Amy’s opportunity cost of going to the movies is
a. the price of the ticket.
b. zero, if she has a free pass to the movie.
c. the price of the ticket plus the value to Amy of what she would have chosen to do
with her time had she not chosen to go to the movies.
d. both b and c
The higher the opportunity cost of attending college,
a. the more likely an individual will go to college.
b. the more economics classes an individual will take at college.
c. the fewer economics classes an individual will take at college.
d. the less likely an individual will go to college.
Which of the following statements is false?
a. A corporate bond typically has face value of $1,000.
b. Corporate bonds typically sell for a price that is equal to the bond’s face value.
c. The interest that corporate bonds pay is fully taxable.
d. State and local governments issue municipal bonds.
Which of the following statements is true?
a. Price ceilings set below the equilibrium price cause shortages.
b. Surpluses result when a price floor is set above the equilibrium price.
c. Price ceililngs set above the equilibrium price cause surpluses.
d. Price ceilings are set by the market and price floors are set by the government.
e. a and b
The nominal interest rate will rise if the
a. expected inflation rate falls.
b. real interest rate rises.
c. expected inflation rate rises.
d. a and b
e. b and c
Proponents of the fixed exchange rate system argue that
a. flexible exchange rates may promote international trade, but under a fixed exchange
rate system at least we know what the rates will be from day to day.
b. under a flexible exchange rate system, there is too great a chance that the exchange
rate will diverge from the equilibrium exchange rate.
c. under a flexible exchange rate system, there is no way of knowing what the exchange
rate is at any particular point in time.
d. under a fixed exchange rate system, there would be only one currency.
e. none of the above
Opportunity cost is the __________ alternative forfeited when a choice is made.
a. least-valued
b. most highly-valued
c. most convenient
d. most recently considered
Suppose the current exchange rate between the U.S. dollar and the Mexican peso is
$0.12 = 1 peso. Furthermore, suppose the price level in Mexico rises 25 percent while
the U.S. price level remains constant. According to the purchasing power parity theory,
what will be the equilibrium exchange rate?
a. $0.15 = 1 peso
b. $0.09 = 1 peso
c. $0.16 = 1 peso
d. $0.096 = 1 peso
Economists perceive a college applicant€s grade point average and standardized test
scores (such as SAT and ACT scores) to be rationing devices.
a. True
b. False
Suppose it has just been discovered that working for long periods of time at a computer
terminal causes eye strain, poor posture, and stress. We would expect, ceteris paribus,
that the supply curve of computer programmers would shift __________ and the wage
rate paid to programmers would __________.
a. rightward; decrease
b. rightward; increase
c. leftward; decrease
d. leftward; increase
Equilibrium price is $19 in a perfectly competitive market. For a perfectly competitive
firm, MR = MC at 120 units of output. At 120 units, ATC is $11, and AVC is $8. The
best policy for this firm is to __________ in the short run. Also, this firm earns
__________ of __________ if it produces and sells 120 units. Finally, the difference
between total revenue and total fixed cost for this firm is __________.
a. continue to produce; profits; $960; $1,920
b. continue to produce; losses; $960; $1,000
c. shut down; losses; $1,200; $2,300
d. continue to produce; profits; $1,920; $1,960
e. none of the above