Which of the following is an example of a “how much” decision?
A) The Pleasantville movie theatre is open only in the evenings. The theatre’s manager
is debating whether to add daily matinee shows.
B) The Zhous have demolished their old home and are debating whether to build a
ranch-style house or a Craftsman home.
C) You’re planning to hold a graduation party and must decide between having your
party catered or having a pot-luck.
D) Chelsea has withdrawn from the swim team to take up a full-time job.
Marginal revenue product can be calculated using the formula marginal product output
price
A) only if output price is constant.
B) only if the marginal product of labor is constant.
C) only if the both marginal product of labor and the output price are constant.
D) only if the firm has market power in the labor market
The level of saving in Japan has historically been high relative to the level of domestic
investment. Based on this information, we would expect that
A) Japan’s net foreign investment has been relatively low.
B) Japan’s net exports have been relatively high.
C) Japan’s capital inflows are positive.
D) Japan’s private saving is greater than its public saving.
Economists have used the ultimatum game and the dictator game in experiments
designed to determine
A) whether consumers care about fairness when they make decisions.
B) whether consumers believe it is fair for producers to raise the price of a product for
which there is excess demand.
C) whether consumers understand the difference between implicit costs and explicit
costs.
D) whether consumers understand the rule of equal marginal utility per dollar spent.
When the Fed embarked on a policy known as quantitative easing, they
A) slowly lowered the federal funds rate target until it was equal to zero.
B) reduced the required reserve ration by one-quarter point per month for 12 months.
C) bought longer-term securities than are usually bought in open market operations.
D) opened up lending to primary dealers, commercial banks, and investment banks.
Figure 10-3
Best friends Laurel and Hardy both enjoy watching romantic comedies and science
fiction movies. Based on the diagrams above what can you conclude about their movie
preferences?
A) They have identical movie preferences.
B) Hardy enjoys romantic comedies more than Laurel.
C) Hardy enjoys science fiction movies more than Laurel.
D) The diagrams do not provide any information about relative preferences.
On the 45-degree line diagram, for points that lie below the 45-degree line,
A) planned aggregate expenditure is greater than GDP.
B) planned aggregate expenditure is less than GDP.
C) planned aggregate expenditure is equal to GDP.
D) planned aggregate expenditure is less than aggregate income.
Figure 12-1
If the firm is producing 500 units, what is the amount of its profit or loss?
A) profit of $280
B) loss equivalent to the area A
C) profit equivalent to the area A
D) There is insufficient information to answer the question.
Financial contributions to the campaigns of members of Congress, state legislators and
other elected officials by firms that seek special interest legislation that make the firms
better off are
A) examples of rent seeking.
B) illegal.
C) the result of the voting paradox.
D) irrational because elected officials will almost always act in the interest of the voters
who have to pay the cost of the legislation.
Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are
responsible for paying this tax. How would the imposition of the tax be illustrated in a
graph?
A) The supply curve for cases of beer would shift to the right by $1.
B) The supply curve for cases of beer would shift to the left by more than $1.
C) The supply curve for cases of beer would shift to the left by less than $1.
D) The supply curve for cases of beer would shift to the left by $1.
Which term refers to a legally established maximum price that firms may charge?
A) a price ceiling
B) a subsidy
C) a price floor
D) a tariff
Assume that price is greater than average variable cost. If a perfectly competitive seller
is producing at an output where price is $11 and the marginal cost is $14.54, then to
maximize profits the firm should
A) continue producing at the current output.
B) produce a larger level of output.
C) produce a smaller level of output.
D) There is not enough information given to answer the question.
When Zynga, the company behind the social games CityVille and Words With Friends,
sold stock to the public for the first time in December 2011, funds were being raised in
a ________ market, and when those newly issued shares are resold to other buyers, the
sales take place in a ________ market.
A) primary; primary
B) primary; secondary
C) secondary; primary
D) secondary; secondary
Suppose that when the price of pickles decreases, Teddy increases his purchase of
ketchup. To Teddy,
A) pickles and ketchup are complements.
B) pickles and ketchup and substitutes.
C) pickles and ketchup are normal goods.
D) pickles are a normal good and ketchup is an inferior good.
Which of the following models has as its central idea that workers and firms have
rational expectations?
A) the monetarist model
B) the new classical model
C) the real business cycle model
D) the new Keynesian model
The development of a new good or a new process for making a good is called
A) an innovation.
B) an invention.
C) a factor of production.
D) a service.