Consumers benefit from monopolistic competition by
A) being able to choose from products more closely suited to their tastes.
B) paying the lowest possible price for the product.
C) paying the same price as everyone else.
D) being able to purchase high-quality products at low prices.
Sarah is a full-time student who is not looking for work. What kind of unemployment is
Sarah experiencing?
A) cyclical
B) structural
C) frictional
D) Sarah is not experiencing unemployment of any kind, because she is not currently
part of the labor force.
To reassure investors who were unwilling to buy mortgages in the secondary market,
the U.S. Congress used two government sponsored enterprises, ________, to sell bonds
to investors and use the funds to purchase mortgages from banks.
A) the Fed and the Treasury Department
B) Fannie Mae and Freddie Mac
C) the Securities and Exchange Commission (SEC) and the Federal Trade Commission
(FTC)
D) ACORN and the Federal Housing Administration (FHA)
Stagflation usually results from
A) a supply shock.
B) a decrease in aggregate demand.
C) an increase in aggregate supply.
D) an increase in aggregate demand.
A large majority of the personal computers (PCs) in the United States use an operating
system purchased from Microsoft. Microsoft’s relationship with PC manufacturers is an
example of which of Porter’s competitive forces?
A) the threat from new entrants
B) the bargaining power of suppliers
C) the bargaining power of buyers
D) competition from substitute goods or services
Marginal productivity theory implies that in a perfectly competitive market economy, a
worker will receive income
A) equal to the value of her marginal contribution to the production process.
B) that is greater than the value of her marginal contribution to production process.
C) that is less than the value of her marginal contribution to the production process.
D) greater than, less than, or equal to the value of her marginal contribution to the
production process, depending on her ability to negotiate with employers.
The number of people receiving Medicare is expected to grow to 80 million by the year
A) 2105.
B) 2020.
C) 2030.
D) 2075.
Assume that when the price of cantaloupes is $2.50, the demand for cantaloupes is
unit-elastic and the demand curve for cantaloupes is linear and downward sloping. If
firms lower the price of cantaloupes to $2.00, which of the following statements can be
made regarding the price elasticity of demand for cantaloupes?
A) The demand for cantaloupes at $2.00 must be inelastic.
B) We cannot determine whether the demand for cantaloupes is elastic or inelastic
without knowing what the quantity demanded is at each price.
C) The demand for cantaloupes at $2.00 must be elastic.
D) The demand for cantaloupes at $2.00 must be unit-elastic.
Figure 7-2
Figure 7-2 represents the market for
medical services with and without insurance, and the effect of a third-party payer
system on the demand for medical services.
The efficient quantity of medical services is
A) 200.
B) 500.
C) 700.
D) >700.
What happens in the secondary market?
A) secondary inputs like electricity are sold
B) a corporate financial manager will raise funds for expansion of the firm
C) newly issued claims are sold by the borrowing firm to the initial buyer
D) already issued claims are sold from one investor to another
China’s exchange rate system from 1994 through 2005 is an example of
A) a floating exchange rate system.
B) a managed float exchange rate system.
C) a fixed exchange rate system.
D) a flexible exchange rate system.
E) the Bretton Woods System.
Figure 10-3
Which of the following is consistent with the graph depicted above?
A) Taxes are changed so that real interest income is taxed rather than nominal interest
income.
B) An expected recession decreases the profitability of new investment.
C) The government runs a budget deficit.
D) Technological change increases the profitability of new investment.
One reason why airlines charge business travelers and leisure travelers different prices
is
A) business travelers fly according to schedules that are planned months in advance.
Many leisure travelers buy their tickets at the last minute.
B) business travelers usually travel alone. Leisure travelers often fly with friends and
family members; therefore, they have a more inelastic demand for airline tickets than
business travelers.
C) business travelers fly more often than most leisure travelers. As a result, their
employers are able to bargain with airlines for lower fares than leisure travelers pay.
D) business travelers often have inflexible schedules and have to travel on a particular
day. The opposite is true for leisure travelers.
________ refers to the reduction in economic surplus resulting from not being in
competitive equilibrium.
A) Marginal cost
B) Producer atrophy
C) Deadweight loss
D) Economic shortage
Under the gold standard, the government must have enough gold to back up any
A) increase in money demand.
B) increase in the money supply.
C) change in its currency’s exchange rate.
D) foreign currency deposits in its central bank.
Figure 3-8
The graph in this figure illustrates an initial competitive equilibrium in the market for
motorcycles at the intersection of D1 and S1 (point A). If there is a surplus of
motorcycles how will the equilibrium point change?
A) The equilibrium point will move from A to B.
B) The equilibrium point will move from A to C.
C) There will be no change in the equilibrium point.
D) The equilibrium point will move from A to E.
Table 9-2
Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita
and Gabriel can each bake in one day. Select the statement that accurately interprets the
data in the table.
A) Sarita has a comparative advantage in baking pies.
B) Gabriel has an absolute advantage in baking cakes.
C) Gabriel has a comparative advantage in baking pies.
D) Gabriel has a comparative advantage in baking pies and baking cakes.
Assume that in recent years the cost of producing microbrew beer in the U.S. has
decreased largely due to technological improvements. At the same time, more and more
Americans prefer microbrew beer over wine. Which of the following best explains the
effect of these events in the microbrew beer market?
A) The supply curve has shifted to the right and the demand curve has shifted to the
left. As a result there has been a decrease in the equilibrium quantity and an uncertain
effect on the equilibrium price.
B) Both the supply and demand curves have shifted to the right. As a result, there has
been an increase in the equilibrium quantity and an uncertain effect on the equilibrium
price.
C) Both the supply and demand curves have shifted to the right. As a result, there has
been an increase in both the equilibrium price and the equilibrium quantity.
D) The supply curve has shifted to the left and the demand curve has shifted to the
right. As a result, there has been an increase in the equilibrium price and an uncertain
effect on the equilibrium quantity.
Which of the following best describes the “interest rate effect”?
A) An increase in the price level raises the interest rate and chokes off government
spending.
B) An increase in the price level lowers the interest rate and chokes off government
spending.
C) An increase in the price level raises the interest rate and chokes off investment and
consumption spending.
D) An increase in the price level lowers the interest rate and chokes off investment and
consumption spending.
Table 9-12Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 9-12 shows the
production and consumption quantities without trade, and the production numbers with
trade.
Prior to trade, what was the opportunity cost to produce 1 belt in Morocco?
A) 1/2 of a sword
B) 4/5 of a sword
C) 1.25 swords
D) 2 swords