If demand is inelastic, a drop in price will raise total expenditure.
a. True
b. False
The concentration ratio of industry is a measure relating to the proportion of the
industry’s total output that is produced by a small number of firms.
a. True
b. False
Profits will be maximized when the slope of the total revenue curve and the slope of the
total cost curve are equal.
a. True
b. False
Table 8-1
At optimal output, the firm described in Table 8-1 sells its output at a price of
a. $5.40.
b. $6.25.
c. $7.
d. $8.
Which factor receives the profit from production?
a. land
b. labor
c. capital
d. entrepreneurship
Aggregate supply is defined as
a. how much the economy can produce at zero unemployment.
b. an amount of output the economy will produce at full employment.
c. the relationship between the expenditures schedule and the leakages schedule.
d. the relationship between the price level and the quantity of real GDP supplied.
The necessity for choice, in economics, arises from
a. high incomes and many goods.
b. scarcity of economic means for satisfying economic wants.
c. scarcity of time and knowledge, and numerous similar goods.
d. All of the above are correct.
Cleaning an environment may lead to
a. less production.
b. higher prices.
c. lower incomes.
d. all of the above.
If aggregate demand had grown faster than it did from 2009 to 2010, then the U.S.
economy would have experienced
a. higher unemployment and higher inflation.
b. lower unemployment and lower inflation.
c. higher unemployment and lower inflation.
d. lower unemployment and higher inflation.
Figure 7-9
Of the graphs in Figure 7-9, which represents average fixed cost?
a. 1
b. 2
c. 3
d. 4
If increases in government spending lead to inflation, the value of the multiplier is
reduced.
a. True
b. False
A market transaction causes an externality if someone
a. directly involved in the transaction receives uncompensated benefits or costs from it.
b. not directly involved in the transaction receives uncompensated benefits or costs
from it.
c. directly involved in the transaction seeks legal assistance to ensure that the
transaction is carried out.
d. not directly involved in the transaction interferes in it by imposing regulations or
product standards.
Identify the “oversimplified multiplier formula.”
a. Multiplier = 1 divided by (1 − change in GDP)
b. Multiplier = 1 divided by (1 − marginal propensity to consume)
c. Multiplier = 1 divided by (1 − marginal propensity to save)
d. Multiplier = 1 divided by (1 − rate of inflation)
Under the U.S. patent system, a patent application must provide evidence that the
invention works, and that is based on another invention.
a. True
b. False
Efficiency in output requires which of the following?
a. MC = MRP.
b. MC = MFC.
c. MC = MU.
d. MC = AVC.
Which of the following statements is incorrect?
a. Budget deficits raise the national debt.
b. The concepts of deficit and debt are closely related.
c. Getting rid of the deficit eliminates accumulated debt.
d. Budget surpluses lower the national debt.
In 2010, dissenters were worried that the effects of policies to reduce unemployment
would create
a. the conditions for higher long-term inflation.
b. the conditions for a more horizontal Phillips curve.
c. conditions for higher long-term unemployment.
d. conditions for larger budget surpluses and, thus, higher interest rates.
Which of the following will increase interest rates in the short run?
a. an decrease in reserve requirements
b. open market sales by the Fed
c. a decrease in real GDP
d. an decrease in the price level
Many states charge a 10-cent deposit on every can of soda sold. A purchaser pays an
extra 10 cents per can and will get his money back by returning the empty can to a
store. This policy encourages recycling by
a. increasing the supply of recyclable materials.
b. shifting in the demand curve for canned soda.
c. raising the opportunity cost of discarding empty cans.
d. taxing the production of canned soda.
Over 50 percent of all U.S. workers now belong to unions.
a. True
b. False
For economic efficiency, which of the following conditions should be met?
a. Scarcer goods should have lower prices.
b. More abundant goods should have lower prices.
c. More abundant goods should have higher prices.
d. All goods should have equal prices.
Who is considered to be the most powerful person in the economic world by many
observers?
a. Federal Reserve Chair
b. EU Central Bank President
c. Director-General of the WTO
d. World Bank President
Total utility can be objectively measured in numbers that indicate usefulness or benefit
to the consumer.
a. True
b. False
In 2013, the U.S. spent more on research and development than any other country in the
world.
a. True
b. False
Regarding the price elasticities of demand, which of the following statements is true?
a. Price elasticities vary considerably from product to product
b. Luxurious goods are generally less price elastic.
c. Necessities are generally more price elastic.
d. All of these statements are true.
What happened to the peso when the Argentine government succumbed to the market
forces in 2002?
a. Revalued
b. Devalued
c. Depreciated
d. Appreciated
The anticipated effect of contractionary monetary policy is
a. increase in aggregate demand.
b. fall in interest rates.
c. increased capital outflow.
d. appreciation of the currency.
The unemployment rate was increasing from 6 percent to 7 percent could be interpreted
as an increase in the natural rate of
a. inflation.
b. unemployment.
c. economic growth.
d. aggregate supply.
According to the principle of marginal productivity, if
a. the product price is less than MRP, the firm is using too little of the input.
b. the price of an input rises, the quantity demanded of the input will increase.
c. MRP is greater than product price, the firm should reduce the use of the input.
d. price of the input equals MRP, the firm is maximizing profit.
The lowest-income fifth of the population ordinarily earns about 20 percent of the
income in the United States.
a. True
b. False