The Internet has created a new category in the book selling market, namely, the “barely
used” book. How does the availability of barely used books affect the market for new
books?
A) The demand curve for new books shifts to the right.
B) The demand curve for new books shifts to the left.
C) The supply curve for new books shifts to the right.
D) The supply curve for new books shifts to the left.
When a foreign investor buys a bond issued in the United States,
A) the balance on the capital account increases.
B) the balance on the current account increases.
C) the balance on the financial account increases.
D) the balance of trade increases.
If, in a competitive market, marginal benefit is less than marginal cost,
A) the net benefit to consumers from participating in the market is less than the net
benefit to producers.
B) the government must force producers to raise prices in order to achieve economic
efficiency.
C) the quantity sold is greater than the equilibrium quantity.
D) the quantity sold is less than the equilibrium quantity.
Suppose Renee can increase her total utility from consuming video rentals and books by
buying one more book and renting one fewer video. Which of the following is true?
A) The marginal utility of video rentals is negative.
B) The marginal utility per dollar spent on books exceeds that of video rentals.
C) The marginal utility of the last book consumed exceeds the marginal utility of the
last video rental consumed.
D) The marginal utility of the last video rental consumed exceeds the marginal utility of
the last book consumed.
Which of the following is a positive economic statement?
A) People should not buy SUVs.
B) The government should mandate electric automobiles.
C) Scarcity necessitates that people make trade-offs.
D) Foreign workers should not be allowed to work for lower wages than the citizens of
a country.
The supply curve for watches
A) shows the supply of watches consumers are willing and able to buy at any given
price.
B) is downward sloping.
C) shows the relationship between the quantity of watches firms are willing and able to
supply and the quantity of watches consumers are willing and able to purchase.
D) shows the relationship between the price of watches and the quantity of watches
supplied.
Figure 12-5 Figure 12-5 shows cost and
demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
The firm’s manager suggests that the firm’s goal should be to maximize average profit.
In that case, what is the output level and what is the average profit that will achieve the
manager’s goal?
A) Q = 1,350 units, average profit = $5
B) Q = 1,100 units, average profit = $6
C) Q = 1,350 units, average profit = $9
D) Q = 1,800 units, average profit = $20
Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the
purchase. How much does Brett value his cell phone?
A) $180
B) $100
C) $80
D) $20
In 1995 ________, which was established in 1948, was replaced by ________.
A) the GATT; the WTO
B) the WTO; NAFTA
C) the Smoot-Hawley Tariff; the GATT
D) NAFTA; the Smoot-Hawley Tariff
If tolls on a toll road can be raised significantly before commuters will consider using a
free alternative, then an increase in tolls will result in
A) a decrease in total revenue.
B) a decrease in non-toll road usage.
C) an increase in total revenue.
D) an increase in toll road usage.
Figure 12-5
Figure 12-5 shows cost and demand
curves facing a typical firm in a constant-cost, perfectly competitive industry. What is
the minimum price the firm requires to produce output?
A) $20
B) $14
C) $5
D) It cannot be determined
Which of the following would increase net exports in the United States?
A) The United States purchases 500 silver necklaces from Mexico.
B) The government of Mexico purchases 500 Ford F-150 pickup trucks from the United
States.
C) A Mexican citizen purchases 25 shares of stock in Ford Motor Company.
D) The U.S. government donates $5 million to Mexico to help victims of drought in
Mexico.
When large firms in oligopoly markets cut their prices
A) rival firms will also cut their prices to avoid losing sales.
B) rival firms will not change their prices because most of their customers have signed
contracts that commit them to doing business with the same firms for the life of their
contracts.
C) we don’t know for sure how rival firms will respond.
D) rival firms will not cut their prices because they fear that the federal government will
accuse them of collusion.
To have a monopoly in an industry there must be
A) barriers to entry so high that no other firms can enter the industry.
B) a patent or copyright giving the firm exclusive rights to sell a product for 20 years.
C) an inelastic demand for the industry’s product.
D) a public franchise, making the monopoly the exclusive legal provider of a good or
service.
Figure 11-15
Suppose Hilda hires labor at $8 per hour and capital costs $10 per unit. What is the
minimum cost of producing 200 gooseberry pies?
A) $3,600
B) $1,120
C) $592
D) $560
When goods and services are produced at the lowest possible cost, ________ occurs.
A) allocative efficiency
B) productive efficiency
C) equity
D) efficient central planning
Vertical-equity is most closely associated with which of the following goals or
principles?
A) the horizontal-equity principle
B) the goal of economic efficiency
C) the goal of attaining social objectives
D) the ability-to-pay principle
How are the fundamental economic decisions determined in Canada?
A) Individuals, firms, and the government interact in a market to make these economic
decisions.
B) These decisions are made by the country’s elders who have had much experience in
answering these questions.
C) The government decides because Canada is a centrally planned economy.
D) The United Nations decides because Canada is a developing economy.
Figure 12-2
Why is the total revenue curve a ray from the origin?
A) because revenue increases at an increasing rate
B) because revenue increases at a decreasing rate
C) because the firm can sell its product at a constant price
D) because the firm must lower its price to sell more