When a credit card company offers different services with its card, like travel insurance
for air travel tickets purchased with the credit card or product insurance for items
purchased with the card, the credit card company is trying to
A) create a barrier to entry for competing firms.
B) create a perfectly competitive market in which to sell its credit card.
C) convince customers that its card has greater value than those offered by rival firms.
D) shift the demand curve for competing firms to the right.
If the quantity of donuts supplied is represented by the equation QS = -15 + 5P then the
corresponding price of donuts is represented by the equation
A) P = 0.2QS + 3.
B) P = 5QS + 75.
C) P = QS – 7.5.
D) P = 15 – 0.5QS.
In a closed economy,
A) I = Y – C – G.
B) I = Y + C – G.
C) I = Y – C + G.
D) I = Y + C + G.
Table 1-6
Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should
extend his hours of operation. Ivan figures that his sales revenue will depend on the
number of hours the jewelry shop is open as shown in the table above. He would have
to hire a worker for those hours at a wage rate of $25 per hour.
What is Ivan’s marginal benefit if he decides to stay open for six hours instead of five
hours?
A) $10
B) $20
C) $30
D) $91.67
If, in a competitive market, marginal benefit is greater than marginal cost,
A) the net benefit to consumers from participating in the market is greater than the net
benefit to producers.
B) the government must force producers to lower price in order to achieve economic
efficiency.
C) the quantity sold is greater than the equilibrium quantity.
D) the quantity sold is less than the equilibrium quantity.
If in the market for apples the supply has decreased, then
A) the supply curve for apples has shifted to the right.
B) there has been a movement upwards along the supply curve for apples.
C) the supply curve for apples has shifted to the left.
D) there has been a movement downwards along the supply curve for apples.
Figure 15-15
Figure 15-15 shows the cost and demand curves for the Erickson Power Company.
What is the economically efficient output level and what is the price at that level?
A) Q4, P1
B) Q3, P2
C) Q2, P2
D) Q2, P3
Table 2-9
Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in
Guatemala and Honduras. Does either Guatemala or Honduras have an absolute
advantage and if so, in what product?
A) Guatemala only has an absolute advantage in producing canoes.
B) Honduras only has an absolute advantage in producing canoes.
C) Guatemala has an absolute advantage in producing both products.
D) Honduras only has an absolute advantage in producing sailboats.
By offering more generous unemployment insurance programs, European countries can
expect
A) to pay less in taxes than in the United States.
B) workers to gain new skills quickly in response to fluctuations in the labor market.
C) shorter periods of unemployment for their workers.
D) longer periods of unemployment for their workers.
Which of the following describes the relative positions of the demand curve and the
average total cost (ATC) curve of a monopolistically competitive firm that earns a profit
in the short run?
A) In the short run, the firm’s demand curve will lie above its ATC curve. The demand
curve will be tangent to the ATC curve in the long run.
B) In the short run, the firm’s demand curve will lie below its ATC curve. The demand
curve will be tangent to the ATC curve in the long run.
C) In the short run, the firm’s demand curve will cross its ATC curve at the ATC curve’s
lowest point. The demand curve will be above the ATC curve in the long run.
D) In the short run, the firm’s ATC curve will cross the demand curve at the profit
maximizing level of output. The demand curve will be tangent to the ATC curve in the
long run.
Given the equations for C, I, G, and NX below, what is the marginal propensity to
consume? C = 2,000 + 0.9Y
I = 2,500
G = 3,000
NX = 400 A) -0.1
B) 0.1
C) 0.9
D) 2000
During World War II, prisoners of war used ________ as money.
A) bullets
B) cowrie shells
C) chocolate
D) cigarettes
During the Chinese experience with pegging the yuan to the dollar, the yuan was
________. As a result, there was a ________ of dollars on the market, and the Chinese
government had to purchase dollars to maintain the peg.
A) overvalued; shortage
B) undervalued; surplus
C) overvalued; surplus
D) undervalued; shortage
Figure 2-1
________ is (are) technically efficient.
A) Point A
B) Point B
C) Point C
D) Points B and C
Which of the following statements is true about marginal revenue?
A) If marginal revenue is zero, it means that quantity demanded falls to zero when a
firm changes its price.
B) If marginal revenue is negative, the additional revenue received from selling 1 more
unit of the good is smaller than the revenue lost from receiving a lower price on all the
units that could have been sold at the original price.
C) If marginal revenue is positive, the additional revenue received from selling 1 more
unit of the good is smaller than the revenue lost from receiving a lower price on all the
units that could have been sold at the original price.
D) Marginal revenue increases as price falls and quantity sold increases.
Reducing the marginal tax rate on income will
A) reduce the tax wedge faced by workers and increase labor supplied.
B) raise the return to entrepreneurship and encourage the opening of new businesses.
C) increase the after-tax return on saving, and encourage saving.
D) All of the above are correct.
Which of the following is a reason why we should consider the federal national debt a
problem?
A) The federal government is in danger of defaulting on its debt.
B) If the debt drives up interest rates, crowding out will occur.
C) If the debt was incurred to finance improvements in infrastructure, crowding out will
occur.
D) If the debt was incurred to finance research and development, crowding out will
occur.
Figure 6-10
The supply curve on which price elasticity changes at every point is shown in
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.