If the marginal social cost of producing a public good is greater than the marginal social
benefit, then
A) more than the efficient quantity of the public good is being produced.
B) less than the efficient quantity of the public good is being produced.
C) the efficient quantity of the public good is being produced.
D) the public good is being produced by a private firm.
E) the public good must be a common resource.
Stock and bond sales are not included in GDP because they
A) do not occur in the year in which the production represented by them takes place.
B) represent corporate production.
C) represent indebtedness.
D) are not goods and services.
E) are not sold in the country in which they are produced.
Figure 17.3.2 shows the marginal private cost curve, marginal social cost curve, and
marginal social benefit curve for raising goats on a common pasture. If property rights
to the pasture are granted to a farmer so that the farmer owns the pasture, the farmer
raises
A) 0 goats.
B) 35 goats.
C) 50 goats.
D) 55 goats.
E) 40 goats.
If the CPI was 140 at the end of 2013 and 150 at the end of 2014, what was the inflation
rate in 2014?
A) 7.14 percent
B) 10 percent
C) 6.25 percent
D) 8 percent
E) 6.67 percent
Suppose we observe a fall in the price of good A and an increase in the quantity of good
A bought and sold. Which one of the following is a likely explanation?
A) The law of supply is violated.
B) The demand for A decreased.
C) The demand for A increased.
D) The supply of A increased.
E) The supply of A decreased.
The Herfindahl-Hirschman Index (HHI) is the square of the percentage market share of
each firm summed over the ________ firms in a market.
A) largest 60
B) largest 50
C) smallest 50
D) largest 75
E) smallest 60
Refer to Figure 19.3.5. This figure shows the labour supply curves and the value of
marginal product curves for high-skilled and low-skilled workers. If there is an increase
in the supply of high-skilled workers and the supply of high-skilled workers is now
equal to the supply of low-skilled workers, then employment of high-skilled labour
would
A) remain the same.
B) decrease.
C) increase to 40 hours per week.
D) increase to 50 hours per week.
E) none of the above
The reference base period is 2002. A consumer price index of 122 in 2014 means that
A) prices of consumer goods have gone up by a factor of 12.2.
B) if the price of a good was $100 in 2002, its price in 2014 is $122.
C) prices of consumer goods have more than doubled.
D) the market basket of consumer goods that cost $122 in 2002 can be purchased for
$100 in 2014.
E) the average of the prices paid by urban consumers for a fixed market basket of
consumer goods and services was 22 percent higher in 2014 than it was on average
during 2002.
Among Canada, Finland, and South Africa, income is distributed most equally in
________ and least equally in ________.
A) South Africa; Finland
B) Canada; South Africa
C) South Africa; Canada
D) Finland; Canada
E) Finland; South Africa
Which of the following does not change short-run aggregate supply?
A) a change in the money wage rate
B) technological change
C) a change in the full-employment quantity of labour
D) an increase in the quantity of capital
E) a change in expected future profits
The capture theory holds that regulations are supplied to maximize
A) total sales.
B) economic profit.
C) marginal product.
D) consumer surplus.
E) marginal revenue.
Other than by adjusting price, the two main ways in which a firm in monopolistic
competition competes with other firms are by ________ and ________.
A) innovation and product development; advertising
B) taking surveys to discover the wants of its consumers; opening up new retail outlets
C) changing its method of production; relocating its factories to areas with lower wage
rates
D) decreasing its workforce; using new technology
E) advertising; producing the efficient quantity
Unions try to raise the demand for their labour by
A) raising wages.
B) encouraging imports.
C) supporting less restrictive immigration laws.
D) sponsoring training for union members.
E) lobbying against minimum wage laws.
It benefits people to specialize and trade with each other because
A) otherwise they would not survive.
B) they can take advantage of the fact they have an absolute advantage in the
production of something.
C) with specialization and trade, this way they can consume outside the production
possibilities frontier.
D) with specialization and trade, the strong can exploit the weak.
E) specialization and trade lead to a linear PPF.
Currently the government of Ricardia has outlays equal to $100 billion, and a tax
scheme that is related positively to real GDP by the following equation: Taxes = $25
billion + 0.1(real GDP). What is the real GDP when the government has a balanced
budget?
A) $100
B) $250
C) $1,250 billion
D) $750 billion
E) $1,000 billion
A monopoly
A) faces a perfectly elastic demand.
B) ignores the demand curve because it is the only seller.
C) can raise the price it charges only if it decreases the quantity that it sells.
D) can raise the price it charges only if it increases the quantity that it sells.
E) faces a perfectly inelastic demand.
Use the figure below to answer the following questions.
Figure 12.4.3
Refer to Figure 12.4.3, which shows the cost curves and marginal revenue curve of a
firm in a perfectly competitive market. In the long run, market
A) demand will increase.
B) demand will decrease.
C) supply will increase.
D) supply will decrease.
E) demand and market supply will both increase.
Individuals A and B can both produce good X. We say that A has a comparative
advantage in the production of good X if
A) A has a lower opportunity cost of producing X than B.
B) A has a higher opportunity cost of producing X than B.
C) A can produce more units of X in a given time period than B.
D) A can produce X using newer technology than B.
E) A can produce less units of X in a given time period than B.
Refer to Table 4.1.1. If the price of good A falls from $4 to $3,
A) total revenue will increase.
B) total revenue will remain constant.
C) demand is elastic in this range.
D) demand is unit elastic in this range.
E) demand is inelastic in this range.
Some sales managers are talking shop. Which one of the following quotations does not
refer to a rightward shift of the demand curve?
A) “Since our competitors raised their prices, our sales have doubled.”
B) “It has been an unusually harsh winter; our sales of wool scarves are up from last
year.”
C) “We decided to cut our prices, and the increase in our sales has been remarkable.”
D) “The Green movement has sparked an increase in our sales of biodegradable
products.”
E) “People are expecting a harsh winter next year, so the sales of our winter coats have
increased.”
Complete the following sentence. In Figure 2.1.1,
A) movement from A to B would require a technological advance.
B) point B is a point of production efficiency.
C) some resources must be unused at point C.
D) the concept of decreasing opportunity cost is illustrated.
E) movement from C to B would require a technological improvement.
As a consumer moves rightward along an indifference curve,
A) the relative price of the good measured on the x-axis falls.
B) the relative price of the good measured on the y-axis falls.
C) the income required to buy the combinations of the goods increases.
D) the consumer remains indifferent among the different combinations of goods.
E) the consumer prefers the combinations of goods that are farther rightward along the
indifference curve.
Consider Fact 30.3.1. An increase in business investment
A) may increase or decrease aggregate demand depending on the effect on government
expenditure.
B) increases aggregate planned expenditure, which increases income and induces an
increase in government expenditure.
C) increases aggregate planned expenditure, which increases income and induces an
increase in consumption expenditure.
D) increases aggregate planned expenditure only if the economy has a recessionary gap.
E) creates a movement up along the aggregate demand curve.
As a result of a poor growing season, the supply curve of apples shifted leftward, the
equilibrium price of apples rose, and total revenue fell. This suggests that the price
elasticity of demand for apples is
A) perfectly inelastic.
B) elastic.
C) inelastic.
D) unit elastic.
E) perfectly elastic.
Dole Co. operates in a monopolistically competitive market. Which of the following
does not characterize Dole Co.’s market?
A) Dole Co. supplies a small portion of the market’s output.
B) Dole Co.’s product is slightly different from its competitors.
C) Dole Co. faced no barrier to entry when it decided to enter its market.
D) Dole Co. is unable to collude with other firms in the market.
E) Dole Co. must pay close attention to the decisions of each of its competitors.
If the government begins to run a larger budget deficit, the demand for loanable funds
________ and the real interest rate ________.
A) decreases; falls
B) decreases; rises
C) increases; rises
D) increases; falls
E) increases; rises or falls depending on the change in the supply of loanable funds
An indifference curve is
A) the boundary between what can be produced and what cannot be produced.
B) the boundary between what a consumer can afford and what he cannot afford.
C) a curve that shows combinations of goods among which a consumer is indifferent.
D) the boundary between normal goods and inferior goods.
E) a line with a positive slope.
The concept of opportunity cost
A) cannot be explained by using a production possibilities frontier.
B) explains that goods are swapped for other goods.
C) implies that when a person is more efficient in the production of one good, he should
produce that good and exchange it for some good that he is relatively less efficient at
producing.
D) implies that a double coincidence of wants must be present for exchange to take
place.
E) implies that because productive resources are scarce, we must give up some of one
good to acquire more of another.
The effect of a change in income on buying plans is called the
A) income effect.
B) substitution effect.
C) normal effect.
D) inferior effect.
E) price effect.
Refer to Table 25.1.1. Between 2009 and 2010, the yen
A) must have depreciated in value versus the euro.
B) must have appreciated in value versus the euro.
C) may or may not have appreciated in value versus the euro.
D) will have appreciated in value versus the euro if the euro has a high weight in CERI.
E) will have appreciated in value versus the euro if the euro has a lower weight in
CERI.