Suppose we observe the following sequence of production and exchange: sand is used
to make silicon; silicon is used to make silicon chips; silicon chips are used to make
computers; computers are sold to retailers; retailers sell those computers to consumers.
Which represents the purchase of a final good?
A) The retailer’s purchase of computers
B) The consumer’s purchase of computers
C) Both A and B above.
D) None of the above.
Predatory pricing
A) is extremely hard to document in the U.S. economy today.
B) is most often practiced in the retailing industry.
C) is not legal under U.S. law but is regularly practiced by foreign firms competing in
the United States.
D) is principally responsible for the decline of competition in the oil industry.
Fill in the blanks: A decrease in ________ tends to decrease ________ and therefore
decrease ________.
A) cost; price; supply
B) cost; demand; price
C) demand; price; cost
D) supply; cost; price
The economic way of thinking assumes individuals
A) are irrational.
B) are only concerned with “number one” (i.e., themselves).
C) try to advance their own projects.
D) cannot possibly behave in the interests of others.
The best time to purchase the stock of a corporation capable of generating large
earnings in the future is when
A) everyone expects its future earnings to be larger than they are now.
B) the price of the stock is lower than it has been in recent years.
C) the price of the stock is higher than it has been in recent years.
D) you alone expect its future earnings to be larger than they are now.
E) you know the corporation has already started to generate large earnings.
If Dr. Giltscalpel’s gross revenue doubled when he doubled his surgical fees, the
demand for his services within the relevant price range would be
A) indeterminate.
B) perfectly elastic.
C) perfectly inelastic.
D) unit elastic.
E) none of the above.
Suppose Ford Motor Company produced and sold $50 million 2015 model-year pickup
trucks during the last half of 2014. How would this affect GPD?
A) 2014 GDP would remain unchanged, and 2015 GDP would rise by $50 million.
B) 2014 GDP would rise by $50 million, and 2015 GDP would not be affected.
C) Both 2014 and 2015 GDP would rise by $25 million.
D) Trick question: 2015 model-year vehicles can’t be produced and sold in 2014.
The assertion “capital is productive, but the ownership of capital is not,” assumes the
efficient use of resources
A) is different from technological efficiency and more difficult to achieve.
B) is no more likely under one ownership arrangement than another.
C) may be significantly affected by transferring ownership from private to public hands.
D) sometimes is affected by transferring ownership from public to private hands.
In the economy of Confoundia, 500 people have jobs, 1000 people are not working but
are searching for work, and 2000 people don’t work and don’t seek work. The
unemployment rate is
A) 25 percent.
B) 33 percent.
C) 40 percent.
D) 50 percent.
E) none of the above.
Pick the decision maker from the list below.
A) The head of Al Qaeda
B) The Taliban
C) The Government of Afghanistan
D) The Middle East
E) All of the above are decision makers.
The economist George Stigler offered support for the Sherman Act when he said
A) competition can only be preserved by protecting competitors from cutthroat
competition.
B) conglomerate mergers could not be prevented or regulated if it were not for the
Sherman Act’s prohibition of combinations in restraint of trade.
C) predatory pricing costs businesses more than it saves consumers.
D) the ghost of Senator Sherman is an ex officio member of the board of directors of
every large company.
E) the Sherman Act is essential if the Clayton act is to be enforceable in any way.
In most economies, resources are allocated by
A) a central planning board.
B) a dictator.
C) the combined and decentralized actions of millions of people.
D) the majority’s will.
The local diner is usually jammed on Saturday mornings. Luke knows the owner and
had him reserve a stool at the counter. Luke has
A) cooperated with the owner.
B) competed with other customers.
C) taken an efficient course of action, from his own perspective.
D) engaged in all of the above.
The economic system of the United States
A) was designed by mercantilists and capitalists.
B) was designed by the framers of the U.S. constitution.
C) was designed to maximize individual freedom.
D) was designed to maximize output per capita.
E) was the result of human intentions but not anyone’s design.
Lu Thier is an accomplished violin and viola maker. He can make either 6 violins or 6
violas each year, or a combination such as 3 violins and 3 violas. Which statement
below is true?
A) The opportunity cost of producing 1 violin is 1 viola.
B) The opportunity cost of producing 1 violin is 3 violas.
C) The opportunity cost of producing 1 violin is 6 violas.
D) The opportunity cost of producing 1 violin is 9 violas.
In the attempt to use deficits to fight the Great Recession, what was the size of the
federal government’s “stimulus” plan of 2009?
A) $7.87 billion
B) $78.7 billion
C) $787 billion
D) $7.87 trillion
From which of the following goods is it most difficult to exclude free riders?
A) Tickets for the Newport Jazz Festival
B) Food and beer sold at the Newport Jazz Festival
C) Programs and souvenirs sold at the Newport Jazz Festival
D) A radio simulcast of the Newport Jazz Festival
If there is a shortage of gasoline, then
A) the purchase plans of buyers are not being fully achieved.
B) buyers will tend to compete amongst themselves for more gasoline.
C) the price of gasoline will tend to rise.
D) all the above are true.
E) none of the above is true.
According to the “law of demand”
A) demand generates a supply sufficient to satisfy the demand.
B) nothing will be produced unless there is a demand for it.
C) people will purchase less of a good when its price rises.
D) wants are indefinitely expansible and can never be fully satisfied.
E) whatever people want will eventually be supplied.
The majority of the members of the U.S. Congress want to retain the so-called Fairness
Doctrine as a control over television and radio broadcasters because
A) competition by itself cannot produce fairness.
B) government oversight is required to assure equal time for conflicting points of view.
C) television and radio are local monopolies to a large extent.
D) the air waves belong to the public.
E) the doctrine gives more power and influence to members of Congress.
The more time gasoline consumers have to adjust to a price change,
A) the lower their price elasticity of demand.
B) the greater their price elasticity of demand.
C) the less sensitive they will be to the price change.
D) the less time they will have to seek out substitutes for gasoline.
Rich and poor people have which of the following in common?
A) Scarcity
B) Economizing behavior
C) Pursuing the plans and projects in which they are interested
D) All of the above.
E) None of the above.
In 2010 the family mean income of householders aged 15-24 years was approximately
A) $11,000.
B) $21,000.
C) $31,000.
D) $41,000.
E) $51,000.
When your textbook says that it is misleading to say that the market economy produces
an aggregate GDP-measured “economic pie,” the authors have the following claim in
mind:
A) Unlike a pie, income in the economy can’t be divvied out independent of the
exchange process.
B) The economy produces more than just pies.
C) The “pie” metaphor focuses solely on real GDP and excludes the more important
measure of nominal GDP.
D) The production of pies create no income opportunities for market participants.
A ten-year-old goes to a baseball convention this week and purchases a
newly-autographed Barry Bonds baseball for $100. How would this affect GDP?
A) It wouldn’t.
B) GDP would increase by $10reflecting the market price of the ball itself.
C) GDP would increase by $90reflecting the market price of Bonds’ autograph.
D) GDP would increase by $100reflecting the market price of the autographed ball.
E) GDP would have increased were the autographed ball purchased by somebody 16
years or older.
Typically a firm’s economic profit will be
A) greater than its accounting profit.
B) less than its accounting profit.
C) equal to its accounting profit.
D) equal to its accounting profit minus its tax liability.
E) equal to its accounting profit plus the market value of any unsold inventory.
Government is viewed in the economic way of thinking as many different people
interacting on the basis of
A) fear of punishment rather than hope for reward.
B) legal considerations rather than profitability.
C) prevailing property rights.
D) principles of cooperation rather than of competition.
E) regard for the public interest rather than private interest.
Hospitals typically include all their sunk costs when deciding how much it costs them
to provide services because
A) each patient benefits from the hospital’s being adequately equipped.
B) hospital administrators have no incentive to be efficient.
C) no hospital could continue operating if it wasn’t able to cover its sunk costs.
D) the payments they receive are largely based on what they say are their costs.
E) they are non-profit institutions and hence are in general poorly managed.
If people increase their rate of time preference
A) more credit is made available in the banking system.
B) less credit is made available in the banking system.
C) the demand for credit shifts left.
D) the supply of credit shifts right.
Roughly what was the change in Venezuela’s per capita GDP between 1960 and 2011?
A) 4%
B) 14%
C) 44%
D) 88%