A monopolistically competitive firm should lower its price if its marginal revenue
exceeds its marginal cost.
A rising price level decreases consumption by decreasing the real value of household
wealth.
The question of whether economic growth is desirable is a positive question, easily
settled by economic analysis.
The process a firm uses to turn inputs into outputs of goods and services is called
technology.
Consumers in a monopolistically competitive market do not receive any consumer
surplus because the price paid for the product exceeds the marginal cost of production.
A supplier of paper napkins to the fast food industry is unlikely to have significant
bargaining power.
If a firm’s goal is to maximize revenue, it will price its product to correspond to the
unit-elastic segment of its demand curve.
Since 1981, deaths from cardiovascular diseases have decreased in the United States.
Roderick received a $100 savings bond for his graduation. The bond pays $100 at
maturity, which is in five years. If the interest rate is 6%, the bond has a present value
of $90.09.
If inflation in Mexico is lower than it is in the United States,
A) the purchasing power of the peso in buying Mexican goods will fall relative to the
dollar.
B) the value of the dollar will rise in the long run.
C) the value of the peso will rise in the long run.
D) the purchasing power of the dollar in buying American goods will rise relative to the
peso.
New York Times writer Michael Lewis wrote that “The sad truth, for investors, seems to
be that most of the benefits… are passed through to consumers free of charge.” To
which of the following did Lewis refer?
A) apple farming in New York state
B) the Enron accounting scandal
C) the medical screening industry
D) new technologies developed in the 1990s
Table 7-3
Mateo and Celeste produce custom saddles and spurs. Table 7-3 lists the number of
saddles and pairs of spurs Mateo and Celeste can each produce in one month. Select the
statement that accurately interprets the data in the table.
A) Celeste has a comparative advantage in making saddles.
B) Mateo has an absolute advantage in making spurs.
C) Mateo has a comparative advantage in making saddles.
D) Mateo has a comparative advantage in making saddles and making spurs.
Households
A) have no influence on the circular flow in a market economy.
B) purchase resources in the factor market.
C) sell goods in the product market.
D) sell resources in the factor market.
Table 9-1
Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the
number of dogs Linda and Sandy can each bathe and groom in one week. Select the
statement that accurately interprets the data in the table.
A) Sandy has a greater opportunity cost than Linda for dog grooming.
B) Sandy’s opportunity cost for dog grooming is less than Linda’s.
C) Linda has a greater opportunity cost than Sandy for dog bathing.
D) Sandy’s opportunity cost for dog grooming and dog bathing are both greater than
Linda’s.
Figure 4-1
Figure 4-1 shows Arnold’s demand curve for burritos.
Arnold’s marginal benefit from consuming the third burrito is
A) $1.25.
B) $1.50.
C) $2.50.
D) $6.00.
The term “brain drain” refers to
A) highly educated individuals who leave developing countries for high-income
countries.
B) the diminishing returns to studying for an exam.
C) the negative impact on brain function of an individual’s overinvestment in human
capital.
D) the decreased quality of the college-educated workforce.
What is the formula you should use to determine a bank account’s future value in one
year?
A) Future value equals the present value plus the rate of interest.
B) Future value equals the present value minus the rate of interest.
C) Future value equals the present value multiplied by one plus the rate of interest in
decimals.
D) Future value equals the present value divided by one plus the rate of interest in
decimals.
Which of the following statements about the budget deficit is true?
A) In 1992, the federal budget was balanced.
B) In 2000, the federal budget was in surplus.
C) In 2004, the federal budget was in surplus.
D) In 2011, the federal budget was in surplus.
U.S. net export spending rises when
A) the price level in the United States rises relative to the price level in other countries.
B) the growth rate of U.S. GDP is slower than the growth rate of GDP in other
countries.
C) the value of the U.S. dollar increases relative to other currencies.
D) the inflation rate is higher in the United States relative to other countries.
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
Bill owns “Bill’s Home of Blues” a store that specializes in selling CDs and DVDs of
blues musicians of the 1960s and 1970s. Bill took out a loan from his bank to pay for
his store and its initial inventory. Bill pays the bank $900 per week for his loan. The
$900 bank payment
A) is a long-run implicit cost.
B) is a fixed cost.
C) is a short-run implicit cost.
D) is a variable cost.
Profit is the difference between
A) marginal revenue and marginal cost.
B) total revenue and variable cost.
C) total revenue and total explicit cost.
D) total revenue and total cost.
Suppose you are a famous international economic advisor. You have been asked to asses
the possibilities for growth in an African country. It is a country abundant in labor and
some natural resources. The capital to labor ratio is low. It has a free market economy.
You have found that this country does not have a very strong and healthy banking
system, however the political system is stable and the government does a good job
protecting property rights. Assess this country’s prospects for growth. Recommend two
things that would enhance the country’s growth.
Explain the relationship between net exports and net foreign investment.
What is the difference between a devaluation and a revaluation of a currency?
What is the difference between a marginal tax rate and an average tax rate? Which is
more important in determining the impact of the tax system on economic behavior?
What is the relationship between the short-run Phillips curve and the long-run Phillips
curve?