If you exhibit the endowment effect as a decision maker, then you are
A) deciding on the basis of sunk costs.
B) buying something you can’t really afford because you expect to save in the future.
C) ignoring non-monetary opportunity costs.
D) consuming based on celebrity endorsements.
Table 15-3
Assume Table 15-3 gives the monthly demand and costs for subscriptions to basic cable
for Comcast, a cable television monopoly in Philadelphia. If Comcast wants to
maximize its profits, what price (P) should it charge and how many cable subscriptions
per month (Q) should it sell?
A) P = $12; Q = 8
B) P = $14; Q = 6
C) P = $16; Q = 4
D) P = $15: Q = 5
For most low-wage earners,
A) the income effect of a wage rate increase is likely to be larger than the substitution
effect.
B) the substitution effect of a wage rate increase is likely to equal the income effect.
C) the opportunity cost of leisure is high.
D) the substitution effect of a wage rate increase is likely to be larger than the income
effect.
Which of the following is not a reason why China is unlikely to maintain high enough
rates of productivity growth to catch up with the standard of living in the United States?
A) The United States invests more in research and development. than does China.
B) Much of China’s growth is likely due to the transition from a centrally-planned
economy to a market economy.
C) Because of the low birth rate in China, the labor force will soon decline.
D) The Chinese migration of rural workers to more productive urban jobs.
In the United States today, how much gold will the Federal Reserve give you in
exchange for $1?
A) none
B) $1 worth of gold (based on the market price of an ounce of gold at the time you
redeem the gold)
C) 1 ounce of gold
D) 1/35th of an ounce of gold
Table 12-1
Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces
plastic camera cases. Assume that output can only be increased in batches of 100 units.
What is the fixed cost of production?
A) $0
B) $500
C) $1,000
D) It cannot be determined.
An increase in the price level in the United States will have what effect on the aggregate
expenditure line?
A) Aggregate expenditure will shift downward.
B) Aggregate expenditure will become steeper.
C) Aggregate expenditure will shift upward.
D) Aggregate expenditure will not be affected by an increase in the price level in the
United States.
Governments sometimes erect barriers to trade other than tariffs and quotas. Which of
the following is not an example of this type of trade barrier?
A) a requirement that the employees of domestic firms that engage in foreign trade pay
income taxes
B) a requirement that imports meet health and safety requirements
C) restrictions on imports for national security reasons
D) a requirement that the U.S. government buy military uniforms only from U.S.
manufacturers
Figure 12-2 Suppose that the level of
GDP associated with point K is potential GDP. If the U.S. economy is currently at point
N,
A) firms are operating below capacity.
B) the economy is at full employment.
C) the economy is in an expansion.
D) the level of unemployment is above the natural rate.
The president of Toyota’s Georgetown plant was quoted as saying, “Demand for high
volumes saps your energy. Over a period of time, it eroded our focus [and] thinned out
the expertise and knowledge we painstakingly built up over the years.” Based on this
quote, what must be true of the plant’s average cost of production curve?
A) It is upward sloping.
B) It is downward sloping.
C) It is a ray from the origin.
D) It is U-shaped.
All ________ economies have been political dictatorships.
A) centrally planned
B) mixed
C) market
D) mixed and market
Figure 15-10
In the figure above, suppose the economy is initially at point A. The movement of the
economy to point B as shown in the graph illustrates the effect of which of the
following policy actions by the Federal Reserve?
A) an increase in income taxes
B) a decrease in the required reserve ratio
C) an open market purchase of Treasury bills
D) an open market sale of Treasury bills
Figure 2-4
Figure 2-4 shows various points on three Different production possibilities frontiers for
a nation.
A movement from ________ is the result of additional government restrictions on the
pollution that results from plastic production.
A) X to V
B) X to W
C) Z to W
D) Z to Y
If Ebenezer Scrooge spends rather than saves his vast wealth, he will
A) slow economic growth because he is reducing the amount of funds available for
investment.
B) slow economic growth because he is increasing the amount of funds available for
investment.
C) promote economic growth because he is increasing the amount of funds available for
investment.
D) promote economic growth because he is decreasing the amount of funds available
for investment.
Bella can produce either a combination of 60 silk roses and 80 silk leaves or a
combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and
80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses?
A) 2.5 silk leaves
B) 10 silk leaves
C) 25 silk leaves
D) 55 silk leaves