Average duration of unemployment is an example of a:
A) leading indicator.
B) coincident indicator.
C) lagging indicator.
D) none of the above.
A restrictive monetary policy, all else equal, will:
A) depreciate the domestic currency.
B) appreciate the domestic currency.
C) all of the above.
D) none of the above.
Which of the following statements regarding historical costs is correct?
A) Historical costs represent what the firm paid for an input when it was purchased,
adjusted for inflation.
B) Historical costs vary depending on the method of depreciation a firm uses.
C) Historical costs are a good indicator of the current opportunity cost of a piece of
capital.
D) Using historical costs can cause true economic profit to be under or over stated.
If a firm experiences constant returns to the variable input in the short run:
A) marginal product will be greater than average variable product, but the two will
become more equal as output increases.
B) marginal product will be less than average variable product, but the two will become
more equal as output increases.
C) marginal product will be greater than average variable product, and the difference
between the two will become larger as output increases.
D) marginal product and average variable product will be equal over the range of output
in question.
By and large, the price of each item on a restaurant menu is:
A) an accurate reflection of the item’s marginal cost.
B) based strictly on consumer demand.
C) a function of cost and the price elasticity of demand for the item.
D) a fixed multiple of the item’s total cost.
Which of the following statements is correct?
A) Workers employed by General Motors are approximately twice as productive as
their Japanese counterparts.
B) Between 1979 and 1998, Chrysler and Ford eliminated the productivity gap between
all of their production facilities and their Japanese counterparts.
C) The increase in productivity Japanese manufacturers experienced in the early 1980s
was the result primarily of changes in management focusing on inventory systems and
plant layout.
D) Auto workers in the United States are less productive than their Japanese
counterparts primarily due to the higher wages U.S. workers receive.
The airline industry is best classified as:
A) an oligopoly.
B) a monopoly.
C) perfectly competitive.
D) monopolistically competitive
Open market purchase will result in:
A) increase in bank reserves and a decrease in the federal funds rate.
B) increase in bank reserves and an increase in the federal funds rate.
C) decrease in bank reserves and a decrease in the federal funds rate.
D) decrease in bank reserves and an increase in the federal funds rate.
A curve that shows the price level at which firms in the economy are willing to produce
different levels of goods and services and the resulting level of real income is called:
A) aggregate demand.
B) aggregate supply.
C) potential output.
D) natural rate of unemployment.
The market structure that is most different from the model of perfect competition is:
A) monopolistic competition.
B) monopsony
C) oligopoly.
D) monopoly.
An increase in the demand for dollars on the foreign exchange market, all else equal,
will result in:
A) appreciation of the U.S. dollar and depreciation of the foreign currency.
B) appreciation of the U.S. dollar and appreciation of the foreign currency.
C) depreciation of the U.S. dollar and depreciation of the foreign currency.
D) depreciation of the U.S. dollar and appreciation of the foreign currency.
The total sum of squares is 400 and the sum of squares errors is 100, what is the
coefficient of determination?
A) 25
B) 0.75
C) 1.00
D) 0
Which of the following is not a characteristic of perfect competition?
A) Large number of firms in the industry.
B) Outputs of the firms are perfect substitutes for one another.
C) Firms face downward-sloping demand functions.
D) No barriers to entry or exit.
Which of the following isnot considered a factor that influences supply?
A) Technology.
B) Production taxes and subsidies.
C) The number of buyers.
D) Resource prices.
Which of the following would cause a change in supply, as opposed to a change in
quantity supplied, in the market for used homes?
A) A decrease in the price of rental housing.
B) A decrease in the mortgage rates.
C) An increase in the incomes of home buyers.
D) An increase in the number of buyers in the market for used homes.
By continuing to operate when price is greater than average variable cost but less than
average total cost, a firm limits its losses to:
A) $0.
B) its total fixed costs.
C) the difference between its total fixed cost and the amount by which total revenue
exceeds total variable costs.
D) its total variable costs.
A system where goods and services are exchanged directly without a common unit of
account is called the:
A) commodity system.
B) fiat system.
C) barter system.
D) none of the above.
The suggestion that a seller will try to set price based on “what the market will bear” is
explicit recognition of the constraint imposed by:
A) the firm’s marginal cost of production.
B) the price elasticity of demand for that item.
C) the firm’s competitors.
D) the need for most firms to earn positive economic profits over time if they are to
remain in business.
Under a flexible exchange rate system, if the quantity supplied of dollars is less than the
quantity demanded of dollars, there is a:
A) balance of payments deficit and the dollar would depreciate.
B) balance of payments surplus and the dollar would depreciate.
C) balance of payments deficit and the dollar would appreciate.
D) balance of payments surplus and the dollar would appreciate.
Consider the production function for bottled water. All of the following would be
considered variable inputs except:
A) the plastic bottles.
B) the water the bottles are filled with.
C) the machine used to fill each bottle.
D) the electricity used to power the machine used to fill the bottles.
Assume the firms in an oligopoly produce a differentiated product and are initially
colluding. If each firm begins to cheat (to increase sales) by underpricing the other
firms, as the amount of cheating increases, the resulting industry price and output will
approach the outcome for:
A) perfect competition.
B) monopolistic competition.
C) noncooperative monopoly.
D) noncooperative oligopoly.
In comparing monopoly to a perfectly competitive market, which of the following is
false?
A) Market price will be higher under monopoly.
B) Equilibrium quantity will be higher under perfect competition.
C) Consumers will be worse off with the monopoly.
D) Employment will be higher under monopoly.
Assume the demand function for good X can be written as Qd = 80 – 3Px + 2Py + 10I,
where Px = the price of X, Py = the price of good Y, and I = Consumer income.
According to this equation:
A) a rise in the price of Y would cause the demand for X to decrease.
B) X and Y are complements
C) X is an inferior good.
D) X and Y are substitutes.
Changes in domestic and foreign income result in:
A) movements along the demand and supply curves of the foreign exchange market.
B) shifts in the demand and supply curves of the foreign exchange market.
C) all of the above.
D) none of the above.
A decrease in the costs of resources or inputs of production would shift the:
A) short-run aggregate supply curve rightward.
B) short-run aggregate supply curve leftward.
C) long-run aggregate supply curve rightward.
D) long-run aggregate supply curve leftward.
A perfectly competitive firm will maximize profits (or minimize losses) so long as price
(marginal revenue) is:
A) greater than marginal cost.
B) greater than average fixed cost.
C) greater than average total cost.
D) greater than average variable cost.
Which of the following is characteristics is common to both monopoly and
monopolistic competition?
A) Ease of entry into the industry.
B) Firms are price setters.
C) A relatively large number of sellers.
D) Long-run economic profit equals 0.
An increase in the real money supply can result from:
A) increase in the nominal money supply or an increase in the price level.
B) increase in the nominal money supply or a decrease in the price level.
C) decrease in the nominal money supply or an increase in the price level.
D) decrease in the nominal money supply or a decrease in the price level.
Which of the following would cause a firm’s LRAC curve to shift up?
A) An increase in the amount of “learning by doing.”
B) An increase in the price of labor, all else constant.
C) An increase in the amount of output produced by the firm.
D) A decrease in the amount of capital employed by the firm.
The technique that estimates long-run costs and the minimum efficient scale by
determining the scale of operation at which most firms in an industry are concentrated
is called the:
A) engineering estimation technique.
B) statistical cost estimation technique.
C) survivor approach.
D) back-of-the-envelope approach.
Which of the following statements concerning the relationships among the firm’s total
cost functions is false?
A) TC = TFC + TVC
B) TVC = TFC – TC
C) TFC = TC – TVC
D) TC = TFC when output = 0.
An increase in the supply of dollars on the foreign exchange market, all else equal, will
result in:
A) appreciation of the U.S. dollar and depreciation of the foreign currency.
B) appreciation of the U.S. dollar and appreciation of the foreign currency.
C) depreciation of the U.S. dollar and depreciation of the foreign currency.
D) depreciation of the U.S. dollar and appreciation of the foreign currency.
Under a flexible exchange rate system, if the quantity supplied of dollars is greater than
the quantity demanded of dollars, there is a:
A) balance of payments deficit and the dollar would depreciate.
B) balance of payments surplus and the dollar would depreciate.
C) balance of payments deficit and the dollar would appreciate.
D) balance of payments surplus and the dollar would appreciate.