Bubba’s Hula Shack bar and bistro has begun giving customers who can show proof
that they arrived at the establishment by public transportation a 10 percent discount on
their total bill. This is an example of
A) arbitrage.
B) two-part tariff pricing.
C) price discrimination.
D) odd pricing.
Most doctors and hospitals operate as private businesses in all of the following
countries except
A) Canada.
B) Japan.
C) the United Kingdom.
D) the United States.
Suppose the demand curve for hybrid cars shifts to the right. This will cause a relatively
small increase in the price of hybrid cars if
A) demand is elastic and supply is inelastic.
B) demand is inelastic and supply is elastic.
C) both demand and supply are inelastic.
D) both demand and supply are elastic.
The largest liability on the balance sheet of most banks is its
A) loans.
B) holdings of securities.
C) deposits with the Federal Reserve.
D) checking account and savings account deposits of its customers.
E) vault cash.
Electric car manufacturers want to sell more electric cars at a higher price. Which of the
following events would have this effect?
A) technological advancement in the production of electric car batteries
B) an increase in the number of manufacturers of electric cars
C) a decrease in the price of lithium, which is used in the electric car batteries
D) an increase in the price of gasoline
In addition to requiring that CEOs personally certify the accuracy of financial
statements, the Sarbanes-Oxley Act of 2002 also requires that
A) CEOs conduct audits of their corporations themselves.
B) firms raise funds for expansion through the sale of bonds only, not stocks.
C) auditors disclose any potential conflicts of interest.
D) corporations issue financial statements monthly rather than quarterly.
Figure 14-3
Rainbow Writer (RW) is a small online company selling a highly rated software
package for printing color labels directly onto CDs. The firm currently earns a profit of
$2 million per year selling its package exclusively on its Web site. Odeon, the producer
of the most popular software package for editing and burning CDs and DVDs has
expressed interest in bundling Rainbow Writer’s product into its own package. Odeon
expects that bundling would further boost its sales and allow it to sell the new bundled
product at a higher price, thus raising its profits beyond its current profit of $12 million.
Figure 14.3 shows the decision tree for the Rainbow Writer-Odeon bargaining game.
How will Rainbow Writer respond to Odeon’s two possible offers?
A) Rainbow Writer will reject either offer.
B) Rainbow Writer will only accept an offer of $30 per copy of the software package.
C) Rainbow Writer will only accept an offer of $40 per copy of the software package.
D) Rainbow Writer will accept either offer.
If national saving decreases,
A) the sum of domestic investment and net exports must increase.
B) the sum of domestic investment and foreign investment must increase.
C) the sum of domestic investment and foreign investment must decrease.
D) foreign investment must increase to cover the loss.
Which of the following models advocate that the quantity of money should be increased
at a constant rate?
A) the monetarist model
B) the new classical model
C) the real business cycle model
D) the new Keynesian model
Countries that use the euro as their currency face similar concerns as countries did
during the years of the gold standard in that each are (were)
A) unable to conduct monetary policy.
B) unable to conduct fiscal policy.
C) using currency which is backed by gold.
D) using a floating currency.
Table 4-1
The table above lists the highest prices three consumers, Curly, Moe, and Larry, are
willing to pay for a bottle of champagne. If the price of the champagne falls from $24 to
$14
A) consumer surplus increases from $32 to $53.
B) Curly will buy four bottles; Moe will buy two bottles, and Larry will buy one bottle.
C) consumer surplus will increase from $80 to $95.
D) Larry and Moe will receive more consumer surplus than Curly.
Assume that when the price of cantaloupes is $2.50 the demand for cantaloupes is
unit-elastic, and that the demand curve for cantaloupes is linear and downward sloping.
If firms lower the price of cantaloupes to $2.00 which of the following statements can
be made regarding the price elasticity of demand for cantaloupes?
A) The demand for cantaloupes at $2.00 must be inelastic.
B) We cannot determine whether the demand for cantaloupes is elastic or inelastic
without knowing what the quantity demanded is at each price.
C) The demand for cantaloupes at $2.00 must be elastic.
D) The demand for cantaloupes at $2.00 must be unit-elastic.
If the United States and other developed nations pay the cost of reducing public
emissions, developing nations such as China could benefit from the reduction while not
contributing to it. In this sense, one can think of reducing carbon emissions as being
like a
A) public good.
B) private good.
C) quasi-private good.
D) quasi-public good.
Figure 4-1 Figure 4-1 shows Arnold’s demand curve for
burritos.
Arnold’s marginal benefit from consuming the second burrito is
A) $1.00.
B) $1.50.
C) $2.00.
D) $4.50.
If actual inflation is greater than expected inflation,
A) real wages rise.
B) real wages fall.
C) the Phillips curve is a vertical line.
D) the unemployment rate rises.
Figure 5-1
Figure 5-1 shows a market with an
externality. The current market equilibrium output of Q1 is not the economically
efficient output. The economically efficient output is Q2. Suppose the current market
equilibrium output of Q1 is not the economically efficient output because of an
externality. The economically efficient output is Q2. In that case, the diagram shows
A) the effect of a positive externality in the production of a good.
B) the effect of a negative externality in the production of a good.
C) the effect of an external cost imposed on a producer.
D) the effect of an external benefit such as a subsidy granted to consumers of a good.
What is the central role of financial intermediaries in a market economy?
A) the creation and printing of money
B) keeping the price level stable
C) bringing together savers and borrowers
D) providing safe deposit boxes for people and businesses
In 2002, the Enron corporation was accused of falsifying information regarding
liabilities on Enron’s balance sheets, thereby
A) increasing Enron’s assets on the balance sheet.
B) reducing Enron’s profit on the balance sheet.
C) increasing Enron’s net worth on the balance sheet.
D) reducing Enron’s net income on the income statement.
Medical research that ends in a cure for a serious disease produces positive
externalities. What is the impact of this positive externality on economic efficiency?
A) At equilibrium, less than the economically efficient quantity of medical research is
produced.
B) A deadweight loss occurs because at equilibrium the marginal social cost of medical
research is greater than the marginal social benefit.
C) At equilibrium, more than the economically efficient quantity of medical research is
produced.
D) A deadweight loss occurs because at equilibrium the marginal social cost equals the
marginal social benefit.
If Joey Kobayashi experiences diminishing marginal utility from eating hot dogs then
A) his total utility from eating hot dogs is negative.
B) the marginal utility from the next hot dog Joey eats will be negative.
C) the additional satisfaction he receives from eating another hot dog will be less then
the satisfaction he received from his eating his last hot dog.
D) Joey is maximizing the marginal utility per dollar he receives from eating hot dogs.