Which of the following clearly restricts the competitive market process?
A) Selling below cost
B) Selling above cost
C) Selling at cost
D) Setting a price above marginal cost
E) None of the above.
The economic way of thinking views government as a social institution
A) in which people do not compete.
B) in which the public interest has priority over private interests.
C) whose actions are controlled by the will of the majority.
D) whose actions are determined by individuals’ perceptions of their self-interest.
A substantial increase in the legal minimum wage will tend to
A) expand employment by increasing purchasing power and hence the demand for
output.
B) improve the position of the least skilled persons in the labor force.
C) reduce employment by raising the cost of hiring some employees above their
expected worth to potential employers.
D) reduce the wages of highly skilled and highly paid employees.
If households were to switch production away from an equal division of chores (e.g.,
doing dishes, mowing the lawn, etc.) to a system based on specialization and trade, the
efficiency of household production would probably ________ and leisure time would
probably ________.
A) decrease; decrease
B) decrease; increase
C) increase; increase
D) increase; decrease
Aristotle believed voluntary trade should be
A) an exchange of unequal values.
B) an exchange of equal values.
C) an exchange of equal material possessions.
D) an exchange of unequal material possessions.
Who would the BLS count as unemployed? The person who
A) searches for a job after retiring from the military.
B) quits work and intends to stay at home raising his kids.
C) was fired from work and decides to attend college full time rather than seek work.
D) is dissatisfied with her present job and spends hours reading the help-wanted ads.
Technical innovation spurs economic growth because it
A) increases labor productivity.
B) increases the stock of capital goods.
C) provides more powerful means of production.
D) does all of the above.
What explains any divergence between nominal and real GDP?
A) Constant prices
B) Changing prices
C) Constant output
D) Changing output
E) None of the above.
Larger volume is more likely to be associated with lower prices if the larger volume
results from
A) increased demand.
B) inelastic demand.
C) increased supply.
D) elastic supply.
E) inelastic supply.
The democratic political process is weighted in a manner that favors
A) contractionary over expansionary fiscal and monetary policies because changes in
aggregate demand tend to affect output before they affect the price level.
B) contractionary over expansionary fiscal and monetary policies because changes in
aggregate demand tend to affect the price level before they affect output.
C) expansionary over contractionary policies because changes in aggregate demand
tend to affect output before they affect the price level.
D) expansionary over contractionary policies because changes in aggregate demand
tend to affect the price level before they affect output.
When your textbook authors say competition “can be recognized only in motion
pictures, not in still photographs,” they mean
A) Hollywood is a competitive industry; portrait photography is non-competitive.
B) competition is better described as a process, rather than a fixed state of affairs.
C) competitors don’t sit still.
D) competition didn’t exist before the advent of motion picture technology.
What does the text suggest might be a possible advantage of being an economically
“backward” nation?
A) Illiteracy
B) The fact that many women have been systematically denied education, and have
therefore learned to become very good homemakers, which is a prerequisite for a stable
society
C) The nation can adopt the advanced technologies of other nations without having to
incur all the costs of research and development.
D) If you invert the per capita GDP figures of the so-called “backward” countries, you
find they are, in real terms, among the wealthiest nations in the world.
If Robinson makes 40 purses or 5 wallets per week, and Chamberlin makes 16 purses or
2 wallets per week, then
A) Chamberlin has a comparative advantage in wallets.
B) Robinson has a comparative advantage in wallets.
C) Chamberlin has a comparative advantage in purses.
D) neither Robinson nor Chamberlin has a comparative advantage.
Your text suggests if the price of insulin were to significantly increase, more diabetics
will
A) avoid refilling their prescriptions.
B) turn toward substitutes such as a better diet and exercise.
C) adopt holistic healthcare, organic medicines, and other perceived substitutes.
D) do all of the above.
E) do none of the above.
Which of the following is not among the first steps the textbook recommends be taken
to reduce negative externalities?
A) Adjudication
B) More scientific research
C) Negotiation
D) The cultivation of civic virtues
A ski resort is clearly “selling short” when it
A) charges lower prices for weekday lift tickets compared to weekend lift tickets.
B) offers children and senior citizens discounts on lift tickets.
C) charges a two-for-one special on Monday nights only.
D) offers a discounted season ticket that must be purchased before the ski season opens.
Suppose the demand curve for committing robbery can be represented by a downward
sloping demand curve. In other words, as the price of committing a robbery falls, more
robberies will be committed. Now, suppose laws are passed allowing people to carry
guns unconcealed in public. Which of the following best explains the likely outcome?
A) Demand for robberies will fall.
B) Supply of robberies will increase.
C) The elasticity of robberies will be perfectly inelastic.
D) The quantity demanded of robberies will decrease because the price of robberies has
risen.
Consider the following simplified sequence of exchanges. A logger sells an oak tree to a
sawmill owner for $60. The sawmill mills it, and sells the boards to a woodworker for
$80. The woodworker makes an oak bookcase out of the boards, and sells it to a retailer
for $300. The retailer then sells you the bookcase for $250. What is the total value
added?
A) $50
B) $250
C) $550
D) $690
E) none of the above.
Suppose the nominal interest rate is 15% and the rate of inflation is 3%. The real
interest rate is therefore
A) 3%.
B) 5%.
C) 12%.
D) 18%.
What would an economist point to explain why there are no large farms within Detroit
city limits?
A) The cultural characteristics of the typical Detroit citizen
B) The political power of the automobile industry in Detroit
C) The residential and commercial demand for real estate in Detroit
D) None of the above.
The “bubble concept,” which is sometimes used by EPA in its pollution control
programs, is designed to
A) capture pollutants and dispose of them safely.
B) confine pollution within a narrow area.
C) make the people who pollute the most the ones financially responsible for pollution
control.
D) reduce the cost of achieving pollution-reduction targets.
E) restore control over the environment to state and local governments.
From the perspective of economic theory, prices are basically
A) constant.
B) information signals
C) rising.
D) rates of exploitation.
An increase in the price of wheat futures will tend to cause
A) a decrease in current wheat consumption.
B) an increase in short-selling of wheat.
C) a shortage of wheat in the future.
D) a surplus of wheat in the future.
Martha and George have just completed a nasty divorce, and Martha won the lion’s
share of the settlement. What can we conclude about their lawyers?
A) George’s lawyer was productive, Martha’s wasn’t.
B) Martha’s lawyer was productive, George’s wasn’t.
C) Both Martha’s and George’s lawyers were productive.
D) Neither lawyer was productive.
Fill in the blank: An opportunity cost is the ________ opportunity a person sacrifices
when making a choice.
A) every
B) least desirable
C) next-best
D) strictly financial
Traffic congestion is an example of
A) a shortage of roadway space.
B) a surplus of automobiles.
C) a surplus of drivers.
D) a surplus of people.
Economic growth in Latin America between 1960 and 2011 is best summarized as
A) a remarkable success.
B) an abject failure.
C) a mixed record.
D) a noteworthy attempt.
Grocery shoppers who willingly pay high prices at one supermarket to avoid long lines
at the check-out counter of another supermarket with lower prices demonstrate, through
their actions,
A) they are not rational shoppers.
B) they don’t care about money.
C) they would pay any amount of money to save a little time.
D) all of the above.
E) none of the above.
When we say supply curves become more elastic over time, we mean
A) the quantity supplied becomes independent of demand.
B) any price change has a larger affect on quantity supplied.
C) the supply curve becomes steeper.
D) the supply curve shifts upward.
The employment rate is defined as
A) the percentage of the labor force holding employment.
B) the percentage of the noninstitutional population either working currently or looking
for work.
C) the percentage of the noninstitutional population holding employment.
D) the percentage of the population currently receiving wages or salaries.
E) the percentage of the population currently working and living principally on
earnings from labor.
According to the text, paper money probably first evolved from
A) the Federal Reserve.
B) the early American savings and loan institutions.
C) goldsmiths.
D) the Bank of England.
Which of the following accurately measures the welfare or happiness of society?
A) Nominal GDP
B) Real GDP
C) Both Nominal GDP and Real GDP
D) None of the above.
Suppose you hear Professor I.M. Dismal say, “There is no substitute for carefully
reading your textbook!” In the real world, students
A) will always and absolutely obey their professor’s orders.
B) will purchase the textbook regardless of its price.
C) will often find what they believe are useful substitutes for reading the text.
D) will have a vertical demand curve for textbooks.