Using a broader measure of the unemployment rate where discouraged workers and
part-time workers who wished to work full time were counted as unemployed, the BLS
estimates the unemployment rate in September 2011 would have ________ compared
to the measured unemployment rate.
A) increased by more than 7 percentage points
B) more than doubled
C) decreased by less than 1 percentage point
D) barely changed
The proponents of ________ and ________ think that the Federal Reserve should adopt
a constant monetary growth rule.
A) new Keynesianism; the new classical model
B) the real business cycle model; Marxism
C) rational expectations; monetarism
D) the monetarist model; the Keynesian model
The marketing of the first ballpoint by Milton Reynolds showed
A) that first-mover advantages can make it more difficult for new firms to enter a
market and compete against the first mover.
B) that being the first firm to market a new product can result in a natural monopoly.
C) that being the first firm to market a product may not lead to a long-lived advantage
over later entrants into the market.
D) how important it is to receive patent protection for a new product.
Figure 11-1
Diminishing marginal productivity sets in after
A) the 2nd worker is hired.
B) the 3rd worker is hired.
C) the 4th worker is hired.
D) the 5th worker is hired.
Lou buys an Iron Man 2 poster at a garage sale for $30 and resells it on eBay to Kyle
for $60. Which of the following statements is true?
A) The transaction has made Lou better off and Kyle worse off.
B) The transaction is economically inefficient.
C) The transaction has made Lou and Kyle better off.
D) It is not possible for Kyle to enjoy any consumer surplus from this transaction.
Economies of scale will create a barrier to entry in an oligopoly industry when
A) a firm’s minimum efficient scale occurs where long-run average total costs are
constant.
B) the typical firm’s long-run average total cost curve reaches a minimum at a level of
output that is a large fraction of total industry sales.
C) the typical firm’s long-run average total cost curve reaches a minimum at a level of
output that is a small fraction of total industry sales.
D) the industry’s four-firm concentration ratio is less than 40 percent.
What is human capital?
A) labor productivity
B) buildings, equipment, and machinery owned by individuals rather than firms
C) buildings, equipment, and machinery owned by firms
D) the accumulated knowledge and skills that workers acquire from education, training,
and their life experiences
Each member of OPEC can increase its income by selling more oil than its output quota
because
A) by selling more at OPEC’s cartel price, a member will automatically earn more
income.
B) each member’s demand is more elastic than the total demand for oil.
C) the demand for oil is inelastic so total revenue increases.
D) the demand for oil is perfectly elastic.
In the United States in 2012, a majority of people received health care through
A) Medicare.
B) Medicaid.
C) their employers.
D) individually purchased insurance policies.
Francis Crawford recently received a 20 percent wage increase and desires to work less.
We can conclude that at his current wage, his supply of labor curve
A) has a positive slope.
B) has a negative slope.
C) is U-shaped.
D) is vertical.
Which of the following is most important in explaining exchange rate fluctuations in
the short run?
A) relative price levels across countries
B) preferences for domestic and foreign goods
C) interest rates
D) relative rates of productivity growth across countries
The M2 measure of the money supply equals
A) savings account balances plus small-denomination time deposits plus traveler’s
checks.
B) savings account balances plus small-denomination time deposits plus
noninstitutional money market fund shares.
C) M1 plus savings account balances plus small-denomination time deposits.
D) M1 plus savings account balances plus small-denomination time deposits plus
noninstitutional money market fund shares.
One reason patent protection is vitally important to pharmaceutical firms is
A) successful new drugs are not profitable. If firms are not granted patents many would
go out of business and health care would be severely diminished.
B) the approval process for new drugs through the Food and Drug Administration can
take more than 10 years and is very costly. Patents enable firms to recover costs
incurred during this process.
C) that taxes on profits from drugs are very high; profits from patent protection enable
firms to pay these taxes.
D) the high salaries pharmaceutical firms pay to scientists and doctors make their labor
costs higher than for any other business. Profits from patents are needed to pay these
labor costs.
Table 7-6 Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 7-6 shows the
production and consumption quantities without trade, and the production numbers with
trade. Prior to trade, what was the opportunity cost to produce 1 belt in Morocco?
A) 1/2 of a sword
B) 4/5 of a sword
C) 1.25 swords
D) 2 swords
Which of the following statements about two-part tariffs is false?
A) Because each individual has a different individual demand curve, if there is just one
entrance fee some consumers will be able to reap some consumer surplus.
B) The producer cannot capture the entire consumer surplus because the entrance fee
might discourage some potential consumers even though they would have been willing
to pay a lesser entrance fee.
C) Two-part tariff pricing allows a producer to capture the entire consumer surplus.
D) For two-part tariff pricing to be successful, the producer must be able to identify two
distinct customer groups.
A student comments to his roommate that the only way he will be able to pass his final
exams is to not sleep for the next three days. This statement suggests that
A) students are more concerned about good grades than good health.
B) society should value sleep more highly than good grades.
C) there is a trade-off between studying and sleep.
D) society should value good grades more highly than sleep because students can catch
up on their sleep once final exams are over.
If a straight line passes through the point x = 8 and y = 4 and also through the point x =
12 and y = 6, the slope of this line is
A) negative 4 divided by 2.
B) two.
C) negative one half.
D) one half.
If the economy is growing beyond potential real GDP, which of the following would be
an appropriate fiscal policy to bring the economy back to long-run aggregate supply?
An increase in
A) the money supply and a decrease in interest rates.
B) government purchases.
C) oil prices.
D) taxes.
Figure 5-10 Chicken pox vaccinations for
toddlers benefit society by protecting young children and by preventing an epidemic of
the disease. Thus, the social benefits of chicken pox vaccinations exceed the private
benefit for any quantity of vaccinations as illustrated in Figure 5-10.
One way to obtain the economically efficient amount of chicken pox vaccinations is for
governments to subsidize these vaccinations. What is the size of the per-vaccination
Pigovian subsidy that the government must provide to internalize the external benefits?
A) PE
B) (PE– PG)
C) (PE– PF)
D) (PF– PG)
Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6
per unit. This month, the company supplied the same quantity of binders at $4 per unit.
Based on this evidence, Tecumseh has experienced
A) a decrease in supply.
B) an increase in supply.
C) an increase in the quantity supplied.
D) a decrease in the quantity supplied.