If a producer is not able to expand its plant capacity immediately, it is
A) bankrupt.
B) operating in the long run.
C) operating in the short run.
D) losing money.
For a perfectly competitive firm, which of the following is not true at profit
maximization?
A) Market price is greater than marginal cost.
B) Marginal revenue equals marginal cost.
C) Total revenue minus total cost is maximized.
D) Price equals marginal cost.
A study conducted by economists at the University of Chicago found that when
Southwest Airlines begins flying a new route, ticket prices on other airlines for that
route ________, indicating that airlines ________.
A) stay relatively unchanged; may begin practicing implicit price collusion when
Southwest enters a market
B) drop by an average of 29 percent; may have been practicing implicit price collusion
before Southwest’s entry into the market
C) rise by an average of 65 percent; know they can practice implicit price collusion
once Southwest announces it is entering a market.
D) first drop and then rise back to their original levels; temporarily stop practicing
implicit price collusion until Southwest becomes established, then return to their
collusive pricing strategies
In the circular flow model, the value of total income for an economy ________ the
value of total production.
A) equals
B) is greater than
C) is less than
D) may be greater than or less than
The crowding out of private spending by government spending will be greater the
A) less sensitive consumption, investment, and net exports are to changes in interest
rates.
B) more sensitive consumption, investment, and net exports are to changes in interest
rates.
C) less sensitive consumption, investment, and net exports are to changes in the price
level.
D) more sensitive consumption, investment, and net exports are to changes in the price
level.
A positive externality causes
A) the marginal social benefit to be equal to the marginal private cost of the last unit
produced.
B) the marginal social benefit to be less than the marginal private cost of the last unit
produced.
C) the marginal social benefit to exceed the marginal private cost of the last unit
produced.
D) the marginal private benefit to exceed the marginal social cost of the last unit
produced.
Holding everything else constant, the demand for a good tends to be more elastic
A) the more substitutes there are for the good.
B) the shorter the time period involved.
C) the more consumers perceive the good to be a necessity.
D) the less important the product is in consumers’ budgets.
Table 9-12 Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 9-12 shows the
production and consumption quantities without trade, and the production numbers with
trade.
If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded, how many
belts will Estonia consume?
A) 50
B) 70
C) 90
D) 120
Given the fact that the productivity slowdown of the mid-1970s to the mid-1990s
affected all industrial countries, which of the following explanations for the
productivity slowdown in the United States is not likely to be correct?
A) A deterioration of the U.S. education system caused a decline in the quality of labor.
B) high oil prices
C) Services have become a larger fraction of GDP.
D) stricter environmental regulations
Table 9-2
Sarita and Gabriel own S&G Bakery. Table 9-2 lists the number of pies and cakes Sarita
and Gabriel can each bake in one day. Select the statement that accurately interprets the
data in the table.
A) Sarita has a comparative advantage in baking pies.
B) Gabriel has an absolute advantage in baking cakes.
C) Gabriel has a comparative advantage in baking pies.
D) Gabriel has a comparative advantage in baking pies and baking cakes.
Figure 5-1 Figure 5-1 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
efficient equilibrium quantity is ________ thousand vaccinations.
A) 200
B) 400
C) 600
D) >600
Monopolistic competition is a market structure in which
A) firms produce and sell products for which there are no close substitutes.
B) the demand curve for a typical firm is horizontal.
C) firms cannot influence the market price.
D) barriers to entry are low.
Economic efficiency requires that a natural monopoly’s price be
A) equal to average total cost where it intersects the demand curve.
B) equal to marginal cost where it intersects the demand curve.
C) equal to average variable cost where it intersects the demand curve.
D) equal to the lowest price the firm can charge and still make a normal profit.
Suppose Congress increased spending by $100 billion and raised taxes by $100 billion
to keep the budget balanced. What will happen to real equilibrium GDP?
A) Real equilibrium GDP will fall.
B) Real equilibrium GDP will rise.
C) There will be no change in real equilibrium GDP.
D) Real equilibrium GDP will initially rise, but then fall below its previous equilibrium
value.
If currencies around the world are based on the gold standard, and the EU lowers the
amount of gold for which the euro will trade, then holding all else constant,
A) the euro will depreciate against the dollar.
B) the euro will appreciate against the dollar.
C) the value of the euro relative to the dollar will stay constant.
D) the value of U.S. exports to EU countries in terms of the euro will decrease.