A monopsony is a term used to refer to a firm that is the sole seller of a good or service.
The sales revenue a seller receives from the sale of an additional unit of goods is called
the marginal cost.
It is possible to have an absolute advantage in producing a good or service without
having a comparative advantage.
If a state requires all drivers to buy health insurance, the problem of adverse selection is
eliminated.
Ceteris paribus, an increase in the government’s budget deficit will decrease the
financial account surplus.
If a tax is imposed on a product, the buyer will always bear the entire burden of the tax.
Figure 4-9 Figure 4-9 shows the market for
cigarettes. The government plans to impose a unit tax in this market.
How much of the tax is paid by buyers?
A) $8
B) $5
C) $4
D) $3
Changes in ________ do not affect the level of aggregate supply in the long run.
A) technology
B) the number of workers in the economy
C) the price level
D) the amount of accumulated capital equipment
Health insurance plans which typically reimburse doctors and hospitals with payment
for each service they provide are known as
A) fee-for-service plans.
B) preferred provider organizations.
C) single-health-payer systems.
D) health maintenance organizations.
Figure 15-16 Figure 15-16 shows the
market demand and cost curves facing a natural monopoly.
Suppose the government regulates this industry in order to remove the inefficiency
implied by the behavior of the profit maximizing owners. If regulators require that the
firm produces the economically efficient output level, what is this level and what price
will be charged?
A) Q4 units; P4
B) Q1 units; P4
C) Q1 units; P1
D) Q3 units; P3
If the Federal Reserve announces that its target for the federal funds rate is falling from
3 percent to 2.25 percent, how do you expect workers and firms to react?
A) As long as the Fed’s announcement is credible, workers and firms will decrease their
consumption and investment spending, which will decrease aggregate demand and
inflation.
B) As long as the Fed’s announcement is credible, workers and firms will increase their
consumption and investment spending, which will increase aggregate demand and
inflation.
C) If the Fed’s announcement is not credible, workers and firms will not expect inflation
to rise so they will increase their consumption and investment spending, which will
decrease aggregate demand and increase inflation.
D) Workers and firms will incorporate the decrease in interest rates into their
expectations of inflation, and they will expect inflation to fall as a result of Fed’s policy
announcement.
Figure 9-3 Since 1953 the
United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates
the impact of the quota. If there was no quota, how many pounds of peanuts would
domestic consumers purchase?
A) 10 million
B) 28 million
C) 34 million
D) 40 million
Figure 2-2
Figure 2-2 above
shows the production possibilities frontier for Mendonca, an agrarian nation that
produces two goods, meat and vegetables. Suppose Mendonca is currently producing 60
pounds of vegetables per period. How much meat is it also producing, assuming that
resources are fully utilized?
A) 45 pounds of meat
B) 75 pounds of meat
C) 80 pounds of meat
D) 100 pounds of meat
Table 9-6
Production and
Consumption Production
Without Trade With Trade
Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production
and consumption quantities without trade, and the production numbers with trade.
Which country has an absolute advantage in producing hats?
A) Denmark
B) Belize
C) both countries
D) neither country
Hotspur Incorporated, a manufacturer of microwaves, is a price taker in both the input
and output markets. To maximize its profit, Hotspur will hire labor up to the point
where
A) the marginal product of labor is no longer positive.
B) all economies of scale have been exhausted.
C) the marginal revenue product of labor equals the wage rate.
D) the marginal revenue product of labor equals the output price.
Figure 13-1
Ceteris paribus, a decrease in firms’ expectations of the future profitability of
investment spending would be represented by a movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
An expansionary monetary policy in the United States should
A) decrease the foreign currency price of U.S. exports.
B) cause the dollar to appreciate.
C) decrease the dollar price of imports.
D) decrease net exports.
Contractionary monetary policy causes
A) aggregate demand to rise and the price level to rise.
B) aggregate demand to fall and the price level to fall.
C) aggregate demand to rise and the price level to fall.
D) aggregate demand to fall and the price level to rise.
When housing prices ________ as they did beginning in 2006 following the housing
market bubble, most banks and other lenders tightened the requirement for borrowers,
making it ________ for potential home buyers to obtain mortgages.
A) fell; easier
B) fell; harder
C) rose; easier
D) rose; harder
In the United States, over the past 40 years federal revenues as a share of gross
domestic product have
A) risen steadily and now are about 40 percent.
B) ranged between 17 and 19 percent.
C) fallen below 10 because of rapid economic growth.
D) been limited by law to no more than 20 percent.
Marginal benefit is equal to the ________ benefit to a consumer receives from
consuming one more unit of a good or service.
A) total
B) unintended
C) additional
D) surplus
If the opportunity cost of production for two goods is different between two countries,
then
A) trade cannot benefit either country.
B) only one country can be made better off by trade.
C) mutually beneficial trade is possible.
D) trade will only benefit both countries if one can lower its opportunity costs.
During what period of time did the United States most consistently adhere to the gold
standard?
A) from the nineteenth century until the 1930s
B) from the eighteenth century until the nineteenth century
C) from 1914 until 1929
D) from 1944 until 1980
President Bush lowered income taxes for individuals in 2001. Explain how lower
income taxes affect the aggregate demand curve.
How is the quantity theory of money different from the quantity equation and why must
the quantity equation always be true?
Is knowledge capital subject to the law of diminishing returns? Explain.
What is a mortgage? What were the important developments in the mortgage market
during the years after 1970?
The reasons why someone cannot get a job are similar to the reasons why someone
cannot get a date. Using the ideas of frictionally unemployed, structurally unemployed,
and cyclically unemployed, describe and explain how a student at your university might
be frictionally “undated,” structurally “undated,” and cyclically “undated.”