A decrease in the demand for incandescent light bulbs due to changes in consumer
tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result
of government restrictions, will result in
A) a decrease in the equilibrium quantity of incandescent light bulbs and no change in
the equilibrium price.
B) a decrease in the equilibrium price of incandescent light bulbs and no change in the
equilibrium quantity.
C) a decrease in the equilibrium price of incandescent light bulbs; the equilibrium
quantity may increase or decrease.
D) a decrease in the equilibrium quantity of incandescent light bulbs; the equilibrium
price may increase or decrease.
Table 13-1
What portion of the marginal revenue of the 4th unit is due to the output effect and what
portion is due to the price effect?
A) output effect = $24.00; price effect = $19.50
B) output effect = $6.50; price effect = $2.00
C) output effect = -$0.50; price effect = $5.00
D) output effect = $6.00; price effect = -$1.50
Odd pricing became common in the late 19th century. Although the origins of odd
pricing are uncertain, several explanations for the practice have been given. Which of
the following is one of these explanations?
A) Odd pricing forced employees to give customers change. This made it more likely
that employees would record sales rather than pocketing their customers’ money.
B) Odd pricing began in an era when it was difficult for owners and managers of firms
to determine the marginal cost of the goods and services they sold. Odd prices were
rough estimates designed to cover costs plus earn firms a profit.
C) Odd pricing was begun in England in the 1700s when America was part of the
British Empire. Members of the British Royal Court were given the task of pricing
products. After independence, merchants in the United States carried on the practice of
odd pricing.
D) After the passage of the Sherman Act in 1890, merchants used odd pricing as a
means of avoiding prosecution for antitrust violations.
If GDP grew 3% in 1970, 2.2% in 1971 and 2.5% in 1972 then, what is the average
annual growth rate over this period?
A) 5%
B) 4%
C) 2.6%
D) -2.2%
Table 13-4
Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per
box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to
university and private research laboratories. Victoria’s profit-maximizing output is
where
A) total profit equals $3.
B) marginal revenue and marginal cost both equal $4.
C) marginal revenue and marginal cost both equal $3.
D) marginal cost is at its minimum value.
If the price elasticity of demand for insulin is equal to zero then the demand curve for
insulin is
A) horizontal.
B) downward sloping.
C) curvilinear.
D) vertical.
The Sarbanes-Oxley Act of 2002 was passed in response to what event?
A) a series of accounting scandals
B) unexpected increases in dividend payments to stockholders at various corporations
C) volatility in NASDAQ indexes
D) historically low bond prices
Table 1-1
Eva runs a small bakery in the village of Roggerli. She is debating whether she should
extend her hours of operation. Eva figures that her sales revenue will depend on the
number of hours the bakery is open as shown in the table above. She would have to hire
a worker for those hours at a wage rate of $12 per hour. What is Eva’s marginal cost if
she decides to stay open for two hours instead of one hour?
A) $12
B) $24
C) $36
D) $71
Figure 14-4
Rainbow Writer (RW) is a
small online company selling a highly rated software package for printing color labels
directly onto CDs. The firm currently earns a profit of $2 million per year selling its
package exclusively on its Web site. Odeon, the producer of the most popular software
package for editing and burning CDs and DVDs, has expressed interest in bundling
Rainbow Writer’s product into its own package. Odeon expects that bundling would
further boost its sales and allow it to sell the new bundled product at a higher price, thus
raising its profits beyond its current profit of $12 million. Figure 14-4 shows the
decision tree for the Rainbow Writer-Odeon bargaining game.
In a real world situation involving Rainbow Writer and Odeon, what scenario below
might permit Rainbow Writer to rationally refuse an offer from Odeon of $40 per copy
of the software package?
A) Odeon is also negotiating with Swift Colors, Rainbow Writer’s chief rival.
B) Odeon’s competitors are also interested in bundling Rainbow Writer’s software.
C) Odeon hires a software developer to begin developing its own proprietary color
labeling software.
D) Odeon is considering new distribution outlets for its products.
An advantage of the household survey over the establishment survey of the labor
market is that the household survey
A) is based on actual payrolls, rather than on unverified answers.
B) includes the number of self-employed persons.
C) includes the number of discouraged workers.
D) omits persons employed at newly opened firms.
Figure 3-5
At a price of $5,
A) there would be a surplus of 4 units.
B) there would be a scarcity of 4 units.
C) there would be a shortage of 6 units.
D) there would be a shortage of 4 units.
Marginal cost is the ________ associated with undertaking an activity.
A) total cost
B) extra cost
C) opportunity cost
D) foregone cost
Table 2-9
Table 2-9 shows the output per week of two jewelers, Serena and Haley. They can either
devote their time to making bracelets or making necklaces. Which of the following
statements istrue?
A) Haley has an absolute advantage in making both products.
B) Serena has an absolute advantage in making both products.
C) Haley has an absolute advantage in making bracelets and Serena in making
necklaces.
D) Haley has an absolute advantage in making necklaces and Serena in making
bracelets.
Table 1-1
Eva runs a small bakery in the village of Roggerli. She is debating whether she should
extend her hours of operation. Eva figures that her sales revenue will depend on the
number of hours the bakery is open as shown in the table above. She would have to hire
a worker for those hours at a wage rate of $12 per hour. What is Eva’s marginal benefit
if she decides to stay open for two hours instead of one hour?
A) $25
B) $36
C) $60
D) $95
To increase the money supply, the Federal Reserve could
A) lower the discount rate.
B) decrease income taxes.
C) raise the required reserve ratio.
D) conduct an open market sale of Treasury securities.
Figure 18-1
Of the tax revenue collected by the government, the portion borne by producers is
represented by the area
A) B + C.
B) F + G.
C) E + H.
D) B + C + F + G.