Rationing when goods have suddenly become more scarce, by asking people to make
sacrifices voluntarily for the sake of others, discriminates against people who are
A) considerate.
B) poor.
C) unethical.
D) unwilling to sacrifice.
E) wealthy.
iTunes offers samples of music downloads, and in doing so they
A) further inform customers.
B) further reduce customer search costs.
C) further expand the range of opportunities available to customers.
D) do all of the above.
Legislators in a democracy are more likely to support special interests than the broad
interests of citizens generally because
A) incumbents have such powerful advantages in election campaigns.
B) money plays such a large role in political campaigns.
C) they cannot know what the public interest requires in the absence of market
information.
D) they do not have to fear being voted out of office.
E) they pay attention to the people paying attention to them.
What is an efficient way to study for an economics exam?
A) Attend every lecture and take copious notes.
B) Read the assigned material once before each class and once after.
C) Form study sessions with others in class.
D) Put off everything and instead cram the night before the exam.
E) Any of the above might be efficient, depending on one’s perceived costs and benefits.
Which of the following is the most important pre-requisite to a well-functioning market
economy?
A) Goods must be non-scarce.
B) Everyone must have an adequate income.
C) Participants must follow some clear, general rules.
D) People must have roughly similar tastes and preferences.
E) There must be approximate equality of incomes.
Someone who says he loves his mother far more than he loves football but nonetheless
attends a football game when he could be visiting his mother
A) displays weakness of will.
B) is a hypocrite.
C) is behaving inconsistently with his own stated values.
D) places a lower marginal value on visiting his mother than on attending the football
game.
E) shows that the marginal value of visiting his mother is less for him than the marginal
cost of attending the football game.
Monetary management in the United States today is under the direction of the
A) Council of Economic Advisers.
B) Federal Trade Commission.
C) Joint Economic Committee of the Congress.
D) Open Market Committee of the Federal Reserve.
E) United States Chamber of Commerce.
The accountant’s definition of profits, or the definition used for tax purposes, is not
wholly satisfactory from the economist’s point of view because
A) accountants are paid by business firms and consequently tend to exaggerate the size
of profits.
B) accountants deal with empirical data while economists are interested in theoretical
explanations.
C) accountants tend to minimize profits in order to avoid the payment of unnecessary
taxes.
D) accounting costs do not include the entrepreneur’s opportunity costs.
When nations attempt to move quickly from central planning to a market system, they
face the obstacle of high transaction costs in large part because
A) market systems are unnatural and require careful design.
B) people who have lived under socialism lack the basic skills a market system
requires.
C) people who have long lived under socialism are not sufficiently individualistic.
D) the experience of socialism makes people distrustful of one another.
E) they lack many of the institutions that develop over time in a market system.
A commodity speculator who thinks next fall’s corn harvest will actually be much larger
than most people now anticipate will want to
A) buy corn now for sale in September.
B) buy September corn futures.
C) buy land suitable for growing corn.
D) sell September corn futures.
E) sell corn in September from stocks accumulated between now and September.
As applied to voter behavior, the “rational ignorance” hypothesis claims
A) voters will have no incentive to be informed of political issues.
B) voters will stop gathering information once the marginal costs exceed the marginal
benefits.
C) voters only vote on the basis of their instinctual or gut feelings.
D) voters are selfish.
If employers were required by law to increase the wages paid to secretaries by 40
percent, which consequence could we most confidently predict?
A) More secretaries would be employed.
B) Secretaries would begin to earn more than they are worth to their employers.
C) The marginal value of secretaries would increase by about 40 percent.
D) The total amount of wages paid to secretaries would decrease.
E) The total amount of wages paid to secretaries would increase.
Rank the following goods from least to most elastic: compact cars, convertible compact
cars, cars.
A) Cars, convertible compact cars, compact cars
B) Compact cars, convertible compact cars, cars
C) Convertible compact cars, compact cars, cars
D) Cars, compact cars, convertible compact cars
Suppose a university refunds students 75% of their tuition if they drop out before the
third week of class, 50% if they drop out between their third and fifth week, 25% if they
drop out between their sixth and eighth week, and 0% after the eighth week. Flint paid
$1,000 tuition, and is in his fourth week of class. What’s his sunk cost?
A) $0
B) $250
C) $500
D) $750
E) $1,000
What is a necessary condition for being categorized as unemployed?
A) Being homeless
B) Actively searching for a job
C) Having no source of income
D) Having no hope of finding a job in the foreseeable future
If the elasticity measure equals 0.6, then the demand is
A) elastic.
B) unit elastic.
C) inelastic.
D) infinitely elastic.
According to your text, what is the significant distinction between the government and
the nongovernment sector of society?
A) Government decisions are made by collectives rather than by individuals.
B) Government is usually granted the right to coerce adults.
C) Government officials pursue the public interest rather than narrow special interests.
D) Government takes the long-run view and thus cares for the interests of future
generations.
E) The government sector is not characterized by competition.
Recalling from Chapter 5, fill in the blanks: Other things constant, when household
“time preferences” ________, business investment tends to ________.
A) fall; fall
B) fall; rise
C) rise; fall
D) rise; rise
Roughly what was the change in Peru’s per capita GDP between 1960 and 2011?
A) 105%
B) 85%
C) 40%
D) 20%
If Brazil’s gross revenue from coffee exports doubles from one year to the next even
though the number of bags of coffee exported declines 50 percent,
A) individual Brazilian coffee producers are price searchers.
B) individual Brazilian coffee producers have substantial market power.
C) the demand for Brazilian coffee is most likely elastic.
D) the demand for Brazilian coffee is most likely inelastic.
Fact: Very few skyscrapers are found on rural farmlands, far outside the city. Why?
A) As opposed to city property, farmland cannot support a skyscraper’s tremendous
weight per square foot.
B) Skyscrapers would spoil the view of the rural landscape.
C) The opportunity cost of building skyscrapers in rural areas is too high.
D) There are far too many dangers involved.
Eliza Doolittle hasn’t worked in years, and doesn’t intend to. What can we clearly
conclude about Eliza?
A) She’s lazy.
B) She’s a parasite on society.
C) She’s not employed.
D) She’s unemployed.
E) All of above are true.
People often make economic decisions they later regret, which shows
A) they failed to acquire additional information up to the point where expected
marginal benefit equals expected marginal cost.
B) they failed to behave rationally.
C) they failed to invest as much as they ought to have invested in information.
D) none of the above.
Will scarce goods necessarily be rationed in some manner?
A) Not if people agree to share them equitably
B) Not if there is enough for everyone to have what they need
C) Not if their prices are free to rise
D) Not if they are privately owned
E) Yes
Gomer can make either 200 gallons of corn liquor (L) or 200 gallons of strawberry wine
(W) every six months. Goober can make only 100 gallons of corn liquor (L) or 50
gallons of strawberry wine (W) every six months. Which statement below is true?
A) It costs Gomer 200 W to make 1 L.
B) It costs Gomer 200 L to make 1 W.
C) It costs Goober 50 W to make 100 L.
D) None of the above.
Fred buys a fresh-off-the-assembly-line car from Wee-Rob-U Auto Sales. He paid
$27,500, even though Wee-Rob-U acquired it for $23,000. What happens to this year’s
GDP?
A) Nothing.
B) It increases by $4,500.
C) It increases by $23,000.
D) It increases by $27,500.
E) It decreases by $4,500, because the dealer robbed Fred.
Let’s assume producers in Canada can make 200 units of beef or 50 units of oranges,
and U.S. producers can make 50 units of beef or 200 units of oranges per time period.
Pick the true statement:
A) The opportunity cost of 1 unit of beef in Canada is 4 units of oranges.
B) The opportunity cost of 1 unit of oranges in the U.S. is 4 units of beef.
C) Canada is has a comparative advantage in oranges.
D) The U.S. has a comparative advantage in beef.
E) None of the above is true.
Even if the City Council fixed high minimum taxi fares and gave licenses to operate to
only a few cab owners, license holders would not earn large profits from operating taxis
in the city because
A) people would drive their own cars.
B) people would substitute buses for taxis.
C) taxis are not a necessity of life.
D) the cost of owning a license would eat up the potential profits from operating a taxi.
E) the demand would fall as taxi fares rose.
If an economist claims there are substitutes for clean air, he is really saying
A) clean air is free air.
B) there are costs to cleaning the air.
C) nobody is truly harmed by unclean, polluted air.
D) dirty air is better than clean air.
E) economists don’t care for clean air.
The M1 money supply
A) is calculated by subtracting M2 from GDP.
B) does not include checking account deposits.
C) is the narrowest measure of the nation’s money supply.
D) does not include travelers’ checks.
According to your textbook,
A) millions of people know how to make pencils, but only a few know how to use
them.
B) millions of people know how to make pencils, but nobody knows how to use them.
C) no single person anywhere in the world knows how to make a pencil.
D) no single person anywhere in the world knows how to use a pencil.
E) none of the above.
State legislators who wanted to eliminate state regulation of the trucking industry would
be most likely to find support among
A) business owners who must pay higher prices for deliveries as a result of the
regulations.
B) owners and managers of large trucking concerns.
C) owners of small trucking concerns.
D) unions that represent truck drivers.