In a market economy, those who are willing and able to buy what is produced
A) receives what the government allows them to receive.
B) receive the most of what is produced.
C) receive no more than everyone else in the market.
D) solely determine what is produced.
If production displays economies of scale, the long-run average cost curve is
A) above the short-run average total cost curve.
B) downward sloping.
C) upward sloping.
D) below the long-run marginal cost curve.
Table 14-1
Suppose a transaction changes a bank’s balance sheet as indicated in the T-account, and
the required reserve ratio is 10 percent. As a result of the transaction, the bank has
excess reserves of
A) $0.
B) $400.
C) $3,600.
D) $4,000.
a. What is the World Trade Organization?
b. When was it established?
c. How many countries are members of the World Trade Organization?
At the state and local levels in the United States, the largest source of tax revenue is
A) individual income taxes.
B) property tax on real estate.
C) sales tax.
D) grants from the federal government.
Why does a monopoly cause a deadweight loss?
A) because it does not produce some output for which marginal benefit exceeds
marginal cost
B) because it appropriates a portion of consumer surplus for itself
C) because it increases producer surplus at the expense of consumer surplus
D) because it does not produce some output for which demand exceeds supply
Which of the following is not a reason why firms experience economies of scale?
A) Technology can make it possible to increase production with a smaller increase in at
least one input.
B) Workers and managers can become more specialized, enabling them to be more
productive.
C) Larger firms may be able to purchase inputs at lower costs than smaller competitors.
D) As output increases, the managers can begin to have difficulty coordinating the
operations of their firms.
Table 13-3
Table 13-3 shows the demand and cost schedules for a monopolistically competitive
firm.
If this firm continues to produce, what is likely to happen to the product’s price in the
long run?
A) It will fall.
B) It will increase
C) It will remain constant.
D) It cannot be determined without information on its long run demand curve.
Figure 22-4
Which of the following combinations of points illustrates changes in the Soviet Union’s
economy from 1950 to 1980?
A) E to B
B) B to D
C) B to E
D) A to B to C
Table 17-7
Dante owns a pencil factory and faces the situation shown in the table and the cost of
renting a machine is $240 per week.
a. Fill in the blanks in the table and determine the profit-maximizing number of
machines for Dante to rent. Explain why renting this number of machines is profit
maximizing.
b. Draw Dante’s demand curve for capital.
In May 2012, Facebook stock sold for $38 per share in its initial public offering (IPO).
More than a year later, in June 2013, the value of Facebook stock
A) had more than doubled in price.
B) had declined by nearly 40 percent from the IPO price.
C) languished at the same $38 per share price.
D) had increased by almost 60 percent from the IPO price.
Consider the market for pilots. What is likely to happen to the equilibrium wage and
quantity of pilots if the government enforces a lower mandatory retirement age, say
from age 65 to age 62?
A) The equilibrium wage and the equilibrium quantity of pilots rise.
B) The equilibrium wage and the equilibrium quantity of pilots fall.
C) The equilibrium wage falls and the equilibrium quantity of pilots rises.
D) The equilibrium wage rises and the equilibrium quantity of pilots falls.
Figure 3-1
An increase in the price of a substitute would be represented by a movement from
A) A to B.
B) B to A.
C) D1 to D2.
D) D2 to D1.
Higher personal income taxes
A) increase aggregate demand.
B) increase disposable income.
C) decrease aggregate demand.
D) both B and C
Suppose the U.S. dollar is backed by one-sixth of an ounce of gold and the British
pound is backed by one-third of an ounce of gold. The exchange rate between the U.S.
dollar and the British pound equals ________ per pound.
A) $0.50
B) $1.00
C) $1.50
D) $2.00
If a firm has an incentive to increase supply now and decrease supply in the future, the
firm expects that the
A) price of its product will be lower in the future than it is today.
B) price of its product will be higher in the future than it is today.
C) price of inputs will be lower in the future than they are today.
D) demand for the product will be lower in the future than it is today.
The quantity demanded of tickets to the Super Bowl is always greater than the than the
quantity supplied. Which of the following in the best explanation why the National
Football League does not raise the price of tickets to the level where the quantity
demanded equals the quantity supplied?
A) Raising the price would reduce the demand for tickets; there would then be a surplus
and the game would not sell out.
B) The cost of raising the price and printing new tickets would exceed the revenue the
NFL would receive from higher ticket prices.
C) The demand for Super Bowl tickets is elastic; raising the price would reduce total
revenue.
D) The NFL is concerned that raising ticket prices would be considered unfair.
Explain how each of the following events would affect the short-run aggregate supply
curve.
a. A decrease in the price level
b. A decrease in what the price level is expected to be in the future
c. A price level that is currently lower than expected
d. An unexpected decrease in the price of an important raw material
e. A decrease in the labor force
With a required reserve ratio of 20 percent, an increase in reserves of $10,000 could
lead to a maximum increase in checking account deposits in the entire banking system
of
A) $2,000.
B) $8,000.
C) $50,000.
D) $100,000.
Figure 11-18
Starting from point e, a movement along the isocost to point f
A) decreases the total cost of production but not output.
B) increases the total cost of production and decreases output.
C) decreases both the total cost of production and output.
D) decreases output but not the total cost of production.