Jaycee Jeans sold 40 pairs of jeans at a price of $40. When it lowered its price to $20,
the quantity sold increased to 60 pairs. Calculate the absolute value of the price
elasticity of demand. Use the midpoint formula.
A) 1.67
B) 1.0
C) 0.6
D) 0.53
The ________ demonstrates the roles played by households and firms in the market
system.
A) production possibilities frontier
B) circular flow model
C) theory of comparative advantage
D) business cycle
Tanesha sells homemade candles over the Internet. Her annual revenue is $64,000 per
year, the explicit costs of her business are $17,000, and the opportunity costs of her
business are $22,000. What are the implicit costs of her business?
A) $17,000
B) $22,000
C) $39,000
D) $47,000
Many firms use odd pricing – charging prices such as $.99 instead of $1.00 and $9.99
instead of $10.00. One reason for this pricing strategy is that consumers will somehow
believe that the difference in price appears to be greater than it actually is. Researchers
conducted consumer surveys to determine whether this is actually the case. What was
the result of these surveys?
A) The surveys found that small differences in price cause small differences in quantity
demanded. There is no evidence that odd pricing makes economic sense.
B) Although the results were not conclusive, there is some evidence that odd pricing
makes economic sense.
C) The surveys found indifference regarding this strategy among most consumers, but
hostility among other consumers. The latter group resented what they viewed as an
attempt to fool them into buying products with odd prices. Researchers concluded that
odd pricing is counterproductive.
D) The survey results were inconclusive because most consumers gave unreliable
responses to the survey questions.
A firm’s net income is also its
A) economic profit.
B) balance sheet.
C) accounting profit.
D) opportunity cost.
Figure 2-3
Carlos Vanya grows tomatoes and strawberries on his land. His land is equally suited
for growing either fruit. Which of the graphs in Figure 2-3 represents 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
Which of the following will not happen as a consequence of a monopolistically
competitive firm suffering economic losses in the short run?
A) The firm’s demand curve will shift to the right if it stays in business in the long run.
B) The firm will exit the industry if it continues to suffer economic losses.
C) The firm will break even if it stays in business in the long run.
D) In the long run, the firm will be able to charge a price that is greater than its average
total cost.
In the long run, the Phillips curve is a ________ at ________.
A) horizontal line; 0% inflation
B) negatively sloped line; the intersection of aggregate demand and short-run aggregate
supply
C) vertical line; the natural rate of unemployment
D) vertical line; the expected rate of inflation
Relative to productivity growth in the United States, which of the following countries
experienced the largest decline in productivity growth from 1990 to 2012?
A) Canada
B) Japan
C) Germany
D) the United Kingdom
The three fundamental questions that any economy must address are
A) What will be the prices of goods and services; how will these goods and services be
produced; and who will receive them?
B) What goods and services to produce; how will these goods and services be produced;
and who receives them?
C) Who gets jobs; what wages do workers earn; and who owns what property?
D) How much will be saved; what will be produced; and how can these goods and
services be fairly distributed?