A decrease in supply is caused by a decrease in the price of the product.
If in the long run a firm makes zero profit, it should exit the industry.
The actual division of a tax between buyers and sellers in a market is the excess burden
of the tax.
Efficiency wage is another name for the minimum wage.
Vaccinations tend to result in a positive externality.
A common mistake made by consumers is the failure to take into account the sunk costs
of their actions.
Logrolling refers to attempts by individuals to use government action to make
themselves better off at the expense of others.
The circular flow of income shows that GDP can be measured as the sum of wages,
interest, rent, and profits received by households or total expenditures on goods and
services by households, firms, government, and the rest of the world.
Increased foreign direct investment in India has contributed to its recent economic
growth.
Economists argue that the level of pollution should be
A) reduced completely to zero because by definition, it is a negative external effect.
B) ignored because it has always been present since the beginning of history.
C) reduced to the point where the marginal benefit of pollution reduction is equal to the
marginal cost of pollution reduction to society.
D) best determined by elected officials who can speak on behalf of the public.
When the government taxes a good or service, it
A) affects the market equilibrium for that good or service.
B) eliminates the deadweight loss associated with the good or service.
C) increases consumer surplus for the good or service.
D) increases producer surplus for the good or service.
Which of the following is an advantage of starting a new business as a corporation?
A) double taxation
B) ease in setting up
C) low expenses of legally organizing
D) greater ability to raise funds
Figure 2-11
Mercedes Benz produces a full line of luxury automobiles, including coupes, sedans,
and SUVs, at a variety of manufacturing plants across the globe. Assume Mercedes
Benz produces both coupes and SUVs at its Tuscaloosa, Alabama factory. Figure 2-11
shows changes to its production possibilities frontier in response to new developments
and Different strategic production decisions at this factory.
Suppose Mercedes-Benz has to shut down a portion of its facility as it works on
remodeling the facility to merge two of its separate assembly lines in preparation for the
production of a new, hybrid models. The production decision to shut down temporarily
will result in a
A) movement from E to F in Graph A.
B) movement from G to H in Graph B.
C) movement from K to L in Graph C.
D) movement from J to H in Graph B.
In each of the following situations, list what will happen to the equilibrium price and
the equilibrium quantity for a particular product, which is an inferior good. a. The
population decreases and productivity increases.
b. The income increases and the price of inputs increase.
c. The number of firms in the market decreases and income decreases.
d. Consumer preference decreases and the price of a complement increases.
e. The price of a substitute in consumption increases and the price of a substitute in
production increases.
Table 2-17
Table 2-17 shows the output per week of two people, James and Lucy. They can either
devote their time to making wagons or making tricycles.
What is James’s opportunity cost of making a wagon?
A) 2 tricycles
B) 1/2 of a wagon
C) 1/2 of a tricycle
D) 3/4 of a wagon
Table 16-1
Because of the productivity slowdown in the United States from the mid-1970s through
the mid-1990s,
A) real GDP per capita grew more rapidly.
B) real GDP per capita grew more slowly.
C) the standard of living did not change.
D) the standard of living increased in the United States.
Table 2-4
Table 2-4 shows the output per day of two gardeners, George and Jack. They can either
devote their time to mowing lawns or cultivating gardens.
Which of the following statements istrue?
A) Jack has an absolute advantage in both tasks.
B) George has an absolute advantage in both tasks.
C) Jack has an absolute advantage in lawn mowing and George in garden cultivating.
D) Jack has an absolute advantage in garden cultivating and George in lawn mowing.
Countries that are more globalized tend to have
A) lower levels of real GDP per capita.
B) a higher likelihood of war or revolution.
C) higher growth rates in real GDP per capita.
D) lower levels of foreign direct investment.
The Federal Reserve’s two main ________ are the money supply and the interest rate.
A) monetary policy targets
B) policy tools
C) fiscal policy targets
D) fiscal tools
Which of the following is not a reason why the Industrial Revolution occurred when
and where it did?
A) The British government was committed to upholding private property rights.
B) The British government was able to eliminate arbitrary increases in taxes.
C) The British government was able to more easily seize wealth.
D) Institutional changes by the British government helped protect wealth.
If a stock’s dividend is expected to grow at a constant rate of eight percent in the future
and it has just paid a dividend of $1.25 a share, and you have an alternative investment
of equal risk that will earn a 12 percent rate of return, what would you be willing to pay
per share for this stock?
A) $31.25
B) $1.40
C) $1.25
D) $1.12
If a decrease in income leads to an increase in the demand for sardines, then sardines
are
A) an inferior good.
B) a neutral good.
C) a necessity.
D) a normal good.
Figure 9-3 Since 1953 the
United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates
the impact of the quota. What is the area of domestic producer surplus after the
imposition of a quota?
A) B
B) B + C
C) B + E + I + J + M
D) E + I + J + M
The formula for calculating the CPI is
A) (Expenditures in the current year/Expenditures in the base year) 100.
B) (Expenditures in the current year Expenditures in the base year)/100.
C) (Expenditures in the base year/Expenditures in the current year).
D) (Expenditures in the base year 100)/(Expenditures in the current year).
During the Great Depression, economists first began studying the relationship between
A) changes in GDP and changes in interest rates.
B) changes in aggregate expenditures and changes in GDP.
C) changes in nominal GDP and changes in real GDP.
D) changes in stock prices and changes in price controls.
A firm in a market economy must do all of the following to succeed except
A) produce the goods and services that consumers want at a lower cost than consumers
themselves can produce.
B) organize the factors of production into a functioning, efficient unit.
C) have access to sufficient funds.
D) be organized as a corporation.
Table 19-21
Consider the following data for a simple economy: Calculate nominal GDP and real
GDP for 2013, using 2011 as the base year. Show your work.
Describe the three types of unemployment.
President Obama has discussed raising income taxes for individuals earning over
$250,000 in income. Explain how these higher income taxes will affect the aggregate
demand curve.
How could the existence of an unemployment insurance system or other transfer
programs have reduced the severity of the Great Depression?
Why might an amusement park switch from charging admission to the park and
charging for the rides to charging for admission but not charging for the rides?