Marginal revenue is
A) revenue earned by increasing the margin between cost and price.
B) revenue earned by purchasing stock on credit.
C) revenue on which a seller is not dependent for survival.
D) the additional monetary receipts that result from a decision.
Suppose Ann can produce 8 units of a material good (M) or 4 units of a spiritual good
(S) in a day, while Ben can produce only 3 Ms or 3 Ss in a day. Both Ben and Ann can
potentially produce a larger combination of M and S if
A) Ann produces both M and S and Ben produces neither.
B) Ann specializes in M and Ben specializes in S and neither of them trade.
C) Ann specializes in S and Ben specializes in M and they exchange with one another.
D) Ann specializes in M and Ben specializes in S and they exchange with one another.
People who run their own businesses
A) can keep their labor costs down by not hiring any employees.
B) have lower labor costs if they dislike working for anyone else than if they don’t mind
working for others.
C) have no labor costs unless the business is incorporated.
D) have the same labor costs as people who hire employees to run their businesses.
“A doubling of the price of gasoline in the 1970s did not reduce consumption one iota.”
The person making the above claim evidently thinks the demand for gasoline is
A) completely elastic.
B) completely inelastic.
C) greater than the supply.
D) less than the supply.
E) unit elastic.
Changes in conditions of supply and demand lead to price changes. For which of the
following types of goods is the change in price likely to occur most quickly?
A) Commercial rents
B) Hourly labor
C) Public utilities
D) Residential rents
E) Retail groceries
Suppose a judge is trying to decide whether, as a matter of fact, homeowners currently
possess the right to prevent airplanes from flying low over their houses. The judge’s
ruling is correct if his decision results in
A) a fall in the market value of the houses.
B) a rise in the market value of the house.
C) no change in the market value of the houses.
D) uncertainty about the market value of the houses.
Money is
A) anything backed by gold.
B) any durable good.
C) whatever people use as a general medium of exchange.
D) something intentionally created by farsighted people.
What gives a demand deposit value?
A) The belief others will readily accept the demand deposit in exchange for valuable
goods
B) The currency the bank holds as reserves
C) The guarantees the government provides
D) The gold backing the deposits
E) In God we trust.
Economic theory assumes people want
A) material goods primarily.
B) money in preference to all other goods.
C) more of everything.
D) to advance the projects in which they are interested.
E) what serves selfish rather than altruistic goals.
Dolly Varden is not employed. She is also not unemployed. How can that be?
A) It can’t. Dolly must be either employed or unemployed.
B) Dolly must be over 65 years old.
C) Dolly must not be actively searching for a job.
D) Dolly must be a discouraged worker.
To maximize net revenue, a price searcher should
A) set marginal revenue as far above marginal cost as possible.
B) set marginal revenue as far below marginal cost as possible.
C) set marginal revenue equal to marginal cost.
D) do none of the above.
Fill in the blanks: Elected government officials ________ support ________ fiscal
policies.
A) must; contractionary
B) tend to; expansionary
C) must; expansionary
D) tend to; contractionary
Roughly what percentage of money income was earned by the highest 5% of income
earners in the U.S. in 2010?
A) 10%
B) 20%
C) 30%
D) 40%
E) 50%
Consider the market for consumer loans. A legal ceiling set below the market-clearing
interest rate would tend to
A) increase the quantity demanded for loans.
B) decrease the quantity supplied of loans.
C) create a shortage of loans.
D) do all of the above.
E) do none of the above.
According to your textbook, Keynesian economic theory
A) argues that federal budget deficits were necessary during periods of rapid economic
growth.
B) questioned the use of the federal budget deficit as a policy tool to manipulate and
fine-tune the economy.
C) helped break the mentality that federal budget deficits were improper.
D) did all of the above.
E) did none of the above.
Suppose Factory A emits 15,000 units of “Yuck” monthly, Factory B emits 30,000 units,
and Factory C emits 45,000 units. Also suppose A’s cost of reducing the emission is $1
per unit, B’s cost is $2 per unit, and C’s cost is $3 per unit. If the EPA wishes to reduce
total emissions down to 45,000 units per month, which of the following is the
lowest-cost method?
A) Leave Factory C alone, and force both A and B to each reduce their emissions to
zero units per month.
B) Leave Factory A and B alone, and force C to reduce emissions to zero units per
month.
C) Leave Factory A alone, and force both B and C to each reduce their emissions to
15,000 units per month.
D) All of the above would be accomplished at the same cost.
Recalling from Chapter 5, fill in the blanks: Other things constant, when households
decide to save more, the supply of credit ________ and interest rates ________.
A) falls; rise
B) falls; fall
C) rises; rise
D) rises; fall
What helps to explain the remarkable 7.3% growth rate in South Korea between 1960
and 2011?
A) A radical reduction in foreign imports and a maximization of South Korean exports
B) Huge foreign aid from the World Bank
C) A relatively high rate of saving among South Korean households
D) All of the above.
E) None of the above.
U.S. households use about 75 gallons of water per capita per day on the average
because
A) the price they must pay for water is low.
B) there is so much fresh water in the U.S.
C) they use water in irrational ways.
D) water is a basic necessity of life.
E) water is a basic right.
Fill in the blanks: Recessions are generally measured as a ________ in ________.
A) rise; real GDP
B) fall; real GDP
C) rise; nominal GDP
D) fall, nominal GDP
Which combination of monetary and fiscal policies might policymakers elect to ward
off a potential recession?
A) Fed sale of bonds combined with tax rate increases
B) Fed sale of bonds combined with tax rate decreases
C) Fed purchase of bonds combined with tax rate increases
D) Fed purchase of bonds combined with tax rate decreases
According to your authors, a necessary condition for the evolution of a successful
commercial society includes
A) stable interest rates.
B) reasonably secure property rights.
C) a superabundance of natural resources.
D) zero economic losses.
Which is the true statement?
A) A society does not need an authoritative central plan to generate order and
cooperation.
B) A society will fall into social chaos without an authoritative central plan.
C) An economic system can last only if guided by a central economic plan.
D) Both B and C are true.
All of the following factors are held constant when price changes on a demand curve
except:
A) income.
B) quantity demanded.
C) population.
D) tastes and preferences.
This is a question about “economic” efficiency: Prior to the 1960s, Catholic masses
were officially conducted throughout the world only in the Latin language. Since the
Vatican II reforms, Catholic masses are now generally conducted in the language
spoken and understood by the local parishioners. What can an economist conclude?
A) Catholic church authorities didn’t like Latin anymore.
B) Catholic church authorities once thought the use of Latin was efficient; during
Vatican II the authorities in power decided it was inefficient.
C) Catholic church parishoners didn’t like Latin anymore.
D) Nothing, because decisions related to religion are non-economic.
Which statement best summarizes the perspective from which economic theory
explains social occurrences? Economic theory assumes
A) gains and losses will eventually cancel out.
B) individuals make choices consistent with their goals.
C) the law of averages holds in the long run.
D) the value of anything is equal to its price.
E) whatever people want is what they ought to be able to buy.
Freedom of entry into a market tends to preserve
A) competition.
B) abnormal profits.
C) social justice.
D) the gap between the price of a good and marginal cost.
The cost of an action is
A) indeterminate from a strictly economic point of view.
B) the value of the next-best alternative opportunity sacrificed
C) the cost to the consumer plus the cost to the producer.
D) the number of consumers needed to set the price.
E) measured only in money.
What is the essential characteristic of money?
A) It must be backed by some other tradable commodity.
B) It must be backed by gold or silver.
C) It must be accepted and used by people as a general medium of exchange.
D) It must be declared by government authority.
Interest is most fundamentally a measure of
A) the cost of money.
B) the scarcity of money.
C) the greater subjective value of present over future goods.
D) all of the above.
E) none of the above.
Fill in the blank: a combination of two goods that lies beyond the production
possibilities frontier ________.
A) can be produced with the current set of resources
B) cannot be produced with the current set of resources
C) can never be produced with any set of resources
D) can be produced but only if the producer becomes more greedy