Economies with poorly defined property rights are often inefficient because
A new moving van will increase a moving company’s yearly revenue by $15,000. Its
useful life is three years. If the interest rate is 10 percent (0.1) per year, which of the
following is the highest price the firm would be willing to pay for the van? Assume that
each year’s revenue is received at the end of the year. (Answers are rounded to the
nearest $100.)
All of the following, except one, help explain why specialization leads to greater
production than is otherwise possible. Which is the exception?
If the price of a certain brand of sneakers falls from $50 to $22.50, and the quantity
demanded by consumers increases from 15 to 25 pairs per week, then the price
elasticity of demand is
The quantity demanded of a good
If a commercial bank has assets valued at $200 million and a net worth of $20 million,
what is the value of the bank’s liabilities?
a. There is not enough information to determine.
b. $20 million
c. $220 million
d. $180 million
e. $200 million
The money supply curve is
a. upward sloping
b. downward sloping
c. vertical
d. horizontal
e. parallel to the money demand curve
In New York City, you need a license to drive a taxicab. Each license is valid for three
years, and then it expires. The holder of a license can expect to earn $10,000 in profit
each year. If the interest rate is 5 percent (0.05) per year, what is the value of a newly
issued taxicab license? (Assume that each year’s profit is received at the end of the
year.)
A Texas oil company extracts petroleum and sells it to a refinery for $1,000. After
processing, the refinery sells the gasoline to a wholesaler for $1,500, who then sells it to
a gas station for $1,700. The gas station sells it to customers for $2,500. In these
transactions, how much has been added to GDP?
a. $1,000
b. $1,500
c. $1,700
d. $2,500
e. $6,700
Which of the following is a liability of a commercial bank?
a. Property and buildings owned
b. Loans
c. Government bonds held
d. Cash in its vault
e. Deposits at the bank
If the demand curve is a vertical line, then
John Maynard Keynes, author of The General Theory of Employment, Interest, and
Money, argued that
a. classical economic theory was correct
b. the government should follow a policy of laissez faire
c. the critiques of classical economics were flawed
d. the economy does not always perform well in the absence of government guidance
e. instead of focusing on money, the government should control interest rates
Which of the following properly matches the owner of a resource with the
corresponding payment?
a. Land owners and rent
b. Entrepreneurs and interest payments
c. Laborers and profit
d. Entrepreneurs and rent
e. Capitalists and salaries