Cassie’s Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent
$800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell
for $1,500 once she is finished. After having spent $800, Cassie discovers that she
would need some special period fabric that would cost her $200 in material and time in
order to complete the task. Alternatively, she can sell the quilt “as is” now for $900.
What is her marginal benefit if she sells the quilt “as is” now?
A) $100
B) $900
C) She makes a marginal loss of $600, not a marginal benefit.
D) The marginal benefit cannot be determined.
In 1986, an Apple IIe computer with 65 kilobytes of memory cost around $1,500.
Today, a $1,500 iMac computer (also made by Apple) comes with 8 gigabytes of
memory. This illustrates the potential for what kind of bias in CPI calculations?
A) new product bias
B) increase in quality bias
C) substitution bias
D) outlet bias
In the modern U.S. economy, the typical unemployed person stays unemployed for
A) a relatively long time, over a year.
B) a relatively short time, less than six months.
C) a long time during expansions and a short time during recessions.
D) an amount of time that is hard to quantify.
Table 2-4
Table 2-4 shows the output per day of two gardeners, George and Jack. They can either
devote their time to mowing lawns or cultivating gardens.
What is George’s opportunity cost of mowing a lawn?
A) half a garden cultivated
B) two lawns mowed
C) two-thirds of a garden cultivated.
D) one and a half lawns mowed
If the price of milk was $1.25 a gallon and it is now $2.25 a gallon, what is the
percentage change in price?
A) 4.4 percent
B) 8 percent
C) 44 percent
D) 80 percent
Figure 24-1
Ceteris paribus, a decrease in government spending would be represented by a
movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
Figure 2-13
Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires
“The Paint Pros,” a professional painting company, to paint her home.
A) J and M
B) K and G
C) K and M
D) J and G
In the long run, ________ differences in economic growth rates result in ________
differences in GDP per capita.
A) large; small
B) large; no
C) small; large
D) small; no
Table 9-1
Linda and Sandy own The Preppy Puppy, a dog grooming business. Table 9-1 lists the
number of dogs Linda and Sandy can each bathe and groom in one week. Select the
statement that accurately interprets the data in the table.
A) Linda has a comparative advantage in dog bathing.
B) Sandy has an absolute advantage in dog bathing.
C) Sandy has a comparative advantage in dog bathing.
D) Linda has a comparative advantage in dog grooming and dog bathing.
Which of the following is not counted in M1?
A) checking account balances
B) credit card balances
C) coins in circulation
D) currency in circulation
E) traveler’s check balances
a. What is the difference between a horizontal merger and a vertical merger?
b. Give an example of each type of merger.
c. Could a horizontal merger be welfare improving?
If, at the current exchange rate between the dollar and the South African rand of 6.92
rand per dollar, the rand is “undervalued,” how do you expect demand and supply in the
foreign exchange markets to respond?
A) The demand for the dollar will fall, while the supply of the rand will rise.
B) The demand for the dollar will rise, while the supply of the rand will fall.
C) The supply of the dollar will rise, while the demand for the rand will rise.
D) The supply of the dollar will rise, while the demand for the rand will fall.
When a firm produces more output using the same inputs or the same output using
fewer inputs we say that the firm
A) experiences an increase in demand.
B) experiences positive technological change.
C) will hire more workers in order to produce more output.
D) is operating in the short run.
The Congressional Budget Office estimates that the Patient Protection and Affordable
Care Act (ACA) will increase government spending
A) by just under $1 trillion over 10 years.
B) by more than the additional taxes and fees enacted under the law will bring in.
C) by less than $50 billion over the next decade.
D) by more than $20 trillion dollars over the next 5 years.