Figure 13-2
The marginal revenue from selling the additional unit Qinstead of Qa equals
A) the area (G + H).
B) the area (H – E).
C) the area (E + F) – (G + H).
D) the area G.
Figure 7-2 Figure 7-2 represents the market
for vaccinations. Vaccinations are considered a benefit to society, and the figure shows
both the marginal private benefit and the marginal social benefit from vaccinations.
The market equilibrium price is
A) $60.
B) $50.
C) $40.
D) <$40.
Figure 4-11 Figure 4-11 shows the demand
and supply curves for the coffee market. The government believes that the equilibrium
price is too low and tries to help almond growers by setting a price floor at $7.00. What
is the value of the deadweight loss after the imposition of the price floor?
A) $600
B) $1,800
C) $2,700
D) $3,300
If the economy experiences a(n) ________, inflation will rise and real GDP will fall.
A) negative supply shock
B) positive supply shock
C) increase in short-run aggregate supply
D) decrease in aggregate demand
The demand for gasoline in the short run is
A) elastic because people can easily switch to public transportation.
B) perfectly inelastic because people have no choice but to buy gasoline.
C) unit-elastic because people tend to consume a stable amount of gasoline per period.
D) inelastic because there are no good substitutes for gasoline.
A characteristic found only in oligopolies is
A) break even level of profits.
B) interdependence of firms.
C) independence of firms.
D) products that are slightly different.
Under the Bretton Woods exchange rate system, the U.S. government agreed to buy or
sell gold at a fixed price of ________ per ounce.
A) $1
B) $35
C) $100
D) $400
When additions of input to a fixed quantity of another input lead to progressively
smaller increases in output, we say we are facing
A) diminishing returns.
B) negative returns.
C) accelerating returns.
D) decreasing production.
Which of the following Nobel laureates became known for the study of asymmetric
information?
A) Gary Becker
B) Michael Spence
C) George Ackerlof
D) Ronald Coase
The principle of ________ is that the economic cost of using a factor of production is
the alternative use of that factor that is given up.
A) marginal cost
B) opportunity cost
C) normative economics
D) entrepreneurship
The De Beers Company, one of the longest-lived monopolies, is facing increasing
competition. One source of competition comes from people who might resell their
previously owned diamonds. Why is De Beers worried that people might resell their
previously owned diamonds?
A) because De Beers will not be able to guarantee the quality of previously owned
diamonds and fears that its reputation might be harmed
B) because the availability of previously owned diamonds would increase the market
demand for diamonds and dilute De Beers’ monopoly
C) because previously owned diamonds would be a close substitute to newly mined
diamonds and therefore reduce De Beers’ market power
D) because the availability of previously owned diamonds would make the market
demand curve for diamonds more inelastic and force De Beers to lower its price
Suppose the following two events occur in the market for elementary school teachers:
a. Overcrowded schools and education budget cuts have discouraged young college
students from pursuing careers in teaching.
b. With an increasing birth rate, the number of children entering the elementary school
system is expected to increase significantly over the next ten years. What is likely to
happen to the equilibrium wage and quantity of teachers as a result of these two events?
A) The equilibrium quantity and the equilibrium wage of elementary school teachers
fall.
B) The equilibrium wage rises and the effect on the equilibrium quantity of elementary
school teachers is indeterminate.
C) The equilibrium quantity falls and the effect on the equilibrium wage of elementary
school teachers is indeterminate.
D) The equilibrium quantity falls and the equilibrium wage of elementary school
teachers rises.
Which of the following could increase unemployment and inflation simultaneously?
A) an increase in oil prices
B) expansionary monetary policy
C) contractionary monetary policy
D) a decrease in the real wage
Suppose consumer preference for beef starts to rise while the cost of raising beef
continues to rise. In the market for beef, this would be represented by the equilibrium
price ________ and the equilibrium quantity ________.
A) increasing; increasing or decreasing
B) decreasing; increasing or decreasing
C) increasing or decreasing; increasing
D) increasing or decreasing; decreasing
When production generates a negative externality, the true cost of production is the
A) private cost of production.
B) public cost of production.
C) social cost of production.
D) average cost of production.
Suppose the U.S. Congress is successful in enacting tariffs large enough to eliminate the
current account deficit. What would happen to the level of domestic investment?
A) It would not change.
B) It would rise and exceed national saving.
C) It would rise to a level equal to net foreign investment.
D) It would fall to a level equal to national saving.