Suppose your marginal utility from consuming the 3rd slice of cake is zero, then your
total utility from consuming cake is
A) maximized.
B) decreasing.
C) negative.
D) increasing.
The profits a corporation keeps to finance future expansion are known as
A) retained earnings.
B) preferred stock.
C) dividends.
D) capital gains.
Figure 5-6 Figure 5-6 shows the market for
measles vaccinations, a product whose use generates positive externalities.What is the
economically efficient output level?
A) Q1
B) Q1 + Q2
C) Q2 – Q1
D) Q2
Table 2-3 Production Choices for Dina’s Diner
Assume Dina’s Diner only produces sliders and hot wings. A combination of 80 sliders
and 50 hot wings would appear
A) along Dina’s production possibilities frontier.
B) inside Dina’s production possibilities frontier.
C) outside Dina’s production possibilities frontier.
D) at the vertical intercept of Dina’s production possibilities frontier.
In economics, choices must be made because we live in a world of
A) unemployment.
B) scarcity.
C) greed.
D) unlimited resources.
The percent increase in the CPI from one year to the next is a measure of the
A) GDP deflator.
B) unemployment rate.
C) real interest rate.
D) inflation rate.
What is a subgame?
A) It is one that begins at any node of the tree, including the game itself.
B) It is one that begins at any decision node of the tree except the first decision node.
C) It is one that starts at the final decision node of the tree.
D) It is a simultaneous game embedded in a sequential game.
If disposable income falls by $50 billion and consumption falls by $40 billion, then the
slope of the consumption function is
A) 1.20.
B) 0.80.
C) 0.70.
D) 0.10.
If a fire insurance company requires firms buying fire insurance to install automatic
sprinkler systems, the insurance company is trying to reduce
A) the problem of adverse selection.
B) the moral hazard problem.
C) sunk costs.
D) asymmetric information.
By the year 2019, health care’s share of gross domestic product in the United States is
projected to
A) return to its 1995 level.
B) have declined to only 6.5 percent.
C) be more than three times as high as it was in 1965.
D) reach a level of 75 percent.
What type of protection does U.S. law grant the creator of a book, film or piece of
music?
A) A public franchise, which grants the exclusive right to use the creation during the
author’s lifetime and to his or her heirs for 70 years after the author’s death.
B) A copyright, which grants exclusive rights to the creation’s author for 20 years after
the work is created.
C) A patent, which grants the exclusive right to use the creation during the author’s
lifetime and to his or her heirs for 70 years after the author’s death.
D) A copyright, which grants the exclusive right to use the creation during the author’s
lifetime and to his or her heirs for 70 years after the author’s death.
According to the production possibility model, if more resources are allocated to the
production of physical and human capital, then which of the following is likely to
happen?
A) Fewer goods will be produced for consumption today.
B) The production possibilities frontier will be shifted inward in the future.
C) Future economic growth will decline.
D) The country’s total production will fall.
Consider an industry that is made up of six firms with the following market shares:
Firm A – 50%, Firm B – 20%, Firms C and D – 10% each, and Firms E and F – 5% each.
What is the value of the Herfindahl-Hirschman Index and how will the industry be
categorized?
A) 2,500; mildly concentrated
B) 3,150; highly concentrated
C) 8,100; highly concentrated
D) 10,000; effectively competitive
Which of the following would shift the supply curve for MP3 players to the right?
A) an increase in the price of a substitute in production
B) an increase in consumer income (assuming that all MP3 players are normal goods)
C) a decrease in the number of firms that produce MP3 players
D) a decrease in the price of an input used to produce MP3 players