For country A, an export is a good produced in:
A) country B and purchased by residents of country B.
B) country B and purchased by residents of country A.
C) country A and purchased by residents of country B.
D) country A and purchased by residents of country A.
Refer to Table 8.1, which gives a firm’s production function. Assume that all non-labor
inputs are fixed. The marginal product of the fourth worker is:
Table 8.1
A) 12 units.
B) 11 units.
C) 5 units.
D) 0 units.
Consider Figure 16.2, which depicts the supply and demand for coal. Assume coal
production creates external costs. If the government imposes a pollution tax on coal
production the:
Figure 16.2
A) supply curve of coal would shift to the left.
B) supply curve of coal would shift to the right.
C) demand curve for coal would shift to the left.
D) demand and supply curves for coal would shift to the left.
In making consumer decisions that involve many options, each decision engages the
cognitive process and ________ brain fuel. Eventually, the consumer is more likely to
make ________ decisions.
A) generates; thoughtful
B) generates; impulsive
C) consumes; thoughtful
D) consumes; impulsive
The poverty rate for elderly has fallen since 1959 largely due to:
A) more elderly workers.
B) Social Security benefits.
C) elderly people working longer.
D) better educational institutions.
Marginal product is defined as the change in ________ resulting from a one-unit
increase in ________.
A) total product; input
B) total product; output
C) output; total product
D) total cost; output
When is an import ban the same as an import quota?
A) when the quota is zero
B) never
C) when all the goods under the quota is taxed
D) when the good under the import ban is taxed
In order to practice price discrimination a firm must:
A) avoid detection by the government.
B) be able to divide consumers into groups with different demands for their product.
C) have a homogeneous product.
D) advertise their product.
In an asymmetric market for used cars, which of the following could be used to avoid a
thin market?
A) offering money-back guarantees on plum used cars
B) offering warranties on lemon used cars
C) offering repair guarantees on lemon used cars
D) used car salesmen
An equilibrium in the labor market is a situation in which:
A) there is no pressure for wages to change.
B) there is no unemployment.
C) wages exceed minimum wage.
D) marginal revenue product equals the wage.
Which of the following statements about fixed costs is correct?
A) Fixed costs are not opportunity costs.
B) Fixed costs must be paid even if the firm’s output is zero.
C) Fixed costs are always the largest portion of total costs.
D) none of the above
At the profit-maximizing level of output, price is ________ marginal cost for a
perfectly competitive firm and price is ________ marginal cost for a monopolist.
A) equal to; greater than
B) equal to; less than
C) equal to; equal to
D) greater than; equal to
Recall Application 2,”Economic Solution to Spam,” to answer the following
questions:
According to the application, one economic solution to spam is to:
A) subsidize spammers.
B) charge a $0.01 electronic stamp for each commercial email message.
C) outlaw the use of the Internet.
D) require Internet service providers to sue spammers.
Which of the following industries was NOT charged with price fixing?
A) industrial diamonds
B) electric generators
C) music distribution
D) none of the above
Figure 4.3 illustrates the supply and demand for blue jeans. If the actual price of blue
jeans is $50, there is:
Figure 4.3
A) excess demand of 40 pairs of blue jeans.
B) excess supply of 40 pairs of blue jeans.
C) excess demand of 50 pairs of blue jeans.
D) excess supply of 50 pairs of blue jeans.
Suppose that you lend $1,000 to a friend and he or she pays you back one year later.
What is the opportunity cost of lending the money?
A) There is no cost.
B) the real interest rate that would have been earned on the money
C) the nominal interest rate that would have been earned on the money
D) the implicit cost of the money
Consider an unregulated monopoly in Figure 13.2. Suppose that a second firm enters
the market. As a result, if the demand curve facing each firm lies entirely below the
long-run average cost curve:
A) only one of the two firm can makes a positive economic profit.
B) both the first and the second firm make positive economic profits.
C) neither firm makes a positive economic profit.
D) There is not sufficient information.
Figure 10.6 shows prices, demands, and cost data for the only restaurant in a small
town. If the restaurant charges the single price of $8 per meal, what is its profit from
non-senior customers?
A) $1,200
B) $1,500
C) $2,280
D) $2,560
The higher the price of a product, the:
A) lower the dopamine reaction in the brain.
B) weaker the gut feeling about purchasing the product.
C) larger the benefit received from the product.
D) stronger the insula activity in the brain.
Recall the Application about the cost of using import restrictions to protect jobs in
the luggage industry to answer the following question(s). According to a report
from the Federal Reserve Bank of Dallas, import restrictions in the luggage
industry protect about 226 jobs and reduce consumer surplus by $290 million.
Recall the Application. According to the report from the Federal Reserve Bank of
Dallas, another protected industry in the United States is one that produces ball
bearings, with 146 jobs saved at an annual cost of $603,368 per job. This indicates that
annual consumer surplus in this industry is reduced by about:
A) $4,130.
B) $872,000.
C) $88 million.
D) $275 million.
As a result of product differentiation, a firm in a monopolistically competitive market:
A) always has some market power.
B) is very similar to a firm in a perfectly competitive market.
C) faces a perfectly elastic demand curve.
D) is very similar to a monopolist.
Increased international trade has brought about:
A) less U.S. imports.
B) an increase in demand for low-skilled workers.
C) less U.S. exports.
D) an increase in demand for high-skilled workers.
If the price elasticity of demand is 0.5, this means that a ________ increase in price
causes a ________ decrease in quantity demanded.
A) 20%; 100%
B) 30%; 15%
C) 20%; 1%
D) 5%; 1%
Suppose that ramen noodles are an inferior good. When income decreases, the
equilibrium quantity of ramen noodles will ________ and the equilibrium price of
ramen noodles will ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Assume that a smartphone maker operates in a perfectly competitive market producing
25,000 smartphones per day. At this output level, price is less than this firm’s marginal
cost. It follows that producing one more smartphone will cause this firm’s:
A) total cost to decrease.
B) profits to increase.
C) profits to decrease.
D) profits to remain unchanged.
Refer to Figure 8.1, which shows a family of average cost curves. The average total cost
curve is represented by:
A) Curve 1.
B) Curve 2.
C) Curve 3.
D) the vertical sum of curve 1 and curve 2.
Figure 4.4 illustrates the demand for guitars. Assume guitars are a normal good. An
increase in income would bring about a movement from:
Figure 4.4
A) point B to point C.
B) point B to point A.
C) D1 to D0.
D) D1 to D2.
Suppose that in a month the price of a liter of soda increases from $1 to $1.50. At the
same time, the quantity of liters of soda supplied increases from 200 to 210. The price
elasticity of supply for liters of soda (calculated using the initial value formula) is:
A) negative.
B) inelastic.
C) unitary elastic.
D) elastic.
Table 15.2 shows the preferred budget for a new civic center and the number of voters
in a community who prefer that budget. Suppose that Jay initially proposed $6 million
while David proposed $10 million. Given the distribution of voters’ preferences, David
can increase his chance of being elected by proposing:
Table 15.2
A) a greater budget than $10 million.
B) a smaller budget than $6 million.
C) a smaller budget toward the median budget.
D) none of the above
Recall the Application about how the price of pollution permits is determined to
answer the following question(s).
Recall the Application. The ________ is a market for carbon dioxide allowances issued
to EU countries under the EU cap-and-trade system.
A) Eurozone
B) Continental Pollution Abatement League
C) European Climate Exchange
D) Paris Emissions Agency
The practice of featherbedding is intended to help unions:
A) reduce the tradeoff between higher wages and fewer jobs.
B) negotiate for higher wages by assuring more efficient labor practices.
C) increase membership by guaranteeing job growth.
D) defeat “right-to-work” laws.
When a supply curve is drawn, which of the following is held constant?
A) the amount of taxes or subsidies that a firm pays or receives
B) the number of sellers in a market
C) prices of inputs
D) All of the above are held constant when constructing a supply curve.