If there are many close substitutes available for a good, its elasticity of demand will be
higher.
a. True
b. False
Wages are comparatively low in markets where demand for labor is low and supply is
high.
a. True
b. False
The method of financing the Social Security system until 1983 is best described as
a. trust fund.
b. excise tax.
c. indirect tax.
d. “pay as you go.”
The elasticity measure which has been employed by the courts to assess the degree of
market competition is
a. price elasticity of demand.
b. income elasticity of demand.
c. cross elasticity of demand.
d. inverse elasticity of demand.
In 2012, about _____% of all Americans under the age of 65 did not have health
insurance.
a. 10%
b. 12%
c. 17%
d. 20%
If at optimum output of 1,000 units, the firm is incurring average variable cost per unit
of $3, average fixed cost per unit of $1.50, and selling its output at $7 per unit, total
profit is
a. $7,000.
b. $2,500.
c. $1,500.
d. $250.
Suppose you purchase a $1,000 bond that bears an interest rate of 10 percent. What will
happen if the interest rate goes to 20 percent?
a. The market price of the bond will increase to $2000.
b. The market price of the bond will drop to $500.
c. The return on the bond will double.
d. The return on the bond will halve.
Students in a class are assigned to groups to work on a project. A grade will be given for
each project, and everyone in the group will receive that grade. For the members of a
particular group, the grade is a
a. beneficial externality.
b. public good.
c. detrimental externality.
d. moral hazard.
As one moves down a straight-line demand curve, the elasticity decreases.
a. True
b. False
The U.S. economy has grown steadily over the years.
a. True
b. False
In 2013, new stock sales accounted for ____ in corporate financing because
corporations bought back some of their stock.
a. $2 billion
b. -$384 billion
c. $1 trillion
d. −$65 billion
The U.S. Constitution prevents tariffs on trade between the individual states.
a. True
b. False
The government used the Herfindahl-Hirschman index to determine if a proposed
merger will lead to excessive concentration.
a. True
b. False
Demand shifts due to changes in price.
a. True
b. False
For which of the following workers would the income effect be more likely to outweigh
the substitution effect of an increase in wage?
a. gardener
b. teacher
c. professional athlete
d. plumber
Wastes impose costs upon the community if they are
a. solid.
b. liquid.
c. gaseous.
d. any of the above.
Society might argue that there are cases in which it is appropriate to resist price
increases in situations where scarcity is serious. Included would be the case of
a. unrestrained monopoly that would otherwise succeed in gouging the public.
b. taxes imposed on products capriciously and inappropriately.
c. rising prices falling so heavily on the poor that rationing becomes preferable.
d. All of the above are correct.
A sum of money received at a future date
a. is worth less than the same sum of money received today.
b. is worth more than the same sum of money received today.
c. has the same value as the same sum of money received today.
d. is worth less than the same sum of money received yesterday.
The effect of a tariff or a quota is to
a. raise the price of a commodity in the exporting country above the price in an
importing country.
b. raise the price of a commodity in an importing country above the price in the
exporting country.
c. lower the price of the commodity in all countries.
d. raise the price of the commodity in all countries.