In order to be binding, a price floor
A) must lie above the free market equilibrium price.
B) must lie below the free market equilibrium price.
C) must coincide with the free market equilibrium price.
D) must be high enough for firms to earn a profit.
Table 9-3
Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists
the number of candles and bars of soap Bryce and Tina can each produce in one month.
Select the statement that accurately interprets the data in the table.
A) Bryce has an absolute advantage in making candles and Tina has an absolute
advantage in making soap.
B) Bryce has an absolute advantage in making soap and Tina has an absolute advantage
in making candles.
C) Bryce has an absolute advantage in making soap.
D) Tina has an absolute advantage in making candles.
Figure 5-7 What is the
incremental benefit of increasing the quantity of pollution reduction from QBto QE
units?
A) PF
B) PFQE
C) the value of the area BEF
D) the value of the area QBBFQE
Based on projections from the U.S. Census Bureau and the Congressional Budget
Office
A) there will be a significant increase in the demand for health care by the year 2020.
B) there will be a significant decrease in the demand for health care by the year 2020.
C) there will be no significant change in the demand for health care by the year 2020.
D) the change in the supply of health care will more than make up for the change in
demand for health care by the year 2020.
Economists Kenneth Chay and Michael Greenstone find that in the two years following
the passage of the Clean Air Act of 1970, the sharp reduction in air pollution also led to
a decline in infant deaths. Although this and other studies provide compelling evidence
of the link between pollution and infant health, it is not clear that reductions from the
much lower levels of ambient pollution today would have the same effect. Which of the
following reasons could explain this?
A) The cost of pollution abatement today is much higher than it was in the 1970s. Thus,
it would be far more costly to achieve the same level of benefit today as the benefit
achieved in 1970.
B) When levels of pollution are high, the marginal benefit of reducing pollution also is
high. It follows therefore that the benefit of reducing air pollution in 1970 would be
much higher than the benefit from a proportional reduction in air pollution today when
the level of pollution is much lower.
C) Today, the level of pollution is much higher. Therefore, it will take a much larger
reduction in air pollution to reap similar benefits as it did in 1970.
D) When levels of pollution are high, the marginal benefit of reducing pollution is low.
Therefore, it was necessary to significantly reduce air pollution in 1970 before benefits
can be realized. Today, when the level of pollution is much lower, such drastic measures
are unnecessary.
The nominal GDP of the U.S. in 2012 was approximately $16.2 trillion. This means that
A) the value of output in 2012 was around $16.2 trillion.
B) total income in 2012 was around $16.2 trillion.
C) total spending in 2012 was around $16.2 trillion.
D) all of the above are true.
The basic aggregate demand and aggregate supply curve model helps explain
A) short-term fluctuations in real GDP and the price level.
B) long-term growth.
C) price fluctuations in an individual market.
D) output fluctuations in an individual market.
Table 19-19
Given the information above, calculate the GDP deflator in 2012.
A) 87
B) 95
C) 105
D) 114
Spending on the war in Afghanistan is essentially categorized as government purchases.
How do increases in spending on the war in Afghanistan affect the aggregate demand
curve?
A) They will move the economy up along a stationary aggregate demand curve.
B) They will move the economy down along a stationary aggregate demand curve.
C) They will shift the aggregate demand curve to the left.
D) They will shift the aggregate demand curve to the right.
As a business type, corporations ________ in the United States.
A) earn the majority of revenues
B) are the most common
C) are the least common
D) are subject to the fewest taxes
Figure 13-1
Ceteris paribus, an increase in the growth rate of domestic GDP relative to the growth
rate of foreign GDP would be represented by a movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
There are several types of barriers to entry that can create a monopoly. Which of the
following barriers is the result of government action?
A) network externalities
B) public franchise
C) economies of scale
D) control of a key resource
Table 4-3
The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that
specializes in producing western wear. If the market price of cowboy hats is $50, how
many hats will be produced?
A) 0
B) 1
C) 2
D) 4
Emily is a writer. She buys pens and paper for $20 and writes a 500-page novel that she
sells to a publishing company for $500,000. If the publisher prints 1 million copies that
sell for $25 each, what is the contribution to GDP of Emily’s novel?
A) $25 million
B) $20 million
C) $500,000
D) $50,000
DeShawn’s Detailing is a service that details cars at the customers’ homes or places of
work. DeShawn’s cost for a basic detailing package is $40, and he charges $75 for this
service. For a total price of $90, DeShawn will also detail the car’s engine, a service that
adds an additional $20 to the total cost of the package. What is the marginal cost of
adding the engine detailing to the basic detailing package?
A) $20
B) $30
C) $60
D) $60 plus the value of his time
During the recession of 2007-2009 in the United States, ________ relative to potential
GDP.
A) business fixed investment spending rose and net export spending declined
B) consumption spending rose and residential construction spending declined
C) federal government purchases rose and changes in business inventories declined
D) net export spending rose and consumption spending declined
All of the following are reasons why the wages of workers and the prices of inputs rise
more slowly than the prices of final goods and services except
A) unions are successful in pushing up wages.
B) firms are often slow to adjust wages.
C) contracts make prices and wages ‘sticky.”
D) menu costs make some prices sticky.
Stockholders
A) are liable for the debts of a corporation.
B) are the owners of a corporation.
C) control a corporation’s day-to-day activities.
D) hire the managers of a corporation.
Figure 27-6
In the dynamic model of AD–AS in the figure above, if the economy is at point A in year
1 and is expected to go to point B in year 2, Congress and the president would most
likely pursue
A) expansionary fiscal policy.
B) contractionary fiscal policy.
C) expansionary monetary policy.
D) contractionary monetary policy.
E) expansionary automatic stabilizers.