Higher relative wages for labor tends to
A) increase the supply of labor.
B) decrease the demand for labor.
C) encourage firms to find substitutes, such as automation.
D) accomplish all of the above.
If the price of sandals is fixed by law below the market-clearing price,
A) a surplus of sandals will result.
B) sandal inventories at shoe stores will be smaller.
C) sandal sellers will spend more on advertising.
D) the quantity of sandals demanded will be greater than the quantity supplied.
E) the quantity of sandals demanded will be less than the quantity supplied.
Larry Lawnlover is trying to decide whether it would be more efficient to trim his lawn
with a hand-operated clipper or to buy and use an electrically operated weed-trimmer.
Which of the items below will help determine the more efficient choice for Larry?
A) Larry’s dislike for the noise created by power tools
B) Larry’s fear of being injured while using power tools
C) The sensitive skin on Larry’s hand, which causes him to develop, blisters easily
D) All of the above.
E) None of the above.
If buyers compete against sellers, then
A) buyers would be worse off as more sellers enter the market.
B) buyers would be better off with fewer sellers in the market.
C) sellers would be worse off with more buyers for their products.
D) sellers would be better off with fewer buyers of their products.
E) all the above are true.
How can it be that people purchase more of a good while its price is rising?
A) The supply curve must be shifting to the left.
B) The demand curve must be shifting to the right.
C) Supply and demand do not change.
D) It cannot happen, otherwise the law of demand is violated.
Fill in the blank: Demanded services are ________ services.
A) instructive
B) deductive
C) productive
D) inductive
The textbook cautions against speaking of “the people” as wanting a particular good
A) because it is not clear in what sense groups as distinct from individuals can ever
have wants.
B) because people rarely know what they themselves really want.
C) because the wants of the people are relevant only in a democracy.
D) because assertions about “the people” confuse economics with politics.
E) unless the majority has clearly voted for it.
A price searcher can move its marginal revenue curve closer to its demand curve if it
can
A) achieve significant economies of scale.
B) charge different buyers different prices for the same good.
C) price at the point of unit demand elasticity.
D) produce at constant marginal cost.
E) set marginal revenue equal to marginal cost.
Paint and paintbrushes are complements. If the price of paint increases, then
A) the demand for paintbrushes will increase.
B) the demand for paintbrushes will decrease.
C) the demand for paint will increase.
D) the demand for paint will decrease.
Roughly what percent of American families lived below the poverty line in 2010?
A) 12%
B) 22%
C) 32%
D) 42%
E) 52%
If the elasticity measure equals 3.5, then the demand is
A) elastic.
B) unit elastic.
C) inelastic.
D) infinitely elastic.
At a Mufflers-R-Us repair shop customers have the opportunity to wait in a room with
chairs, a television, magazines, coffee and donuts. The economic way of thinking
suggests the muffler shop is
A) selling mufflers below cost.
B) selling the additional goods and services below cost.
C) attempting to increase its total profit
D) engaging in unfair trade practice because it provides the goods and services free of
charge.
E) almost certainly doing none of the above.
Fill in the blanks: A price discriminating firm will tend to charge a ________ price for
the category of customer with the ________ elasticity of demand.
A) higher; higher
B) higher; lower
C) lower; lower
D) 100 percent markup; infinite
Fill in the blank: Your textbook authors suggest ________ is the goal of a
price-searching firm.
A) just getting by
B) maximizing sales
C) maximizing net revenue
D) maximizing total revenue
E) maximizing the markup
Zero economic profits would most likely exist in which market environment?
A) Pure monopoly
B) Oligopoly
C) Perfect competition
D) Any market structure riddled with uncertainty
E) None of the above.
National League pitchers partake in some batting practice (typically, bunting). Why
don’t American League pitchers practice batting?
A) Practice can’t be expected to improve their terribly poor batting skills.
B) They have little incentive, given the designated hitter rule.
C) They don’t believe the slogan “There is no ‘I’ in ‘Team’.”
D) They ignore the rules of the game.
Why are Federal Reserve Notes (U.S. dollar bills) money in the U.S? Because
A) they are backed by gold.
B) they are used as a general medium of exchange.
C) they are created by the government.
D) they would otherwise be useless.
E) of all the above reasons.
According to your authors, America’s Great Depression of the 1930s was evidence of
A) an unstable free market system
B) rampant greed among entrepreneurs.
C) a cluster or accumulation of errors.
D) antagonistic interests among the propertied and nonpropertied classes.
E) all of the above.
Which of the following purchases is included in gross domestic product account?
A) Purchases of bibles from a Christian bookstore
B) Purchases of how-to manuals from a local hardware store
C) Purchases of anti-capitalist literature from a radical, student-managed bookstore
D) All of the above.
E) None of the above.
George loses his job. The BLS will consider him unemployed
A) immediately.
B) only after his severance pay runs out.
C) only after he begins to actively seek another job.
D) even if he accepts a cheaper part-time job.
If the manager of a nonprofit enterprise sets prices below market clearing levels, she
A) increases the net revenue of the enterprise.
B) provides herself with control over a valuable good.
C) reduces her personal popularity.
D) produces all of the above consequences.
Using the economic way of thinking, complete the following sentence: “One person’s
profit is
A) a sign of sinful activity.”
B) the result of uncertainty.”
C) only a matter of luck and chance.”
D) another person’s loss.”
The price elasticity of demand is measured as
A) the ratio of the typical consumer’s quantity demanded to the entire quantity
demanded in the market.
B) the percentage change in quantity demanded divided by the percentage change in
price.
C) the number of purchases divided by the price of the product.
D) price divided by quantity.
E) quantity divided by price.
The costs affecting decisions to supply always lie in the
A) future.
B) opportunities already forgone.
C) past.
D) present.
E) surplus between demand and supply.
Bonnie can produce either 10 hats or 20 scarves in a month. Phil can produce either 5
hats or 10 scarves in a month. Therefore:
A) Phil has a comparative advantage in hats, Bonnie in scarves.
B) Bonnie has a comparative advantage in hats, Phil in scarves.
C) Phil has a comparative advantage in both hats and scarves.
D) Bonnie has a comparative advantage in both hats and scarves.
E) Neither of them has a comparative advantage in hats or scarves.
The fiscal and monetary policy alternative to fine-tuning is
A) abandonment of both fiscal and monetary policy.
B) abandonment of fiscal policy in favor of exclusive reliance on monetary policy.
C) budgets established for the long term and a steady growth rate for the money stock.
D) price and wage controls.
E) redistribution of income in favor of those with a higher propensity to spend.
If Mother Teresa had spent $190,000 on a leprosarium in Calcutta, how would her
purchase have directly affected U.S. GDP?
A) It would remain unchanged because the expenditure occurred outside the domestic
economy.
B) It would remain unchanged because Mother Teresa was not acting out of her own
selfish interests.
C) It would have increased by $190,000.
D) It would have decreased by $190,000.
Beer and wine were difficult to find during the prohibition on alcohol, but whisky and
gin were plentiful. Why?
A) Beer and wine were illegal; whisky and gin weren’t.
B) The drinking public only wanted whisky and gin.
C) Criminals found it much more efficient to produce liquor.
D) Police were willing to overlook production and consumption of whisky and gin
because they believed liquor was less dangerous than beer and wine.
E) Government officials were interested in seeing what would happen to rate of alcohol
poisoning in the United States.
By selling additional wheat, each U.S. wheat farmer
A) decreases his total revenue because the demand for his wheat is elastic.
B) decreases his total revenue because the demand for his wheat is inelastic.
C) increases his total revenue because the demand for his wheat is elastic.
D) increases his total revenue because the demand for his wheat is inelastic.
Using the economic way of thinking, what is the least efficient use of water?
A) Drinking
B) Bathing
C) Filling balloons
D) It depends on the water user’s estimate of cost and benefit.
Are the wages of the pilots marginal costs or sunk costs to an airline trying to decide
whether to add a late-night flight from Seattle to San Francisco? They are
A) marginal costs because pilots are indispensable to the flight.
B) sunk costs if the pilots will receive no additional compensation for the flight.
C) marginal costs because they will be paid after the flight rather than before.
D) sunk costs because pilots’ wage rates are determined by a contract already existing.
Why has the federal government generally run budget deficits over the past several
decades?
A) Political pressures make expenditures hard to control.
B) The federal government’s control of the money supply enables it to borrow
indefinitely without becoming unable to find creditors.
C) The public has accepted the notion that budget deficits can be good for the economy.
D) A combination of the three factors mentioned above.
To economize means to
A) allocate available resources in a way that yields the most value to the economizer.
B) behave in a selfish rather than generous manner.
C) conserve as much as possible for future use.
D) put economic theory to work.
E) save rather than spend.
Suppose you find $1000 in your attic and decide to deposit it all into your local bank,
which must hold 10% as required reserves. The deposit expansion multiplier suggests
that this $1,000 “injection” of new money can, in the theoretical limit,
A) increase the money supply by a little more than $1,000.
B) increase the money supply by a little less than $1,000.
C) increase the money supply by only $1,000.
D) increase the money supply by $10,000.
Who is “selling short”?
A) The grocer who sells a pound of apples today at a slashed price of 75 cents a peck
B) The airline requiring you to pay for your ticket two weeks in advance of the flight
C) The church that provides a free Thanksgiving dinner to the poor
D) All of the above.