Firms in perfect competition are price takers because
A) one firm determines the price that all other firms in the industry will charge.
B) consumers have enough market power to set prices.
C) firms accept the price determined by the government.
D) each firm is too small relative to the market to be able to influence price.
What is an economic model?
A) It is a description of an economic issue that includes all possible related information.
B) It is a description of an economic issue based on official government information.
C) It is a detailed version of some aspect of economic life used to analyze an economic
issue.
D) It is a simplified version of some aspect of economic life used to analyze an
economic issue.
If Paul decides to buy a $60 ticket to a Cirque du Soleil show rather than a $45 ticket
for a Blue Man Group performance, we can conclude that
A) the marginal utility per dollar spent on Cirque du Soleil is lower than the marginal
utility per dollar spent on Blue Man Group.
B) Paul’s demand for a ticket to see Cirque du Soleil is more elastic than his demand for
a ticket to see Blue Man Group.
C) Paul is not making a rational choice.
D) the marginal utility per dollar spent on Cirque du Soleil is higher than the marginal
utility per dollar spent on Blue Man Group.
Table 9-1
Consider the data above for a simple economy.
The unemployment rate for this simple economy equals
A) (100/1,000) 100.
B) (100/1,100) 100.
C) (100/15,000) 100.
D) (100/20,000) 100.
Figure 2-9
Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each
country produces two goods, cotton and cashews. What is the opportunity cost of
producing 1 bolt of cotton in Indonesia?
A) 3/8 of a pound of cashews
B) 5/8 of a pound of cashews
C) 2 2/3 pounds of cashews
D) 120 pounds of cashews
According to the signaling hypothesis
A) signaling about job openings occurs in help wanted classified ads.
B) a college diploma signals to employers that a person has certain desirable
characteristics.
C) a slowdown in output signals to companies the need to hire more labor.
D) a high unemployment rate is a signal to the government to take some policy action.
When the price of a good falls, consumers buy a larger quantity because of the
________ effect and the ________ effect.
A) substitution; income
B) normal; inferior
C) substitute; complement
D) supply; demand
Which of the following statements about capital markets is true?
A) The U.S. capital market is currently larger than all other capital markets combined.
B) At one time, the U.S. capital market was larger than all other capital markets
combined, but that is no longer the case.
C) There are currently large capital markets in Europe, but none in Asia.
D) The largest capital markets in the world today are in East Asia and Latin America.
If firms in a monopolistically competitive market are earning economic profits, which
of the following scenarios best reflects the change a representative firm experiences as
the market adjusts to its long-run equilibrium?
A) Demand decreases and becomes less elastic.
B) Demand decreases and becomes more elastic.
C) Demand increases and becomes less elastic.
D) Demand increases and becomes more elastic.
Table 16-2
Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets
with demand schedules as shown in Table 16-2. The average cost of production is
constant at $2 per tube.
Which of the following statements is trueabout the two markets?
A) The demand in Middle Fall is more price elastic than the demand in West Fall.
B) The demand in Middle Fall is less price elastic than the demand in West Fall.
C) The demand in Middle Fall is more income elastic than the demand in West Fall.
D) The demand in Middle Fall is less income elastic than the demand in West Fall.
A firm’s accounting profit is also its
A) economic profit.
B) income statement.
C) net income.
D) statement of liabilities.
A decrease in interest rates can ________ the demand for stocks as stocks become
relatively ________ attractive investments as compared to bonds.
A) increase; more
B) decrease; less
C) decrease; more
D) increase; less
E) increase; similar
If the balance of the current account in the United States is -$900 billion, which of the
following is most likely to be true?
A) The balance on the financial account is positive.
B) The trade balance is positive.
C) Net foreign investment is positive.
D) The balance on the capital account is negative.
Which of the following is a true statement about the multiplier?
A) The multiplier rises as the MPC rises.
B) The smaller the MPC, the larger the multiplier.
C) The multiplier is a value between zero and one.
D) The multiplier effect does not occur when autonomous expenditure decreases.
Which of the following statements best describes the economic short run?
A) It is a period of one year or less.
B) It is a period during which firms are free to vary all of their inputs.
C) It is a period during which at least one of the firm’s inputs is fixed.
D) It is a period during which fixed inputs become variable inputs because of
depreciation.