A change in quantity supplied is represented by a movement along the supply curve.
A perfectly competitive firm’s marginal revenue curve is downward sloping.
Market equilibrium occurs where the quantity supplied is equal to the quantity
demanded.
If the demand for a product is elastic, the quantity demanded changes by a larger
percentage than the percentage change in price.
In a centrally planned economy, the government decides how economic resources will
be allocated.
Figure 5-3
The deadweight loss due to the externality is represented by the area
A) mso.
B) msn.
C) nso.
D) mtn.
An equal increase in government purchases and taxes will cause
A) an increase in real GDP.
B) no change in real GDP.
C) an increase in the budget surplus.
D) a reduction in cyclically adjusted budget surplus.
Suppose real GDP is $12.1 trillion and potential GDP is $12.6 trillion. To move the
economy back to potential GDP, Congress should
A) lower taxes by an amount less than $500 billion.
B) raise government purchases by $500 billion.
C) raise government purchases by more than $500 billion.
D) lower taxes by $500 billion.
E) lower government purchases by $500 billion.
Which of the following is an example of a common resource?
A) the Sumatran tiger population in the world
B) rabbit fur
C) the stock of knowledge in the public domain
D) taxicab services
The United States Post Office
A) faces no competition for its mail services.
B) has a monopoly in the provision of first-class mail service.
C) can safely ignore the prices for mail services charges by its rivals such as FedEx and
UPS.
D) is an example of a monopoly that results from the ownership of a key resource: first
class mail service.
Which of the following equations is true in an open economy?
A) Private saving = net foreign investment + domestic investment.
B) Domestic saving = net capital flows.
C) Net exports = -Financial account balance.
D) Net exports = net foreign investment.
If total utility increases at a decreasing rate as a consumer consumes more coffee, then
marginal utility must
A) remain constant.
B) increase also.
C) decrease.
D) be negative.
Figure 4-4
The figure above represents the market for pecans. Assume that this is a competitive
market. If 8,000 pounds of pecans are sold
A) the deadweight loss is equal to economic surplus.
B) producer surplus equals consumer surplus.
C) the marginal benefit of each of the 8,000 pounds of pecans equals $9.
D) marginal benefit is equal to marginal cost.
Which of the following summarizes the impact of population growth on the labor
market?
A) This will increase the labor supply, reduce the equilibrium wage and increase the
quantity of labor demanded.
B) There will be an increase in the demand for labor. As a result, the wage rate will rise
and the quantity of workers supplied will decrease.
C) There will be an increase in the demand for jobs. This will result in an increase in the
equilibrium wage rate and a movement along the labor supply curve.
D) There will be an increase in both the demand for labor and the supply of labor. As a
result, the equilibrium wage will not change.
Suppose a price floor on sparkling wine is proposed by the Health Minister of the
country of Vinyardia. What will be the likely effect on the market for sparkling wine in
Vinyardia?
A) Consumer surplus will increase.
B) Producer surplus will increase.
C) Deadweight loss will increase.
D) Market efficiency will increase.
Figure 2-3
Carlos Vanya grows tomatoes and strawberries on his land. A portion of his land is more
suitable for growing tomatoes and the other portion is better suited for strawberry
cultivation. Which of the graphs in Figure 2-3 represent his production possibilities
frontier?
A) Graph A
B) Graph B
C) Graph C
D) either Graph A or Graph B
E) either Graph B or Graph C
An equilibrium in a game in which players pursue their own self-interest is called
A) a Nash equilibrium.
B) a cooperative equilibrium.
C) a noncooperative equilibrium.
D) a prisoner’s dilemma.
The informal sector can be a significant drag on the economies of developing countries
because the firms in the informal sector
A) produce goods and services no one wants.
B) sell their goods and services to citizens in other countries.
C) do not pay taxes to the government.
D) employ illegal immigrants from other countries.
The output of U.S. citizens who work in Canada would be included in the
A) gross domestic product of Canada.
B) gross national product of Canada.
C) gross domestic product of the United States.
D) gross national product of Canada and the gross national product of the United States.
At the profit-maximizing level of output for a perfectly competitive firm, price equals
marginal cost. Which of the following is also true?
A) The difference between total revenue and total cost is the greatest.
B) Total revenue equals total cost.
C) Average revenue equals average total cost.
D) Marginal profit equals marginal cost.
Nike has used Michael Jordan to create the impression that Air Jordan basketball shoes
are superior to any other basketball shoes. Nike is attempting to
A) differentiate Air Jordan basketball shoes from other types of basketball shoes.
B) lower the marginal cost of producing Air Jordan basketball shoes.
C) increase its profit by raising the price of Air Jordan basketball shoes.
D) convince consumers that Air Jordan basketball shoes are no different from other
basketball shoes favored by celebrities.
On average, people in high-income countries ________ than people in low-income
countries.
A) have a shorter life expectancy
B) are subject to a higher infant mortality rate
C) are taller
D) are exposed to more severe diseases
________ is considered a high income country, ________ a developing country, and
________ a newly industrializing country.
A) Japan; Hong Kong; South Korea
B) United States; Somalia; Taiwan
C) Canada; France; Singapore
D) Honduras; New Zealand; South Korea
A tax is imposed on employers and workers that are used to fund Social Security and
Medicare. This tax is sometimes referred to as
A) the Income Security Tax.
B) the federal income tax.
C) the ACIF.
D) the payroll tax.
If American demand for purchases of Mexican goods has increased, how would you
expect the equilibrium exchange rate in the market for dollars to respond? Support your
answer graphically.
Use the money demand and money supply model to show graphically and explain the
effect on interest rates of the Federal Reserve’s open market sale of Treasury securities.
Suppose you transfer $2,000 from your mutual fund account to your checking account.
What is the immediate impact of this transfer on M1 and M2?
Table 8-31
The table above represents hypothetical data from the National Income Accounts for
2013. Use the data to calculate personal income and disposable income.
Why are demand and marginal revenue represented by the same curve for a firm in a
perfectly competitive market, but by separate curves for a firm in a monopolistically
competitive market?
What is the main reason for changes in GDP in the short run?