Marginal benefit is the benefit that your activity provides to someone else.
The purchase of stocks and bonds issued in another country is known as foreign direct
investment.
One possible reason as to why consumers respond to sales is that by displaying a “high”
regular price and a “low” sale price, sales provide consumers with a reference point to
interpret the prices being offered.
If marginal costs differ quite substantially from average total costs, then using a
cost-plus pricing schedule will not lead to the profit maximizing price.
By the late 1950s, dollars held by foreign central banks exceeded the official dollar
value of U.S. gold reserves.
The study of economics arises due to
A) money.
B) scarcity.
C) greed.
D) resources.
The “new economy” that emerged in the mid-1990s is based on
A) manufacturing.
B) financial services.
C) information technology.
D) retail sales.
Figure 10-1
Which of the following statements is true?
A) Quantities Q0 and Q1 are the utility-maximizing quantities of hoagies at two
different prices of hoagies.
B) Quantities Q0 and Q1 may not necessarily be the utility-maximizing quantities of
hoagies at two different prices because we have no information on the consumer’s
budget or the price of other goods.
C) Quantity Q0 could be a utility-maximizing choice if the price is $5.75, but quantity
Q1 may not be because we have no information on the marginal utility per dollar when
price changes.
D) Quantities Q0 and Q1 are derived independently of the utility-maximizing model.
Figure 17-5
Answer
the following questions.
a. What is the equilibrium quantity of firefighters hired, and what is the equilibrium
wage?
b. What is the equilibrium quantity of paralegals hired, and what is the equilibrium
wage?
c. Explain why firefighters might earn a higher weekly wage than paralegals.
d. Suppose that comparable worth legislation is passed, and the government requires
that firefighters and paralegals be paid the same wage, $800 per week. Now how many
firefighters will be hired and how many paralegals will be hired?
In the city of Alvarez, with the exception of guide dogs for blind people, all dogs are
banned from its three public parks, regardless of whether the animals are leashed. Many
residents are pushing for a change in policy. Canine lover Sara Northridge observed,
“There are 800 or more homes here. There are three parks within 10 minutes, and
almost everyone has a dog, but we can’t take our dogs there.” Others fear that allowing
dogs would detract from their enjoyment of the parks. Tim Cortis retorted, “We’re not
preventing dog lovers from enjoying the park, just come without your dog.” Which of
the following is a way of dealing with the problem by assigning property rights to a
particular group?
A) impose a two-tier entry fee system – a lower fee for non dog owners and a higher fee
for dog owners
B) impose a fee only for dog-owners to use the public parks; non dog owners do not
pay a fee
C) dedicate some parks, or at least one park, exclusively for the use of visitors bringing
dogs to the park
D) allow dog owners to bring their dogs to the park but insist that they keep watch over
their dogs
Which of the following is an advantage of starting a new business as a proprietorship?
A) The owner has limited personal liability.
B) A proprietorship has few government rules and regulations to comply with.
C) Business profits are not taxed.
D) A proprietorship can easily attain additional funding.
Figure 4-5
The figure above represents the market for pecans. Assume that this is a competitive
market. If the price of pecans is $3, what changes in the market would result in an
economically efficient output?
A) The price would increase, the quantity supplied would decrease, and the quantity
demanded would increase.
B) The quantity supplied would increase, the quantity demanded would decrease, and
the equilibrium price would increase.
C) The price would increase, the demand would decrease, and the supply would
increase.
D) The price would increase, the quantity demanded would decrease, and the quantity
supplied would increase.
If tolls on a toll road can be raised significantly before commuters will consider using a
free alternative, then an increase in tolls will result in
A) a decrease in total revenue.
B) a decrease in non-toll road usage.
C) an increase in total revenue.
D) an increase in toll road usage.
Why does the short-run aggregate supply curve shift to the left in the long run,
following an increase in aggregate demand?
A) Workers and firms adjust their expectations of wages and prices downward and they
accept lower wages and prices.
B) Workers and firms adjust their expectations of wages and prices downward and they
push for higher wages and prices.
C) Workers and firms adjust their expectations of wages and prices upward and they
push for higher wages and prices.
D) Workers and firms adjust their expectations of wages and prices upward and they
accept lower wages and prices.
Economists estimate that ________ of U.S. currency is outside the United States and
held primarily by ________.
A) over half; households and firms in countries where there is little confidence in the
local currency
B) over half; foreign banks and foreign governments
C) less than one quarter; households and firms in countries where there is little
confidence in the local currency
D) less than one quarter; foreign banks and foreign governments
In 2011, the dividend yield on Microsoft (MSFT) stock rose from 1.97% to 3.10%.
Which of the following would have generated that result?
A) The closing price of Microsoft stock rose.
B) Microsoft announced an increase in the dividend it would pay per share.
C) The price-earnings ratio rose.
D) Microsoft issued bonds with a coupon rate equal to 3.10%.
Table 1-6
Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should
extend his hours of operation. Ivan figures that his sales revenue will depend on the
number of hours the jewelry shop is open as shown in the table above. He would have
to hire a worker for those hours at a wage rate of $25 per hour.
What is Ivan’s marginal cost if he decides to stay open for six hours instead of five
hours?
A) $10
B) $20
C) $25
D) $91.67
What happens to a monopoly’s revenue when it sells more units of its product?
What are the five most important variables that cause the market demand curve for
labor to shift?
Explain and show graphically how a decrease in government spending affects the
equilibrium interest rate and equilibrium quantity of loanable funds in the market for
loanable funds.
Explain why increasing the government budget deficit can decrease investment
spending.
If the labor demand curve shifts to the right and the labor supply curve remains
unchanged, what will happen to the equilibrium wage and the equilibrium level of
employment? Illustrate your answer with a graph.
What are the two effects that explain the Law of Demand? Briefly explain each effect.
Why is the aggregate demand curve downward sloping while the aggregate expenditure
line is upward sloping?
What is the difference between positive economic analysis and normative economic
analysis? Give one example each of a positive and normative economic issue or
question or statement.