Allison’s Auto Art is a company that applies pinstripes to vehicles. Allison’s cost for a
basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total
price of $175, Allison will apply a fancier 3-color pinstripe application to an
automobile, a service that adds an additional $40 to the total cost of the package.
Should Allison continue to offer the 3-color pinstripe application?
A) Yes, she still makes a profit by selling the 3-color application.
B) Yes, but only if she lowers the price of the 1-color application.
C) No, her marginal benefit is less than her marginal cost.
D) More information is needed for Allison to make this decision.
If the exchange rate changes from $0.08 = 1 mexican peso to $0.09 = 1 mexican peso,
then
A) both the peso and dollar have appreciated.
B) both the peso and dollar have depreciated.
C) the peso has appreciated and the dollar has depreciated.
D) the peso has depreciated and the dollar has appreciated.
Since 1994, obesity rates in the United States
A) have been on a slow and steady decline.
B) have increased in all 50 states.
C) have primarily increased in the Southeast and remained constant or slightly
decreased in the remainder of the country.
D) have remained fairly constant throughout the country.
If a corporate bond with a face value of $2,000 pays yearly coupon payments of $50,
what is the coupon rate?
A) 2.5%
B) 4%
C) 25%
D) 40%
In August 2013, the U.S. unemployment rate was highest for
A) whites.
B) Hispanics.
C) high school dropouts.
D) African-Americans.
E) Asians.
Figure 12-1
If the firm is producing 500 units,
A) it is making a profit.
B) it is making a loss.
C) it should maintain its output to maximize profit.
D) it should increase its output to maximize profit.
Figure 2-1
________ is (are) technically efficient.
A) Point A
B) Point B
C) Point C
D) Points B and C
Why do some firms choose not to file for a patent and instead try to keep the results of
their research a trade secret?
A) because firms must disclose information about the product or process being patented
in a patent application
B) because trade secrets are never divulged
C) because a patent only gives the inventor exclusive rights to a product or process for
5 years
D) because trade secrets provide the same exclusive legal rights to a product as a patent
does
When the economy enters into a recession, your employer is ________ to reduce your
wages because ________.
A) unlikely; output and input prices generally fall during recession
B) unlikely; lower wages reduce productivity and morale
C) likely; output prices always fall during recession
D) likely; aggregate demand is vertical in the long run
Which of the following is the best example of an oligopolistic industry?
A) the beef market
B) the pharmaceutical industry
C) public education
D) the beauty products industry
Inflation will
A) increase aggregate demand.
B) increase the quantity of real GDP demanded.
C) decrease aggregate demand.
D) decrease the quantity of real GDP demanded.
The process of bundling loans together and buying and selling these bundles in a
secondary financial market is called
A) open market operations.
B) securitization.
C) fractional reserve lending.
D) seigniorage.
China has developed a comparative advantage in the production of children’s toys. The
source of this comparative advantage is
A) superior process technology.
B) a large supply of unskilled workers and relatively little capital.
C) investment in capital used to produce toys.
D) a large supply of natural resources.
Figure 10-4
Which of the following is consistent with the graph depicted?
A) an increase in household income
B) an increase in transfer payments to households
C) an increase in the proportion of income after net taxes used for consumption
D) an increase in tax revenues collected by the government
An increase in aggregate demand in the economy will have what effect on
macroeconomic equilibrium in the long run?
A) The price level will fall, and the level of GDP will rise.
B) The price level will fall, and the level of GDP will fall.
C) The price level will rise, and the level of GDP will fall.
D) The price level will rise, and the level of GDP will be unaffected.
Suppose the economy is at a short-run equilibrium GDP that lies below potential GDP.
Which of the following will occur because of the automatic mechanism adjusting the
economy back to potential GDP?
A) Output will decrease.
B) Prices will increase.
C) Unemployment will rise.
D) Short-run aggregate supply will shift to the right.
Which of the following takes place in the direct finance market?
A) Firms borrow funds from banks.
B) Deposits from savers are accumulated and loans made to borrowers.
C) Ownership in corporations is sold in the form of preferred stock.
D) Banks offer savings accounts to customers.
In October, market analysts predict that the price of platinum will fall in November.
What happens in the platinum market in October, holding everything else constant?
A) The supply curve shifts to the right.
B) The supply curve shifts to the left.
C) The quantity demanded and the quantity supplied of platinum increase.
D) The demand curve shifts to the right.