The price elasticity of an upward-sloping supply curve is always
A) positive.
B) negative.
C) greater than one.
D) impossible to determine.
To affect the market outcome, a price floor
A) must be set above the black market price.
B) must be set above the legal price.
C) must be set above the price ceiling.
D) must be set above the equilibrium price.
Table 14-5
Ming and Henri each
run one of the two dry cleaning facilities in the town of Scaraby. Both consider offering
free pickup and delivery services. Table 14-5 shows the payoff matrix containing the
expected quarterly profits for each firm. What is the Nash equilibrium in this game?
A) There is no Nash equilibrium.
B) Ming offers free pickup and delivery, but Henri does not.
C) Henri offers free pickup and delivery, but Ming does not.
D) Both Ming and Henri offer free pickup and delivery.
In the United States, health care spending on people over age 65 is ________ on people
aged 18 to 24.
A) one third as much as
B) twice as much as
C) six times greater than
D) forty times greater than
The ratio at which a country can trade its exports for imports from other countries is
called
A) a trade barrier.
B) the terms of trade.
C) autarky.
D) a free trade agreement.
If the purchasing power of the dollar is greater than the purchasing power of the euro,
purchasing power parity predicts that the exchange rate will
A) increase if the exchange rate is greater than 1 euro per dollar.
B) decrease if the exchange rate is less than 1 euro per dollar.
C) be equal to the relative purchasing power across the currencies in the long run.
D) not fluctuate and stay constant in the long run.
If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two
years?
A) 270%
B) 50%
C) 5%
D) 2.7%
Overuse of a common resource may be avoided by all of the following methods except
A) charging for the use of a common resource.
B) issuing tradable permits for the use of a common resource.
C) government taking over ownership of all private common resources.
D) setting quotas or legal limits on the quantity consumed of the common resource.
If you can produce more of something than others with the same resources, you have
A) a comparative advantage.
B) an absolute advantage.
C) an efficient production system.
D) a free-market economy.
Health insurance companies impose deductibles on policies and co-payments on claims
A) to increase sales.
B) to reduce moral hazard problems.
C) to reduces sunk costs.
D) to increase prices.
Table 2-4
Table 2-4 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 Jack’s opportunity cost of mowing a lawn?
A) half a garden cultivated
B) two lawns mowed
C) two-thirds of a garden cultivated
D) one and a half lawns mowed
Figure 3-5
In a free market such as that depicted above, a surplus is eliminated by
A) a price increase, increasing the supply and decreasing the demand.
B) a price decrease, decreasing the supply and increasing the demand.
C) a price decrease, decreasing the quantity supplied and increasing the quantity
demanded.
D) a price increase, increasing the quantity supplied and decreasing the quantity
demanded.
Figure 13-13
What is the profit maximizing output level?
A) Q1 units
B) Q2 units
C) Q3 units
D) Q4 units
Which of the following is a characteristic shared by a perfectly competitive firm and a
monopoly?
A) Each must lower its price to sell more output.
B) Each sets a price for its product that will maximize its revenue.
C) Each maximizes profits by producing a quantity for which marginal revenue equals
marginal cost.
D) Each maximizes profits by producing a quantity for which price equals marginal
cost.
According to census figures and the Congressional Budget Office, the number of people
aged 65 and older is projected to ________ and the number of uninsured people is
projected to ________ by the year 2020.
A) increase; increase
B) decrease; increase
C) increase; decrease
D) decrease; decrease
Figure 2-4
Figure 2-4 shows various points on three Different production possibilities frontiers for
a nation.
Consider the following events:
a. a decrease in the unemployment rate
b. an increase in technology with respect to both food and plastic production
c. a war that kills a significant portion of a nation’s population Which of the events
listed above could cause a movement from W to Y ?
A) a, b and c
B) a and b only
C) a and c only
D) b only
E) c only
If you can produce more of something than others with the same resources, you have
A) a comparative advantage.
B) an absolute advantage.
C) an efficient production system.
D) a free-market economy.
Figure 4-1 Figure 4-1 shows Kendra’s
demand curve for ice-cream cones.
Kendra’s marginal benefit from consuming the third ice cream cone is
A) $13.00
B) $2.50
C) $1.50
D) $0.50
A monopolistically competitive industry that earns economic profits in the short run
will
A) continue to earn economic profits in the long run.
B) experience the entry of new rival firms into the industry in the long run.
C) experience the exit of existing firms out of the industry in the long run.
D) experience a rise in demand in the long run.
How are the fundamental economic decisions determined in Canada?
A) Individuals, firms, and the government interact in a market to make these economic
decisions.
B) These decisions are made by the country’s elders who have had much experience in
answering these questions.
C) The government decides because Canada is a centrally planned economy.
D) The United Nations decides because Canada is a developing economy.