A nonmonetary opportunity cost is called a(n) ________, while a cost that involves
spending money is called a(n) ________.
A) accounting cost; explicit cost
B) implicit cost; explicit cost
C) accounting profit; economic profit
D) normal rate of return; asset
Danielle Ocean pays for monthly pool maintenance for her home swimming pool. Last
week the owner of the pool service informed Danielle that he will have to raise his
monthly service fee because of increases in the price of pool chemicals. How is the
market for pool maintenance services affected by this?
A) There is an increase in the supply of pool maintenance services.
B) There is a decrease in the demand for pool maintenance services.
C) There is a decrease in the quantity of pool maintenance services supplied.
D) There is a decrease in the supply of pool maintenance services.
Table 17-1
If the output price is $3, what is the marginal revenue product of the fifth unit of labor?
A) $1,050
B) $360
C) $210
D) $150
How will the exchange rate (foreign currency per dollar) respond to an increase in
preference for imported goods in the United States in the long run?
A) Exchange rates will rise.
B) Exchange rates will fall.
C) Exchange rates will be unaffected by changes in the relative rate of productivity
growth in the United States, both in the short run and in the long run.
D) The exchange rate will be affected in the short run, but not in the long run.
Table 17-3
Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input
and output markets. The firm hires labor at a constant wage rate of $800 per week and
sells microwave ovens at a constant price of $80. Table 17-3 shows the relationship
between the quantity of labor it hires and the quantity of microwave ovens it produces.
What is Hotspur’s profit maximizing quantity of labor?
A) 2 workers
B) 3 workers
C) 5 workers
D) 6 workers
Table 2-16
Table 2-16 shows the number of labor hours required to produce a cell phone and a
board foot of lumber in Estonia and Finland. What is Estonia’s opportunity cost of
producing one board foot of lumber?
A) 0.2 cell phones
B) 5 cell phones
C) 8 cell phones
D) 32 cell phones
Which of the following is not one of the key services provided by the financial system?
A) decreasing taxes
B) risk sharing
C) liquidity
D) generating information
Figure 2-5
If the economy is currently producing at point X, what is the opportunity cost of moving
to point W?
A) 3 million tons of steel
B) 19 million tons of steel
C) 5 million tons of paper
D) 9 million tons of paper
Banks can make additional loans when required reserves are
A) greater than total reserves.
B) less than total reserves.
C) less than total deposits.
D) less than total loans.
“For a given supply curve, the excess burden of a tax will be greater when the demand
for a product is less elastic than when the demand is more elastic.” This statement is
A) correct.
B) incorrect because the incidence of the tax, not the burden of the tax, is affected by
the elasticity of demand.
C) incorrect. When demand is less elastic, the burden of the tax is smaller than when the
demand is more elastic.
D) incorrect. The statement confuses demand with quantity demanded.