DeShawn’s Detailing is a service that details cars at the customers’ homes or places of
work. DeShawn’s cost for a basic detailing package is $40, and he charges $75 for this
service. For a total price of $90, DeShawn will also detail the car’s engine, a service that
adds an additional $20 to the total cost of the package. Should DeShawn continue to
offer the engine detailing service?
A) yes, he still makes a profit by selling the engine detailing service with the basic
detailing package
B) yes, but only if he raises the price of the basic detailing package
C) no, his marginal benefit is less than his marginal cost
D) More information is needed for DeShawn to make this decision.
The Patient Protection and Affordable Care Act (ACA) is scheduled ________, at
which point more than 30 million additional individuals are expected to have health
care coverage.
A) to be phased in over the next 20 years
B) to be fully implemented by 2019
C) to be phased out by 2015
D) to be completely in place by 2012
Of the following, which has most likely contributed the most to the rapid rise in health
care costs in the United States?
A) the cost of malpractice insurance
B) the cost to treat uninsured patients
C) slow growth in labor productivity in health care
D) the cost of malpractice lawsuit settlements
Table 4-3
The table above lists the marginal cost of polo shirts by Marko’s, a firm that specializes
in producing men’s clothing. If the market price of Marko’s polo shirts is $13, Marko’s
will produce
A) 1 shirt.
B) 2 shirts.
C) 3 shirts.
D) 4 shirts.
Protectionism
A) is the use of cheap labor to protect firms from paying high wages.
B) is the use of trade barriers to protect domestic firms from foreign competition.
C) refers to reductions in tariffs and other barriers that protect consumers from paying
high prices.
D) refers to the use of copyright and trademark laws to protect inventors and artists
from losing the rights to their creative efforts.
Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry
and have eight children. Bob stops working for Mary in order to care for the children.
What will be the effect on GDP?
A) GDP will decrease.
B) GDP will increase.
C) GDP will not change.
D) GDP may increase or may decrease depending on inflation.
Table 8-15
Consider the following data on nominal GDP and real GDP (values are in billions of
dollars): The GDP deflator for 2012 equals
A) 94.1.
B) 105.1.
C) 106.2.
D) 108.5.
In the circular flow model, households
A) sell goods and services in the input market.
B) and firms spend earnings from resource sales on goods and services in the factor
market.
C) hire resources sold by firms in the factor market.
D) spend earnings from resource sales on goods and services in the product market.
What impact does expansionary monetary policy have on the short-run Phillips curve if
consumers and firms expect the expansionary monetary policy to increase inflation?
A) The short-run Phillips curve shifts down.
B) The short-run Phillips curve shifts up.
C) The short-run Phillips curve becomes the long-run Phillips curve.
D) The short-run Phillips curve is not affected by expansionary monetary policy.
A public good is
A) a good that is rivalrous and excludable.
B) good that is nonrivalrous and nonexcludable.
C) a good that is nonrivalrous and excludable.
D) a good that is rivalrous and nonexcludable.
What is allocative efficiency?
A) It refers to a situation in which resources are allocated to their highest profit use.
B) It refers to a situation in which resources are allocated such that goods can be
produced at their lowest possible average cost.
C) It refers to a situation in which resources are allocated such that the last unit of
output produced provides a marginal benefit to consumers equal to the marginal cost of
producing it.
D) It refers to a situation in which resources are allocated fairly to all consumers in a
society.
Which of the following correctly describes the relationship between economic
efficiency and economic equity?
A) They are both automatically achieved in a free market economy.
B) They always call for opposite outcomes.
C) There is no conflict between the two goals.
D) There is often a trade-off between the two.
Figure 13-6
Suppose Dell finds the relationship between the average total cost of producing
notebook computers and the quantity of notebook computers produced is as shown by
Figure 13-2. Dell will maximize profits if it produces ________ notebook computers
per month.
A) 100,000
B) 200,000
C) 300,000
D) Not enough information is given to determine the profit-maximizing quantity.
A corporation’s management
A) owns the corporation.
B) hires the board of directors.
C) are liable for the corporation’s debts.
D) operates and controls a corporation in its day-to-day activities.
If economies of scale are relatively unimportant in an industry, the typical firm’s
long-run average total cost curve will reach a minimum at a level of output that is a
________ fraction of total industry sales. The industry will be ________.
A) large; competitive
B) large; an oligopoly
C) small; competitive
D) small; an oligopoly
Economists argue that the corporate income tax is an example of a tax with a high
deadweight loss because
A) some of the burden of the tax is passed on to consumers in the form of higher prices.
B) it discourages corporations from undertaking capital investments to enhance market
competitiveness.
C) taxing a corporation’s income amounts to double taxing the earnings on individual
shareholders’ investments in corporations.
D) it encourages corporations to seek ways to evade taxes.
The labor force participation rate is defined as
A) the percentage of the working-age population that is employed.
B) the percentage of the working-age population that is unemployed.
C) the percentage of the labor force that is employed.
D) the percentage of the labor force that is unemployed.
E) the percentage of the working-age population in the labor force.
A perfectly competitive firm earns a profit when price is
A) equal to minimum average total cost.
B) above minimum average total cost.
C) equal to minimum average variable cost.
D) equal to minimum average fixed cost.
If, when you consume another piece of candy, your marginal utility is zero, then
A) you want more candy.
B) you have maximized your total utility from consuming candy.
C) you have not yet reached the point of diminishing marginal utility.
D) you should consume less candy.
Of the $840 billion American Recovery and Reinvestment Act stimulus package which
was enacted in 2009, approximately ________ took the form of tax cuts and ________
took the form of increases in government expenditures.
A) one-half; one-half
B) three-fourths; one-fourth
C) one-tenth; nine-tenths
D) one-third; two-thirds