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Monopolistically competitive firms have a:
A. horizontal demand curve.
B. perfectly inelastic demand curve.
C. perfectly elastic demand curve.
D. downward-sloping demand curve.
Investment, as defined in national income accounts, would include:
A. additions to business inventories.
B. personal consumption expenditures on durable goods.
C. government construction of new highways and dams.
D. purchases of shares of stock in corporate businesses.
Refer to the above diagram, in which Qf is the full-employment output. If the
economy's present aggregate demand curve is AD2:
A. the most appropriate fiscal policy is an increase of government expenditures or a
reduction of taxes.
B. the most appropriate fiscal policy is a reduction of government expenditures or an
increase of taxes.
C. government should undertake neither an expansionary nor a contractionary fiscal
policy.
D. the economy is achieving its maximum possible output.
Which is a factor of production?
A. Money
B. Interest
C. Rent
D. Capital
Assume that Johnson deposits $350 of currency in his account in the XYZ Bank. Later
the same day Swanson negotiates a loan for $2000 at the same bank. In what direction
and by what amounts has the supply of money changed?
A. Increased by $2350.
B. Increased by $2000.
C. Decreased by $350.
D. Decreased by $1650.
In monopolistic competition, there is:
A. allocative efficiency.
B. productive efficiency.
C. both allocative and productive efficiency.
D. neither allocative nor productive efficiency.
In a purely competitive industry, a decrease in a firm's marginal revenue product for an
economic resource could result from a(n):
A. decrease in demand for the firm's final product.
B. decrease in the price of the economic resource.
C. decrease in the supply of the economic resource.
D. increase in the marginal productivity of the resource.
Under conditions of imperfect competition in hiring labor, union efforts to increase
wages:
A. will necessarily cause unemployment.
B. will necessarily reduce unemployment.
C. will strengthen the monopoly power of management.
D. may either increase or decrease the level of employment.
According to the text, U.S. corporations generate approximately what percentage of
total sales revenue?
A. 11 percent.
B. 20 percent.
C. 72 percent.
D. 82 percent.
Refer to the above graphs. If union workers decide to take more leisure, while the prices
of the products produced by union workers increase, this situation is depicted in graph:
A. A.
B. B.
C. C.
D. D.
The economy experiences an increase in the price level and an increase in real domestic
output. Which is a likely explanation?
A. Interest rates have increased.
B. The stock of capital has increased.
C. Wage rates have fallen.
D. Net exports have increased.
Refer to the above graph. If the United States is represented by Lorenz curve (C) above,
which curve would represent most other industrially advanced nations?
A. a
B. b
C. c
D. d
An increase in the demand for computers leads to an increase in demand for computer
programmers. This situation arises because:
A. programmers minimize the costs of production.
B. the supply of programmers has decreased.
C. the demand for programmers is a derived demand.
D. of producer sovereignty in resource markets.
A leftward shift of a product supply curve might be caused by:
A. an improvement in the relevant technique of production.
B. a decline in the prices of needed inputs.
C. an increase in consumer incomes.
D. some firms leaving an industry.
If an economy is producing at a point inside a production possibilities curve:
A. the economy is efficient.
B. there is economic growth.
C. resources are unemployed.
D. resources are fully employed.
Which is an example of a market failure?
A.There are not enough tickets available to concerts of extremely popular performers.
B.The price of medical care has risen dramatically as a result of the introduction of
sophisticated equipment and techniques.
C.Polio shots and chest x-rays provide widespread benefits to the community as a
whole as well as to the individuals who get them.
D.Extensive decreases in the prices of electronic equipment resulted in large numbers
of bankruptcies in the computer industry.
In one year the dollar would buy 262 Japanese yen, but 10 years later, it would buy only
123 yen. Relative to the yen, the value of the dollar:
A. increased by about 25 percent.
B. decreased by about 53 percent.
C. decreased by about 75 percent.
D. decreased by about 79 percent.
Refer to the above data. The average fixed cost of producing 3 units of output is:
A. $8.
B. $7.40.
C. $5.50.
D. $6.
Total fixed costs are $24 (i.e., costs where output level is zero). Average fixed costs at 3
units of output is $24/3 = $8.
All of the following are sources of increasing returns and economies of scale except:
A. network effects.
B. spreading of development costs.
C. more specialized inputs.
D. coordination problems in large organizations.
The term "scarcity" in economics can refer to the fact that:
A. economic wants are limited and resources are abused.
B. even in the richest country some people go hungry.
C. no country can produce enough products to satisfy everybody's economic wants.
D. it is impossible to produce too much of any particular good or service in a market
economy.
When the distribution of income is adjusted for noncash transfers, the income
distribution shows:
A. perfect equality.
B. greater equality.
C. greater inequality.
D. little, if any, change.
In a market economy with well-defined property rights, the potential threat of a lawsuit
or a liability judgment against a firm will give firms an incentive to:
A.decrease negative externalities from production.
B.increase negative externalities from production.
C.increase positive externalities from production.
D.turn to the government to provide public goods.
Refer to the above graph. The Gini ratio would be greatest for which curve?
A. a
B. b
C. c
D. d
Successful price discrimination requires that:
A. buyers with inelastic demand be charged higher prices than buyers with elastic
demand.
B. buyers with inelastic demand be charged lower prices than buyers with elastic
demand.
C. all buyers be charged the same price regardless of their elasticity of demand.
D. all buyers have the same price elasticity of demand.
In the above market, economists would call a government-set maximum price of $40 a:
A. price ceiling.
B. price floor.
C. equilibrium price.
D. fair price.
The cornerstone of antitrust legislation is the:
A. Clayton Act.
B. Sherman Act.
C. Celler-Kefauver Act.
D. Federal Trade Commission Act.
Assume that the market for soybeans is purely competitive. Currently, firms growing
soybeans are experiencing economic profits. In the long run, we can expect this
market's:
A. supply to increase.
B. demand to increase.
C. supply to decrease.
D. demand to decrease.
The amount by which potential GDP exceeds actual GDP is one measure of the:
A. natural rate of unemployment.
B. opportunity cost of cyclical unemployment.
C. difference between real and nominal GDP.
D. difference between real and nominal income.
For complementary goods, the coefficient of cross-price-elasticity of demand is:
A. negative.
B. positive.
C. greater than one.
D. near zero.
The table below shows cost data for a firm that is selling in a purely competitive
market.
Refer to the above table. If the market price for the firm's product is $70, the
competitive firm will:
A. produce one unit.
B. produce two units.
C. produce three units.
D. shut down.
Other things equal, economists would prefer:
A. free trade to tariffs and tariffs to import quotas.
B. free trade to import quotas and import quotas to tariffs.
C. import quotas to tariffs and tariffs to voluntary export restrictions.
D. import quotas to free trade and free trade to tariffs.
A statement that is often used to describe demand-pull inflation is:
A. "A rising tide lifts all boats."
B. "Money is easily earned, but not easily saved."
C. "Too much money chasing too few goods."
D. "It's important to have some skin in the game."
To keep high inflation from eroding the value of money, monetary authorities in the
United States:
A. create token money that is less than its intrinsic value.
B. make paper money legal tender for the payment of debt.
C. establish insurance on checkable deposit accounts.
D. control the supply of money in the economy.
Autos and chemicals are in units of one million
The data in the above tables show that production in:
A. Germany is subject to increasing domestic opportunity costs and the United States to
constant domestic opportunity costs.
B. the United States is subject to increasing domestic opportunity costs and Germany to
constant domestic opportunity costs.
C. both Germany and the United States are subject to constant domestic opportunity
costs.
D. both Germany and the United States are subject to increasing domestic opportunity
costs.
Which is an example of a change in productivity that increases labor demand?
A. Mail-order catalog sales rise, thus increasing the demand for workers in the
mail-order business.
B. Sport utility vehicles increase in popularity, thus increasing the demand for the
workers who make them.
C. A decrease in the price of lumber decreases the cost of building homes, thus
increasing the demand for construction workers.
D. A technological change increases output per worker in the computer industry, thus
increasing the demand for computer workers.
