A final good is one that
A) is used in the production of another good.
B) is a natural resource used to produce a good.
C) is purchased as an input in the production process.
D) is purchased by its final user.
The ________ effect refers to the change in quantity demanded for a good that results
from the effect of a change in the good’s price on consumer’s purchasing power.
A) ceteris paribus
B) population
C) substitution
D) income
Which of the following price indices comes closest to measuring the cost of living of
the typical household?
A) GDP deflator
B) producer price index
C) consumer price index
D) household price index
Table 16-2
Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets
with demand schedules as shown in Table 16-2. The average cost of production is
constant at $2 per tube. What are the total profits from both markets combined?
A) $50
B) $48
C) $18
D) $15
Caroline is an artist. She purchases canvas, paints, brushes, and accessories for $75. She
sells one of her original paintings to an art gallery for $1,500, even though an art lover
would pay $4,500 for that painting. How much value does Caroline add?
A) $75
B) $1,425
C) $1,500
D) $4,425
Suppose Tinsel Town Videos lowers the price of its movie club membership by 10
percent and as a result, CineArts Videos experienced a 16 percent decline in its movie
club membership. What is the value of the cross-price elasticity between the two movie
club memberships?
A) -1.6
B) -0.625
C) 0.625
D) 1.6
Figure 19-4
The equilibrium exchange rate is originally at A, $3/pound. Suppose the British
government pegs its currency at $4/pound. Speculators expect that the value of the
pound will drop and this shifts the demand curve for pounds to D2. If the government
abandons the peg, the equilibrium exchange rate would be
A) $4/pound.
B) $3/pound.
C) $2/pound.
D) less than $2/pound.
Unlike a perfectly competitive firm, for a monopolistically competitive firm
A) price marginal cost for all output levels.
B) price marginal revenue for all output levels.
C) price average revenue for all output levels.
D) marginal revenue = marginal cost at the profit-maximizing output.
Which of the following is operating income?
A) explicit plus implicit costs
B) stockholders’ equity
C) revenue minus operating expenses
D) net profit
The volatility of a stock’s market price is indicated by
A) the highest stock price and the lowest stock price over the previous year.
B) the price of newly issued shares compared to the price of previously issued shares.
C) the Difference between the stock’s selling price and its asking price.
D) the stock’s price-earnings ratio.
The output of Mexican citizens who work in Texas would be included in the
A) gross domestic product of Mexico.
B) gross national product of Mexico.
C) gross national product of the United States.
D) net national product of the United States.
If rational workers and firms know that the Federal Reserve is following a
contractionary monetary policy, they will expect inflation to ________ and will adjust
wages so that the real wage ________.
A) increase; remains unchanged
B) decrease; remains unchanged
C) decrease; increases
D) increase; decreases
Paul Romer, an economist at Stanford University, is most closely associated with what
economic theory?
A) new growth theory
B) labor productivity theory
C) the process of creative destruction
D) the Communist Manifesto
________ is equal to consumption spending plus planned investment spending plus
government purchases plus net exports.
A) Full employment GDP
B) Short-run aggregate supply
C) Planned inventory investment
D) Planned aggregate expenditure