Assume that the hourly price for the services of personal trainers has risen and sales of
these services have also risen. One can conclude that
A) the law of demand has been violated.
B) the number of personal trainers has increased.
C) the demand for personal trainers has increased.
D) personal trainers are deliberately charging high prices because they provide services
for wealthy clients.
An appreciating yen makes Japanese products
A) more expensive in foreign markets.
B) less expensive in foreign markets.
C) more expensive in the Japanese market.
D) more expensive in both foreign markets and the Japanese market.
A demand curve which is ________ represents perfectly inelastic demand, and a
demand curve which is ________ represents inelastic demand.
A) downward sloping; vertical
B) horizontal; downward sloping
C) vertical; downward sloping
D) upward sloping; horizontal
If stricter immigration laws are imposed and many foreign workers in the United States
are forced to go back to their home countries,
A) the long-run aggregate supply curve will shift to the right.
B) the long-run aggregate supply curve will shift to the left.
C) we will move up along the long-run aggregate supply curve.
D) we will move down along the long-run aggregate supply curve.
Consider two single-malt whiskey distillers, Laphroaig and Knockando. If they
advertise, they can both sell more whiskey and increase their revenue. However, the
cost of advertising more than offsets the increased revenue so that each distiller ends up
with a lower profit than if they do not advertise. On the other hand, if only one
advertises, that distiller increases its market share and also its profit.
a. Construct a payoff matrix using the following hypothetical information: If neither
distiller advertises: each earns a profit of $35 million per year. If both advertise: each
earns a profit of $20 million per year. If one advertises and the other does not: the
distiller who advertises earns a profit of $50 million and the distiller who does not
advertise earns a profit of $9 million.
b. If the two distillers agree to coordinate their strategies, what is the outcome?
The income effect of a price change refers to
A) the change in demand that occurs when consumer income changes.
B) the change in the quantity demanded that results from a change in price, making the
good more or less expensive relative to other goods, holding everything else constant.
C) the change in demand that occurs when both income and price change.
D) the change in the quantity demanded of a good that results from the effect of a
change in price on consumer purchasing power, holding everything else constant.
Figure 9-1 Figure 9-1 shows the U.S. demand
and supply for leather footwear.
Under autarky, the producer surplus is
A) $40
B) $105
C) $195
D) $285
The ________ shows the relationship between the price level and quantity of real GDP
demanded.
A) consumer price index
B) aggregate expenditure line
C) 45-degree line
D) aggregate demand curve
A firm would decide to shut down if its production resulted in
A) MR < ATC.
B) ATC > AVC.
C) AFC > AVC.
D) MR < AVC.
Jack lost his job six months ago, and he’s been actively looking for a new job ever
since. The Bureau of Labor Statistics would classify Jack as
A) unemployed.
B) out of the labor force.
C) a discouraged worker.
D) all of the above.
Economist Jerry Hausman estimated the price elasticity of demand for “Post Raisin
Bran” and “All types of breakfast cereals.” He found that the price elasticity of demand
for Post Raisin Bran was -2.5 and the price elasticity of demand for “All types of
breakfast cereals” was -0.9. Which of the following can be implied from Hausman’s
estimates?
A) The demand for “All types of breakfast cereals” is elastic.
B) A 1 percent increase in the price of Post Raisin Bran will lead to a 25 percent
decrease in the quantity demanded of Post Raisin Bran.
C) The demand for Post Raisin Bran is more elastic than the demand for “All types of
breakfast cereals.”
D) A 1 percent decrease in the price of breakfast cereals will lead to a 2.5 percent
increase in the quantity demanded of Post Raisin Bran.
Lionel’s Lawn Care is a company that maintains residential yards. Lionel’s cost for his
standard package of mowing, edging, and trimming is $15, and he charges $25 for this
service. For a total price of $40, Lionel will also trim shrubs, a service that adds an
additional $10 to the total cost of the standard package. What is Lionel’s marginal cost
of adding the shrub-trimming service to the standard package?
A) $10
B) $15
C) $25
D) $40