In the past two decades the United States lost its comparative advantage in automobiles
to Japan. What factor was most responsible for the development of Japan’s comparative
advantage in automobiles?
A) Japanese firms excelled in process technology.
B) Japan has abundant supplies of labor.
C) Japanese firms benefited from external economies.
D) Japan has abundant supplies of natural resources needed to produce automobiles.
Which of the following are represented by the same flow in the circular flow model?
A) the flow of goods and the flow of factors of production
B) the flow of costs and the flow of revenue
C) the flow of income earned from the sale of resources and the flow of expenditures on
goods and services
D) the flow of income received by households and the flow of tax revenues paid by
firms
Lack of investment in strong education and health care systems
A) causes a deterioration in human capital and a decline in labor productivity.
B) causes a decline in physical capital and a decline in labor productivity.
C) increases human capital and cause a decline in labor productivity.
D) causes a deterioration in human capital and an increase in physical capital.
Figure 6-3
Using the midpoint formula, calculate the absolute value of the price elasticity of
demand between e and f.
A) 0.32
B) 0.4
C) 2.5
D) 3.125
Jake sells Star Wars memorabilia on eBay. His annual revenue is $42,000 per year, the
explicit costs of his business are $10,000, and the opportunity costs of his business are
$18,000 per year. What is his economic profit?
A) $14,000
B) $24,000
C) $32,000
D) $34,000
In order to avoid the imposition of other types of trade barriers, foreign producers will
sometimes agree to limit their exports to a country. What are these types of agreements
called?
A) involuntary export restraints
B) voluntary export restraints
C) implicit quotas
D) sanctions
What is the difference between “diminishing marginal returns” and “diseconomies of
scale”?
A) Both concepts explain why marginal cost increases after some point but diminishing
marginal returns applies only in the short run when there is at least one fixed factor,
while diseconomies of scale applies in the long run when all factors are variable.
B) Both concepts explain why average total cost increases after some point but
diminishing marginal returns applies only in the short run when there is at least one
fixed factor, while diseconomies of scale applies in the long run when all factors are
variable.
C) Diminishing marginal returns, which applies only in the short run when at least one
factor is fixed, explains why marginal cost increases, while diseconomies of scale,
which applies in the long run when all factors are variable, explains why average cost
increases.
D) Diminishing marginal returns,which applies only in the long run when all factors are
variable, explains why average variable cost increases, while diseconomies of scale,
which applies in the short run when at least one factor is fixed, explains why average
total cost increases.
Figure 9-9 Bragabong currently
both produces and imports almonds. The government of Bragabong decides to restrict
international trade in almonds by imposing a quota that allows imports of only 10
million kilos each year. Figure 9-9 shows the estimated demand and supply curves for
almonds in Bragabong and the results of imposing the quota.
Answer questions a-j . a. If there is no quota what is the domestic price of almonds and
what is the quantity of almonds demanded by consumers?
b. If there is no quota how many kilos of almonds would domestic producers supply
and what quantity would be imported?
c. If there is no quota what is the dollar value of consumer surplus?
d. If there is no quota what is the dollar value of producer surplus received by producers
in Bragabong?
e. If there is no quota what is the revenue received by foreign producers who supply
almonds to Bragabong?
f. With a quota in place what is the price that consumers of Bragabong must now pay
and what is the quantity demanded?
g. With a quota in place what is the dollar value of consumer surplus? Are consumers
better off?
h. With a quota in place what is the dollar value of producer surplus received by
producers in Bragabong? Are domestic producers better off?
i. Calculate the revenue to foreign producers who are granted permission to sell in
Bragabong after the imposition of the quota.
j. Calculate the deadweight loss as a result of the quota.
Typically, as an economy begins to emerge from a recessionary phase of the business
cycle,
A) unemployment falls immediately.
B) unemployment continues to rise.
C) inflation begins to fall.
D) investment begins to fall.
In the aggregate expenditure model, ________ has both an autonomous component and
an induced component.
A) planned investment spending
B) consumption spending
C) government spending
D) net export spending