Although there are barriers to entry in a monopolized industry, there are usually many
close substitutes for the monopolist’s product.
Every economic system requires a means for determining resource allocation.
Jacob is torn between two jobs, grounds keeper and street repair. He is indifferent
between the two jobs even though the street repair job pays $25 more per hour. This
must mean that
Which of the following will lead to an increase in the quantity of money demanded?
a. A decrease in the overall level of wealth in the economy
b. A decrease in the price level
c. A decrease in nominal income
d. An increase in real income
e. A decrease in real income
The firm’s long-run average total cost curve
By what mechanism does the economy always return to full employment after a
demand shock in the short run?
a. Wages automatically adjust themselves.
b. The interest rate automatically adjusts itself.
c. Prices automatically adjust themselves.
d. Taxes automatically adjust themselves.
e. Rents automatically adjust themselves.
The prices of which of the following goods would be included in the Consumer Price
Index?
a. Fighter planes
b. Iron ore
c. Tennis shoes
d. Firefighters’ services
e. IBM stock
Which of the following would be counted in U.S. GDP?
a. The salary of an American professor teaching in England
b. The value of a used U.S.-produced car purchased in the U.S.
c. The value of a new U.S.-produced car purchased by a French citizen
d. The value of a new French-produced car purchased by a U.S. citizen within in the
U.S.
e. The value of a General Electric corporate bond bought by a Japanese citizen
To measure the annual increase in the capital stock most broadly, we should include
a. business purchases of plant and equipment, changes in inventory, and new home
construction
b. private investment spending plus government investment spending
c. stocks and bonds purchased by firms, total investment, and human capital
d. purchases of durable goods and human capital
e. net private investment spending, net government investment spending, purchases of
durable goods, and investment in human capital
In a Mexican factory, each worker can produce 1/8 of a vase or 1/16 of a statue per
hour. If there are 400 workers at the factory, the maximum number of statues that could
be produced in one hour is
a. 50
b. 100
c. 80
d. 25
e. 160
If a worker is indifferent between a job with a wage of $12 per hour and a job with a
wage of $15 per hour, then the
If the unemployment rate is 6 percent, that means that 6 percent of
a. the population is not working
b. potential workers do not have jobs
c. the workforce is searching for work but has not found a job at that time
d. the individuals who are looking for work cannot find jobs
e. the population is not looking for a job
Assume that Ernesto earned a nominal wage rate of $15 per hour in 2001, the base year
for the CPI. If the CPI in 2002 was 102.6 and his nominal wage rate was $16 per hour,
what was his real wage rate in 2001?
a. $14.62
b. $15.00
c. $15.59
d. $16.00
e. His real wage for 2001 cannot be determined with the information given.
The economy’s self-correcting mechanism is such that demand shocks are offset in the
long run by shifts of aggregate supply and supply shocks are offset by shifts of
aggregate demand.
At a firm’s current output level of 200 units per week, it has 10 employees at a weekly
wage of $500 each. Raw materials, which are ordered and delivered daily, cost $1,000
per week. The weekly cost of the firm’s capital is $1,250. Which of the following
statements is correct?
