Collusion between two firms occurs when
A) the firms independently pursue strategies that could hurt each other.
B) firms explicitly or implicitly agree to adopt a uniform business strategy.
C) announce that each will match its rival’s market price.
D) firms act altruistically to bring about the economically efficient outcome.
Indicate whether each of the following situations would shift the supply curve to the
left, to the right, or not at all.
a. An increase in the number of firms in the market
b. An increase in the current price of the product
c. A decrease in productivity
d. An increase in the expected future price of a product
e. A decrease in the price of an input
Economists John Cogan, Glenn Hubbard, and Daniel Kessler have estimated that
________ the tax preference for employer-provided health insurance would reduce
spending by people enrolled in these programs by 33 percent.
A) enacting
B) doubling
C) cutting in half
D) repealing
Which of the following is the best example of a voluntary export restraint?
A) a limit set by the Japanese government on the number of sports utility vehicles that
the United States can import from Japan
B) a subsidy granted by the U.S. government to domestic garment manufacturers so
they can compete more effectively with foreign garment manufacturers
C) a tax placed on all sports utility vehicles sold in the domestic market
D) a $5,000 per-car fee imposed on all sports utility vehicles imported into the United
States
If China decides to enact laws to clean up the environment, what would be the effect on
GDP?
A) GDP would increase reflecting the fact that the environment would be cleaner.
B) GDP would decrease if the pollution controls reduce productivity by more than the
cost of the controls.
C) GDP would increase as the citizens of China were made happier as the environment
was cleaned up.
D) GDP would increase as the environmental costs of pollution were not included in the
calculation of GDP.
An increase in the interest rate should ________ the demand for dollars and the value of
the dollar, and net exports should ________.
A) decrease; decrease
B) decrease; increase
C) increase; decrease
D) increase; increase
E) increase; not change
The seven members of the Board of Governors of the Federal Reserve are appointed by
A) Congress.
B) the President.
C) the Governors of the States.
D) leaders in the banking industry.
E) the Treasury Department.
Which of the following describes actual trends in the U.S. labor force participation rate?
A) The labor force participation rate of adult men has risen since 1950.
B) The labor force participation rate of adult women has fallen since 1950.
C) The labor force participation rate of adult men not in school, but too young to retire
has risen since 1950.
D) The labor force participation rate of adult women has risen since 1950.
E) The labor force participation rate of all adults has fallen since 1950.
A set of actions that a firm takes to achieve a goal, such as maximizing profits, is called
A) a business strategy.
B) a payoff matrix.
C) the Porter’s Competitive Forces plan.
D) game theory.
Countries that use the euro as their currency face similar concerns as countries did
during the years of the gold standard in that each are (were)
A) unable to conduct monetary policy.
B) unable to conduct fiscal policy.
C) using currency which is backed by gold.
D) using a floating currency.
Table 20-9
Suppose that the data in the table above reflect the price levels in the economy. Given
that data, we can say that the cost of living rose by ________ between 2012 and 2013?
A) 2%
B) 5%
C) 8%
D) 11%
E) 13%
Economists believe the most persuasive argument for protectionism is to protect infant
industries. But the argument has a drawback. What is this drawback?
A) Governments always make the level of protection for infant industries too high.
B) Governments are usually too impatient and do not allow protection to remain in
place long enough to allow industries to be competitive in international markets.
C) Governments usually use tariffs, rather than quotas, to protect infant industries in
order to collect tariff revenue. (Quotas do not result in government revenue).
D) Protection lessens the need for firms to become productive enough to compete with
foreign firms; this often results in infant industries never “growing up.”
Investment spending will increase when
A) the interest rate rises.
B) the corporate income tax increases.
C) business cash flow increases.
D) firms become more pessimistic about earning future profits.
Table 4-4
Table 4-4 shows the demand and supply schedules for the low-skilled labor market in
the city of Westover.
Suppose that the quantity of labor supplied decreases by 40,000 at each wage level.
What are the new free market equilibrium hourly wage and the new equilibrium
quantity of labor?
A) W = $9.00; Q = 330,000
B) W = $9.50; Q = 370,000
C) W = $10.00; Q = 350,000
D) W = $8.00; Q = 390,000
An article in the Wall Street Journal noted the following: Instead of relying on a
full-coach, round-trip unrestricted fare of about $2,000 between Cleveland and Los
Angeles …Continental [Airlines] since June has offered a $716 unrestricted fare in that
market …. Through October, the test resulted in about the same revenue that Continental
thinks it would have collected with its higher fare.
Source: Scott McCartney, “Airlines Try Cutting Business Fares, Find They Don’t Lose
Revenue,” Wall Street Journal, November 22, 2002.
What is the absolute value of the price elasticity of demand on this airline route?
A) 0
B) less than 1
C) greater than 1
D) approximately 1
In the United States in 2012, about two-thirds of those who were not covered by health
insurance
A) are single and unemployed.
B) live in families in which at least one member has a job.
C) live in families in which all members are unemployed.
D) are retired from the workforce.
Which of the following would increase the current account balance of the United
States?
A) an increase in imports
B) an increase in the amount of money the U.S. government sends in foreign aid to
other countries
C) an increase in the balance of trade
D) an increase in the amount of income U.S. companies pay out to foreigners who own
investments in the United States.
A sole proprietorship is
A) the easiest type of business to set up.
B) the most difficult type of business to set up.
C) the most expensive type of business to set up.
D) the least profitable type of business to set up.