Which of the following would cause the dollar to depreciate?
A) an increase in the demand for dollars
B) a decrease in the demand for dollars
C) a decrease in the supply of dollars
D) a decrease in the demand for imports from foreign countries
Explain whether each of the following is a fixed cost or a variable cost for Damian
Dandridge’s tattoo parlor.
a. The payment he makes to buy tattoo ink.
b. The wages he pays his employees.
c. The $500-per-month payment he makes to advertise his shop on highway billboards.
d. The lease payment he makes to the landlord who owns the building where his shop is
located.
e. The payment he makes on his liability insurance policy.
Laura’s Pizza Place incurs $800,000 per year in explicit costs and $100,000 in implicit
costs. The restaurant earns $1.3 million in revenues and has $5 million in net worth.
Based on this information, what is economic profit for Laura’s Pizza Place?
A) $200,000
B) $400,000
C) $500,000
D) $2.8 million
Consumption spending is $5 million, planned investment spending is $8 million,
unplanned investment
spending is -$2 million, government purchases are $10 million, and net export spending
is $2 million. What is GDP?
A) $15 million
B) $23 million
C) $25 million
D) $27 million
The substitution effect of an increase in the price of Raisin Bran refers to
A) the decrease in the demand for Raisin Bran when its price rises.
B) the result that consumers will now switch to a substitute good such as Cheerios, and
the demand curve for Raisin Bran shifts to the left.
C) the fact that the higher price of Raisin Bran lowers consumer’s purchasing power,
holding money income constant.
D) the fact that the higher price of Raisin Bran relative to its substitutes, such as
Cheerios, cause consumers to buy less Raisin Bran.
A stock’s dividend yield is determined by
A) dividing the dividend payment by the stock’s initial price.
B) dividing the dividend payment by the stock’s closing market price.
C) dividing the stock’s closing market price by the dividend payment.
D) subtracting the stock’s initial purchase price from the stocks’ closing market price on
a given day.
Suppose the following two events occur in the domestic market for radiologists:
a. Some hospitals are outsourcing some radiology services such as reading x-rays.
b. Some medical schools have closed down their radiology departments as fewer
students enroll in this field. What is likely to happen to the equilibrium wage and
quantity of radiologists following these two events?
A) The equilibrium wage and the equilibrium quantity of radiologists rise.
B) The equilibrium wage and the equilibrium quantity of radiologists fall.
C) The equilibrium quantity falls and the effect on the equilibrium wage of radiologists
is indeterminate.
D) The equilibrium wage falls and the effect on equilibrium quantity of radiologists is
indeterminate.
Assume that a monopolist practices perfect price discrimination. The firm’s marginal
revenue curve will
A) be perfectly elastic.
B) be equal to its demand curve.
C) will be perfectly inelastic.
D) will lie below its demand curve.
The price level in the economy between 2012 and 2013 rose from 100 to 105. Between
2013 and 2014, the price level rose from 105 to 110.25. How does the short-run Phillips
curve predict the unemployment rate will change as a result?
A) The unemployment rate will decrease since inflation decreased.
B) The unemployment rate will decrease since inflation increased.
C) The unemployment rate will increase since inflation increased.
D) The unemployment rate would not change since there is no change in the rate of
inflation.
Juicy Couture has been successful in selling women’s clothing using an unusual
strategy.
According to an article in the Wall Street Journal, the key to the firm’s strategy is to
“limit distribution to maintain the brand’s exclusive cachet, even if that means
sacrificing sales, a brand-management technique once used only for high-end luxury
brands.” In 2006, Juicy clothes were sold in only four department stores: Neiman
Marcus, Saks, Bloomingdale’s, and Nordstrom. In 2006, its sales have more than
quadrupled since 2002.
Source: Rachel Dodes, “From Track Suits to Fast Track,” Wall Street Journal,
September 13, 2006. How does limiting the number of stores in which Juicy’s products
are sold contribute to its success?
A) By sacrificing sales, the company was able to focus on producing high quality
products.
B) It enables Juicy to price its products at a premium and differentiate them from lower
priced products.
C) It helps establish Juicy’s products as luxury items favored by the very wealthy.
D) Maintaining the exclusivity of a product increases the demand for the product.
The “Big Mac Theory of Exchange Rates” tests the accuracy of the purchasing power
parity theory. In July 2013, the Economist reported that the average price of a Big Mac
in the U.S. was $4.56. In Sweden, the average price of a Big Mac at that time was 41.6
kronor. What is the “implied exchange rate” between Swedish kronor and U.S. dollars?
A) 0.11 kronor per dollar
B) 1.90 kronor per dollar
C) 9.12 kronor per dollar
D) 46.2 kronor per dollar
In comparing China to Canada, China’s relatively ________ growth rate in GDP would
make you more likely to take a job in China, and China’s relatively ________ level of
GDP would make you less likely to take a job in China.
A) high; low
B) high; high
C) low; low
D) low; high
The National Restaurant Association states that the restaurant industry has economic
effect of more than $1.7 trillion annually in the United States, with every dollar spent in
restaurants generating an estimated total of $2.05 in spending in the economy. This
indicates that the spending multiplier for the restaurant industry is equal to
A) 1.21.
B) 1.70.
C) 2.05.
D) 4.25.