An increase in the equilibrium price of Japanese yen per dollar could be caused by a(n):
a. increase in the general level of prices in Japan.
b. increase in the U.S. demand for domestically-built automobiles.
c. decrease in the U.S. income relative to the income in Japan.
d. increase in the supply of dollars on the foreign market.
Which of the following is a characteristic of an LDC?
a. Capital flight. c. Lack of entrepreneurs.
b. Vicious circle of poverty. d. All of these.
Tina’s marginal utility of her first piece of cake is 15, while Jerry’s marginal utility of
his first piece of cake is 24. An economist would conclude that:
a. Tina likes cake more than Jerry likes cake.
b. Jerry likes cake more than Tina likes cake.
c. Tina likes cake less than Jerry likes cake.
d. Jerry likes cake less than Tina likes cake.
e. we can’t make a comparison to see who values cake more.
Paul’s Plumbing is a small business that employs 12 people. Which of the following is
most likely to be a fixed cost for Paul’s Plumbing?
a. The tax and insurance payments on the property owned by the firm.
b. The wages paid to the 12 employees.
c. The payroll taxes on the wages of the 12 employees.
d. The salary paid to Paul, who is the manager of the firm.
Which of the following statements is true?
a. The doctrine of laissez-faire advocates an economic system with extensive
government intervention and little individual decision-making.
b. In capitalism income is distributed on the basis of need.
c. Adam Smith was the father of socialism.
d. Most real-world economies are mixed economic systems.
e. The “invisible hand” refers to government economic control.
Persistent negative current account balances will lead to ____.
a. c and d
b. d and e
c. budget deficits
d. appreciation of foreign currency
e. depreciation of domestic currency
The short-run equilibrium for a monopolistically competitive firm is at P = $28.47, ATC
= $22.13, and MC = MR = $17.47. Which of the following is true?
a. Per-unit profit is $11.
b. Additional firms will be attracted into the industry.
c. The firm could raise price and increase profits.
d. The firm could lower price and increase profits.
e. Average cost must be rising.
Exhibit 2-19 Production possibilities curves
In Exhibit 2-19, the production possibilities curves for a country are shown for the years
Year X and Year Y. Which of the following could have caused a shift for Year X to Year
Y in production possibilities curves?
a. An increase in unemployment.
b. A decline in technology.
c. An increase in the stock of capital goods.
d. A natural disaster.
e. More efficient production.
When economists say goods are scarce, they mean:
a. consumers are too poor to afford the goods and services available.
b. consumers are unwilling to buy goods unless they have very low prices.
c. goods are generally freely available from nature in most countries.
d. the desire for goods and services exceeds our ability to produce them with the limited
resources available.
When there is a positive externality associated with the watering of one’s lawn, the free
market results in:
a. not enough lawn watering.
b. too much lawn watering.
c. the socially optimal level of lawn watering.
d. people watering each other’s lawns.
e. government subsidies for lawn watering.
Exhibit 7-17 Long-run average cost curve
If the firm represented in Exhibit 7-17 is operating with a plant whose size corresponds
to short-run average total cost curve A, the level of output that would minimize its
short-run average total cost is:
a. Q1 units per week.
b. Q2 units per week.
c. Q3units per week.
d. Q4 units per week.
Exhibit 6-1 Total utility for good X
As shown in Exhibit 6-1, the marginal utility for the fifth unit consumed is:
a. 305.
b. 155.
c. 5.
d. 0.
Larissa is a famous attorney with a great reputation in court. She charges her clients
$300 for each hour she spends working on their cases. If she earned $450,000 in hourly
wages last year, and by raising her rates to $350 per hour her income increased to
$490,000 what can we say about the elasticity of demand for Larissa’s legal services?
a. It is approximately equal to 2.3.
b. It is approximately equal to 1.6.
c. It is approximately equal to 1.0.
d. It is approximately equal to 0.45.
e. It is approximately equal to 0.1.
Since World War II, tariff reductions have occurred in large part because of negotiations
under the:
a. Industry and Trade Administration Act.
b. Employment Act.
c. Monetary Control Act.
d. General Agreement on Tariffs and Trade.
If Mr. Smith thinks the last dollar spent on shirts yields more satisfaction than the last
dollar spent on cola, and Smith is a utility-maximizing consumer, he should:
a. decrease his spending on cola.
b. decrease his spending on cola and increase his spending on shirts.
c. increase his spending on shirts.
d. increase his spending on cola and decrease his spending on shirts.
Exhibit 6-2 Total utility for hamburgers, fries, and Cokes
In Exhibit 6-2 assume that the price of hamburgers is $2 each, fries cost 50 cents each,
and Cokes cost $1 each. What is the marginal utility of having a second order of fries?
a. 10 utils.
b. 20 utils.
c. 30 utils.
d. 50 utils.
Exhibit 8-4 Marginal cost and revenue for a firm
In Exhibit 8-4, this firm is currently operating at its profit-maximizing level of output.
How much profit is the firm earning?
a. Zero.
b. $1.
c. $16.
d. $16.
e. Unable to determine with this information.
Exhibit 7-13 Cost curves
In Exhibit 7-13, ATC is shown by the graph labeled:
a. I.
b. II.
c. III.
d. IV.
e. V.
Exhibit 7-9 Cost schedule for firm X
As shown in Exhibit 7-9, the total cost of producing 5 units is:
a. zero.
b. $227.
c. $250.
d. $100.