Roughly what was the Democratic Republic of Congo’s per capita GDP in 2011?
A) $110
B) $1,100
C) $11,000
D) $110,000
Cooperation among different people can occur
A) even if most people know nothing about one another.
B) only if at least 10% of the people know one another personally.
C) only if the majority of people know one another personally.
D) only if everybody knows one another personally.
What’s a normal good to me might be
A) a normal good to you.
B) an inferior good to you.
C) a bad to you.
D) any of the above to you.
What, according to the textbook, accounts for the federal budget surplus in the late
1990s?
A) A move toward virtue on Capital Hill
B) Strong economic growth during that period
C) Huge increases in tax rates
D) A successful beggar-thy-neighbor strategy
Publishers charge much higher prices for a book in hardcover than for the same book in
paper cover because
A) the demand for hardcover books is less elastic at the same price.
B) the marginal cost of attaching hardcovers is very high.
C) there are larger sunk costs in the production of hardcover editions.
D) they have less bargaining power against bookstores in marketing paperback editions.
E) they want to subsidize students.
Suppose the nominal interest rate is 5% and the real interest rate is 2%. We can deduce
that the rate of inflation is
A) 7%.
B) 3%.
C) 2%.
D) 0%.
According to chapter 1 in your textbook,
A) all economists approach questions with some preconceptions or prejudices.
B) economists (and others) ought to approach all questions with a completely open
mind, though they often do not.
C) economists approach questions with more of an open mind than do most other social
scientists.
D) most economists approach questions with a completely open mind.
E) most economists derive their conclusions from their political preferences.
Suppose the pizza at Pizza House and Little Weezer’s are fairly close substitutes. If
Pizza House raises their price 20%, and Little Weezer’s keeps their price unchanged,
which is most likely to occur?
A) The demand for Little Weezer’s pizza will increase
B) The demand for Pizza House pizza will decrease
C) Both A and B
D) None of the above
Suppose the market clearing price for apples falls from $3.00 to $2.00 per pound, and
the overall market clearing output decreases from 1 million to 1/2 million pounds. How
can we explain the fall in price and fall in market output?
A) Supply decreased and demand remained unchanged.
B) Supply remained unchanged and demand decreased.
C) Demand increased and supply remained unchanged.
D) Demand remained unchanged and supply increased.
What happens when the Fed sells government bonds?
A) The money supply tends to rise.
B) The money supply tends to remain unchanged.
C) The money supply tends to fall.
D) The U.S. budget deficit necessarily rises.
For years Hugh R. Riskee enjoyed an 11% annual return on his S&P 500 mutual fund
index. Last year he decided to sell his mutual fund, and invest it all in the Nasdaq 100
mutual fund index, in which he enjoyed a 14% annual return. What percent below
represents the rate of his economic profit?
A) 3%
B) 11%
C) 14%
D) 17%
E) 25%
Fill in the blank: Since millions of people now use email as opposed to traditional “snail
mail,” the price elasticity of demand for the Post Office’s first class letter service tends
to ________.
A) decrease
B) increase
C) increase in the short run but then decrease in the long run
D) leave unchanged
Supply curves slope upward to the right because
A) high enough prices make sunk costs irrelevant.
B) higher prices attract resources from other uses.
C) marginal cost is less than elasticity of demand.
D) otherwise they would not intersect demand curves.
What is the approximate cost to a professional basketball team of giving ten free tickets
for a particular game to children in an orphanage?
A) Probably nothing if the game is not sold out.
B) The face price of the tickets
C) The value of the opportunities forgone by putting on the game, divided by the
number of seats (times ten)
D) We cannot tell unless we know the value the orphans place on attending.
Which of the following statements is true?
A) Capitalism has a tendency to eliminate scarcity.
B) Competition could be eliminated if money were abolished.
C) Competition is desirable and cooperation is undesirable.
D) Greed must be present for a market transaction to be effective.
E) None of the above.
Which of the following increases the information available to prospective buyers?
A) The auto dealer that allows customers to test drive their cars
B) The grocer that packages its meat in cellophane
C) The college that organizes orientation sessions for potential students
D) The baker that gives customers free samples
E) All of the above.
Who would be least inclined to engage in “feel good” foreign projects, which contribute
minimal benefits to the poor but look impressive to outside observers?
A) Private investors
B) Foreign governments
C) International aid agencies
D) The World Bank
Legal ceilings on the rate of interest charged to individuals
A) guarantee credit is allocated according to need rather than ability to pay.
B) make it easier for people with poor credit ratings to obtain loans.
C) reduce the probability corporations will obtain scarce credit by bidding funds away
from consumers.
D) accomplish all of the above.
E) accomplish none of the above.
“The Florida freeze has destroyed 40% of the orange crop. The reduction in supply will
increase orange prices, and therefore reduce demand. As demand falls, orange prices
will also fall.” Is there anything wrong with the above statement?
A) Yes. The freeze would not reduce the supply.
B) Yes. The higher price would not reduce the demand.
C) Yes. It assumes the demand curve for oranges is vertical.
D) Yes. It assumes the demand curve for oranges is upward-sloping.
The brief success of the OPEC cartel in the 1970s can most plausibly be attributed to
A) the dependence of industrial economies on oil.
B) the fact that OPEC was a cartel formed by national governments.
C) the inelastic demand for oil.
D) the misguided policies of the U.S. government.
E) the widespread expectation of much higher prices in the future.
Fill in the blank: ________ cost refers to the next-best option a person gives up when
making a choice.
A) Accounting
B) Objective
C) Efficient
D) Opportunity
E) Regrettable
Your textbook authors argue that the redemption efforts to free Sudanese slaves
A) generally succeeded until the government stepped in and created unintended
shortages.
B) worked poorly because slave surpluses became rampant.
C) unintentionally increased profitability and slave supply.
D) proved that underground markets do not coordinate the plans of participants.
If the wheat harvest next summer in Canada will be much less than had been expected,
there will tend to be
A) a decrease in the price of wheat futures and an increase in the current cash price of
wheat in the US.
B) a decrease in the price of wheat futures and in the current cash price of wheat in the
US.
C) an increase in the price of wheat futures and a decrease in the current cash price of
wheat in the US.
D) an increase in the price of wheat futures and in the current cash price of wheat in the
US.
According to the law of demand, the higher the price, the lower the quantity demanded.
But, five years ago the Dropouts used to sell only 50 tickets for their shows at $5 each.
Today they sell 5000 tickets at $20 each. Does the change described above contradict
the law of demand?
A) Yes, because the price has fallen and the quantity demanded has fallen.
B) Yes, because the price has risen and the quantity demanded has risen.
C) No, because the supply has risen.
D) No, because other things weren’t constant.
Fill in the blank: National income accountants define a(n) ________ good as something
purchased without the goal of reselling it or further processing or remanufacturing it
into another sellable good.
A) scarce
B) intermediate
C) final
D) finished
E) completed
According to your authors, the model of perfect competition
A) is an accurate description of real-world markets.
B) obscures how plan coordination occurs in the real world.
C) explains how economic profits can exist over time.
D) explains economic losses better than economic profits.
Specialization is another word for
A) pursuing one’s comparative advantage.
B) the division of labor.
C) producing at a comparably lower opportunity cost.
D) all of the above.
E) none of the above.
Which of the following Latin American countries had by far the worst growth rate
between 1960 and 2011?
A) Brazil
B) Columbia
C) Mexico
D) Venezuela
“Loss” is another word for
A) profit.
B) negative profit.
C) cost.
D) exploitation.
What helps to explain the remarkable 7.3% growth rate in South Korea between 1960
and 2011?
A) A relatively high rate of saving among South Korean households
B) The education of South Korean women
C) A general attempt to honor the rule of law
D) All of the above.
What does U.S. GDP intend to measure?
A) The market value of final goods and services produced by U.S. citizens during the
course of a year
B) The market value of all goods and services produced by U.S. citizens during the
course of a year
C) The market value of final goods and services produced within the U.S. during the
course of a year
D) The market value of all goods and services produced within the U.S. during the
course of a year
When a law freezes residential rents at their existing level for as long as the vacancy
rate remains below some target level,
A) owners will be encouraged to supply additional rental units.
B) rents will be frozen indefinitely, or at least until the law is changed.
C) affordable housing to low-income people will be guaranteed.
D) the vacancy rate will rise.
Entrepreneurs tend to have a comparative advantage in
A) arbitrage.
B) manipulating market prices.
C) stealing other people’s ideas.
D) selling their products below cost.
E) hiring others to act as residual claimants.