Economists use game theory to analyze oligopolies because
A) real markets are too complicated to analyze without using games.
B) it is more enjoyable for economists and students to learn by playing games.
C) game theory helps us to understand why interactions among firms are crucial in
determining profitable business strategies.
D) game theory is useful in understanding the actions of firms that are price takers.
The tax multiplier
A) is negative.
B) is larger in absolute value as compared to the government spending multiplier.
C) is a measure of how much taxes will fall when income is falling.
D) is always less than one.
Economic efficiency in a free market occurs when
A) consumer surplus is maximized.
B) producer surplus is maximized.
C) the sum of consumer surplus and producer surplus is maximized.
D) price is as low as possible.
The Arrow impossibility theorem
A) explains why people can be rational as well as ignorant at the same time.
B) explains why voting systems do not consistently represent the preferences of voters.
C) explains why candidates for public office must represent the preferences of the
political middle.
D) explains why it is impossible, in most cases, to eliminate special-interest legislation
after it has become law.
When Potbelly sold stock to the public in its IPO, it did so through the NASDAQ
market. This was an example of Potbelly using ________ to raise funds.
A) indirect finance
B) direct finance
C) bonds
D) corporate governance
Figure 11-6 Figure 11-6 contains
information about the short-run cost structure of a firm.
In the figure above, which letter represents the marginal cost curve?
A) A
B) B
C) C
D) D
The total value of U.S. Treasury bonds outstanding equals
A) the federal government deficit.
B) the federal government surplus.
C) the federal government debt.
D) the cyclically adjusted budget deficit.
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.
Scott is a woodworker and charges $125 an hour for his time manufacturing
custom-made wood products. For his wife’s birthday, he designs and creates an intricate
birdseye maple jewelry box that takes him 15 hours to complete. By how much and in
what direction does GDP change as a result of his efforts?
A) GDP rises by $1,875.
B) GDP is not affected by Scott’s production of the jewelry box.
C) GDP rises by $125.
D) GDP falls by $1,875.
Who selects the board of directors of a corporation?
A) the state where the corporation is chartered
B) employees
C) stockholders
D) managers
Table 12-3
Arnie sells basketballs in a perfectly competitive market. Table 12-3 summarizes
Arnie’s output per day (Q), total cost (TC), average total cost (ATC) and marginal cost
(MC). What price (P) will Arnie charge and how much profit will he earn if the market
price of basketballs is $12.50?
A) Price and profit cannot be determined from the information given.
B) P = $12.50; profit = $52.50
C) P = $12.50; profit = $22.50
D) P = $20; profit = $75.00.
Figure 26-1
In the figure, the money demand curve would move from Money demand1 to Money
demand2 if
A) real GDP increased.
B) the price level decreased.
C) the interest rate increased.
D) the Federal Reserve sold Treasury securities.
An advantage of the establishment survey over the household survey of the labor
market is that the establishment survey
A) is based on actual payrolls, rather than on unverified answers.
B) includes the number of self-employed persons.
C) includes persons employed at newly opened firms.
D) provides an estimate of the number of persons unemployed.