Which of the following is a positive economic statement?
A) U.S. citizens should only buy products which are produced in the United States.
B) The government should ban the production and sale of incandescent light bulbs.
C) Raising the tax on gasoline raises the selling price of gasoline.
D) The government should revamp its immigration policies.
A car dealer sells you a car today in exchange for money in the future. This illustrates
which function of money?
A) medium of exchange
B) unit of account
C) store of value
D) standard of deferred payment
Damian shares a small food truck with his sister. His share of the expenses is $500 per
month. He has decided to get his own, newer food truck which he will not have to share
with anyone. His expenses for the newer truck are $1,400 per month. Damian is as
rational as any other person. As an economics major, you rightly conclude that
A) Damian cannot afford the newer truck and will have to go back to sharing a truck
with his sister.
B) Damian figures that the additional benefit of having his own truck (as opposed to
sharing) is at least $900.
C) Damian figures that the benefit of having his own truck (as opposed to sharing) is at
least $1,400.
D) the cost of having one’s own truck outweighs the benefits.
What is the natural rate of unemployment?
A) the unemployment rate that exists when the economy is at potential GDP
B) the unemployment rate that exists when the economy is at a trough in a business
cycle
C) an unemployment rate of 0%
D) any unemployment rate that is above the inflation rate
Which of the following statements best describes the concept of consumer surplus?
A) “I paid $89 for a microwave oven last week. This week the same store is selling the
same microwave oven for $69.”
B) “I sold my hard copy of Harry Potter and the Half-Blood Prince to a used book
store for $10 even though I was willing to sell it for $5.”
C) “Target was having a sale on tube socks so I bought 5 pairs.”
D) “I was going to pay $200 for new sunglasses that I had seen at the Oakley store but I
ended up paying only $140 for the same sunglasses.”
Rent control is an example of
A) a subsidy for low-skilled workers.
B) a price floor.
C) a price ceiling.
D) a black market.
________ of unemployment during ________ make it easier for workers to ________
wages.
A) High levels; a recession; negotiate higher
B) Low levels; an expansion; negotiate higher
C) Low levels; a recession; accept lower
D) High levels; an expansion; accept lower
If a 5 percent increase in income leads to a 10 percent increase in quantity demanded
for airline travel, then airline travel is
A) a necessity.
B) a substitute for another good.
C) a luxury.
D) an inferior good.
In a graph that illustrates a perfectly competitive firm, marginal revenue is
A) a diagonal line that lies below the firm’s demand curve.
B) a line that intersects the firm’s demand curve from below at its lowest point.
C) a line that intersects the firm’s average total cost curve from below at its lowest
point.
D) the same as the firm’s demand curve.
The supply curve of a perfectly competitive firm in the short run is
A) the firm’s average variable cost curve.
B) the portion of the firm’s marginal cost curve below the minimum point of the
average variable cost curve.
C) the portion of the firm’s marginal cost curve above the minimum point of the average
variable cost curve.
D) the portion of the firm’s marginal cost curve above the minimum point of the
average total cost curve.
Automobile manufacturers produce a range of automobiles such as sports utility
vehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic
question are they addressing by making this range of products?
A) How to produce goods that consumers want?
B) Why produce a variety of automobiles?
C) What to produce?
D) Who to produce automobiles for?
In 2013, infant mortality in the United States was ________ per 1,000 live births.
A) 5.9
B) 45.4
C) 82.7
D) 228.9
If the purchasing power of the dollar is greater than the purchasing power of the euro,
purchasing power parity predicts that the exchange rate will
A) increase if the exchange rate is greater than 1 euro per dollar.
B) decrease if the exchange rate is less than 1 euro per dollar.
C) be equal to the relative purchasing power across the currencies in the long run.
D) not fluctuate and stay constant in the long run.
Although the pegged exchange rate between the yuan and the dollar has ________ the
yuan, China has been reluctant to abandon the peg for fear that abandoning the peg
would ________.
A) undervalued; reduce exports
B) undervalued; reduce imports
C) overvalued; increase imports
D) overvalued; reduce exports
If Norwegian workers are more productive than Albanian workers, then trade between
Norway and Albania
A) cannot take place because Norwegian goods and services will be less expensive than
Albanian goods and services.
B) will take place so long as each country has a comparative advantage in a good or
service that buyers in the other country want.
C) cannot take place until Albanian workers become more productive.
D) can take place only if Albania has an absolute advantage in producing a good or
service Norwegian buyers want.
The marginal revenue product of capital is
A) the cost to the firm of renting an additional unit of capital.
B) the change in the firm’s revenue as a result of employing one more unit of capital,
such as a machine.
C) the economic rent received by hiring an additional unit of capital.
D) the revenue generated by substituting capital for labor in the production process.
Stockholders
A) are liable for the debts of a corporation.
B) are the owners of a corporation.
C) control a corporation’s day-to-day activities.
D) hire the managers of a corporation.