Which of the following models advocate that the quantity of money should be increased
at a constant rate?
A) the monetarist model
B) the new classical model
C) the real business cycle model
D) the new Keynesian model
A sequential game can be used to analyze whether a retail firm should build a large
store or a small store in a city, when the correct choice depends on whether a competing
firm will build a new store in the same city. Which of the following is used to analyze
this type of decision?
A) a decision tree
B) a decision matrix
C) a sequential matrix
D) an either-or graph
In economics, the term ________ means “additional” or “extra.”
A) allocative
B) marginal
C) equity
D) optimal
Max Shreck, an accountant, quit his $80,000-a-year job and bought an existing tattoo
parlor from its previous owner, Sylvia Sidney. The lease has five years remaining and
requires a monthly payment of $4,000. The lease
A) is a fixed cost of operating the tattoo parlor.
B) is a variable cost of operating the tattoo parlor.
C) is an implicit cost of operating the tattoo parlor.
D) is part of the marginal cost of operating the tattoo parlor.
Figure 12-9 Figure 12-9 shows cost and
demand curves facing a profit-maximizing, perfectly competitive firm.
Identify the firm’s short-run supply curve.
A) the marginal cost curve
B) the marginal cost curve from a and above
C) the marginal cost curve from and above
D) the marginal cost curve from d and above
Which of the following represents the true economic cost of production when firms
produce goods that cause negative externalities?
A) the private cost of production
B) the social cost of production
C) the external cost of production
D) the explicit cost of production
Table 2-8
Table 2-8 shows the output per month of two people, Wilma and Betty. They can either
devote their time to making marble statues or making marble benches.
What is Wilma’s opportunity cost of making a bench?
A) 1/3 statue
B) 3 statues
C) 1/2 bench
D) 1.3 statues
In October 2008, Congress passed the Troubled Asset Relief Program (TARP), under
which the Treasury provided ________ to banks in exchange for ________.
A) bonds; cash
B) lines of credit; loan guarantees
C) funds; stock
D) financial advice; promises to expand mortgage lending
Figure 18-1
The sales tax revenue collected by the government is represented by the area
A) B+C.
B) F+G.
C) E+H.
D) B+C+F+G.
In the United States, the bulk of health care spending is paid by health insurance
companies. Such a system is also called a third-party payer system where consumers of
health care pay a nominal fee and the rest are paid by the health insurance provider.
Why might such a system lead to an inefficient outcome?
A) Health insurance companies have an incentive to control cost and therefore tend to
deny consumers many cutting edge medical treatments.
B) Consumers have an incentive to over-consume health care services because they pay
prices well below the cost of providing these services.
C) Physicians concerned that insurance companies may not approve payments tend not
to order expensive tests for their patients.
D) Consumers fearing that excessive use of health care services may lead to a rise in
insurance premiums tend to under-consume health care services.
If the dollar appreciates against the Mexican peso,
A) Mexican imports to the U.S. become more expensive.
B) U.S. exports to Mexico become less expensive.
C) U.S. exports to Mexico become more expensive.
D) The value of Mexican imports to the United States does not change.
If a dollar a year from now will likely have less purchasing power because of inflation,
then a dollar today ________ a dollar a year from now.
A) is more valuable than
B) is less valuable than
C) has the same value as
D) may be more valuable or less valuable than
When the average total cost is $16 and the total cost is $800, then the number of units
the firm is producing is
A) impossible to determined with the information given.
B) 12,800.
C) 784.
D) 50.
Figure 17-2 Figure 17-2
shows the marginal revenue product for Becca’s Baubles, a producer of hand-beaded
bracelets.
If the wage rate is $20, how many workers should Becca hire?
A) 6
B) 5
C) 4
D) 3
While many analysts defended the actions taken by the Fed and the Treasury to respond
to the financial crisis in 2008, others were critical of these actions. The critics were
concerned that by not allowing large firms to fail,
A) smaller firms will resent not receiving similar assistance.
B) stockholders and bondholders of these firms were not allowed to receive the
proceeds from the sale of assets that would have occurred if the firms had declared
bankruptcy.
C) there is an increased likelihood that other firms will engage in risky behavior in the
future with the expectation that they will also not be allowed to fail.
D) there will be less competition in the U.S. economy, which could led to higher prices
for consumers.
Uninsured patients receiving treatments at hospital emergency rooms that could have
been provided less expensively at doctor’s offices account for ________ of health care
costs in the United States.
A) between 1 and 4 percent
B) approximately 25 percent
C) almost 40 percent
D) between 15 and 20 percent