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Which of the following is not a characteristic of a monopolistically competitive firm in
long-run equilibrium?
A) Marginal revenue is equal to marginal cost.
B) Price is equal to average revenue.
C) The firm has excess capacity.
D) Price is equal to marginal cost.
The economic analysis of minimum wage involves both normative and positive
analysis. Consider the following consequences of a minimum wage:
a. The minimum wage law causes unemployment.
b. A minimum wage law benefits some groups and hurts others.
c. In some cities such as San Francisco and New York, it would be impossible for
low-skilled workers to live in the city without minimum wage laws.
d. The gains to winners of a minimum wage law should be valued more highly than the
losses to losers because the latter primarily comprises businesses. Which of the
consequences above are positive statements and which are normative statements?
A) a, b, and c are positive statements; d is a normative statement.
B) a and b are positive statements; c and d are normative statements.
C) Only a is a positive statement; b, c and d are normative statements.
D) a and c are positive statements; b and d are normative statements.
Which of the following is not a reason why the U.S. economy has been more stable
since 1950?
A) Goods have become a larger fraction of GDP and services have become a smaller
fraction of GDP.
B) The government has actively pursued policy to combat recessions and prolong
expansions.
C) Unemployment insurance and other government programs curtail the decline in
spending that occurs during a recession.
D) Services have become a larger fraction of GDP and goods have become a smaller
fraction of GDP.
Under autarky, consumer surplus is represented by the area
A) above the supply curve and below the equilibrium price.
B) above the supply curve and below the demand curve.
C) below the demand curve and above the equilibrium price.
D) above the demand curve and below the supply curve.
The political process is more likely to serve the interests of individuals whose
preferences are in the middle, rather than individuals with preferences that are much to
the left or right of the political center. This statement is best explained by which of the
following?
A) logrolling
B) the voting paradox
C) the Arrow impossibility theorem
D) the median voter theorem
Economics does not study correct or incorrect behaviors but rather it assumes that
economic agents behave ________, meaning they make the best decisions given their
knowledge of the costs and benefits.
A) equitably
B) rationally
C) emotionally
D) selfishly
Adverse selection occurs in the market for used cars because used car buyers
A) have more information than used car sellers.
B) have less information than used car sellers.
C) have less incentive to maintain the value of their cars than new car buyers.
D) tend to have more accidents than new car buyers.
A tax bracket is
A) the percent of taxable income paid in taxes at a specific income bracket.
B) the income range within which a particular tax rate applies.
C) the type of tax structure for which a range of taxes applies.
D) the range, from the high to the low tax rate, of a particular type of tax.
The passage of the Smoot-Hawley Tariff in 1930 sparked a trade war that caused net
exports to ________ and real GDP to ________.
A) increase; increase
B) decrease; increase
C) increase; decrease
D) decrease; decrease
An increase in ________ shifts the production function ________, and makes it
possible to produce a higher level of GDP with ________ capital per hour worked.
A) technology; down; the same amount of
B) technology; up; the same amount of
C) consumption; up; a lesser amount
D) labor productivity; down; the same amount of
Table 18-6
Table 18-6 shows the income tax brackets and tax rates for single taxpayers in
Calpernia. Calculate the income tax paid by Sasha, a single taxpayer with an income of
$60,000.
A) $22,800
B) $14,399
C) $13,800
D) $13,642
When Zynga, the company behind the social games CityVille and Words With Friends,
sold stock to the public for the first time in December 2011, funds were being raised in
a ________ market, and when those newly issued shares are resold to other buyers, the
sales take place in a ________ market.
A) primary; primary
B) primary; secondary
C) secondary; primary
D) secondary; secondary
