David Card and Alan Kruger conducted a study of fast-food restaurants in New Jersey
and Pennsylvania. The study found that
A) there was a large reduction in employment of low-skilled workers when the
minimum wage was raised in these states.
B) the earned income tax credit is more effective in raising the incomes of low-skilled
workers than increases in the minimum wage.
C) increases in the minimum wage had a very small impact on employment.
D) increases in the prices of food have a greater effect on wage increases in New Jersey
than in Pennsylvania.
Which of the following does not arise from price discrimination?
A) an increase in producer surplus
B) an increase in consumer surplus
C) an increase in quantity sold
D) an increase in profits
Figure 13-1
Ceteris paribus, an increase in interest rates 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.
If the market price is $25 in a perfectly competitive market, the marginal revenue from
selling the fifth unit is
A) $5.
B) $12.50.
C) $25.
D) $125.
Which of the following statements is true?
A) If a tax is imposed on a product sold by a monopolist, the monopolist will maximize
its profits by producing where marginal revenue equals marginal cost.
B) A monopolist will always charge the highest possible price.
C) If a tax is imposed on a product sold by a monopolist, the monopolist can increase
its price to pass along the entire tax to consumers.
D) Because a monopolist faces no competition, the demand for its product is perfectly
inelastic.
If at a price of $24, Octavia sells 36 home-grown orchids and at $30 she sells 24
home-grown orchids, the demand for her orchids is
A) elastic.
B) inelastic.
C) unit-elastic.
D) perfectly elastic.
Which of the following is a consequence of the voting paradox?
A) A majority of voters elect a candidate that does not represent the preferences of the
voter who is in the political middle.
B) Politicians support small groups of individuals and firms that benefit from special
interest legislation, rather than a much larger group of voters who pay the cost for this
legislation.
C) Individuals and firms who benefit from government actions engage in rent seeking.
D) The collective preferences of voters are not transitive and voting outcomes are
inconsistent.
Prior to the 1998 World Cup, France banned the use of all soccer balls made by child
workers. Several economists criticized the ban. Which of the following is an argument
these economists used to justify the use of child labor in some countries?
A) Soccer balls are easy to carry and workers were given soccer balls to play with.
B) Child workers were allowed to attend school during the periods they worked.
C) Child workers were given gloves to protect their hands while they stitched soccer
balls.
D) Some of the alternatives to stitching soccer balls include begging and prostitution.
Between 1950 and 2013, the productivity of wheat farmers in the United States more
than doubled. This means that
A) the amount of land and other resources devoted to wheat production more than
doubled.
B) the incomes of wheat farmers more than doubled.
C) the total amount of wheat produced more than doubled.
D) the amount of wheat produced by the average farmer more than doubled.
In an oligopoly market
A) the pricing decisions of all other firms have no effect on an individual firm.
B) individual firms pay no attention to the behavior of other firms.
C) advertising of one firm has no effect on all other firms.
D) one firm’s pricing decision affects all the other firms.
When deciding on which new products to develop, a firm must devote people, time, and
money to designing a new product. Because any firm has only limited resources, it
A) should wait until its competitors develop a similar product before deciding on
devoting resources to its own product development.
B) is not able to develop more than one new product at a time.
C) must be certain that the product it chooses to develop will be successful or it will not
be able to stay in business.
D) faces a trade-off because resources used to develop one product will not be available
to develop another product.
Upon your graduation from college, you find that the economy is in recession and the
unemployment rate is relatively high. Nonetheless, you continue along your career path
looking for a new job because
A) the cost of additional education is always higher during recession.
B) high unemployment rates do not usually last for very long.
C) looking for work is your only option.
D) the wages of college graduates do not fall during recession.
The opportunity cost of taking an online history class is
A) the knowledge and enjoyment you receive from taking the class.
B) the value of the time spent on line.
C) equal to the highest value of an alternative use of the time and money spent on the
class.
D) zero because there is no classroom time involved if you are enrolled in the course.
E) the cost of tuition and fees only.
Ford Motor Company started producing the Model A at plants scattered around the
United States
A) to save on transport costs.
B) because diseconomies of scale at its initial River Rouge plant resulted in high
production costs.
C) to locate its production centers closer to its customers.
D) because it was not able to attract skilled workers in Michigan (where its first plant
was located).
The broadest measure of the price level that includes all final goods and services is
A) the producer price index .
B) the consumer price index.
C) the GDP deflator.
D) the wholesale price index.
All of the following are part of the “regulation of health insurance” provision of the
Patient Protection and Affordable Care Act (ACA) except
A) individuals with pre-existing medical conditions will be able to acquire health
insurance.
B) all policies must provide coverage for dependant children up to age 26.
C) lifetime dollar maximums on coverage will be prohibited.
D) limits on the size of deductibles and on waiting periods before coverage takes effect
will be eliminated.
Which of the following statements is true about monopolistically competitive firms?
A) Unlike perfectly competitive firms, monopolistically competitive firms are able to
raise their prices without losing all of their customers.
B) Like perfectly competitive firms, monopolistically competitive firms are not able to
raise prices without losing all of their customers because they face competition from
firms selling similar products.
C) Like perfectly competitive firms, monopolistically competitive firms maximize their
profits by settling price equal to marginal cost.
D) Unlike perfectly competitive firms, monopolistically competitive face perfectly
inelastic demand curves.
A monopoly is a firm that is the only seller of a good or service that does not have
A) a patent.
B) a close complement.
C) a barrier to entry.
D) a close substitute.
The first important federal law passed to regulate monopolies in the United States was
the
A) Cellar-Kefauver Act.
B) Clayton Act.
C) Federal Trade Commission Act.
D) Sherman Act.
In the 1960s, many economists and policy makers considered the trade-off between
inflation and unemployment revealed in the Phillips curve to be permanent. This belief
was challenged by ________, who argued that there is no trade-off between inflation
and unemployment in the long run.
A) Robert Lucas and Thomas Sargent
B) Finn Kydland and Edward Prescott
C) Paul Samuelson and James Tobin
D) Milton Friedman and Edmund Phelps