Typically, in towns and villages across the Midwest, bowling alleys are one-story
buildings. In Manhattan, one is more likely to bowl in alleys found in multi-story high
rises. Why?
A) Because Midwesterners live on flat lands, they think flat and build flat.
B) The bowling cultures are different.
C) The cost of building single-story bowling alleys in Manhattan is too high.
D) Midwestern zoning codes must prohibit bowling alleys in multi-story structures.
When scarce goods are allocated according to some generally known criteria,
A) no one is discriminated against as long as the criteria are socially and legally
accepted.
B) people will compete to satisfy the criteria.
C) rationing of scarce goods becomes unnecessary.
D) surpluses almost inevitably appear.
Suppose the market-clearing price of milk is $3.00 per gallon, but the diary industry
persuades the government to establish a legally-mandated price support at $4.00 per
gallon. The newly legislated price tends to
A) reduce the demand for milk.
B) increase the production of milk.
C) create a shortage of milk.
D) decrease the price of milk products.
From which of the following is it least difficult to exclude free riders?
A) A library book
B) Landscaping on the edges of urban expressways
C) Police protection
D) Fireworks displays
Your authors argue that, since the 1960s in the U.S.
A) poverty has substantially decreased.
B) inequality has substantially increased.
C) poverty has substantially increased.
D) inequality has substantially decreased.
Which of the following leads to a recession?
A) An accumulation of money in the economy
B) An accumulation of mistakes in the economy
C) An accumulation of non-renewable resources in the economy
D) An accumulation of irrational decisions among businesses and households
Fill in the blanks: If you are informed orange juice concentrate prices will rise in the
next few months, you should ________ orange juice concentrate futures. But if that
information becomes common knowledge, others will do the same thing, and the price
of orange juice concentrate futures will ________.
A) buy; rise
B) sell; rise
C) buy; fall
D) sell; fall
Why are elected representatives far more likely to be informed about the issues on
which they vote, compared to the typical citizen-voter?
A) A politician loves politics; citizens hate it.
B) A politician is more patriotic than citizens.
C) A politician is rationally ignorant; citizens are just plain ignorant.
D) A politician’s vote has a far greater probability of affecting the outcome, compared to
a citizen’s vote.
The Federal Open Market Committee (FOMC) is responsible for managing the nation’s
A) domestic economic policy.
B) international trade policy.
C) money supply.
D) gold and silver reserves.
E) wage and retirement policies.
If a used-car dealer suffers economic losses, then
A) as a group, its customers were necessarily made worse off.
B) as a group, its competitors necessarily enjoyed economic profits.
C) it must pass its losses onto its future customers.
D) none of the above is true.
If the college athletic department raises the price of football tickets from $6 to $8 and
sells more tickets at $8 than it had sold the year before at $6, we could reasonably
conclude the demand for football tickets
A) was completely inelastic.
B) had increased.
C) was elastic.
D) was inelastic.
E) was unit elastic.
Economic theory looks at social coordination as a process of
A) continuing mutual adjustments to the situations created by the actions of others.
B) continuous adjustment of extremes to conform to the average.
C) passing information up from below and instructions or commands down from above.
D) sacrificing personal interest to the public or general interest.
E) sacrificing the public interest to self-interest.
Economists use GDP to determine
A) the economic performance of a country over time.
B) the well-being of a country’s citizens.
C) the financial stability of a nation.
D) the overall money supply within a nation.
E) all of the above.
We see evidence of shortages when we see scarce goods beginning to be acquired by
A) price decreases.
B) rising nonmoney costs.
C) the money price.
D) unfair means.
Suppose somebody made the following statement: “There will never be a substitute for
Howard Stern, the radio shock-jock.” According to the economic way of thinking, the
above statement
A) is essentially true.
B) is misleading because cloning already exists and it is a matter of time before people
will be cloned.
C) is incorrect because many people choose to listen to other programs as the perceived
costs of listening to Howard Stern change.
D) is essentially false because Howard Stern provides nothing of value to society.
Suppose there is currently a shortage in the guitar market. Pick the correct statement.
A) Quantity demanded exceeds quantity supplied.
B) Sellers could sell all they plan to sell at the current price.
C) The price of guitars would tend to increase.
D) All of the above are true.
E) None of the above is true.
Unless demand is changing, price and quantity will
A) be proportionate.
B) move in opposite directions.
C) move in the same direction.
D) fluctuate cyclically.
E) remain constant.
Because the sale of goods and services generates income for the sellers,
A) GDP is unaffected by such exchanges.
B) national income will usually by greater than GDP.
C) national income will essentially equal GDP.
D) national income will increase, but GDP will decrease.
E) sales taxes must be subtracted from GDP.
An economy that experiences a fall in the price level over two consecutive quarters
necessarily experiences
A) a recession.
B) inflation.
C) deflation.
D) disinflation.
The function of the financial statement, which colleges ask parents to fill out to make
their children eligible for tuition scholarships, is to
A) determine cases of genuine need.
B) maintain the college’s eligibility for federal assistance.
C) permit the college to confine its aid to students who can make most effective use of
the aid.
D) provide information about the demand curves of potential customers.
Keynes rhymes with
A) beans.
B) gains.
C) genies.
D) none of the above.
According to your authors, entrepreneurial innovation is similar to arbitrage because
both activities ultimately involve
A) obtaining inputs at relatively high prices and selling the output at lower prices.
B) obtaining inputs at relatively low prices and selling the output at higher prices.
C) the absence of uncertainty.
D) the presence of perfect and complete information.
What is the analytically correct way to allocate joint costs or to determine the specific
costs of products produced jointly (such as the view and the food from a restaurant with
an excellent view)?
A) By comparing marginal costs
B) By comparing all costs other than sunk costs
C) By subtracting the total costs from the total revenue
D) By using the prevailing interest rate to discount the stream of expected future costs
and benefits
E) There is no analytically correct way to do so.
Your college bookstore buys a used textbook for $25 and sells it to you for $125. What
happens to GDP?
A) It increases by $25.
B) It increases by $100.
C) It increases by $125.
D) It increases by $150.
If the supply curve illustrates the quantities producers plan to sell at given prices, and
the demand curve illustrates the quantities consumers plan to buy at given prices, then
the plans of producers and consumers are fully coordinated at the point where
A) the supply curve lies above the demand curve.
B) the supply curve intersects the demand curve.
C) the demand curve lies above the supply curve.
D) the amount of a good needed by consumers exactly equals the amount supplied by
producers.
Suppose the relative price of Ford F150 pickup trucks has risen over the past decade.
Yet, even at the higher price, more F150 pickups have been sold. What would an
economist conclude?
A) The supply of F150 pickups is downward-sloping.
B) The demand for F 150 pickups is upward-sloping.
C) Buyers of F150 pickups are acting irrationally.
D) All of the above are true.
E) None of the above is true.
An increase in the minimum wage for unskilled labor tends to
A) generate unemployment among unskilled laborers.
B) increase the quantity supplied of unskilled laborers.
C) decrease the quantity demanded for unskilled laborers.
D) encourage employers to seek substitutes for unskilled labor.
E) accomplish all of the above.
An increase in a retailer’s “overhead expenses”
A) compels the retailer to raise prices.
B) enables the retailer to raise prices.
C) makes it profitable for the retailer to raise prices.
D) does not in itself make higher prices necessary, possible, or profitable.
Is there any difference between fining people who put contaminants into the atmosphere
and charging feesfor putting contaminants into the air?
A) Not if the fee and the fine are the same per quantity of contaminant.
B) Not if the fee per quantity of contaminant is the same as the fine multiplied by the
probability of “getting caught.”
C) Only in the language or rhetoric, but not in the incentives the laws create.
D) Yes, because a fee constitutes social authorization while a fine expresses social
disapproval.
Fill in the blank: Firms under perfect competition would enjoy ________ market power.
A) absolutely no
B) some
C) much
D) total
It makes sense to measure relative costs in terms of leisure time
A) because leisure time is of equal value to everyone.
B) because leisure time is the ultimate good.
C) only if leisure time is of equal value to everyone.
D) only in societies with labor-saving technologies.