If, in response to a decrease in the price of grapes, the quantity of grapes demanded
increases, economists would describe this as
A) an increase in demand.
B) an increase in quantity demanded.
C) a change in consumer income.
D) an increase in consumers’ taste for coffee.
If you transfer all of your currency to your checking account, then initially, M1 will
________ and M2 will ________.
A) increase; not change
B) not change; increase
C) not change; not change
D) decrease; increase
Marginal revenue product falls as more labor is hired because
A) the price of the product must fall for a perfectly competitive firm to sell more.
B) the wage rate rises as more workers work more hours.
C) the marginal product of labor is negative as additional units of labor are hired.
D) the marginal product of labor falls as a result of the law of diminishing returns.
Which of the following is not a cost posed by inflation?
A) Inflation reduces the affordability of goods and services to the average consumer.
B) The money that consumers and firms hold loses its purchasing power.
C) Firms must pay for changing prices on products and printing new catalogs.
D) Banks can lose if they under predict inflation and charge an interest rate that does
not completely compensate for inflation.
Suppose when the price of laptops falls, college students buy more laptops. This implies
that
A) there is a positive relationship between laptop prices and quantities purchased by
college students.
B) there is a negative relationship between laptop prices and quantities purchased by
college students.
C) there is a direct relationship between laptop prices and quantities purchased by
college students.
D) there is a one-to-one relationship between laptop prices and quantities purchased by
college students.
Corporate governance involves the way in which
A) the government nationalizes corporations.
B) the government licenses corporations.
C) a corporation is subject to government regulations.
D) a corporation is structured.
Suppose the economy is at full employment and firms become more optimistic about
the future profitability of new investment. Which of the following will happen in the
short run?
A) Output will decline.
B) Prices will decline.
C) Unemployment will decline.
D) The aggregate demand curve will shift to the left.
If inflation is positive and is perfectly anticipated,
A) those that borrow money lose.
B) those that lend money lose.
C) those that hold paper money lose.
D) no one in the economy loses.
When you buy previously-issued shares of Facebook stock, this transaction takes place
in the
A) primary market.
B) bond market.
C) secondary market.
D) bear market.
Figure 15-11 In 2011,
Verizon was granted permission to enter the market for cable TV in Upstate New York,
ending the virtual monopoly that Time Warner Cable had in most local communities in
the region. Figure 15-11 shows the cable television market in Upstate New York.
What is the size of the deadweight loss prior to Verizon entering the market and what
happens to this deadweight loss after Verizon does enter the market?
A) The deadweight loss of area D is converted to consumer surplus.
B) The deadweight loss of area C+D is converted to consumer surplus
C) The deadweight loss of area D is converted to producer surplus.
D) The total deadweight loss is the area D+F; D is converted to consumer surplus and
F to producer surplus.
Table 11-1
Table 11-1 shows the technology of production at the Matsuko’s Mushroom Farm for
the month of May. What is the average product of labor when the farm hires 5 workers?
A) 4 pounds
B) 10.8 bushels
C) 38.2 pounds
D) 54 pounds
An economic principle that explains why people pursue different occupations is
A) absolute advantage.
B) international trade.
C) comparative advantage.
D) NAFTA.
Since 1950 there has been a substantial increase in wheat production. The increase in
production has led to a decrease in the price of wheat because of which of the following
factors?
A) The absolute value of the price elasticity of demand for wheat is less than 1, and the
income elasticity of demand for wheat is greater than 1.
B) The absolute value of the price elasticity of demand for wheat is greater than 1, and
wheat is a close substitute for other food products.
C) The absolute value of the price elasticity of demand for wheat is less than 1, and the
income elasticity of demand for wheat is low.
D) The income elasticity of demand for wheat is high, and wheat is an inferior good.
What is perfect price discrimination and why do economists believe that no firm is able
to practice perfect price discrimination?
What is the “tax wedge”?
Suppose 180,000 people are employed, 20,000 people are unemployed, and 50,000
people are out of the labor force, then calculate the labor force participation rate.
Explain three reasons why the productivity slowdown of 1974-1995 occurred.
Money cannot serve as a medium of exchange unless it also serves as a store of value.
Is this statement true or false? Explain.
Explain how unemployment changes over the business cycle. Why do these changes
occur?