The size of the underground economy as a percent of GDP is larger in the United States
as compared to poorer countries such as Zimbabwe.
Answer:
Results of the ultimatum game indicate that most people value fairness enough that they
will refuse to participate in a transaction they consider unfair, even if they are worse off
financially as a result.
Answer:
A common mistake made by consumers is the failure to take into account the monetary
costs of their actions.
Answer:
Minimum efficient scale is defined as the level of output at which the short-run average
total cost stops decreasing.
Answer:
The only type of business that faces unlimited liability is a sole proprietorship.
Answer:
The law of one price holds exactly only if there are transactions costs associated with
buying a product in one location and selling it in another location.
Answer:
The additional output a firm produces by hiring one more worker is called the marginal
product of labor.
Answer:
Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the
Gulf coast states. In the market for gasoline,
A) the supply curve shifted to the left resulting in an increase in the equilibrium price.
B) the supply curve shifted to the right resulting in an increase in the equilibrium price.
C) the demand curve shifted to the left resulting in a decrease in the equilibrium price.
D) the demand curve shifted to the right resulting in an increase in the equilibrium
price.
Answer:
Figure 17-2
Figure 17-2 shows the
marginal revenue product for Becca’s Baubles, a producer of hand-beaded bracelets.
Suppose the market price of bracelets falls to $2. What happens to the curve given in
the diagram?
A) Nothing, because labor’s productivity has not changed.
B) There will be a movement along the curve.
C) The curve shifts to the left.
D) We cannot answer the question without knowing if Becca would want to hire more
workers.
Answer:
The firm’s gain in profit from hiring another worker is
A) the marginal revenue product of the extra worker.
B) the difference between marginal revenue product and the wage of the worker.
C) the extra output of the extra worker.
D) the reduction in costs from hiring another worker.
Answer:
Suppose the labor force stays constant, and the working-age population stays constant,
but a greater number of persons who were unemployed become employed. The labor
force participation rate will
A) increase.
B) decrease.
C) remain constant.
D) not change in a way that can be predicted.
Answer:
How do current tax laws in the United States favor employer-based health care
insurance?
A) Individuals who receive health insurance benefits are allowed to deduct the value of
these benefits from their taxable income.
B) Employers who provide health insurance benefits are reimbursed by the government
and are not taxed on these reimbursements.
C) Individuals who receive health insurance benefits do not pay taxes on the value of
these benefits.
D) Health insurance companies that provide insurance to employers are subject to a
lower tax rate than those insurance companies that provide insurance to private
individuals.
Answer:
If the per-worker production function shifts up,
A) it now takes more capital per hour worked to get the same amount of real GDP per
hour worked.
B) an economy can increase its real GDP per hour worked without changing the level of
capital per hour worked.
C) the per-worker production function becomes flatter.
D) negative technological change has occurred in the economy.
Answer:
You are given the following market data for Venus automobiles in Saturnia.
Demand: P = 200 – 0.25Q
Supply: P = 130 + 0.10Q
where P = Price and Q = Quantity. a. Calculate the equilibrium price and quantity.
b. Calculate the consumer surplus in this market.
c. Calculate the producer surplus in this market.
Answer:
An increase in the price of off-road vehicles will result in
A) a smaller quantity of off-road vehicles supplied.
B) a larger quantity of off-road vehicles supplied.
C) an increase in the demand for off-road vehicles.
D) a decrease in the supply of off-road vehicles.
Answer:
Figure 5-4
Suppose there are several paper mills producing paper for a market. These mills,
located upstream from a fishing village, discharge a large amount of wastewater into the
river. The waste material affects the number of fish in the river, and the use of the river
for recreation and as a public water supply source. Figure 5-4 shows the paper market.
Use this Figure to answer the following question(s).
What is the deadweight loss from producing at the market equilibrium?
A) area C
B) area E
C) area D
D) area F
Answer:
A decrease in the demand for American-made goods will
A) increase the supply of dollars in the foreign exchange market.
B) decrease the supply of dollars in the foreign exchange market.
C) increase the demand for dollars in the foreign exchange market.
D) decrease the demand for dollars in the foreign exchange market.
Answer:
What action should the Fed take if it wants to move from a point on the short-run
Phillips curve representing low unemployment and high inflation to a point representing
higher unemployment and lower inflation?
Answer:
What is an externality?
Answer:
In most countries in South America, the legal driving age is 18. If the legal driving age
in the United States was raised from 16 to 18, how would this affect the market for new
and used automobiles? What would happen to the equilibrium price and quantity of new
and used automobiles?
Answer:
How might have the educational system of the United States contributed to the
productivity slowdown of the mid-1970s to the mid-1990s?
Answer:
Table 26-6
Answer:
Suppose that the current equilibrium GDP is $14.5 trillion and that potential GDP is
$14.3 trillion. Will decreasing government purchases by $200 billion, or raising taxes
by $200 billion, restore the economy to potential GDP? Explain.
Answer:
