Long-run equilibrium in a monopolistically competitive market is similar to long-run
equilibrium in a
perfectly competitive market in that in both markets, firms
A) produce at the minimum point of their average total cost curves.
B) produce where price equals marginal cost.
C) break even.
D) produce where price equals marginal revenue.
In a graph of unemployment rates (on the horizontal axis) versus inflation rates (on the
vertical axis), the short-run Phillips Curve is
A) downward sloping.
B) horizontal.
C) vertical.
D) upward sloping.
What is the term that explains why voters often lack knowledge of pending legislation,
and lack knowledge of the views of candidates for office on a range of issues that affect
their own (the voters’) welfare?
A) the voting paradox
B) logrolling
C) rational ignorance
D) regulatory capture
Figure 23-1
If the economy is in equilibrium, it is at a level of aggregate expenditure given by point
A) J.
B) K.
C) L.
D) Points J, K and L all represent equilibrium.
When the market value of the dollar falls relative to other currencies around the world,
we say that
A) the dollar has appreciated.
B) the dollar has depreciated.
C) the demand for dollars has decreased.
D) the supply of dollars has decreased.
Joss is a marketing consultant. Iris and Daphne are potential customers interested in
commissioning Joss to undertake a market survey and compile the findings in a report.
Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose
that the opportunity cost of Joss’s time is $1,200. Assume that Iris and Daphne do not
know each other. If the price is $500 per copy
A) only Iris will purchase Joss’s services and Joss will undertake the job for her.
B) only Daphne will purchase Joss’s services and Joss will undertake the job for her.
C) both Iris and Daphne will purchase Joss’s services and Joss will undertake the job.
D) both Iris and Daphne will want to purchase Joss’s services but Joss will not be
willing to undertake the job.
When the price of pistachio nuts is $7.50 per lb. the quantity demanded is 48 lbs. When
the price of peaches is $9.00 per lb. the quantity demanded is 40 lbs. When the
midpoint formula is used to measure the price elasticity of demand we can say that the
demand for pistachio nuts is
A) relatively, but not perfectly, elastic.
B) unit-elastic.
C) completely inelastic.
D) relatively, but not perfectly, inelastic.
What is outlet bias?
A) the tendency for households to spend more money over time
B) the tendency for households to spend their money at discount stores as prices rise
C) the tendency for the quality of products to improve over time even though the CPI
does not measure changes in quality
D) the tendency for consumers to purchase newer, more technologically advanced
products even though they have higher prices
Which of the following is a flow in the circular flow model?
A) the flow of goods and services from households to firms
B) the flow of profit and the flow of revenue
C) the flow of income earned by firms and the flow of expenditures earned by
households
D) the flow of revenue received by firms and the flow of payments to resource owners
Workers in high-income countries have ________ to work with than do workers in
low-income countries.
A) less physical capital
B) more physical capital
C) more labor
D) more labor and less physical capital
Recent research has shown that the first firm to enter a market often does not have a
long-term advantage over later entrants into the market. An example that has been used
to illustrate this is
A) McDonald’s entry into the high-end coffee market.
B) Xerox, which became a generic term for making photocopies.
C) Abercrombie and Fitch, which was the first clothing company to market to young
men.
D) the introduction of the first ballpoint pen in 1945.
Pollution is an example of a
A) public good.
B) positive externality.
C) private cost.
D) negative externality
If Congress wanted to counteract the effects of a recession it could
A) increase tax rates.
B) increase taxes by a fixed amount.
C) increase government purchases.
D) decrease defense spending.
An avocado orchard employs five full-time workers. Currently, the average product of
labor is 120 pounds of avocados per day. The orchard hires a 6th full-time worker and
his marginal product is 150 pounds of avocados. The average product of the six workers
will now be
A) more than 120 pounds.
B) less than 120 pounds.
C) equal to 120 pounds.
D) less than the marginal product of labor.