The government proposes a tax on imported champagne. Buyers will bear the entire
burden of the tax if the
A) supply curve for imported champagne is vertical.
B) demand curve for imported champagne is vertical.
C) demand curve for imported champagne is horizontal.
D) demand curve is downward sloping and the supply curve is upward sloping.
Which of the following is typically considered a fixed cost by academic book
publishers but a variable cost by companies that print books?
A) postage and supplies
B) travel
C) rent
D) wages and salaries
The United States
A) currently is one of the most corrupt countries.
B) has never had a significant problem with corruption.
C) had a significant problem with corruption in the 1930s.
D) currently ranks among the least corrupt countries.
A teenaged babysitter is similar to a firm in a perfectly competitive industry in that, for
both,
A) fixed costs are lower than variable costs.
B) there are many other suppliers of similar goods or services.
C) the implicit costs of production exceed the explicit costs of production.
D) average costs of production do not change when their industry expands.
Assume a hypothetical case where an industry begins as perfectly competitive and then
becomes a monopoly. Which of the following statements comparing the conditions in
the industry under both market structures is true?
A) A monopoly will produce more and charge a higher price than would a perfectly
competitive industry producing the same good.
B) A monopoly will produce more and advertise more than would a perfectly
competitive industry producing the same good.
C) A monopoly will produce less and charge a higher price than would a perfectly
competitive industry producing the same good.
D) A monopoly will produce less and charge a lower price than would a perfectly
competitive industry producing the same good.
Figure 3-7
Assume that the graphs in this figure represent the demand and supply curves for frozen
yogurt. Which panel describes what happens in the market for frozen yogurt when the
price of ice cream, a substitute product, increases?
A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)
If, for a given percentage increase in price, quantity supplied increases by a
proportionately larger percentage, then supply is
A) unit-elastic.
B) perfectly elastic.
C) relatively inelastic.
D) elastic.
Figure 16-6
Watanabe Sensei operates the only
martial arts school in Hartfield. For simplicity, assume that consumers have identical
demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows
this demand curve. If Sensei acts as a monopolist and charges the profit-maximizing
price, what is the consumer surplus received by his customers?
A) the area A + B + C + D
B) the area A + B + C + D + E
C) the area A + B
D) the area A + C + H
What explains the appreciation of the Japanese yen relative to the U.S. dollar from 1970
to the early 1990s?
A) Japanese productivity rose faster than U.S. productivity.
B) Japanese inflation rose faster than U.S. inflation.
C) U.S. consumers reduced their preferences for Japanese goods.
D) High tariffs and restrictive quotas in the United States caused the value of the dollar
to decline.
An example of a government-imposed barrier to entry gives a firm the exclusive right
to a new product for a period of 20 years from the date the product is invented. This
entry barrier is known as
A) a copyright.
B) a patent.
C) an exclusive marketing agreement.
D) a tariff.
Figure 2-9
Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each
country produces two goods, cotton and cashews. What is the opportunity cost of
producing 1 pound of cashews in Indonesia?
A) 3/8 of a bolt of cotton
B) 5/8 of a bolt of cotton
C) 2 2/3 bolts of cotton
D) 320 bolts of cotton
Figure 13-1
Ceteris paribus, a decrease in personal income taxes would be represented by a
movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
If households choose to take some fraction of each check they deposit and hold it as
currency, then the simple deposit multiplier ________ the real-world multiplier.
A) is greater than
B) is less than
C) is equal to
D) bears no relationship to
Suppose when Nablom’s Bakery raised the price of its breads by 10 percent, the
quantity demanded fell by 15 percent. What was the effect on sales revenue?
A) Sales revenue increased.
B) Sales revenue remained unchanged.
C) Sales revenue decreased.
D) It cannot be determined without information on prices.
The demand for loanable funds is determined by the willingness of ________ to borrow
money to engage in new investment projects.
A) government
B) households
C) banks
D) firms
Macroeconomics, as opposed to microeconomics, includes the study of what
determines the level of
A) employment in a specific industry.
B) employment in the economy.
C) output of a specific firm.
D) output of a specific industry.
Dalton, Georgia, a town with a population less than 35,000, has developed into a
leading producer of carpets, despite its small size. Some government officials argue that
the success achieved by firms in Dalton in developing a comparative advantage in
carpet making because of external economies can be used to justify trade barriers as a
means to protect an “infant industry.” After an infant industry gains experience it can
compete in international markets and the trade barriers can be removed. What
objections do economists make to this argument in favor of trade barriers?
What variables cause the short-run aggregate supply curve to shift? For each variable,
identify whether an increase in that variable will cause the short-run aggregate supply
curve to shift to the right or to the left.
Is the value of U.S. exports is typically larger or smaller than the value of U.S. imports.
Suppose, on average, a family in Church Falls earning $60,000 per year paid 6 percent
of its income in state taxes. A family earning $80,000 paid, on average, $4,760 in state
income taxes. Are state taxes in Church Falls progressive or regressive? Be sure to
explain the difference between a progressive tax and a regressive tax.
Briefly describe monetarism and the monetary growth rule.
Based on the following information, calculate public saving, net foreign investment,
and national income. Private saving = $83 billion
Exports = $125 billion
Imports = $130 billion
Consumption = $200 billion
Private investment = $56 billion
Government purchases = $38 billion