The central bank of the United States is the:
A) First American Bank.
B) Federal Reserve.
C) Federal Deposit Insurance Corporation.
D) U.S. Treasury.
Imports are:
A) positively related to the level of domestic income and negatively related to the
exchange rate.
B) positively related to the level of domestic income and positively related to the
exchange rate.
C) negatively related to the level of domestic income and negatively related to the
exchange rate.
D) negatively related to the level of domestic income and positively related to the
exchange rate.
Which of the following is considered a necessary condition for successful price
discrimination?
A) A firm’s customers must all have the same price elasticity of demand.
B) Firms are able to prevent resale among different groups of customers.
C) Firms must be able to determine each customer’s maximum willingness to pay for
the product in question.
D) Firms must operate in a perfectly competitive market.
The marginal product of a variable input is calculated as:
A) the change in total product divided by the change in output.
B) total product divided by the change in the variable input.
C) the change in total product divided by the change in the variable input.
D) total product divided by the total quantity of the variable input.
Use the following information on a hypothetical short-run production function to
answer questions a-c.
Units of Labor/Day 5 6 7 8 9
Units of Output/Day 120 140 155 165 168
The price of labor is $20 per day. Ten units of capital are used each day, regardless of
output level. The price of capital is $50 per unit.
a. Calculate the marginal and average variable product of each unit of labor input.
b. Calculate total, average total, average variable, and marginal costs.
c. Can you tell where diminishing marginal returns sets in?
A decrease in wealth would shift the:
A) aggregate demand curve rightward.
B) aggregate demand curve leftward.
C) aggregate supply curve rightward.
D) aggregate supply curve leftward.
Assume that when price is $20, quantity demanded is 9 units, and when price is $19,
quantity demanded is 10 units. Based on this information, we can conclude that over the
price range from $19 to $20, demand is price:
A) elastic.
B) unit elastic.
C) inelastic.
D) cannot be determined.
Household consumption primarily depends on:
A) disposable income.
B) the interest rate.
C) marginal propensity to import.
D) credit card debt.
Assuming that C = $4,500, I = $1,000, G = $1,200, Exports = $450, Imports = $550,
Depreciation = $600, and Indirect Business Taxes = $500 (all in billions of dollars),
GDP equals:
A) $5,500 billion.
B) $6,000 billion.
C) $6,400 billion.
D) $6,600 billion.
In the market for a normal good, what is the ultimate market reaction of suppliers to an
increase in the incomes of consumers?
A) Suppliers do not react, because a change in income shifts the demand curve, not the
supply curve.
B) The supply curve shifts to the right.
C) The supply curve shifts to the left.
D) Quantity supplied increases as the equilibrium moves along the supply curve due to
a rise in the demand.
In which of the following situations would reliance on expert opinion as a basis for a
managerial decision be most preferred?
A) When the product can be packaged with a variety of price and quality combinations.
B) When the business in question serves as a supplier of inputs to other businesses,
especially in multi-product situations where other strategies may be prohibitively
expensive.
C) When the level of economic activity can have a significant effect on the demand for
the firm’s output.
D) When the product being marketed is relatively new.
An isocost line represents:
A) all the combinations of inputs to a production process that result in the same total
costs of production.
B) all the combinations of inputs that result in the same amount of output.
C) all of the combinations of two inputs for which the amount of money spent on each
of the inputs is equal.
D) all of the levels of output that result in the same total cost.
If GDP falls:
A) income and production must both fall.
B) income and production must both rise.
C) income must rise, but production may rise or fall.
D) none of the above.
According to the text, the price elasticity of demand for bath tissue has been estimated
to be -2.42. This implies that a 10 percent decrease in the price of bath tissue would
cause the quantity demanded of bath tissue to:
A) increase by 2.4 percent.
B) decrease by 2.4 percent.
C) increase by 24.2 percent.
D) decrease by 24.2 percent.
Large denomination time deposits are included in:
A) M1.
B) M2.
C) M3.
D) L.
Which of the following is a plausible reason that restaurants offer “Senior Citizen
Discounts”?
A) Senior citizens tend to have relatively more elastic demands for restaurant meals
than other consumer groups.
B) Senior citizens tend to have relatively more inelastic demands for restaurant meals.
than other consumer groups.
C) Senior citizens are not very sensitive to changes in prices.
D) Senior citizens are easily fooled by “come-ons” and are therefore frequently victims
of price discrimination.
Assume the elasticity of of supply for a particular good has been estimated to equal 1.8.
In this case, a 10 percent increase in product price would cause the quantity supplied to:
A) decrease by 1.8 percent.
B) increase by 1.8 percent.
C) decrease by 18 percent.
D) increase by 18 percent.
Which of the arguments Staples and Office Depot made in defense of their proposed
merger would be least defensible on economic grounds?
A) There would be substantial economies of scale.
B) The two firms were in competition with all other office supply stores, not just office
supply superstores.
C) The history of low pricing by the two stores meant that they would not raise prices in
the future after they merged.
D) Entry into the office supply market is relatively easy.
The amount of output a firm can produce with a given quantity of fixed and variable
inputs is called:
A) total product.
B) average variable product.
C) marginal product.
D) total fixed product.
In 2012, all of fast-food chains expanded their hours of operation, with nearly 40% of
all McDonald’s restaurants being open 24 hours per day. This strategy was aimed at
increasing sales because:
A) it was estimated that nearly one-fifth of all employed Americans worked primarily in
the evening contributing to the demand for fast-food in late hours.
B) it was estimated that consumers who shop at night tend to be more price sensitive.
C) it was believed that longer hours of operation would lead to greater brand loyalty.
D) none of the above.
Refer to Table 11.1. What is the value of net exports or the trade balance?
A) $300.
B) -$300.
C) $1,700.
D) -$1,700.
Decreases in the NAIRU represent a:
A) leftward shift in the aggregate demand curve.
B) leftward shift of the long-run aggregate supply curve.
C) rightward shift of the long-run aggregate supply curve.
D) rightward shift in the aggregate demand curve.
An increase in the number of buyers in the market for LED TVs would cause the
market demand curve for LED TVs to:
A) shift right.
B) shift left.
C) stay the same because market demand doesn’t depend on the number of buyers.
D) shift left or right depending on whether the new buyers purchase more or less than
existing customers at each price.
The reserve requirement is 0.10. What is the simple deposit multiplier?
A) 2
B) 20
C) 0.2
D) 10
Consider two goods, X and Y, where X is measured on the horizontal axis and Y is
measured on the vertical axis. All else constant, a decrease in the price of X will cause
the consumer’s budget constraint to:
A) rotate in along the X axis
B) rotate out along the X axis.
C) shift out parallel to the original budget constraint.
D) shift in parallel to the original budget constraint.
In a multiple regression problem involving two independent variables, if b1 is computed
to be +2.0, it means that:
A) the relationship between X1 and Y is significant.
B) the estimated value of Y increases by an average of 2 units for each increase of 1
unit of X1, holding X2 constant.
C) the estimated value of Y increases by an average of 2 units for each increase of 1
unit of X1, without regard to X2.
D) the estimated average value of Y is 2 when X1 equals zero.
When the exchange rate is allowed to shift gradually over time, or within an exchange
rate band which may also shift over time, this is considered a(n):
A) fixed exchange rate.
B) managed float.
C) flexible exchange rate.
D) none of the above.
Firms are considered to be price searchers, as opposed to price takers, in all of the
following market types except:
A) perfect competition.
B) monopolistic competition.
C) oligopoly.
D) monopoly.
All of the following are possible characteristics of a monopoly except:
A) there is a single firm.
B) the firm is a price taker.
C) the firm produces a unique product.
D) the existence of some advertising.
To maximize joint profits, a cartel must determine the level of output at which:
A) joint marginal revenue equals the marginal cost of the largest member of the cartel.
B) marginal revenue equals joint marginal cost.
C) the horizontally sum of the members marginal cost curves is at a minimum.
D) joint marginal revenue equals the marginal cost of the smallest member of the cartel.