A fish hatchery raises brook trout and rainbow trout. An increase in the market price of
brook trout therefore tends to
A) reduce the demand for brook trout.
B) increase the hatchery’s cost of raising rainbow trout.
C) increase the demand for brook trout.
D) decrease the hatchery’s cost of raising rainbow trout.
If a pizza seller reduces its prices, the price cut will
A) have no effect on the demand for competing sellers’ pizza.
B) increase the seller’s gross revenue.
C) increase the seller’s net revenue.
D) shift the seller’s demand curve if competing pizza sellers match the price decreases.
When do Federal Reserve notes become part of the money supply (M1)? When they are
A) deposited in the vaults of commercial banks.
B) printed by the Bureau of Engraving.
C) received by the Federal Reserve Banks.
D) spent by the public on newly-produced goods.
E) withdrawn from commercial banks by the public.
Attempts to fine-tune the economy through counter-cyclical fiscal policy
A) demonstrated their effectiveness in the 1930s.
B) demonstrated their effectiveness during World War II.
C) demonstrated their effectiveness between 1945 and 1960.
D) have not yet demonstrated their effectiveness.
According to your text, the so-called “Superbowl Effect”
A) is an example of a mere statistical correlation.
B) is an example of correct cause-and-effect reasoning.
C) is a sound discovery in economic theory.
D) is based upon a false set of facts.
Other things constant, which of the following would tend to increase the demand for
Toyota autos?
A) A fall in the price of Toyotas
B) A fall in the price of Chryslers (a substitute for Toyotas)
C) A rise in income, if Toyotas are a normal good
D) A rise in income, if Toyotas are an inferior good
Which of the following would tend to increase the demand for college textbooks?
A) A lower price of college textbooks
B) An increase in the number of enrolled college students
C) A significant increase in college tuition
D) Both A and B
Agreements among competing sellers to maintain prices and share markets
A) are usually unenforceable in court and illegal under many state laws and under
federal law where applicable.
B) are very common because they lead to economies of scale and hence greater
efficiency.
C) enable all sellers to cover their sunk costs but do not guarantee that any seller will be
able to cover marginal cost.
D) usually result in greater total output but also in higher prices to consumers.
If the baseball team can sell 6000 box-seat tickets when they set the price at $10 and
7000 box-seat tickets when they lower the price to $8, the marginal revenue per ticket
between 6000 and 7000 tickets is
A) $60,000.
B) $56,000.
C) $9.
D) $2.
E) minus $4.
Suppose the market clearing rent is $500 per month, but a rent control is established at
$400 per month. Which is most likely to emerge?
A) The demand for apartments would increase.
B) The supply of apartments would increase.
C) The scarcity of apartments would decrease.
D) The quantity of apartments demanded would exceed quantity supplied.
Federal Reserve Chairman Ben Bernanke once said if all else fails, the Fed could drop
money from helicopters to help the US economy. If “helicopter Ben” ever comes to the
rescue and begins dropping money from the sky, the will be engaged in
A) shenanigans.
B) expansionary monetary policy.
C) operation financial Armageddon.
D) contractionary monetary policy.
The money prices attached to goods in the economy
A) conceal the fact of their scarcity.
B) make the goods artificially scarce.
C) provide information about their scarcity.
D) reflect the level of greed prevailing in particular markets.
The time lags, which must be either reduced or known with some precision if fiscal
policy is to be an effective stabilizing technique, are the lags between
A) the beginning of a cyclical movement and its recognition.
B) the decision that compensatory action should be taken and the enactment of tax or
expenditure changes.
C) the increase or decrease in net government receipts and their final effects on total
spending.
D) all of the above, because a significant miscalculation with respect to any of these
lags could increase aggregate instability.
“Market clearing” refers to the case where
A) the purchase and sale plans of buyers and sellers are fully coordinated.
B) quantity demanded equals quantity supplied.
C) there is neither a shortage nor surplus of a good.
D) all of the above.
Suppose a babysitter demands payment in full before the parents go out for the night.
Using the economic way of thinking, the babysitter is clearly
A) exploiting the parents.
B) exploiting the children.
C) selling short.
D) in it only for the money.
Car A gets 20 miles per gallon, and sells for $17,000. Car B gets 40 miles per gallon,
and sells for $34,000. In the economic way of thinking, which car is more efficient?
A) Car A
B) Car B
C) Both are equally efficient.
D) It depends on the car buyer’s estimate of cost and benefit.
E) It depends on a number of statistical tests done by economists, the results of which
are not stated in the question.
Which of the following would not shift the supply curve?
A) A rise in the price of the good
B) A fall in the expected future price of the good
C) A rise in the costs of production of the good
D) A negative supply shock that destroys a portion of output
A continuing, long-term, large decline in the demand for coffee will not cause the price
of coffee to fall much over the years if
A) coffee is not scarce.
B) the demand for coffee is highly elastic.
C) the demand for coffee is highly inelastic.
D) the supply of coffee is highly elastic.
E) the supply of coffee is highly inelastic.
Which is the more efficient use of one’s tight budget: going to a first-run movie at $7.50
or waiting for the video to be available through Netflix?
A) Going to the first-run movie
B) Waiting for the video
C) Doing neither, especially if one’s budget is tight.
D) It depends on the chooser’s own evaluations of costs and benefits.
When Federal Reserve Banks add to their holdings of government securities,
A) commercial banks must reduce their net lending.
B) commercial bank reserves increase.
C) the Fed is extending less credit to the economy.
D) the stock of money declines.
Protecting air quality by establishing identical low limits on noxious discharges for all
firms is a questionable policy because
A) a little pollution from many sources adds up to excessive pollution.
B) by allowing firms to pollute at all it sacrifices the community’s interest to private
profit.
C) it does not allow high-cost air polluters to exceed the air pollution limits.
D) it tolerates preventable air pollution.
E) no one knows the possible side effects of the discharges.
When the Fed sells bonds on a mass scale
A) bonds go to the Fed, and dollars go into the banking system, so the money supply
tends to rise.
B) bonds go to the Fed, and dollars exit the banking system, so the money supply tends
to fall.
C) banks have fewer bonds and more dollars, so the money supply tends to rise.
D) banks have more bonds and fewer dollars, so the money supply tends to fall.
If Croatian firms can make 600 pitchforks or 100 hammers in a week and Slovenian
firms can make 200 pitchforks or 200 hammers in a week, then
A) the costs of production differ in each country.
B) the Croats have an incentive to specialize in hammers.
C) the Slovenes have an incentive to specialize in pitchforks.
D) all of the above are true.
It generally costs advertisers more to run a commercial on television in the evening than
in the morning because
A) it costs stations and networks more to broadcast any given commercial in the
evening.
B) overtime wage rates must usually be paid in the evening.
C) stations and networks ignore their own costs in setting their prices.
D) the government regulates television content but not prices.
Why did India’s economic growth rate lag far behind growth rates in South Korea,
Japan, and Taiwan between 1960 and 1999?
A) Indian households saved too much and spent too little.
B) Indian government officials opened the nation up to free international trade.
C) India engaged in central economic planning.
D) India has too small of a population to generate a highly specialized division of labor.
People in the U.S. will rarely pay a great deal per gallon to obtain water because
A) there are so many excellent substitutes for water.
B) there is no relationship between objective price and subjective value.
C) they are usually creatures of habit.
D) they think water, as a basic necessity, ought to be supplied at a very low price.
E) they place a very low marginal value on water.
Economics assumes people
A) tend to compete more in markets than they do in government.
B) tend to cooperate more in markets than they do in government.
C) try to advance their own projects in market and government processes.
D) try to pursue the public interest but find over time that only private interests matter.
Suppose the market-clearing price of milk is $3.00 per gallon, but the diary industry
persuades the government to establish a legally-mandated price support at $4.00 per
gallon. The newly legislated price tends to
A) create a surplus of milk.
B) increase the price of milk products.
C) increase the output of milk.
D) reduce the quantity of milk demanded.
E) do all of the above.
Fill in the blanks: ________ attempts to reduce negative externalities by ________.
A) Legislation; appropriate taxation
B) Legislation; letting people work out the problem themselves
C) Adjudication; creating new rights
D) Adjudication; discovering who has which rights
A woman who decides to drive to work rather than take the bus
A) is wasting scarce resources.
B) is behaving inefficiently.
C) thinks driving is more economically efficient for her.
D) is probably paying attention to personal comfort and convenience rather than
economic efficiency.
People who buy futures on the commodity market are
A) increasing, not reducing, their personal risk.
B) reducing, not increasing, their personal risk.
C) either reducing or increasing their personal risk, depending on the circumstances.
D) creating added risk for others in society.
E) showing they are essentially indifferent to risk.
An increase in the demand for a good will tend to bid up the cost of acquiring the good
more
A) if suppliers respond by quickly making larger quantities available.
B) if the cost of transferring resources out of other uses into production are low.
C) in the short run than in the long run.
D) if the supply curve is highly elastic.
Other things constant, which of the following would tend to decrease the demand for
Disney World vacations?
A) A rise in the price of Hawaiian vacations (a substitute for Disney World)
B) A rise in income, if Disney World vacationing is a inferior good
C) A fall in the price of air travel (a complementary good)
D) New information that Disney World will raise its prices after this summer
E) All of the above.
Fill in the blanks: Transaction costs are likely to be ________ when property rights are
________ clearly defined.
A) lower ; less
B) higher; more
C) lower; more
D) Trick question: there is no causal relationship between transaction costs and property
rights.
Which of the following nations had the lowest growth rate between 1960 and 2011?
A) Taiwan
B) Chile
C) Ethiopia
D) South Korea