If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces, then $50 is
the marginal cost of producing the 5th necklace.
In the short-run, changes in output can only be brought about by a change in the
quantity of variable inputs.
Inflation usually increases during a recession and decreases during an expansion.
As the number of firms in a market decreases, the supply curve will shift to the left and
the equilibrium price will rise.
Labor demand is considered a derived demand because producers do not demand labor
for itself but only because labor is used to produce output that consumers desire.
An increase in the government budget deficit will not lead to a current account deficit if
domestic investment declines.
The additional cost to a firm of producing one more unit of a good or service is equal to
producer surplus.
An increase in government spending increases the supply of money in our economy.
The three most important financial centers in the world today are New York, London,
and Tokyo.
The demand curve for an inferior good can never be downward-sloping.
One consequence of adverse selection in the market for used cars is that most used cars
sold will be lemons.
If marginal benefit is less than marginal cost, output is inefficiently high.
________ is defined as a market outcome in which the marginal benefit to consumers of
the last unit produced is equal to the marginal cost of production, and in which the sum
of consumer surplus and producer surplus is at a maximum.
A) Economic efficiency
B) Consumer efficiency
C) Producer efficiency
D) Deadweight efficiency
How are the fundamental economic decisions determined in North Korea?
A) Individuals, firms, and the government interact in a market to make these economic
decisions.
B) These decisions are made by the country’s elders who have had much experience in
answering these questions.
C) The government decides because North Korea is a centrally planned economy.
D) The United Nations decides because North Korea is a developing economy.
Alternative approaches for reducing carbon dioxide emissions are
A) carbon taxes and carbon scrubbing.
B) carbon trading and carbon subsidies.
C) carbon taxes and carbon trading.
D) burning low carbon coal and deforestation.
Figure 4-8 Figure 4-8 shows the market for
apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000
per month. What is the value of the portion of producer surplus transferred to
consumers as a result of the rent ceiling?
A) $40,000
B) $100,000
C) $125,000
D) $140,000
If, as a perfectly competitive industry expands, it can supply larger quantities at the
same long-run market price, it is
A) a constant-cost industry.
B) an increasing-cost industry.
C) a decreasing-cost industry.
D) a fixed-cost industry.
Figure 13-13
What is the area that represents the firm’s profit?
A) profit = 0
B) P4edP2
C) P4eaP1
D) P3baP2
Figure 4-15 Figure 4-15 shows the market for
beer. The government plans to impose a unit tax in this market.
The price buyers pay after the tax is
A) $7.
B) $20.
C) $22.
D) $27.
Figure 3-2
A decrease in the price of inputs would be represented by a movement from
A) A to B.
B) B to A.
C) S1 to S2.
D) S2 to S1.
Table 2-10
Table 2-10 shows the output per month of two people, Fred and Barney. They can either
devote their time to making pogo sticks or making unicycles. What is Fred’s
opportunity cost of making a pogo stick?
A) 1/3 unicycle
B) 3 unicycles
C) 6/7 pogo stick
D) 1/2 unicycle
Table 3-4
The table above shows the demand schedules for cashews of two individuals (Jordy and
Amy) and the rest of the market. At a price of $10, the quantity demanded in the market
would be
A) 2 lbs.
B) 48 lbs.
C) 50 lbs
D) 52 lbs.
Which of the following statements explains the difference between diminishing returns
and diseconomies of scale?
A) Diminishing returns are the result of changes in explicit costs. Diseconomies of
scale are the result of changes in explicit costs and implicit costs.
B) Diminishing returns refer to production, while diseconomies of scale refer to costs.
C) Diminishing returns cause a firm’s marginal cost curve to rise; diseconomies of scale
cause a firm’s marginal cost curve to fall.
D) Diminishing returns apply only to the short run; diseconomies of scale apply only in
the long run.
Figure 2-5
If the economy is currently producing at point Y, what is the opportunity cost of moving
to point X?
A) 5 million tons of steel
B) 9 million tons of paper
C) 5 million tons of paper
D) 19 million tons of steel
Which of the following would increase GNP in the United States?
A) an increase in the production of U.S.-owned General Motors cars made in Mexico
B) an increase in the production of Japanese-owned Toyota cars in Mexico
C) an increase in the production of Japanese-owned Toyota cars in the U.S.
D) an increase in the production of Mexican-owned Grupo Minsa corn in the U.S.
Table 14-3 Suppose OPEC
has only two producers, Saudi Arabia and Nigeria. Saudi Arabia has far more oil
reserves and is the lower cost producer compared to Nigeria. The payoff matrix in Table
14-3 shows the profits earned per day by each country. “Low output” corresponds to
producing the OPEC assigned quota and “high output” corresponds to producing the
maximum capacity beyond the assigned quota.
Which of the following statements is true?
A) The Nash equilibrium is a noncooperative, dominant strategy equilibrium.
B) The Nash equilibrium is a cooperative equilibrium.
C) The Nash equilibrium is a collusive equilibrium.
D) There is no Nash equilibrium in this game because each party pursues its dominant
strategy.
Which one of the following about a monopoly is false?
A) A monopoly could make profits in the long run.
B) A monopoly could break even in the long run.
C) A monopoly must have some kind of government privilege or government imposed
barrier to maintain its monopoly.
D) A monopoly status could be temporary.
What are the five most important variables that shift the market supply curve?
As the level of output increases, what happens to the value of average fixed cost, and
what happens to the difference between the value of average total cost and average
variable cost?
During 2007, many ‘subprime” and “Alt-A” borrowers began to default on their
mortgages. Describe ‘subprime” and “Alt-A” borrowers.
If a union successfully negotiates for higher wages and benefits for steel workers, what
impact would this have on the supply and demand in the market for steel, assuming no
other changes take place in this market?
What is meant by the term “economic efficiency”?
What is the difference between a monopoly’s marginal revenue curve and a perfect
competitor’s marginal revenue curve?
Define macroeconomics.
Who decides who controls a corporation?
Table 20-22
Using the above table, calculate real average hourly earnings for 2011, 2012, and 2013.
Calculate the rate of growth of real average hourly earnings from 2012 to 2013.
Using a supply and demand graph, illustrate the effect of an increase in the federal
cigarette tax of $1.00 per pack, where the entire tax burden falls on the consumer.
Assume the equilibrium price before the tax is $5.00 per pack and the equilibrium
quantity is 30 million packs. After the implementation of the tax, what are the
equilibrium price and equilibrium quantity?
