Economists who have compared the incomes of never-married men and never-married
women have found that with equal amounts of human capital
A) men earn significantly more than women.
B) women earn significantly more than men.
C) the wages of the two groups are equal.
D) men specialize more in home production.
E) women tend to undertake more education.
A consumer considers Coke and Pepsi to be perfect substitutes for each other. What
would the consumer’s indifference curves for these two goods look like?
A) L-shaped
B) horizontal along the entire length
C) vertical along the entire length
D) upward sloping
E) downward sloping with a constant slope
A perfectly competitive market is in short-run equilibrium with price below average
total cost. Which one of the following is not a prediction of the long-run consequences
of such a situation?
A) Price will rise.
B) Market output will increase.
C) Firms will exit the market.
D) The output of each existing firm will increase.
E) Economic profit will be zero.
A decrease in the quantity supplied is shown by a
A) movement down along the supply curve.
B) movement up along the supply curve.
C) rightward shift of the supply curve.
D) leftward shift of the supply curve.
E) rightward shift of the demand curve.
If the wage rate increases, the income effect gives a household the incentive to
A) raise its reservation wage.
B) increase leisure and decrease work.
C) increase work and decrease leisure.
D) increase both work and leisure.
E) decrease both work and leisure.
What is the maximum value of the Herfindahl-Hirschman Index?
A) 1
B) 1,000,000
C) 100,000
D) 10,000
E) 1,000
When Kathryn is at her consumer equilibrium, she is
A) consuming the combination of goods that is at the midpoint of her budget line.
B) consuming a combination of goods that is located inside her budget line.
C) consuming a combination of goods that is located outside her budget line.
D) consuming a combination such that the marginal utility from good X divided by the
marginal utility from good Y equals the price of good X divided by the price of good Y.
E) on the midpoint of her demand curve.
Use the information below to answer the following questions.
Fact 18.3.1 In Modern Rarity, Workers Form Union at Small Chain
In New York’s low-income neighbourhoods, labour unions have virtually no presence.
But after a year-long struggle, 95 workers at a chain of 10 sneaker stores have formed a
union. After months of negotiations, the two sides signed a three-year contract that sets
the wage rate at $7.25 an hour.
Refer to Fact 18.3.1. Labour unions are scarce in New York’s low-income
neighbourhoods because there are
A) a great number of low-skilled workers, which makes it more difficult for a union to
organize and influence them.
B) too few employers, which makes forming a labour union an inefficient use of time.
C) many immigrants, who do not support unions.
D) many workers who are satisfied to earn minimum wage, which they can do without
help from a labour union.
E) so many unemployed people who are thankful for a job regardless of the working
conditions.
Which of the following best fits the definition of money?
A) gold
B) any commodity or token that is generally acceptable as a means of payment
C) an obligation between the parties to a transaction
D) any unit of account
E) any medium of exchange
Use the figure below to answer the following questions.
Figure 3.5.2
Original equilibrium at 1.
Refer to Figure 3.5.2, which represents the market for beans. If the price of peas, a
substitute for beans rises, what is the new beans equilibrium, ceteris paribus?
A) 8
B) 3
C) 9
D) 5
E) 6
If you want to investigate the claim that more goods and services were produced in the
economy during 2014 than 2015, what should you study?
A) real GDP
B) nominal GDP
C) intermediate GDP
D) GDP calculated using the expenditure approach
E) GDP calculated using the income approach
In Figure 1A.4.3, a decrease in the value of z results in, ceteris paribus,
A) a decrease in the value of x.
B) an increase in the value of x.
C) an increase in the value of y.
D) no change in the value of y.
E) no change in the value of x.
If the total product of three workers is 214 units and the total product of four workers is
221 units, then the marginal product of the fourth worker is
A) 71.3 units.
B) 55.25 units.
C) 7 units.
D) 62.14 units.
E) 1.75 units.
Use the figure below to answer the following questions.
Figure 16.3.3
Refer to Figure 16.3.3. The figure shows the marginal private benefit and marginal
social cost of a university education. If society’s external benefit from university
graduates is $10,000 each, then the
A) marginal social cost curve lies $10,000 to the left of the private marginal benefit
curve.
B) marginal social cost curve lies $10,000 to the right of the private marginal benefit
curve.
C) marginal social benefit curve lies $10,000 below the private marginal benefit curve.
D) marginal social benefit curve lies $10,000 above the private marginal benefit curve.
E) marginal social benefit curve is horizontal.
When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent.
The demand for peanut butter
A) is elastic.
B) is inelastic.
C) is unit elastic.
D) has a price elasticity equal to 1/2.
E) has a price elasticity equal to 2.
The demand curve for knobs is P = 75 – 6QD and the supply curve for knobs is P = 35 +
2QS. What is the equilibrium price of a knob?
A) $5
B) $10
C) $40
D) $45
E) $75
As a consumer’s income decreases, marginal utility theory predicts that
A) the price of normal goods falls.
B) the demand for normal goods decreases.
C) the demand for all goods decreases.
D) the demand for normal goods increases.
E) total utility increases.
Refer to Table 20.2.5. From the data in the table, compute Southton’s nominal GDP in
the base year.
A) $208
B) $197
C) $209
D) $226
E) It cannot be calculated given the data.
________ occurs when a foreign firm sells its exports at a lower price than its cost of
production.
A) Comparative advantage
B) Learning-by-doing
C) A tariff
D) An infant industry
E) Dumping
If firms exit an market, the
A) market supply curve shifts leftward.
B) price of the good falls.
C) economic profit of the remaining firms decrease.
D) total market output increases.
E) economic profit of the remaining firms stay the same.
The budget line
A) shows the limits to a household’s consumption choices.
B) shows the household’s total utility.
C) is downward sloping because it illustrates decreasing marginal utility.
D) shows how a household’s consumption choices change as income changes.
E) shifts outward as total utility increases.
The cross elasticity of demand for good A with respect to the price of good B is -1.5. A
10 percent rise in the price of good B will lead to
A) an increase of 1.5 percent in the quantity of A demanded.
B) an increase of 15 percent in the quantity of A demanded.
C) a decrease of 15 percent in the quantity of A demanded.
D) an increase of 6.7 percent in the quantity of A demanded.
E) a decrease of 6.7 percent in the quantity of A demanded.
Complete the following sentence. A surplus
A) exists if the price is above the equilibrium price.
B) is the amount by which the quantity demanded exceeds the quantity supplied.
C) is the amount by which the quantity demanded exceeds the equilibrium quantity.
D) is the amount by which the quantity supplied exceeds the equilibrium quantity.
E) will lead to rising prices.
Suppose a country is producing $20 million of real GDP. If the economy grows at 10
percent per year, approximately how many years will to take for real GDP to grow to
$80 million?
A) 14
B) 7
C) 4
D) 30
E) 3.5
In the Keynesian business cycle theory, business cycles begin with a change in
A) inflation expectations.
B) government expenditure.
C) business confidence.
D) monetary policy.
E) the money wage rate.
Refer to Figure 16.2.2. This figure shows the demand curve, the marginal private cost
curve and the marginal social cost curve of good A. What is the efficient quantity of
good A?
A) 0 units
B) 5 units
C) 6 units
D) 8 units
E) impossible to determine without additional information
The Coase theorem states that
A) patents and copyrights will solve the problem of external costs.
B) taxes will solve the problem of external costs.
C) global warming is hard to solve due to the prisoners’ dilemma aspect of the problem.
D) property rights are social arrangements governing ownership, use and disposal of
factors of production and goods and services.
E) if property rights are established, and if only a small number of parties are involved,
and if transactions costs are low, then private transactions are efficient.
Which one of the following illustrates an elastic demand?
A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded.
B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded.
C) A price elasticity of demand equal to 0.2
D) A price elasticity of demand equal to 1.0
E) A price elasticity of demand equal to zero
Diminishing marginal returns refers to a situation where the ________ of an additional
worker is less than the ________ of the previous worker.
A) marginal cost; marginal cost
B) average cost; average cost
C) marginal product; marginal product
D) average product; average product
E) marginal product; average product
Table 18.3.1
Refer to Table 18.3.1. Table 18.3.1 gives information about the labour market in Lantis,
a community in which the labour market is perfectly competitive. The equilibrium wage
rate is ________ an hour and the quantity of labour employed is ________ hours per
day.
A) $25; 600
B) $25; 200
C) $15; 400
D) $5; 200
E) $5; 600
Refer to Table 12.2.3 which gives the total cost schedule for Brenda’s Balloon Shop, a
perfectly competitive firm. The average variable cost of producing the 1st balloon is
A) $1.00.
B) $4.00.
C) $2.00.
D) $4.80.
E) $3.00.