who sell product at a farmers’ market are similar to other entrepreneurs who
introduce products that earn short-run profits but invite competition that drives down
prices and profits in the long run.
C) Farmers who sell product at a farmers’ market are similar to other business owners
who take advantage of the willingness of some consumers to pay high prices for new
and different products.
D) Farmers selling product at a farmers’ market provide a product that is a necessity,
rather than a luxury.
Figure 16-6 Watanabe Sensei
operates the only martial arts school in Hartfield. For simplicity, assume that consumers
have identical demand curves and that Sensei knows what this demand curve is. Figure
16-6 shows this demand curve.
If Sensei acts as a monopolist and charges the profit-maximizing price, what is his
producer surplus?
A) the area B + D + G
B) the area A + B + C + D + H + G
C) the area C + D + H + G
D) the area A + C + H
Marginal cost is calculated for a particular increase in output by
A) multiplying the total cost by the change in output.
B) multiplying the change in total cost by the change in output.
C) dividing the total cost by the change in output.
D) dividing the change in total cost by the change in output.
Anything of value owned by a person or a firm is
A) an asset.
B) a liability.
C) wealth.
D) owner’s yield.
Figure 18-2 Figure 18-2 shows a
demand curve and two sets of supply curves, one set more elastic than the other.
If the government imposes an excise tax of $1.00 on every unit sold, the producer’s
burden of the tax
A) is Pa– Pdunder either supply curve.
B) is P- Peunder either supply curve.
C) is Pa– Pdif the supply curve is S0 and P- Peif the supply curve is S1.
D) is Pc– Pdif the supply curve is S0 and Pc– Peif the supply curve is S1.
Which of the following is not a factor of production?
A) an acre of farmland
B) a drill press in a machine shop
C) the manager of the local tire shop
D) $1,000 in cash
There is a strong link between changes in the money supply and inflation
A) in both the short run and the long run.
B) in neither the short run nor the long run.
C) in the short run, but not in the long run.
D) in the long run, but not in the short run.