Roughly what was the change in Chile’s per capita GDP between 1960 and 2011?
A) 2.65%
B) 26.5%
C) 265%
D) 2,650%
Pick the true statement regarding the notion of competition as a process versus the
model of perfect competition.
A) The process notion allows for uncertainty and incomplete information; perfect
competition doesn’t.
B) The process notion allows for price searching activity; perfect competition doesn’t.
C) The process notion allows for product differentiation; perfect competition doesn’t.
D) The process notion allows for a small number of participants; perfect competition
doesn’t.
E) All of the above are true.
Does an increase in the demand for Introductory Economics increase the cost to
students of taking the course?
A) No, because tuition rates are not set to clear the market.
B) Not if the college refuses to hire additional people to teach the course.
C) Yes, if the course is consequently taught in a larger room, which costs more to heat.
D) Yes, insofar as students have to accept less satisfactory class schedules in order to
take the course.
People who are not currently employed, but say they want a job, are counted as
unemployed only if they
A) are actively seeking employment.
B) are between 16 and 65 years of age.
C) are willing to accept a reasonable offer.
D) have no other source of income.
E) have previously held a job.
Suppose eating soybeans leads to less cancer and heart disease. What effect would
people eating more soybeans likely have on feed corn (a product also grown on land
used to grow soybeans)?
A) The supply of feed corn will decrease.
B) The cost of producing feed corn will increase.
C) The price of feed corn will increase.
D) All of the above.
When laws and regulations prohibit firms from selling at “prices less than cost,”
A) consumers benefit.
B) they are rarely enforced; therefore, competition is allowed to decline in the retailing
industry.
C) they help maintain competition by eliminating one important advantage of large
firms.
D) they must define “cost” arbitrarily since no firm has an incentive to sell below cost.
E) they serve as our most effective defense against predatory pricing.
Suppose the market clearing price for apples rises from $2.00 to $3.00 per pound, and
the overall market clearing output increases from 1 million to 2 million pounds. How
can we explain the increase in price and increase in market output?
A) Supply increased and demand remained unchanged.
B) Supply decreased and demand decreased.
C) Demand increased and supply remained unchanged.
D) None of the above.
A landlord rents his rat-infested apartment for $700 per month for a total of twelve
months this year. What happens to GDP?
A) It increases by $8,400.
B) It increases by the difference between the rent charged and the price of any
maintenance and repairs.
C) It decreases by $8,400.
D) Nothing.
We often witness prices of water, gasoline and construction materials surge in a region
just before a major storm hits. Some call this “price gouging.” In the economic way of
thinking, however, those higher prices are caused by
A) an increase in supply and an increase in demand.
B) an increase in supply and a decrease in demand.
C) a decrease in supply and an increase in demand.
D) a decrease in supply and a decrease in demand.
E) practices that are not connected to underlying supply and demand conditions.
There are very few gasoline stations in the downtown areas of large cities basically
because
A) it would be too dangerous.
B) it would be an inefficient use of land for the land’s owners.
C) most people don’t want to buy gasoline while they are downtown.
D) zoning laws prohibit it.
People specialize in activities in which they have a comparative advantage
A) if they know they are more productive than anyone else in the particular activity.
B) only if they understand the logic of comparative advantage.
C) when they expect to obtain more of whatever they want by doing so.
D) only when all of the above are true.
According to your textbook authors, economics is generally
A) an unbiased science.
B) a method rather than a body of settled conclusions.
C) founded on the observation of data.
D) a false and misleading discipline.
In the economic way of thinking,
A) buyers compete against other buyers, sellers cooperate with other sellers, and buyers
cooperate with sellers.
B) buyers cooperate with other buyers, sellers cooperate with other sellers, and buyers
compete with sellers.
C) buyers compete against other buyers, sellers compete against other sellers, and
buyers cooperate with sellers.
D) buyers cooperate with other buyers, sellers cooperate with other sellers, and buyers
cooperate with sellers.
A local bar provides free pretzels and peanuts. Once a week it even provides chicken
wings for only ten cents each. It is
A) selling drinks below cost.
B) selling pretzels, peanuts and wings below cost.
C) unfairly competing against other local bars who are unable to do the same.
D) almost certainly doing none of the above.
A citizen who acquires good information about the candidates before voting in a
presidential election thereby
A) imposes spillover costs on all other registered voters.
B) increases the probability others will also acquire information before voting.
C) incurs a substantial cost; yet, his vote no discernible effect on the election.
D) makes it much more likely a candidate will be elected who will promote that voter’s
interests.
E) makes it much more likely a good candidate will be elected.
ACME Steel made $68 million in profits last year selling its steel to the Cogswell Car
Corporation, which means
A) Cogswell Car Corp. also enjoyed $68 million in profits last year.
B) Cogswell Car Corp. also suffered a $68 million loss last year.
C) Cogswell Car Corp. also expected to profit from the deal.
D) Cogswell Car Corp. was acting inefficiently.
If the Slamdunkers can sell 5000 season tickets for $100 and 6000 season tickets only
by lowering the price to $80, the demand for season tickets between the two prices is
A) elastic.
B) inelastic.
C) marginal.
D) unit elastic.
The economizing process (choosing from among alternatives to maximize benefits)
A) applies only to consumers.
B) applies only to privately-owned firms.
C) applies only to producers.
D) is the same for producers as it is for consumers.
The “discount rate” is the rate used by the Fed when
A) the Fed extends a short-term loan directly to a commercial bank.
B) the Fed extends a short-term loan to one of the regional Federal Reserve banks.
C) the Fed calculates the present value of particular long-term investment projects.
D) the Fed makes cash available for the federal government.
A customer at an auction who obtains an antique chair by outbidding several other
prospective purchasers
A) may be paying more than the opportunity cost of obtaining the chair.
B) pays a price other than opportunity cost.
C) pays more than its real cost of his bid exceeds the original cost of the chair plus the
cost of running the auction.
D) pays the opportunity cost of the last disappointed bidder.
Which of the following would lead to a decrease in the supply of crude oil?
A) Favorable tax breaks for oil companies
B) An increase in the demand for crude oil
C) An increase in the price of gasoline
D) Both A and C.
E) None of the above.
Sudden and extensive changes in property rights make social cooperation less effective
by
A) encouraging excessively conservative attitudes.
B) inducing people to save for the future rather than spending now.
C) making planning more difficult.
D) reducing the power of government to manage the economy.
Fact: The lowest 20% of U.S. family incomes in the U.S. has fallen from 4.8% to 3.8%
between 1960 and 2010. Your authors argue that
A) this is clear evidence that the poor have gotten poorer.
B) this is primarily the result of a general decline of the power of labor unions in
America.
C) while their percentage of national income has fallen, real GDP has increased over 4
times during the past 50 years, and so those persons actually earned much more income
than before.
D) none of the above are true.
Bonnie can produce either 20 hats or 10 scarves in a month. Phil can produce either 5
hats or 10 scarves in a month. Therefore:
A) Phil has a comparative advantage in hats, Bonnie in scarves.
B) Bonnie has a comparative advantage in hats, Phil in scarves.
C) Phil has a comparative advantage in both hats and scarves.
D) Bonnie has a comparative advantage in both hats and scarves.
E) Neither of them has a comparative advantage in scarves.
The Sherman Act of 1890
A) established the corporate income tax.
B) prohibited price-setting agreements among sellers.
C) required employers to bargain collectively with labor unions.
D) set maximum prices railroads could charge interstate shippers.
E) set minimum prices railroads could charge without being guilty of unfair trade
practices.
If the market clearing price of computer tablets rises from $400 to $600, and the market
clearing output increases from 5 million to 7 million units,
A) demand decreased and supply remained unchanged.
B) supply increased and demand remained unchanged.
C) demand increased and supply remained unchanged.
D) supply decreased and demand remained unchanged.
Pick the true statement from your textbook:
A) Land has a cost.
B) Fruit has a cost.
C) Fertilizer has a cost.
D) Only actions can have costs.
Taxes on emissions have come to be called
A) the “command and control” approach.
B) “licenses to pollute.”
C) spillover costs.
D) the fallacy of false alternatives.
Burger Queen enjoyed $1 million in profits last year. What does Burger Queen’s $1
million in profits mean for its competitor, Burger Lord?
A) Nothing.
B) Burger Lord must have suffered $1 million in losses last year.
C) Burger Lord must have also enjoyed $1 million in profits last year.
D) Burger Queen is more efficient at serving its customers compared to Burger Lord.
What makes it extremely difficult for cartels to function effectively without government
assistance?
A) Cartel members cannot agree among themselves on the optimum price because all
have different costs.
B) High prices encourage cartel members to offer discounts, and they attract new
entrants to the industry.
C) Marginal cost will not equal marginal revenue except at output levels beyond the
cartel’s capacity.
D) Public interest considerations usually require an output greater than the cartel’s net
revenue maximizing output.
E) The hostility of the public to price exploitation makes it difficult for the cartel to
defend itself against the consequences of popular hostility.