If the number of firms producing mouthwash increases and consumer preference for
mouthwash increases, the equilibrium price of mouthwash will definitely increase.
Answer:
When the government imposes a tax equal to the external cost of producing a product
that causes pollution, the government is said to externalize the externality.
Answer:
Small differences in economic growth rates result in small differences in living
standards.
Answer:
Empirical evidence shows that the impact of government budget deficits and surpluses
on the equilibrium interest rate is quite large.
Answer:
If a country produces only two goods, it is possible to have a comparative advantage in
the production of both those goods.
Answer:
Equilibrium in a competitive market results in the greatest amount of economic surplus
from the production of a good or service.
Answer:
It is not possible to have a comparative advantage in producing a good or service
without having an absolute advantage.
Answer:
The law of one price holds exactly only if there are transactions costs associated with
buying a product in one location and selling it in another location.
Answer:
An increase in the level of structural unemployment will shift the long-run Phillips
curve.
Answer:
In recent years, economists have come to rely more on the establishment survey rather
than the household survey to analyze current labor market statistics.
Answer:
Vaccinations tend to result in a negative externality.
Answer:
The larger the MPS, the smaller the value of the multiplier.
Answer:
The basic economic problem of ________ has always existed and will continue to exist.
A) scarcity
B) efficiency
C) inflation
D) recession
Answer:
Which of the following is the best example of a quota?
A) a subsidy from the U.S. government to domestic manufacturers of residential air
conditioners to enable them to compete more effectively with foreign producers
B) a limit on the quantity of residential air conditioners that can be imported from a
foreign country
C) a $150 fee imposed on all imported residential air conditioners
D) a tax placed on all residential air conditioners sold in the domestic market to help
offset the impact of emissions on the environment
Answer:
Cost-price pricing typically does not result in profit-maximization. As a result,
economists have two views of cost-plus pricing. One of these views is
A) cost-plus pricing is more likely to lead to profit-maximization for large firms than
for small firms.
B) cost-plus pricing is a good way to approximate the profit-maximizing price when
marginal revenue or marginal cost is difficult to determine.
C) cost-plus pricing is more likely to lead to profit-maximization for monopolistically
competitive firms than for oligopoly firms.
D) cost-plus pricing is more likely to result in profit-maximization the more elastic the
firm’s demand curve is.
Answer:
In 2012, Smileytown consumed 50,000 tubes of toothpaste. In 2013, toothpaste
consumption rose to 62,000 tubes. Calculate the percentage change in toothpaste
consumption.
A) 12%
B) 16.42%
C) 19.35%
D) 24%
Answer:
Despite being in a market with ________, from the mid-1990s to the mid-2000s
Starbucks was able to significantly differentiate its products from the products of its
competitors.
A) few barriers to entry
B) significant barriers to entry
C) blocked entry
D) no barriers to entry
Answer:
When an investor buys a corporate bond, the ________ the bond is a loan to the
corporation.
A) interest on
B) face value of
C) coupon payment on
D) dividend payment on
Answer:
Figure 9-4 Figure 9-4 shows the U.S.
demand and supply for leather footwear.
Under autarky, the equilibrium price is
A) $0.
B) $24.
C) $30.
D) $54.
Answer:
Which of the following is one reason for the decline in aggregate demand that led to the
recession of 2007-2009?
A) falling oil prices
B) an increase in net exports
C) the end of the housing bubble
D) a decline in government spending
Answer:
For many products, such as fast foods, a variety of prices can be found, but sellers with
higher prices can expect to sell their products because
A) consumers are not sensitive to prices.
B) arbitrage will quickly eliminate price differences.
C) firms differentiate products in many ways; for example, higher priced fast food
restaurants may offer better service.
D) their demand is perfectly inelastic.
Answer:
Donnie’s Donuts incurs $450,000 per year in explicit costs and $200,000 in implicit
costs. The bakery earns $800,000 in revenues and has $2 million in net worth. Based on
this information, what is the accounting profit for Donnie’s Donuts?
A) $150,000
B) $350,000
C) $600,000
D) $1.2 million
Answer:
If the marginal product of labor is 45 units of output and the marginal product of capital
is 56 units of output while the wage rate is $20 per worker and the cost of capital is $28
per machine, are these two inputs being used in the least cost combination and what
should be done if they are not?
Answer:
What is meant by the term “economic efficiency”?
Answer:
A negative externality is an example of market failure. The root of the problem lies in
the definition and enforcement of property rights. Explain.
Answer:
Describe the process of “creative destruction” using a specific example.
Answer:
Use the saving and investment equation to explain why the United States experienced
large current account deficits in the late 1990s.
Answer: