The area ________ the market supply curve and ________ the market price is equal to
the total amount of producer surplus in a market.
A) above; above
B) above; below
C) below; above
D) below; below
Health Clubs typically experience an increase in one-year memberships in January, but
many new customers cancel their memberships before the end of the year. Which of the
following is the best explanation for this behavior?
A) Some health club members suffer minor injuries that prevent them from working
out.
B) Some people are overly optimistic about their future behavior.
C) Some people fail to treat their membership fees as sunk costs.
D) Some members receive utility from activities they believe are popular.
Identify whether each of the following transactions will take place in the factor market
or in the product market.:
a. Graciela buys a Tesla Motors Model X.
b. Lashan works 60 hours a week at a law firm.
c. Tito sells his family’s farmland to a housing developer.
d. Tesla Motors increases employment at its Fremont, California plant.
Table 20-2
Assume the market basket for the consumer price index has two products : bread and
milk – with the following values in 2006 and 2013 for price and quantity: The
Consumer Price Index for 2013 equals
A) 118.
B) 116.
C) 86.
D) 85.
A persistent surplus of pounds at a given fixed exchange rate (in dollars per pound) is
evidence that the pound is ________ versus the dollar. This surplus can be reduced or
eliminated through a ________ of the pound.
A) undervalued; devaluation
B) undervalued; revaluation
C) overvalued; revaluation
D) overvalued; devaluation
If the quantity of soccer balls demanded is represented by the equation QD = 80 – 2P,
then the corresponding price of soccer balls is represented by the equation
A) P = 1.6QD + 80.
B) P = 80 – QD.
C) P = 40 – 0.5QD.
D) P = QD + 160.
Figure 2-8 Figure 2-8 above shows the production
possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids.
If Vidalia chooses to produce 50 dozen roses, how many orchids can it produce to
maximize production?
A) 20 dozen orchids
B) 40 dozen orchids
C) 60 dozen orchids
D) 80 dozen orchids
According to the short-run Phillips curve, the unemployment rate and the inflation rate
are
A) unrelated.
B) positively related.
C) negatively related.
D) unaffected by monetary policy.
How are sunk costs and fixed costs related?
A) They are not related in any way.
B) Sunk costs cannot be recovered and fixed costs can be avoided by shutting down.
C) In the short run they are equal to each other.
D) In the long run they are equal to each other.
Figure 5-16
Amit and Bree are the only two
homeowners on an isolated private road. Both agree that installing street lights along
the road would be beneficial and want to do so. Figure 5-16 shows their willingness to
pay for different quantities of street lights, the market demand for street lights and the
marginal cost of installing the street lights.
What is the optimal quantity of street lights to install?
A) 3
B) 4
C) 6
D) 9
Which of the following describes how a positive externality affects a competitive
market?
A) The externality causes a Difference between the private benefit from consumption
and the social benefit.
B) The externality causes a Difference between the private benefit from production and
the social cost of production.
C) The externality causes quantity demanded to exceed quantity supplied.
D) The externality causes a Difference between the social cost of production and the
social cost of consumption.
The Santa Fe Spark Plug Company supplies spark plugs to automotive parts dealers. An
increase in the demand for its product led Santa Fe to hire 150 new workers. Santa Fe
also plans to expand the capacity of its plant but this project will take 2 years to
complete. Which of the following statements is true?
A) The wages and benefits paid to the new workers are implicit costs.
B) The long run for Santa Fe is longer than 1 year.
C) The short run for Santa Fe is 1 year.
D) In the short run Santa Fe’s variable costs increase, but its fixed costs decrease.
The income effect of a decrease in the price of legal services, a normal good, results in
A) a decrease in the demand for legal services.
B) a decrease in the quantity demanded of legal services.
C) an increase in the quantity demanded of legal services.
D) an increase in the demand for legal services.
If the demand for labor is unchanged, an increase in the supply of labor will lead to
A) a decrease in the quantity of labor demanded and a decrease in the equilibrium
wage.
B) an increase in the quantity of labor demanded and a decrease in the equilibrium
wage.
C) an increase in the quantity of labor demanded and an increase in the equilibrium
wage.
D) a decrease in the quantity of labor demanded and an increase in the equilibrium
wage.
All of the following are examples of explicit cost a firm might incur except
A) the out-of-pocket expense to hire employees.
B) taxes owed to the state government.
C) the rental value of the warehouse space the company owns and uses for itself.
D) the revenue a firm generates in using its resources.
The money supply curve is vertical if
A) banks and the Fed jointly determine the money supply.
B) the Fed is able to completely determine the money supply.
C) banks and households determine the money supply.
D) households and the Fed jointly determine the money supply.
Table 8-18
A very simple economy produces three goods: cameras, legal services, and books. The
quantities produced and their corresponding prices for 2008 and 2013 are shown in the
table above.
What is the GDP deflator in 2013 if 2013 is the base year?
A) 120
B) 118
C) 100
D) 87