Foreign direct investment occurs when a Chinese corporation
A) purchases stock issued in China.
B) opens a new Chinese factory.
C) purchases 1,000 shares of stock issued by an American company.
D) opens a new factory in France.
If the 15th unit of output has a marginal cost of $29.50 and the average cost of
producing 14 units of output is $30.23, what will happen to the average cost of
production if the 15th unit is produced?
A) Average cost increases as more is produced.
B) Average cost will fall.
C) Average cost could increase or decrease depending on what happens to variable cost.
D) Average cost could increase or decrease depending on what happens to fixed cost.
Table 14-1
Godrickporter and Star
Connections are the only two airport shuttle and limousine rental service companies in
the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase
its advertising spending to compete for customers. Table 14-1 shows the payoff matrix
for this advertising game. Let’s suppose the game starts with each firm adhering to its
original budget so that Godrickporter earns a profit of $6,000 and Star Connections
earns a profit of $12,000. Is there an incentive for any one firm to increase its
advertising budget?
A) No, neither firm has an incentive to raise its advertising spending.
B) Yes, both firms have an incentive to raise their advertising budgets.
C) Yes, Star Connections has an incentive to increase its advertising budget, but
Godrickporter does not.
D) Yes, Godrickporter has an incentive to increase its advertising budget, but Star
Connections does not.
Figure 4-10
Suppose the market is initially in equilibrium at price P1 and now the government
imposes a tax on every unit sold. Which of the following statements best describes the
impact of the tax? For demand curve D1
A) the producer bears a smaller share of the tax burden if the supply curve is S2.
B) the producer bears a smaller share of the tax burden if the supply curve is S1.
C) the producer’s share of the tax burden is the same whether the supply curve is S1or
S2.
D) the producer bears the entire burden of the tax if the supply curve is S2 and the
consumer bears the entire burden of the tax if the supply curve is S1.
Figure 12-16
Which panel best represents the perfectly competitive organic produce market in which
some firms are earning short-run economic profits, and the Surgeon General announces
that switching from non-organic produce to organic produce will add 5 years to the
average life span of consumers?
A) Panel A
B) Panel B
C) Panel C
D) Panel D
Figure 5-13
Figure 5-13 illustrates the
market for gasoline before and after the government imposes a tax to bring about the
efficient level of gasoline production.
The efficient equilibrium price of gasoline is ________ per gallon.
A) $3.00
B) $3.75
C) $4.25
D) $5.00
In the long run, the Phillips curve is a ________ at ________.
A) horizontal line; 0% inflation
B) negatively sloped line; the intersection of aggregate demand and short-run aggregate
supply
C) vertical line; the natural rate of unemployment
D) vertical line; the expected rate of inflation
Figure 9-4 Figure 9-4 shows the U.S.
demand and supply for leather footwear.
Suppose the government allows imports of leather footwear into the United States.
What will the market price be?
A) >$24
B) $24
C) $30
D) $54
Economists have long debated whether there is a significant loss of well-being to
society in markets that are monopolistically competitive rather than perfectly
competitive. Which of the following offers the best reason why some economists
believe that monopolistically competitive markets are less efficient than perfectly
competitive markets?
A) In contrast to perfectly competitive markets, neither allocative efficiency nor
productive efficiency are achieved in monopolistically competitive markets.
B) In contrast to perfectly competitive markets, firms in monopolistically competitive
markets earn economic profits in long-run equilibrium.
C) In contrast to perfectly competitive markets, firms in monopolistically competitive
markets do not produce where price equals average total cost in long-run equilibrium.
D) In contrast to perfectly competitive markets, firms in monopolistically competitive
markets can charge a price greater than average total cost in the short run.
Figure 2-5
If the economy is currently producing at point W, what is the opportunity cost of
moving to point X?
A) 3 million tons of steel
B) 19 million tons of steel
C) 5 million tons of paper
D) 9 million tons of paper
Figure 11-15
Suppose Hilda produces 100 gooseberry pies. What is the marginal rate of technical
substitution of labor for capital when labor is increased from 10 to 20 hours?
A) 1 unit of capital
B) 10 units of capital
C) 14 units of capital
D) 24 units of capital
The efficient output level of a public good occurs where the
A) greatest number of free riders occurs.
B) marginal cost of producing the last unit is equal to the marginal benefit realized by
consumers.
C) total cost of production is affordable.
D) marginal cost of production is at its lowest.
The largest government-run health care system in the world, with 1.7 million
employees, is in
A) Canada.
B) Japan.
C) the United Kingdom.
D) the United States.
If marginal product is greater than average product, then
A) average product must be decreasing.
B) marginal product must be decreasing.
C) marginal product must be increasing.
D) marginal product could either be increasing or decreasing.
To maintain a monopoly, a firm must have
A) a perfectly inelastic demand.
B) an insurmountable barrier to entry.
C) marginal revenue equal to demand.
D) few competitors.
Figure 1-1
Using the information in the figure above, calculate the percentage change in sales of
alcoholic beverages between 2008 and 2010.
A) 23.8%
B) 40%
C) 42.9%
D) 73.3%
Table 2-9
Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in
Guatemala and Honduras. What is Honduras’s opportunity cost of producing one
sailboat?
A) 1/5 of a canoe
B) 1.5 canoes
C) 4 canoes
D) 5 canoes
Which of the follow is a result of imposing a rent ceiling?
A) Some consumer surplus is converted to producer surplus.
B) There is an increase in the quantity of apartments supplied.
C) There is an increase in the quantity of apartments demanded.
D) The marginal benefit of the last apartment rented is less than the marginal cost of
supplying it.
Game theory was developed in the 1940s by John von Neuman, a mathematician, and
an economist named
A) John Nash.
B) John Maynard Keynes.
C) Oskar Morgenstern.
D) Milton Friedman.