Baxter International, a manufacturer of hospital supplies, acquired American Hospital
Supply, a distributor of hospital supplies. This is an example of
A) a conglomerate merger.
B) a horizontal merger.
C) a vertical merger.
D) a two-dimensional merger.
Proponents of the ________ model argue that the short-run supply curve is vertical.
A) the monetarist model
B) the new classical model
C) the real business cycle model
D) the new Keynesian model
A common belief among political analysts is that someone running for his or her party’s
nomination for president of the United States must choose a different strategy once the
nomination is secured. To be nominated, the candidate must appeal to voters from one
party€Democrat or Republican€but in a general election a party’s nominee must appeal
to voters from both parties as well as independent voters. Which of the following offers
the best explanation for this change in strategy?
A) the Arrow impossibility theorem
B) the voting paradox
C) the median voter theorem
D) rent seeking
The ratio of the increase in ________ to the increase in ________ is called the
multiplier.
A) equilibrium nominal GDP; autonomous expenditure
B) equilibrium real GDP; autonomous expenditure
C) autonomous expenditure; equilibrium real GDP
D) induced expenditure; equilibrium real GDP
The minimum efficient scale is
A) the level of output where diminishing returns have not set in yet.
B) the plant size that yields the most profit.
C) level of operation where long-run average costs are lowest.
D) the smallest output level where the firm finally reaches productive efficiency.
a. Draw a production possibilities frontier for a country that produces two goods, beer
and pretzels. Assume that resources are equally suited to both tasks.
b. Define opportunity costs.
c. Use your production possibilities frontier graph to demonstrate the principle of
opportunity costs.
Which of the following statements about the budget deficit is true?
A) In 1992, the federal budget was balanced.
B) In 2000, the federal budget was in surplus.
C) In 2004, the federal budget was in surplus.
D) In 2011, the federal budget was in surplus.
If demand is perfectly elastic, the absolute value of the price elasticity coefficient is
A) infinity.
B) zero.
C) more than one.
D) equal to the absolute value of the slope of the demand curve.
In many corporations, there is ‘separation of ownership from control.” What does this
mean?
A) The shareholders control the corporation, although the board of directors owns the
corporation.
B) The managers of the corporation run the corporation, although the shareholders own
the corporation.
C) The board of directors controls corporate operations, although the managers of the
corporation own the corporation.
D) Top corporate managers only make decisions that have been approved unanimously
by shareholders.
An increase in real GDP can shift
A) money demand to the right and decrease the equilibrium interest rate.
B) money demand to the right and increase the equilibrium interest rate.
C) money demand to the left and decrease the equilibrium interest rate.
D) money demand to the left and increase the equilibrium interest rate.
A rapid increase in the price of oil will tend to
A) shift short-run aggregate supply to the left.
B) shift long-run aggregate supply to the left.
C) shift long-run aggregate supply to the right.
D) shift aggregate demand to the right.
Scenario 17-1
In academia, professors in some disciplines receive higher salaries than others. For
example, professors teaching in business schools receive higher salaries than professors
in the English department. Suppose at Unity College, assistant professors in the
business school earn $80,000 while assistant professors in the English department earn
$50,000. Now suppose the government passes comparable worth legislation that
requires academic institutions to pay all faculty the same salaries.
Following the passage of comparable worth legislation, Unity College responds by
placing salaries at $65,000. Which of the following is the result of the legislation?
A) The supply of English professors increases and the supply of business professors
decreases.
B) The demand for English professors decreases and the demand for business
professors increases.
C) There will be a surplus in the market for English professors and a shortage in the
market for business professors.
D) There will be a surplus in the market for English professors and the market for
business professors will not be affected.
The production possibilities frontier shows the ________ combinations of two products
that may be produced in a particular time period with available resources.
A) minimum attainable
B) maximum attainable
C) only
D) equitable
When housing prices fell as they did beginning in 2006 following the housing market
bubble, most banks and other lenders ________ the requirement for borrowers, making
it ________ for potential home buyers to obtain mortgages.
A) tightened; easier
B) tightened; harder
C) eased; easier
D) eased; harder
An insurance company is likely to attract customers like Clancy who want to purchase
insurance because he knows better that the company that he is more likely to make a
claim on a policy. What is the term used to describe the situation above?
A) moral hazard
B) adverse selection
C) asymmetric information
D) economic irrationality
If changes in inflation are higher than expected,
A) the short-run Phillips curve will be positively sloped, but not vertical.
B) the short-run Phillips curve will be negatively sloped.
C) the short-run Phillips curve will be vertical.
D) the long-run Phillips curve will be negatively sloped.
Assume price exceeds average variable cost over the relevant range of demand. If a
monopolistically competitive firm is producing at an output where marginal revenue is
$23 and marginal cost is $19, then to maximize profits the firm should
A) continue to produce the same quantity.
B) increase output.
C) decrease output.
D) shutdown.