We do not have reliable information on the time lags between expansionary fiscal and
monetary policy actions and their effect on production and prices because
A) Congress has reduced the funds available to the Bureau of Economic Analysis.
B) economists believe any discretionary policy would only make matters worse.
C) economists have only recently discovered the importance of this problem.
D) the length of the lags will depend in large part on how long they are thought to be.
The demand for a good is inelastic if, when its price rises,
A) the demand falls.
B) the quantity demanded falls.
C) the quantity demanded increases.
D) total dollar expenditure on the good decreases.
E) total dollar expenditure on the good increases.
Which of the following regions had the most impressive growth rate between 1960 and
2011?
A) India
B) East Asia
C) Latin America
D) Sub-Saharan Africa
Of the following cancer patients, who is speculating?
A) The one who follows their doctor’s advice and elects chemotherapy
B) The one who goes against their doctor’s advice and rejects chemotherapy
C) The one who gets a second opinion, but not a third opinion
D) All of the above.
E) None of the above.
The textbook’s example of urban traffic flows demonstrates the notion of single-minded
pursuits of one’s own best interest
A) creates traffic jams.
B) interferes with achievement of the public interest.
C) produces social cooperation under appropriate rules of the road.
D) will not work to any single person’s advantage.
E) will work to some people’s advantage but will harm the vast majority.
Governments usually provide national defense from tax funds because
A) everyone wants national defense.
B) national defense benefits everyone.
C) more security is better than less.
D) it is hard to supply national defense exclusively to the people who willingly pay for
it.
A barter exchange
A) always takes place without greed on behalf of the trading parties.
B) takes place without money.
C) tends to have lower transaction costs compared to exchanges using money.
D) is characterized by all of the above.
Which statement below is true?
A) Only price takers practice price discrimination.
B) Non-profit firms do not practice price discrimination.
C) No U.S. government organization is officially allowed to practice price
discrimination.
D) All of the above are true.
E) None of the above is true.
The economic efficiency of any process will be evaluated by
A) the proportion of marginal to non-marginal costs.
B) the ratio of work done to energy supplied.
C) comparing what is gained from what is sacrificed.
D) the relationship of supply to demand.
The “miracle” of the market, as addressed in your text, refers to the countless goods and
services of great complexity made abundantly available
A) under conditions of massive ignorance.
B) with a minimum number of errors and mistakes.
C) with few losses and bankruptcies.
D) with no systematic or scientific way of explaining how it happens.
Restaurants catering to both a lunch and dinner trade are likely to mark their prices up
above the cost of the food more for dinner than for lunch because
A) the demand is greater at dinner.
B) the demand is less at dinner.
C) the demand is less elastic at dinner.
D) the demand is more elastic at dinner.
The effective owner of a resource is the person who
A) can appropriate the income that arises from selling the services of the resource.
B) enjoys physical possession of the resource.
C) has legal title to the resource.
D) has mixed the resource with individual effort to create private property.
Which is the most likely effect upon the market for cotton of a greatly increased price
for corn, which can usually be grown on land suitable for cotton cultivation?
A) The demand for cotton will decrease and the quantity exchanged will fall.
B) The demand for cotton will increase and the quantity exchanged will rise.
C) The supply of cotton will increase and the quantity exchanged will rise.
D) The supply of cotton will decrease and the quantity exchanged will fall.
E) The supply of cotton will increase and the quantity exchanged will fall.
Suppose Carmen buys ramen noodles. To determine whether ramen noodles are a
normal or inferior good for her, we must observe how Carmen
A) responds to a change in the price of a substitute for ramen noodles.
B) responds to a change in the price of a complement for ramen noodles.
C) responds to a change in the price of ramen noodles itself.
D) responds to a change in her income.
E) responds to all of the above.
Nations with slower growth rates can “catch up” to rapidly growing countries by
A) using budget deficits as a long-run policy tool.
B) adopting the technologies of the wealthier nations.
C) pressuring the central bank to increase the money supply and reduce interest rates.
D) raising the minimum wage.
E) exporting more than it imports.
A unit of output whose production and sale adds less to cost than it generates in
additional revenue is
A) a profitable unit to produce and sell if marginal cost declines with additional output.
B) a profitable unit to produce and sell if total receipts exceed total costs.
C) a profitable unit to produce and sell unless it must be sold at a price below average
unit cost.
D) a profitable unit to produce and sell.
Who among the following provides a productive service?
A) Bill, a talented software developer
B) Monica, a paid Washington, D.C. intern
C) Buggs, an illicit drug smuggler
D) All of the above.
The market price for a final good reflects
A) the objective value of the good.
B) the values added by earlier stages of production.
C) the seller’s profit.
D) the buyer’s loss.
E) both C and D.
If price discrimination enables sellers to increase net revenues, why don’t all sellers try
it? Because
A) some sellers can’t control resentment.
B) some sellers are price takers.
C) some sellers find it too costly to devise, administer, and monitor.
D) of all the above reasons.
A cancer patient is told he needs chemotherapy in order to live three more years at best,
but the patient’s final three years will be filled with all the terrible side-effects of the
treatment. Without it, he will surely die within a year, but his quality of life would be a
better. Suppose he chooses to quit chemotherapy and instead he spends his time
learning to play the cello, something he always wanted to learn. The economic way of
thinking suggests
A) others should consider playing the cello while they are still young and healthy.
B) the doctors were absolutely rightthe patient needs chemotherapy.
C) the patient considers playing the cello a substitute for chemotherapy.
D) the patient has clearly given up his will to live.
Which of the following is the best example of a “free” good?
A) HIV/AIDS cocktails freely distributed to people in developing countries
B) The air you are currently breathing
C) Public roads
D) Public schooling in states where education is subsidized
Suppose we observe a substantial increase in the price of a good, and, at the same time,
an increase in the quantity of the good demanded. What can we conclude?
A) The law of supply is untrue.
B) Consumers haven’t followed the law of demand.
C) The demand curve has shifted to the right.
D) The good is a luxury good.
Any combination of two goods that lies beyond the production possibilities frontier
A) is currently impossible to produce.
B) is currently possible to produce, but not worth trying.
C) represents economic waste.
D) represents a more efficient combination of output than anything lying on the frontier.
Suppose all producers in a given industry charge exactly the same price for their
product. Uniform prices across an industry proves
A) industry competetitiveness.
B) industry monopolization.
C) producers cannot be earning monopoly profits.
D) absolutely nothing about whether the industry is adequately competitive.
Your textbook authors use the urban traffic example to show
A) why economics cannot explain non-financial processes.
B) how social cooperation emerges when people act under generally accepted rules.
C) how a smooth flow of traffic can only be achieved by detailed, central planning.
D) how a smooth flow of traffic can only be achieved if people drive in the public
interest.
Suppose a price searcher faces the following demand curve: At $100, $90, $80, $70,
and $60, the quantity demanded is 1, 2, 3, 4, and 5 units respectively. If the firm’s
marginal cost is $40 at any level of output, it would maximize net revenues by
A) producing 5 units and charging $60.
B) producing 4 units and charging $70.
C) producing 3 units and charging $80.
D) producing 2 units and charging $90.
The marginal cost to a student of missing a class meeting in Introductory Economics
increases when
A) textbook prices increase.
B) tuition rates increase.
C) valuable information is communicated in the class meetings.
D) any of the above occurs.
Wealth consists ultimately of
A) gold.
B) land.
C) money.
D) whatever people value.
The economic way of thinking suggests that which group below unintentionally
expanded the number of people captured and sold as slaves in Sudan?
A) The profit-seeking slave traders
B) Western humanitarian organizations that tried to redeem and free Sudanese slaves
C) Government agencies that set price supports on Sudanese slaves
D) The United Nations
Which of the following would shift the supply curve to the right?
A) A rise in the expected future price of the good
B) A rise in the costs of producing the good
C) Fewer producers in the industry
D) All of the above.
E) None of the above.