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Refer to the figure above. If this firm were to increase sales from 20 units to 30 units of
output, its marginal revenue would be:
A. $20.
B. $200.
C. $0.
D. -$20.
U.S. firms wishing to purchase European goods and services are ______ the foreign
exchange market.
A. suppliers of U.S. dollars in
B. suppliers of Euros in
C. supplied Euros by the Fed for use in
D. demanders of U.S. dollars in
Lunch in Jamie's dorm is an all-you-can-eat buffet, served from 11 a.m. until 1 p.m. By
noon, the buffet is picked over, and by 12:30, there are very few popular items left. The
garbage bins, though, are full of food.
Refer to the information given above. The buffet in Jamie's dorm is an example of:
A. a Coase-like solution to externalities.
B. a tragedy of the commons.
C. excess supply in the market.
D. a good with positive externalities.
At the price of $20 each, demand for T-shirts for students group's fundraising activity is
unitary elastic. Total expenditure for T-shirts reaches ______ at a price of $20 each.
A. zero
B. its minimum
C. its maximum
D. its maximum profit
Airlines that charge higher prices for seats in the first class cabin are:
A. not price discriminating because the product is not the same.
B. price discriminating because all passengers on the plane are traveling the same route.
C. perfect price discriminators.
D. using the hurdle method of price discrimination.
In exchange for a share in the revenues earned on campus, State U has granted
CheapFizz the exclusive right to sell soft drinks in the student union and in vending
machines on campus. Prior to the deal, three soft drink companies sold beverages on
campus; now no other soft drink company is allowed to sell its products on campus or
at university events.
Refer to the information above. The beneficiaries of this deal are _______.
A. the students
B. State U
C. State U and CheapFizz
D. CheapFizz
Refer to the figure above. If the price changes from $10 to $4, what happens to the
elasticity?
A. It will increase.
B. It will decline.
C. It will stay the same.
D. It will first decline then increase.
The two main responsibilities of the Federal Reserve System are to ______ and to
______.
A. apprehend counterfeiters; regulate the stock market
B. enable banks to make affordable mortgages; control the exchange rate of the U.S.
dollar
C. insure bank deposits; print currency
D. conduct monetary policy; oversee financial markets
Joe is the owner of the 7-11 Mini Mart, Sam is the owner of the SuperAmerica Mini
Mart and together they are the only gas stations in town. At the current price of $3 per
gallon, both receive total revenues of $1,000. Joe is considering cutting his price to
$2.90, which would increase his total revenue to $1,350 if Sam continues to charge $3.
If Sam's price remains $3 after Joe cuts his price, Sam will collect $500 in revenues. If
Sam cuts his price to $2.90, his total revenues would also rise to $1,350 if Joe continues
to charge $3. Joe will collect $500 in revenues if he keeps his price at $3 while Sam
lowers his to $2.90. Joe and Sam will receive $900 each in total revenue if they both
lower their price to $2.90. You may find it easier to answer the following question if
you fill in the payoff matrix below.
Refer to the information given above. If both players choose their dominated strategy
they will each earn _____ and if both players choose their dominant strategy they will
each earn _____.
A. $500; $1350
B. $900; $1350
C. $900; $1000
D. $1000; $900
Which one of the following activities is most likely to be counted in GDP?
A. Fran volunteers at the local veteran's hospital twice a month.
B. Stu gave $5 to a homeless man he met in the park.
C. Gail buys paper and crayons to donate to poor children in need of school supplies.
D. Bud works hard five hours each week to make sure that his lawn always looks nice.
If an event has an expected value of zero, the event is termed a(n)
A. better than fair gamble.
B. unfair gamble.
C. zero gamble.
D. fair gamble.
Sharing the results of applied research conducted under government sponsorship with
the private sector, such as the development of the Global Positioning System, is an
example of a government policy to promote economic growth by:
A. increasing human capital.
B. increasing physical capital.
C. improving technology.
D. increasing the availability of natural resources.
Matt has decided to purchase his textbooks for the semester. His options are to purchase
the books via the Internet with next day delivery to his home at a cost of $175, or to
drive to campus tomorrow to buy the books at the university bookstore at a cost of
$170. Last week he drove to campus to buy a concert ticket because they offered 25
percent off the regular price of $16.
The benefit to Matt of buying his books at the bookstore is _____.
A. $5
B. $9
C. $170
D. $175
Contractionary policies are government stabilization policy actions intended to
decrease:
A. population.
B. unemployment.
C. average labor productivity.
D. planned spending.
Fran is considering moving to Denver. There is a 70% chance that he will find a job that
pays $1,000 more than what he currently earns and a 30% chance he will find one that
pays $3,000 less. The expected value of moving to Denver is
A. -$200.
B. $200.
C. $700.
D. $900.
A study that deals with the salaries of university professors would be considered:
A. macroeconomics
B. microeconomics
C. economic naturalism
D. marginal benefit
The Boskin Commission found that the CPI ______ the true inflation rate.
A. is independent of
B. understates
C. precisely measures
D. overstates
Supply and Demand Curve for Jeans in Gallania Mall. Refer to the figure above. The
equilibrium price will NOT lead to the largest possible total economic surplus when:
A. the jeans are purchased by consumers with reservation prices greater than $40.
B. the jeans market is perfectly competitive.
C. production of jeans generates air pollution.
D. production of jeans experiences diminishing marginal returns to inputs.
Assume the price of gasoline doubles tonight and remains at that price for the next two
years. The short-term price elasticity of demand for gasoline will be ______ when
compared with the long-term price elasticity of demand for gasoline.
A. more elastic
B. larger in absolute value
C. the same
D. more inelastic
When state regulators require consumers to purchase and use a safety device, the
regulation
A. always reduces total economic surplus.
B. has an ambiguous effect on total economic surplus, depending on whether the
regulation infringes on personal liberty.
C. does not reduce total economic surplus if the marginal cost of providing the last
device purchased is equal to the marginal social benefit of that device.
D. increases total economic surplus if the government subsidizes the purchase.
Gertie saw a pair of jeans that she was willing to buy for $35. The price tag, though,
said they were $29.99. Therefore:
A. Gertie should not buy the jeans because they will be of lower quality than she
expected.
B. Gertie should not buy the jeans because the price is not equal to her reservation
price.
C. Gertie should buy the jeans because the price is less than her reservation price.
D. Gertie should buy the jeans because the price is more than her reservation price.
Refer to the figure above. Based on the Keynesian cross diagram, at short-run
equilibrium output,
A. there is a recessionary gap.
B. there is an expansionary gap.
C. output equals potential output.
D. firms will be producing more than they can sell.
Assume the minimum wage exceeds the market-clearing wage. If there is an increase in
the labor supply, then the number of workers who are unemployed will ______ and the
number of workers who are employed will _______.
A. increase; increase
B. increase; decrease
C. increase, not change
D. decrease; increase
Ingrid has been waiting for the show "Mamma Mia!" to come to town. When it finally
does come, ticket prices are $60. Ingrid's reservation price is $75. But when Ingrid tries
to buy a ticket, they are sold out.
Refer to the information above. Sven had purchased a ticket at the ticket window for
$60. Sven's reservation price is $65. If Sven attends "Mamma Mia!" and Ingrid does
not, it is:
A. inefficient because Sven and Ingrid could have made a mutually beneficial trade.
B. efficient because Sven paid less for the ticket than his reservation price.
C. efficient because Sven arrived at the ticket counter before the show was sold out.
D. inefficient because ticket prices are regulated by the government.
Suppose a retail store was offering 10% off all prices on all goods. The incentive to take
advantage of the 10% savings is:
A. unrelated to the list price of one good.
B. inversely related to the list price of the good.
C. directly related to the list price of the good.
D. independent of the list price.
A good example of central planning at work in the U.S. would be:
A. Burger King's value meal price control.
B. McDonald's fries being the same everywhere in the U.S.
C. union wages.
D. New York City's rent control.
The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents
and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle
predicts that Tim will:
A. realize he has had too much soda to drink and go home.
B. drink the seventh glass and continue until the marginal benefit of drinking another
glass of soda is zero.
C. volunteer to empty out the fountain.
D. not drink the seventh glass.
When an individual deposits currency into a checking account:
A. bank reserves increase, which allows banks to lend more and increases the money
supply.
B. bank reserves decrease, which reduces the amount banks can lend and reduces the
growth of the money supply.
C. bank reserves are unchanged.
D. bank liabilities increase, which reduces the amount banks can lend and reduces the
growth of the money supply.
A decrease in the demand for bananas with no concurrent change in the supply of
bananas will result in a ________ equilibrium price and a(n) ________ equilibrium
quantity.
A. higher; lower
B. lower; lower
C. higher; unchanged
D. higher; higher
In the absence of legal requirements, insurance is most attractive to
A. the poor.
B. the wealthy.
C. those with lowest likelihood of filing a claim.
D. those with the highest likelihood of filing a claim.
