Logrolling refers to attempts by individuals to use government action to make
themselves better off at the expense of others.
The total amount of producer surplus in a market is equal to the area above the market
supply curve and below the market price.
Government intervention in agriculture began in the United States in the 1890s.
By the late 1950s, dollars held by foreign central banks exceeded the official dollar
value of U.S. gold reserves.
Economic rent refers to the price of a factor of production which is fixed in supply.
The amount of national income in an economy equals the money supply in an economy.
An increase in the labor force shifts the production possibility frontier inwards over
time.
There will be no deadweight loss if the marginal benefit to consumers is equal to the
marginal cost of production and the sum of consumer surplus and producer surplus is
maximized.
Vaccinations tend to result in a positive externality.
If expected inflation falls, the long-run Phillips curve will
A) shift to the right.
B) not be affected.
C) shift to the left.
D) become negatively sloped.
The Taylor rule accurately predicted the changes in the federal funds target during the
period
A) when Alan Greenspan was the chairman of the Federal Reserve Board.
B) when Paul Volcker was the chairman of the Federal Reserve Board.
C) when Arthur Burns was the chairman of the Federal Reserve Board.
D) when William McChesney Martin was the chairman of the Federal Reserve Board.
Figure 15-7
Suppose the economy is in a recession and no policy is pursued. Using the static AD–AS
model in the figure above, this situation would be depicted as a movement from
A) A to B.
B) B to A.
C) C to B.
D) A to E.
E) C to D.
Allison’s Auto Art is a company that applies pinstripes to vehicles. Allison’s cost for a
basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total
price of $175, Allison will apply a fancier 3-color pinstripe application to an
automobile, a service that adds an additional $40 to the total cost of the package. What
is Allison’s marginal benefit if she sells a basic 1-color job?
A) $35
B) $60
C) $95
D) The marginal benefit cannot be determined.
Marginal revenue product can be calculated using the formula marginal product output
price
A) only if output price is constant.
B) only if the marginal product of labor is constant.
C) only if the both marginal product of labor and the output price are constant.
D) only if the firm has market power in the labor market.
Firms that participate in regular open market transactions with the Federal Reserve are
called
A) secondary market banks.
B) Treasury banks.
C) primary dealers.
D) Federal Reserve partners.
Recent research has shown that the first firm to enter a market often does not have a
long-term advantage over later entrants into the market. An example that has been used
to illustrate this is
A) McDonald’s entry into the high-end coffee market.
B) Xerox, which became a generic term for making photocopies.
C) Abercrombie and Fitch, which was the first clothing company to market to young
men.
D) the introduction of the first ballpoint pen in 1945.
The cost incurred from the production of an additional unit of a product
A) is a marginal cost to the firm.
B) is called a loss.
C) is called opportunity cost.
D) must be zero for a firm to be efficient.
Table 14-7
The payoff matrix shown above assumes that Perfect Plants and Florabunda Florist
must decide whether to offer same-day delivery for their products. The matrix shows
how much profit each firm will earn if it does or does not offer same-day delivery. The
amount of profit for one firm depends on whether the other firm offers same-day
delivery. Which of the following statements is true?
A) Given that Florabunda offers same-day delivery, Perfect’s best strategy is to not offer
same-day delivery.
B) Given that Perfect offers same-day delivery, Florabunda’s best strategy is to offer
same-day delivery.
C) Perfect and Florabunda will agree to collude in order to maximize their profits.
D) Neither Perfect nor Florabunda will offer same-day delivery; this decision will
decrease their costs and allow each firm to earn more than $1,800 million in profits.
Figure 4-3 Figure 4-3 shows the market for
granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now
suppose producers decide to cut output to Q2 in order to raise the price to P2. What area
represents the deadweight loss at the equilibrium price of P1?
A) C + E + H
B) G + H
C) C + E
D) There is no deadweight loss at the price of P1.
Figure 12-16
Which panel best represents the perfectly competitive organic produce market’s
transition to the long run when some firms in the market are earning economic profits?
A) Panel A
B) Panel B
C) Panel C
D) Panel D
With which of the following statements would a “real business cycle” theorist most
closely agree?
A) “Monetary policies have the greatest impact on real GDP when they are anticipated.”
B) “Expansionary monetary policy allows the central bank to control inflation and
unemployment simultaneously.”
C) “Wages adjust rapidly to changes in inflation as long as expectations are formed
rationally.”
D) “Technological shocks to the economy affect only aggregate demand in the short
run.”
Table 2-5
Table 2-5 shows the number of labor hours required to produce a cell phone and a board
foot of lumber in Estonia and Finland. Finland has a comparative advantage in the
production of
A) both products.
B) lumber.
C) cell phones.
D) neither product.
If GDP per capita rises by 2% between 2013 and 2014, which of the following is
necessarily true?
A) Real GDP has risen by more than 2%.
B) The population has decreased.
C) The population has increased, but by less than 2%.
D) None of the above is necessarily true.
The CPI is also referred to as
A) the GDP deflator.
B) the inflation-consumption index.
C) the cost-of-living index.
D) the producer price index.
Banks can make additional loans when required reserves are
A) greater than total reserves.
B) less than total reserves.
C) less than total deposits.
D) less than total loans.
Given Table 23-5 below, fill in the values for saving. Assume there are no taxes. Table
23-5
Starting at point B in the diagram below, identify which combinations of points
illustrate technological change. Give a brief explanation to support your answer.
With state and multistate lotteries, winners are typically given the choice between a
lump sum payment today or a 20 year series of annuities. How should a winner decide
which is better?
If the labor demand curve shifts to the left and the labor supply curve remains
unchanged, what will happen to the equilibrium wage and the equilibrium level of
employment? Illustrate your answer with a graph.
Explain why OPEC is caught in a prisoner’s dilemma?
Fill in the columns in the following table and use the values in the table to determine
the profit-maximizing level of output.
Define macroeconomics.
What are inventories? What usually happens to inventories at the beginning of a
recession, and what usually happens to inventories at the beginning of an expansion?