________ means the supply curve has shifted to the right, while ________ refers to a
movement along a given supply curve in response to an increase in price.
A) An increase in supply; a decrease in supply
B) A decrease in supply; an increase in supply
C) An increase in supply; an increase in quantity supplied
D) A decrease in supply; a decrease in quantity supplied
Assume that production from an electric utility caused acid rain and that the
government imposed a tax on the utility equal to the cost of the acid rain. This is an
example of
A) a transaction cost.
B) a Pigovian tax.
C) a Pigovian subsidy.
D) the Coase Theorem.
Automobiles and many other products are differentiated. As a result
A) different countries may each have a comparative advantage in producing different
types of automobiles.
B) consumers of automobiles have difficulty deciding what type of imported
automobile to buy.
C) the quality of imported automobiles is less than it could be.
D) we see countries specializing completely in the production of automobiles.
Crowding out, following an increase in government spending, results from (the
exchange rate is the foreign exchange price of the domestic currency)
A) higher interest rates and a lower exchange rate.
B) higher interest rates and a higher exchange rate.
C) lower interest rates and a lower exchange rate.
D) lower interest rates and a higher exchange rate.
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.
Although the Federal Reserve had traditionally made discount loans only to ________,
in response to the financial crisis in 2008 the Fed made primary dealers eligible for
discount loans as well.
A) commercial banks
B) government agencies
C) investment banks
D) mortgage lenders
Figure 13-15
Answer the following questions.
a. What is the profit-maximizing output level?
b. What is the profit-maximizing price?
c. What is the average total cost at the profit-maximizing output level?
d. What area represents the firm’s profit?
e. At which output level are economies of scale exhausted?
f. Does this graph most likely represent the long run or the short run? Why?
________ marginal opportunity cost implies that the more resources already devoted to
any activity, the payoff from allocating yet more resources to that activity increases by
progressively smaller amounts.
A) Increasing
B) Decreasing
C) Constant
D) Negative
Figure 12-1
If the firm is producing 500 units, what is the amount of its profit or loss?
A) profit of $280
B) loss equivalent to the area A
C) profit equivalent to the area A
D) There is insufficient information to answer the question.
Following a decrease in government spending, as the price level falls we would expect
the level of interest rates to ________ and investment to ________.
A) decrease; decrease
B) decrease; increase
C) increase; decrease
D) increase; increase
Most movie theatres charge different prices to different groups of customers for movie
admission but not on movie popcorn. Which of the following is a reason for this?
A) because the markup on movie popcorn is very high and movie theatres do not want
to forego this source of revenue
B) because the demand for popcorn is very high relative to the demand for movie
admissions
C) because it is easier to limit resale in movie admissions but not in popcorn
D) because the cost of operating a concession stand in a movie theatre is very high
compared to the cost of showing a movie
Why is a typical person likely to gather more information when buying a new car than
when voting for a member of Congress?
A) because a person’s preferences are more likely to be met with little effort in the
political sphere but this is not the case when buying a car in the private marketplace
B) because it is less costly to acquire information about consumer items than it is about
political candidates
C) because buying a new car affects a person more immediately and personally
compared to voting for a member of Congress; in the latter, a person’s vote is only one
of many voters and therefore, not likely to have a large impact on the outcome
D) because the effects of buying a car are long term while a member of Congress has a
relatively short tenure
A change in which variable will change the market demand for a product?
A) the price of the product
B) population
C) technology
D) the prices of substitutes in production
If, between 2003 and 2013, the economy’s real GDP grew from $20 billion to $40
billion, what was the average annual growth rate in the economy?
A) 3%
B) 7%
C) 20%
D) 100%
Assuming that the total market size remains constant, a monopolistically competitive
firm earning profits in the short run will find the demand for its product decreasing in
the long run because
A) new entrants into the market are more likely to have cutting edge products.
B) as the firm raises its price in the long run, it will lose some customers to new
entrants in the market.
C) some of its customers have switched to purchasing the products of new entrants in
the market.
D) its costs of production rises.
What is a second-price auction?
A) An auction in which the bidder who submitted the highest bid is awarded the object
being sold and pays a price equal to the second highest amount bid.
B) An auction in which the bidder who submitted the second highest bid is awarded the
object being sold.
C) An auction in which the bidder who submitted the highest bid is awarded the object
being sold and pays a price equal to the average of the highest and second highest
amount bid.
D) An auction in which the bidder who submitted the second highest bid is awarded the
object being sold and pays a price equal to the average of the highest and second
highest amount bid.
The price of domestic goods in terms of foreign goods is referred to as
A) the nominal exchange rate.
B) the relative inflation rate.
C) the current account balance.
D) the real exchange rate.