When a government mandate sets the rental price of an apartment below the market
clearing level, which of the following result?
A) A shortage
B) A surplus
C) Scarcity
D) The outcome is unknowable.
When determining value added, national income accounting systematically ignore
A) accounting profits.
B) economic profits.
C) accounting losses.
D) the expected market value of unsold inventory.
A positive externality clearly occurs when
A) a person behaves in the public interest.
B) a person’s action unintentionally benefits other people.
C) a person behaves only with courtesy and social grace.
D) a person couldn’t care less about anybody else.
When Mother Teresa used her $190,000 Nobel Peace Prize to construct a leprosarium,
she was
A) behaving irrationally.
B) behaving selfishly.
C) not behaving in a truly voluntary way.
D) pursuing her self interest.
E) violating the fundamental laws of economics.
The law of demand applies to
A) clean streets.
B) clean air.
C) clean water.
D) the maintenance endangered species.
E) all of the above.
In the economic way of thinking, the identification of wealth with material objects
A) is at the foundation of modern capitalism.
B) is good economics but antithetical to religious precepts.
C) is usually rejected by socialists.
D) must be rejected because it makes no sense.
According to the text, the most serious cost of continued inflation in a democratic
society is
A) its tendency to undermine social consensus and feed political conflict.
B) the eventual recession that must inevitably occur as a result of the inflation.
C) the open and disguised unemployment that accompanies it, especially among
minorities and teenagers.
D) the slowdown in the rate of economic growth that it causes.
E) the steady rise in the cost of living that it entails.
Roughly what percent of American families lived below the poverty line in 1960?
A) 8%
B) 18%
C) 28%
D) 38%
E) 48%.
Who, among the following, is least likely to price discriminate?
A) The local tavern
B) The local diner
C) The local potato farmer
D) The telephone company
If the elasticity measure equals 1.0, then the demand is
A) elastic.
B) unit elastic.
C) inelastic.
D) infinitely elastic.
An ordinance making it illegal for people to park commercial vehicles on the street
overnight in residential areas
A) protects property rights.
B) takes away property rights.
C) protects some property rights and takes away others.
D) has nothing to do with property rights.
E) reduces negative externalities for residents of affected areas.
From the economist’s point of view, dividends paid to stockholders are part of a
corporation’s costs
A) because taxes are paid on a corporation’s profits prior to the payment of dividends.
B) because they must be included in stockholders’ incomes for purposes of personal
income taxation.
C) insofar as they are contractual obligations.
D) insofar as they represent what funds invested in the corporation could have earned
elsewhere.
According to your text, open market operations
A) can be a difficult and delicate task.
B) are free from political pressures.
C) are designed solely in the national interest.
D) have failed to be effective ever since the U.S. has gone off the gold standard.
Are credit cards “money”?
A) No, because they are not used as a general medium of exchange.
B) No, because they are used to make money.
C) Yes, because they are used as a general medium of exchange.
D) Yes, because they are used to make money.
Does monetary policy require the accompaniment of fiscal policy to change total
spending?
A) No, because the Fed is an independent agency of the federal government.
B) Yes, because monetary policy can contract total spending but cannot by itself expand
it.
C) Yes, because no policy is effective if it only changes nominal money values.
D) Yes, if the demand for money tends to change in about the same direction and
amount whenever the supply changes.
Which of the following would be likely to change the relative efficiency of trucks
versus trains in carrying freight?
A) Higher wages for truck drivers
B) More powerful locomotives
C) Tolls on interstate highways
D) All of the above.
In the economic way of thinking, bald eagles are a scarce good. Thus,
A) the bald eagle population can be maintained at no cost.
B) the bald eagle population should be maintained at any cost.
C) there are substitutes for bald eagles.
D) there are no substitutes for bald eagles.
E) economists don’t like bald eagles.
Ed Sike was able to increase his net revenue by charging different prices to different
customers because
A) his cost of serving different customers varied.
B) his marginal costs declined as his sales increased.
C) his marginal costs were rising.
D) he could distinguish faculty from students at low cost.
An organic farm sells tomatoes for 50 cents each at the local farmers market. It only
cost them (in the accounting measure) 5 cents to produce each tomato. What happens to
GDP with the sale of each tomato?
A) It increases by 5 cents.
B) It increases by 45 cents.
C) It increases by 50 cents.
D) It increases by 55 cents.
E) It remains unchanged because organic farmers try not strive for profit.
According to your text, controversies about negative externalities are almost always
conflicts between the legitimate expectations of citizens and the
A) desire of individuals for greater profits.
B) desire of politicians to be reelected.
C) legitimate expectations of other citizens.
D) mindless urge for more material goods.
E) strident demands of environmentalists.
When a shortage of a goods leads to a price increase, its price usually rises because
A) Americans are committed to capitalism.
B) most people are better off if it does.
C) sellers can benefit by raising their prices.
D) higher prices lead to scarce goods being allocated most efficiently.
What will be the principal and most immediate effect on the supply or demand for raw
cotton grown in the United States if new EPA regulation, which prohibit the use of
certain pesticides and herbicides widely used by cotton farmers, are introduced?
A) Decrease in demand
B) Decrease in supply
C) Increase in demand
D) Increase in supply
When a commercial bank borrows directly from the Fed, it pays
A) a zero rate of interest.
B) an interest rate called the federal funds rate.
C) an interest rate called the discount rate.
D) the Fed in a mutually agreed upon quantity of gold reserves in its vaults.
Because the actual market-capitalist system is a combination of market processes and
political processes,
A) it can only be managed appropriately by well-trained political economists.
B) it is often unclear where to place the blame when things go wrong.
C) political considerations will always ruin the market process.
D) economic considerations will always ruin the political process.
For a seller who is a price taker, marginal revenue is always
A) less than marginal cost.
B) more than marginal cost.
C) the same as marginal cost.
D) less than price.
E) the same as price.
Suppose it costs a farmer $1.00 to produce 1 unit of corn, $2.10 to produce 2 units of
corn, and $3.30 to produce 3 units of corn. What’s the marginal cost of producing 3
units of corn?
A) 0
B) 30 cents
C) $1.10
D) $1.20
E) $3.30
According to your textbook, which best explains the fact that income inequality has
increased in the U.S. since 1980?
A) A growing distrust of the efficacy of federal government spending programs
combined with a rising concern over federal budget deficits
B) A widening gap between the wages of skilled and extensively-educated workers and
the wages of those with fewer skills and less education
C) The impact of cheaply-produced and low-priced foreign imports
D) Government deregulation of business
Suppose homebuyers believe that prices will fall over the next six months to a year.
This would tend to
A) increase their demand for homes today.
B) decrease their demand for homes six months from today.
C) decrease their demand for homes today.
D) have no effect on their demand today or six months from today.
Chuck Stake never eats vegetables, although he can afford to buy them. According to
the economic way of thinking, Chuck
A) must have a serious physiological aversion to vegetables.
B) was probably forced to eat them as a kid, and now hates them.
C) believes the additional benefits from eating vegetables are outweighed by the
additional costs.
D) has studied economics enough to know that nobody needs to eat their vegetables.
If grocery stores in high-crime areas charge higher prices than stores elsewhere, it is
because
A) each item sold must bear its share of the higher insurance costs.
B) residents of high crime areas tend to be less price-conscious shoppers.
C) the costs of crime are a legitimate cost of doing business.
D) the store owners are not setting marginal cost equal to marginal revenue.
E) there is less competition between stores in high-crime areas.
The total market demand for the wheat grown by U.S. farmers is
A) always equal to the total supply.
B) completely or perfectly elastic.
C) completely or perfectly inelastic.
D) less than completely or perfectly elastic.
E) unit elastic at the prevailing price.
Physical or technological facts are by themselves never sufficient to measure efficiency
because
A) what is efficient changes over time.
B) efficiency is a ratio between evaluations.
C) more complex technological processes are inevitably more efficient.
D) physical or technological data can never be known precisely.
E) we can never be sure we are using the most advanced technology.
Any scientific theory
A) emphasizes some factors while slighting others.
B) contains some biases.
C) offers no guarantee of being completely valid and true.
D) is characterized by all of the above.
E) is characterized by none of the above.