Tabitha shares a flea market booth with her sister. Her share of the rent is $150 per
month. She is considering moving to her own, larger booth which she will not have to
share with anyone. The larger booth rents for $450 per month. Recently, you ran into
Tabitha in the grocery store and she tells you that she has rented the larger booth.
Tabitha is as rational as any other person. As an economics major, you rightly conclude
that
A) Tabitha did not have a choice; her sister was overcharging her.
B) Tabitha figures that the additional benefit of having her own booth (as opposed to
sharing) is at least $300.
C) Tabitha figures that the benefit of having her own booth (as opposed to sharing) is at
least $450.
D) the cost of having one’s own booth outweighs the benefits.
Suppose the United States has a Gini coefficient of 0.4 and Sweden has a Gini
coefficient of 0.25. Which of the following statements is true?
A) The distribution of income is more equal in the United States.
B) The distribution of income is more equal in the Sweden.
C) Income distribution is changing faster in the United States.
D) Without information on population, it is not possible to compare income distribution
between countries.
The application of economic analysis to human resources issues is called
A) resource economics.
B) personnel economics.
C) human economics.
D) labor economics.
If wages and prices adjust slowly, we would expect expansionary monetary policy to be
A) less likely to reduce the natural unemployment rate.
B) more likely to reduce inflation.
C) more likely to affect the unemployment rate.
D) more likely to result in a vertical short-run Phillips curve.
The DeBeers Company of South Africa was able to block competition through
A) economies of scale.
B) ownership of an essential input.
C) government-imposed barriers.
D) differentiating its product.
How does the construction of a market demand curve for a private good Differ from
that for a public good?
A) There is no Difference; in both cases the demand curve is determined by adding up
the price each consumer is willing to pay for each quantity of the good.
B) There is no Difference; in both cases the demand curve is determined by adding up
the quantities demanded by each consumer at each price.
C) The market demand curve for a private good is determined by adding up the
quantities demanded by each consumer at each price, but the market demand curve for a
public good is determined by adding up the price each consumer is willing to pay for
each quantity of the good.
D) The market demand curve for a private good is determined by adding up the price
each consumer is willing to pay for each quantity of the good, but the market demand
curve for a public good is determined by adding up the quantities demanded by each
consumer at each price.
Which of the following is (are) responsible for managing the money supply in the
United States?
A) the Federal Reserve Bank of New York
B) the twelve Federal Reserve Banks
C) the Federal Open Market Committee
D) the Board of Governors
When Wal-Mart decides to build a new retail store in a town, it will decide to build a
large store rather than a small store if the large store is expected to earn a greater
economic profit. What other motive would Wal-Mart have for choosing to build a large
store?
A) A larger store will help Wal-Mart maintain its position as the leading retail company
in the world more than a smaller store would.
B) A larger store will give Wal-Mart greater political influence in the community.
C) A larger store may deter entry into the town by a rival firm.
D) Because of economies of scale, the average total cost of production is less for a
larger store than a smaller store.
You’re traveling in Japan and are thinking about buying a new kimono. You’ve decided
you’d be willing to pay $175 for a new kimono, but kimonos in Japan are all priced in
yen. If the kimono you’re looking at costs 14,000 yen, under which of the following
exchange rates would you be willing to purchase the kimono? (Assume no taxes or
duties are associated with the purchase.)
A) 24.5 yen per dollar
B) 65 yen per dollar
C) 80 yen per dollar
D) You would purchase the new kimono at any of the above exchange rates.
Absolute advantage is
A) the ability to produce more of a good or service than competitors when using the
same amount of resources.
B) the ability to produce higher quality goods compared to one’s competitors.
C) the ability to produce a good or service at a higher opportunity cost than one’s
competitors.
D) the ability to produce more of a good or service than competitors that have more
resources.
China has developed a comparative advantage in the production of clothing. The source
of this comparative advantage is
A) a large supply of natural resources.
B) a large supply of unskilled workers and relatively little capital.
C) investment in capital used to produce clothing.
D) superior process technology.
The revenue received from the sale of ________ of a product is a marginal benefit to
the firm.
A) an additional unit
B) the total number of units
C) no units
D) only profitable units