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.
If the market price of each camera case is $8, what is the profit-maximizing quantity?
A) 300 units
B) 400 units
C) 500 units
D) 600 units
The economic analysis of monopolistic competition shows that market forces eliminate
profits in the long run. However, it is possible for a firm to continue to earn economic
profits if the firm
A) expands its marketing budget.
B) adopts new technologies that enable it to lower its cost of production.
C) expands its product offerings to appeal to a wider range of consumers.
D) reduces its price to expand its market.
Which of the following describes a situation in which a good or service is produced at
the lowest possible cost?
A) productive efficiency
B) allocative efficiency
C) marginal efficiency
D) profit maximization
A perfectly competitive wheat farmer in a constant-cost industry produces 1,000
bushels of wheat at a total cost of $50,000. The prevailing market price is $48. What
will happen to the market price of wheat in the long run?
A) The price remains constant at $48.
B) The price falls below $48.
C) The price rises above $48.
D) There is insufficient information to answer the question.
Figure 6-2
The absolute value of the price elasticity of demand at points a and is 1. What is the
value of P?
A) $50
B) $40
C) $30
D) $20
Which of the following is an appropriate policy for a central bank to follow if the
economy is plagued with deflation?
A) increasing the target interest rate on overnight loans
B) using contractionary monetary policy to drive up interest rates
C) consistently pursuing policy to promote the credibility of the central bank
D) gradually raising the required reserve rate
The provision of the Patient Protection and Affordable Care Act (ACA) which states
that every firm with more than 200 full-time employees must offer health insurance to
its employees and must automatically enroll them in the plan is the ________ provision.
A) employer mandate
B) state health exchanges
C) individual mandate
D) regulation of health insurance
The supply curve for umbrellas
A) shows the supply of umbrellas consumers are willing and able to buy at any given
price.
B) is downward sloping.
C) shows the relationship between the quantity of umbrellas firms are willing and able
to supply and the quantity of umbrellas consumers are willing and able to purchase.
D) shows the relationship between the price of umbrellas and the quantity of umbrellas
supplied.
Given the equations for C, I, G, and NX below, what is the marginal propensity to save?
C = 1,000 + 0.8Y
I = 1,500
G=1,250
NX = 100 A) 0.2
B) 0.8
C) 1.8
D) 10
We say that the economy is at full employment if the unemployment rate is equal to
A) zero.
B) the natural rate of unemployment.
C) the amount of cyclical unemployment.
D) the sum of frictional and cyclical unemployment.
E) the sum of structural and cyclical unemployment.
What takes place in the indirect finance market?
A) Part ownership of corporations is sold in the form of stocks.
B) Corporate and government bonds are sold to savers.
C) Deposits of savers are accepted and loans made to borrowers.
D) Government purchases of buildings and equipment are sold to the highest bidder.
Exports are domestically produced goods and services
A) sold to other countries.
B) sold to the government.
C) sold at home.
D) which are used to produce other goods and services.
The Jeans Store sells 7 pairs of jeans per day when it charges $100 per pair. It sells 8
pairs of jeans per day at a price of $90 per pair. The marginal revenue of the eighth pair
of jeans is
A) $20.
B) $90.
C) $100.
D) $700.