The long-run supply curve for a perfectly competitive, constant-cost industry
A) is upward sloping.
B) is horizontal.
C) is downward sloping.
D) is found by adding up the marginal cost curves for all firms in the industry.
The following appeared in a Florida newspaper a week after a hurricane hit the state.
“Floridians are relieved that the storm produced no fatalities, but homeowners face
weeks, if not months, of rebuilding. Matters are made worse by the soaring prices of
plywood and other building materials that always follow in a hurricane’s path.
Complaints of profiteering and price gouging have not deterred firms from raising their
prices by over 100 percent.” Which of the following offers the best explanation for the
price increases referred to in the article?
A) The hurricane reduced the number of suppliers of building materials.
B) The hurricane created an artificial shortage of building materials.
C) The hurricane caused an increase in the demand for building materials.
D) There was a reduction in supply as firms shipped plywood and other materials to
locations not affected by the storm.
What is the most common type of business?
A) corporation
B) partnership
C) sole proprietorship
D) They are equally represented because of Federal laws.
According to the “rational expectations” school of thought in macroeconomics, the
short-run Phillips curve is ________ in face of anticipated changes in monetary policy.
A) negatively sloped
B) positively sloped
C) vertical
D) horizontal
Suppose a bank has $100 million in checking account deposits with no excess reserves
and the required reserve ratio is 10 percent. If the Federal Reserve reduces the required
reserve ratio to 4 percent, then the bank can make a maximum loan of
A) $0.
B) $4 million.
C) $6 million.
D) $10 million.
Cost-plus pricing may be a reasonable way to determine price when
A) marginal cost and average fixed cost are roughly equal.
B) marginal cost and average cost are about the same.
C) marginal cost differs significantly from average cost.
D) marginal cost is very low.
If you own a $1,000 face value bond with one year remaining to maturity and a 3
percent coupon rate and new bonds are paying 14 percent, what is the most you can get
for your old bond?
A) $903.51
B) $997.19
C) $1,000
D) $1,140
Apple introduced its iPhone 3G in July 2008 and within a month sales had topped 3
million units. By April 2009, more than 25,000 apps for the iPhone 3G were available
in the iTunes store, an indication that in a competitive market
A) the ease at which a new firm can enter a competitive market is low.
B) the ease at which a new firm can enter a competitive market is high.
C) entry into the market is blocked.
D) entry into the market is restricted in the short run, but becomes easier in the long
run.
A consequence of the quota that has been imposed on the importation of sugar into the
United States is
A) consumers are protected from eating unsafe products made from cheap imported
sugar.
B) competition in the U.S. sugar market is reduced.
C) the cost of producing cereal, chocolate and candy products in the United States is
reduced.
D) the market for sugar in the United States has become monopolistically competitive
rather than oligopolistic.
Which of the following explains why mortgages weren’t considered securities prior to
1970?
A) The Federal Reserve Act of 1913 prohibited mortgages from being considered
securities. An amendment to the Act was approved in 1970 that allowed mortgages to
be considered securities.
B) Until 1970, the average annual increase in housing prices did not allow the buying
and selling of mortgages to be profitable. There has been a significant annual increase
in housing prices and mortgage values since 1970.
C) Congress passed a law in 1970 stipulating that mortgages could be classified as
securities.
D) Prior to 1970, mortgages were rarely resold in the secondary market.