Table 20-15
Looking at the table above, real average hourly earnings were equal to ________ in
2012.
A) $9
B) $9.52
C) $10
D) $12
) Figure 24-2
Ceteris paribus, a decrease in the capital stock would be represented by a movement
from
A) SRAS1 to SRAS2.
B) SRAS2 to SRAS1.
C) point A to point B.
D) point B to point A.
Table 12-1
Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces
plastic camera cases. Assume that output can only be increased in batches of 100 units.
What is the fixed cost of production?
A) $0
B) $500
C) $1,000
D) It cannot be determined.
Calculate the government purchases multiplier if the marginal propensity to consume
equals 0.75, the tax rate is 0.2, and the marginal propensity to import equals 0.3.
A) 1.43
B) 1.6
C) 3.33
D) 4
The total value to society of having garbage removed is greater than the value of
baseball games. Why, then, are baseball players paid more than garbage collectors?
A) Although the total value of garbage removal is greater than the total value of
baseball, wages are determined by average values.
B) Garbage removal results in significant external benefits that are not captured in the
price paid for garbage removal. As a result, wages of garbage collectors do not reflect
their social benefits.
C) There is greater competition in the garbage collection industry than there is in Major
League Baseball.
D) Wages do not depend on total values but marginal values. The marginal revenue
product of baseball players exceeds the marginal revenue product of garbage collectors.
FedEx plays such a large role in moving packages around the country that there is
usually a close relationship between fluctuations in FedEx’s business and fluctuations in
GDP. Some economists refer to this relationship as the
A) shipping cycle.
B) FedEx indicator.
C) overnight delivery index.
D) package prognostication process.
Members of the European Union decided to adopt a single currency by what year?
A) 2008
B) 2005
C) 1999
D) 1992
An advantage of imposing a tax on the producer that generates pollution is that
A) it forces the polluting producer to internalize the external cost of the pollution.
B) the government can keep tabs on exactly what is produced in an industry.
C) it will eliminate pollution.
D) a producer can pass the cost of the pollution to consumers.
A perfectly competitive firm’s marginal revenue
A) is greater than price.
B) is less than price because a firm must lower its price to sell more.
C) is equal to price.
D) may be either greater or less than price, depending on the quantity sold.
Economic growth is represented on a production possibilities frontier model by the
production possibility frontier
A) shifting outward.
B) shifting inward.
C) becoming steeper.
D) becoming flatter.
The new Keynesians emphasize the importance of
A) rational expectations.
B) the monetary growth rule.
C) real causes of the business cycle.
D) sticky wages and prices.
What does the term “marginal” mean in economics?
A) the edge of a market
B) an additional or extra
C) illegal
D) secondary
E) trivial
You explain to your friend Haslina, who runs a catering service called “Meals in a Zip”,
about an economic theory which asserts that consumers will purchase less of a product
at higher prices than they will at lower prices. She contends that the theory is incorrect
because over the past two years she has raised the price of her catered meals and yet has
seen a brisk increase in sales. How would you respond to Haslina?
A) Haslina is right; she has evidence to back her claim. The theory must be erroneous.
B) I will explain to her that she is making the error of reverse causality: it is the
increase in demand that has enabled her to raise her prices.
C) I will explain to her that there are some omitted variables that have contributed to an
increase in her sales such as changes in income.
D) Haslina is making the mistake of assuming that correlation implies causation.
Figure 4-6
Figure 4-6 shows the demand and supply curves for the almond market. The
government believes that the equilibrium price is too low and tries to help almond
growers by setting a price floor at Pf. What is the area that represents producer surplus
after the imposition of the price floor?
A) A + B + E
B) B + E
C) B + E + F
D) B + C + D + E
GDP is not a perfect measure of well-being because
A) the value of leisure is included in GDP.
B) GDP is not adjusted for pollution.
C) GDP is adjusted for changes in crime rates.
D) GDP is adjusted for increases in drug addiction.
Figure 13-11
The diagram depicts a firm
A) in a constant cost industry.
B) in an increasing cost industry.
C) in long-run equilibrium.
D) that is making short-run losses.
The use of fiscal policy to stabilize the economy is limited because
A) changes in government spending and tax rates have a small effect on aggregate
demand.
B) changes in government spending and tax rates have a small effect on interest rates.
C) the legislative process can be slow, which means that it is difficult to make fiscal
policy actions in a timely way.
D) the Internal Revenue Service (IRS) resists changes in tax rates because of all the
changes they would have to make to the tax code.
The ________ effect of a price change refers to the impact of a change in the price of a
good on a consumer’s purchasing power.
A) income
B) substitution
C) demographics
D) ceteris paribus