If the Luddites had succeeded in ______ the introduction of labor-saving machinery,
economic growth in Great Britain may have been ______.
A. blocking; slower
B. blocking; more rapid
C. promoting; slower
D. promoting; more rapid
Pepsi One is a close substitute for Diet Coke. When Pepsi introduced Pepsi One, the
price elasticity of demand for Diet Coke _______ and Coke’s ability to raise revenues
through price increases _________.
A. increased; was reduced
B. increased; increased
C. decreased; was reduced
D. had no effect; was reduced
Suppose last year Moe faced a 25% marginal tax rate. This year tax rates increased and
now Moe faces a 30% marginal tax rate. Moe chooses to work fewer hours this year
because
A. working hours tend to increase over a worker’s life in the U.S.
B. the opportunity cost of leisure – not working – has increased.
C. the opportunity cost of leisure – not working – has fallen.
D. Moe must work more hours to have the same after-tax income this year.
During Thanksgiving you participated in a pumpkin-pie eating contest since you love
pumpkin pie. You really enjoyed the first two pies, the third one was OK, but as soon as
you ate the 4th one you became ill and lost the contest.
You got ______ utility from eating the 4th pie than eating the 2nd pie.
A. less
B. more
C. the same amount of
D. marginal
Refer to the figure above. When the demand is P1 = $30, what is the profit maximizing
output?
A. 30
B. 45
C. 60
D. 80
The positive correlation between economic success and well-defined private property
rights is:
A. a statistical anomaly, and not a causal relationship.
B. an example of capitalist greed and exploitation.
C. due to the observation that, when resources are owned, they are not treated as if they
have a marginal cost of zero.
D. only evident in the Western world.
Campus Bookstore is the only textbook supplier in the town, a profit-maximizing
business. The table below represents the reservation prices for the eight students
enrolled in the class for which this book is required.
Assume that the marginal and average total cost for each book is $12.
Refer to the information above. At the profit maximizing price how many books will
they sell?
A. 3
B. 4
C. 5
D. 7
The federal funds rate is the interest rate on short-term loans made by:
A. the Federal Reserve to commercial banks.
B. the federal government to the Federal Reserve.
C. the Federal Reserve to the federal government.
D. commercial banks to other commercial banks.
An example of a government policy to provide a framework within which the private
sector can operate productively is:
A. the taxation of savings.
B. the suppression of political dissent.
C. maintaining a well-functioning legal system.
D. government ownership of capital.
The coupon rate is the:
A. amount originally lent.
B. regular payment of interest to a bondholder.
C. interest rate promised when a bond is issued.
D. maximum interest rate that can be paid on a bond.
Early settlers in the town of Dry Gulch drilled wells to pump as much water as they
wanted from the single aquifer beneath the town. (An aquifer is an underground body of
water.) As more people settled in Dry Gulch, the aquifer level fell and new wells had to
be drilled deeper at higher cost.
Refer to the information given above. Compared to a town in which all residents
collectively decide on how much water to use, Dry Gulch will experience:
A. greater water use.
B. the same water use.
C. less water use.
D. the same amount of water use but at a lower cost.
Based on the information in the table, what is the unemployment rate?
A. 7.2%
B. 8.0%
C. 10.0%
D. 28.0%
Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck, but she
finds one for $12,000. Her __________ is __________.
A. benefit; $12,000
B. cost; $15,000
C. economic surplus; $3,000
D. economic surplus; $12,000
According to the textbook, if all linemen in the NFL took anabolic steroids, the rank
ordering of linemen (1st, 2nd, 3rd, etc.) would be unchanged. This assumes that:
A. anabolic steroids have no effect on performance.
B. anabolic steroids improve the performance of all NFL linemen by the same amount.
C. steroid usage is widespread.
D. anabolic steroids are legal.
If owners of a business are receiving total revenues just sufficient to cover all their
explicit and implicit costs, they are:
A. doing better than their next best alternative.
B. earning a normal profit.
C. earning economic losses.
D. doing worse than their next best alternative.
The opportunity cost of capital investment is the:
A. value of the marginal product of capital.
B. value of the marginal product of labor.
C. real interest rate.
D. price of new capital goods.
Where Y is GDP, C is consumption, I is investment, G is government spending, T is net
taxes, and there is no international trade, the government budget deficit equals:
A. T – G.
B. Y – G.
C. Y + T – G.
D. G – T.
Suppose you bought a concert ticket from Ticketmaster for $50, but when you got to the
concert scalpers (individuals who re-sell tickets at the event) were selling tickets in the
same seating area as yours for $25. What is probably true?
A. There is excess demand for this concert at the Ticketmaster price.
B. The ticket you bought was under-priced for the market.
C. There is an excess supply of tickets for this concert at the Ticketmaster price.
D. The Ticketmaster price is an equilibrium price.
100 percent reserve banking refers to a situation in which banks’ reserves equal 100
percent of their:
A. loans.
B. deposits.
C. profits.
D. income.
Daily Supply and Demand: Oranges in Hurricane Alley
Refer to the figure above. What is the cost of harvesting the tenth pound of oranges?
A. $2
B. $2.50
C. $4
D. $5
The following table provides data for an economy in a certain year.
Given the data in the table, how much did households spend on nondurables and
services?
A. 300
B. 700
C. 1,000
D. 1,300
The productivity slowdown of the 1970’s occurred:
A. only in the U.S.
B. only in the U.S. and the United Kingdom.
C. only in the U.S, the United Kingdom, and Japan.
D. around the world.
In tit-for-tat, if your partner _______ on the first interaction you would then _______ in
your next interaction with her.
A. defected; cooperate
B. defected; defect
C. cooperates; defect
D. defected; refuse to play
Having a comparative advantage in a particular task means that:
A. you are better at it than other people.
B. you give up more to accomplish that task than do others.
C. you give up less to accomplish that task than do others.
D. you have specialized in that task, while others have not.
Factors of production most likely to earn positive economic rent are:
A. real estate.
B. uniquely talented individuals.
C. fixed factors.
D. factors that are subject to free entry.
Suppose that a new drug has been approved to treat a life-threatening disease. Demand
for that drug is shown on the graph below. Prior to approval of this drug, the only
treatment for this condition was non-prescription pain relief. Demand for one brand of
non-prescription pain reliever is also shown on the graph below.
Refer to the figure above. The manufacturer of the new drug would _______ total
revenue by increasing the price from $15 to $25.
A. increase
B. decrease, but continue to earn some
C. experience no change
D. completely eliminate
Refer to the table above. Pat’s opportunity cost of the delivery of an extra pizza is the
production of _____ pizza(s).
A. 12
B. 10
C. 3/2
D. 2/3
If the natural rate of unemployment equals 5 percent and the actual rate of
unemployment equals 6 percent, then cyclical unemployment equals:
A. 11 percent
B. 3 percent
C. 1 percent
D. 0.3 percent
Refer to the figure above. Private incentives in this market generate deadweight loss
equal to _______.
A. ½ × PS × TV
B. ½ × PS × TU
C. ½ × PR × UV
D. ½ × PR × TU
Suppose that there are three power-generating plants, all of which generate emissions.
The table summarizes the cost of emission reduction for each firm given five different
levels of pollution:
Suppose that the government imposes a tax of $21 per ton of pollution generated. Firm
A will emit ____ tons; Firm B will emit ___ tons and Firm C will emit ___ tons.
A. 0; 2; 3
B. 1; 3; 4
C. 3; 4; 4
D. 1; 2; 4