Which of the following is motivated by an efficiency concern?
A) In 2009, the Obama administration increased unemployment benefits.
B) As part of an economic stimulus package, each taxpayer received a $3,000 tax rebate
check.
C) Following a six-month drought, a city banned homeowners from watering their
lawns in an effort to conserve water.
D) Some U.S. colleges have cut back on merit scholarships since these programs siphon
money from need-based programs, thus harming lower-income students with greater
financial need.
Table 14-1
Godrickporter and Star
Connections are the only two airport shuttle and limousine rental service companies in
the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase
its advertising spending to compete for customers. Table 14-1 shows the payoff matrix
for this advertising game. Is there a dominant strategy for Star Connections and if so,
what is it?
A) No, its outcome depends on what Godrickporter does.
B) Yes, Star Connections should increase its advertising spending.
C) Yes, Star Connections should reduce its advertising spending.
D) Yes, Star Connections’ dominant strategy is to collude with Godrickporter.
If you want to know the present value of a future payment received in one year, what
formula can you use?
A) Present value equals future payment times the current market rate of interest.
B) Present value equals future payment divided by one plus the rate of interest.
C) Present value equals one plus the rate of interest in decimals divided by future
payment.
D) Present value equals future payments times one plus the rate of interest.
The economic model of consumer behavior predicts that
A) consumers will try to earn as much income as they can over their lifetimes.
B) consumers will choose to buy the combination of goods and services that make them
as well off as possible from those combinations that their budgets allow them to buy.
C) consumers will try to accumulate as many goods and services as they can before
they die.
D) consumers divide their time between consumption and leisure activities in order to
maximize social welfare.
If, in an economy experiencing inflation, the government decided to tax real interest
income rather than nominal interest income, this change would cause the real interest
rate to ________ and the equilibrium quantity of loanable funds to ________.
A) fall; rise
B) fall; fall
C) rise; fall
D) rise; rise
The rate at which a firm is able to substitute one input for another while keeping the
level of output constant is called the
A) opportunity cost of inputs.
B) marginal rate of technical substitution.
C) input trade-off rate.
D) isoquant substitution rate.
Figure 4-18 Figure 4-18 shows the market
for cigarettes. The government plans to impose a unit tax in this market.
What is the size of the unit tax?
A) $8
B) $5
C) $3
D) cannot be determined from the figure
Figure 2-4
Figure 2-4 shows various points on three Different production possibilities frontiers for
a nation.
A movement from Y to Z
A) represents an increase in the demand for plastic products.
B) could occur because of general technological advancements.
C) is the result of advancements in food production technology.
D) is the result of advancements in plastic production technology.
Which of the following generates productive efficiency?
A) competition among sellers
B) competition among buyers
C) government inspectors
D) government production rules and regulations
The aggregate expenditure model focuses on the relationship between ________ and
________ in the short run, assuming ________ is constant.
A) total production; total income; real GDP
B) total spending; real GDP; total income
C) total spending; real GDP; the price level
D) total income; real GDP; the price level