Figure 24-1
Ceteris paribus, a decrease in personal income taxes would be represented by a
movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
A student comments to his roommate that the only way he will be able to pass his final
exams is to not sleep for the next three days. This statement suggests that
A) students are more concerned about good grades than good health.
B) society should value sleep more highly than good grades.
C) there is a trade-off between studying and sleep.
D) society should value good grades more highly than sleep because students can catch
up on their sleep once final exams are over.
Which of the following statements about the importance of trade to the U.S. economy is
false?
A) Since 1950, both exports and imports have steadily increased as a fraction of U.S.
gross domestic product.
B) Overall, about 20 percent of U.S. manufacturing jobs depend directly or indirectly
on exports.
C) The United States is the second largest exporter in the world.
D) The U.S. economy is highly dependent on international trade for growth in its gross
domestic product.
Table 2-9
Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in
Guatemala and Honduras. Honduras has a comparative advantage in the production of
A) canoes.
B) sailboats.
C) both products.
D) neither product.
Wall Street, in the borough of Manhattan in New York City, is the heart of the U.S.
financial system, where banks, brokerage houses, other financial firms, and the New
York Stock Exchange are all located. What is the reason for New York City’s
comparative advantage in the financial market?
A) the development of superior information technology
B) an abundant supply of skilled labor
C) New York City has one of the largest sea ports in the world.
D) external economies
In an oligopoly, firms can increase their market power by
A) selling to buyers who have market power.
B) pursuing dominant strategies.
C) colluding to set prices.
D) undertaking heavy advertising expenditure.
Table 18-6
Table 18-6 shows the income tax brackets and tax rates for single taxpayers in
Calpernia. Sasha is a single taxpayer with an income of $60,000. What is his marginal
tax rate and what is his average tax rate?
A) marginal tax rate = 38%; average tax rate = 23%
B) marginal tax rate = 17%; average tax rate = 21%
C) marginal tax rate = 38%; average tax rate = 24%
D) marginal tax rate = 23%; average tax rate = 38%
Vaccinating people against a communicable disease such as influenza not only reduces
the chances that the person vaccinated will catch the disease but also reduces the
probability that an epidemic of the disease will occur. Which of the following
statements is true?
A) Reducing the chances that the person vaccinated will catch the disease is a private
cost while reducing the probability of an influenza epidemic is a social benefit.
B) Vaccinating people against communicable diseases yields private benefits in excess
of social benefits.
C) Reducing the chances that the person vaccinated will catch the disease is a private
benefit while reducing the probability of an influenza epidemic is a social benefit.
D) The benefits of the influenza vaccination outweigh the costs.
For each of the following pairs of products state which are complements, which are
substitutes, and which are unrelated.
a. House plants and potato chips
b. Eyeglasses and contact lenses
c. Motorcycles and gasoline
d. Smartphone and smartphone apps
e. Red wine and white wine
Suppose the demand for milk is relatively inelastic. What happens to sales revenue if
the government imposes a price floor above the free market equilibrium price in the
market for milk?
A) Sales revenue falls.
B) Sales revenue rises.
C) Sales revenue remains unchanged.
D) It cannot be determined without information on prices.