A patch of edible mushrooms growing wild in a national forest is a ____ good.
A. public
B. private
C. pure public
D. commons
Refer to the figure above. According to this data, marginal utility for apple consumption
is
A. constant.
B. first increasing, but decreasing after the fourth apple.
C. decreasing after the first apple.
D. constantly increasing.
The aging of the labor force in the U.S. is likely to ______ the natural rate of
unemployment; an increase in the efficiency of the labor market is likely to ______ the
natural rate of unemployment.
A. decrease; decrease
B. increase; increase
C. increase; decrease
D. decrease; increase
Refer to the figure above. If Row Resorts decides to keep its rates high for the summer,
Column Cruises would get the highest payoff by:
A. also keeping its rates high in the summer.
B. offering reduced summer rates.
C. agreeing with Row Resorts to both lower their rates at exactly the same time.
D. it doesn’t matter which he chooses because he will have the same payoff in either
case.
“Holding all other relevant factors constant, consumers will purchase more of a good as
the price falls.” This statement reflects the behavior underlying:
A. the demand curve.
B. an increase in demand.
C. the supply curve.
D. a decrease in the demand curve.
Refer to the table above. The Chairman of the Economics Department at What’s
AMatterU says that fundraisers should be hired as long as their marginal donations
exceed their marginal labor costs. Following this criterion, __________ employees are
hired and net benefits are __________.
A. 1; $22,000
B. 2; $25,426
C. 3; $25,426
D. 2; $3,476
Most economists agree that ______ are the single most important source of productivity
improvements.
A. increases in human capital
B. increases in physical capital
C. technological advances
D. discoveries of natural resources
The aggregate demand curve shows the relationship between planned spending and the
______.
A. nominal interest rate
B. real interest rate
C. unemployment rate
D. inflation rate
Bookstores often sponsor author book-signing events. When a famous author came to
Olivia’s local bookstore, Olivia had to buy her book from the local store weeks before
the signing and leave it at the store to be picked up at the time of the signing. The
bookstore adopted this policy in order to
A. allow the author to sign many books in advance, speeding up the line.
B. maintain high levels of security at the signing.
C. prevent people from bringing in copies of the book that had been purchased
elsewhere.
D. prevent people from plagiarizing the author’s book.
This graph describes the production possibilities on the island of Genovia:
The opportunity cost of producing one car in Genovia is:
A. 5,000 tons of agricultural products.
B. 500 tons of agricultural products.
C. 5 tons of agricultural products.
D. 50 tons of agricultural products.
Assume that this graph illustrates a perfectly competitive labor market.
If the supply of worker hours in this market shifted to the right
A. the equilibrium wage would fall and the number of worker hours would increase.
B. the equilibrium wage and the number of worker hours would increase.
C. the equilibrium wage would stay the same, but the number of worker hours would
increase.
D. the equilibrium wage would fall and the number of worker hours would decrease.
Refer to the figure above. If the market is unregulated, the value of consumer surplus is:
A. $4.
B. $8.
C. $16.
D. $24.
A winner-take-all labor market is one in which
A. large differences in human capital translate into small differences in wages.
B. one worker receives all of the available compensation and the rest receive nothing.
C. small differences in human capital translate into small differences in wages.
D. small differences in human capital translate into large differences in wages.
Which of the following workers is least likely to lose his/her job during a recession?
A. carpenter
B. automobile assembly line worker
C. roofer
D. police officer
The Federal Aviation Administration requires large commercial jets to install greater
amounts of safety equipment than small, private planes. This policy
A. violates the notion of efficiency because the marginal costs of safety on small planes
are smaller.
B. violates the notion of efficiency because the benefit of one less fatality is the same
whether a jet or a small plane is involved.
C. affirms the notion of efficiency because one fewer commercial jet accident will save
more lives than one fewer private plane accident.
D. affirms the notion of efficiency because airlines can spread the costs out over many
tickets.
Each of the following would increase the demand for U.S. dollars, shifting the demand
curve for dollars to the right, EXCEPT:
A. an increased preference for U.S.-made goods.
B. an increase in real GDP abroad.
C. an increase in the real interest rate on U.S. assets.
D. an appreciation of foreign currencies relative to the U.S. dollar.
You can spend $5 for lunch and you would like to have two double cheeseburgers.
When you get to the restaurant, you find out the price for double cheeseburger has
increased from $2.50 to $2.99. You decide to have just one double cheeseburger for
lunch. This is best described as a(n):
A. substitution effect.
B. income effect.
C. buyer’s reservation price effect.
D. seller’s reservation price effect.
Better information about consumers’ reservation prices generally leads to
A. a reduction in consumer surplus.
B. acquisition of goods by consumers who are willing to pay the highest price.
C. equitable distribution of goods among low income consumers.
D. acquisition of goods by consumers with the greatest need.
Providing workers with on-the-job training will increase:
A. average labor productivity.
B. the share of the population employed.
C. the unemployment rate.
D. the labor force participation rate.
The market for bagels contains two firms: BagelWorld (BW) and Bagels’R’Us (BRU).
The owners of the two firms decide to fix the price of bagels. The table shows the total
profits the firms will earn if they abide by the price setting agreement or if they cheat on
the agreement.
Refer to the figure above. This game __________ a prisoner’s dilemma because
__________.
A. is not; cheating has the highest payoff for both firms
B. is; if both firms played their dominated strategy, profits would be higher than if they
play their dominant strategies
C. is; if both firms played their dominant strategy, profits would be higher than if they
play their dominated strategies
D. is not; neither firm has a dominant strategy
Demand tends to be _______ in the short run than in the long run.
A. more elastic
B. more inelastic
C. more volatile
D. less important
When the production process extends over more than one year, the value of the final
product is:
A. included in GDP for the year in which production began.
B. included in GDP for the year in which production was completed.
C. allocated to GDP in each year according to the value added in that year.
D. allocated equally to GDP in each year.
If the local electricity utility wants to raise revenues, it should _______ its price
because demand for electricity is likely to be ________.
A. lower; inelastic
B. raise; elastic
C. lower; elastic
D. raise; inelastic
Suppose that in most car collisions between cars of unequal size, the smaller car
sustains the most damage and its occupants suffer the most injury. In answering the
following question, assume that, on average, smaller cars generate less air pollution and
that every person in the economy drives at least one car.
Refer to the information above. Individuals have a private incentive to:
A. buy smaller cars so that all collisions will be between owners of smaller vehicles.
B. buy smaller cars because they pollute less.
C. buy larger cars so that they are safer in the event of a collision.
D. not change the size of their cars because their original choice reflected an optimal
choice.
Refer to the figure above. The firm earns a ___________ of __________ when it
produces 120 units of output.
A. loss; $64
B. profit; $64
C. loss; $114
D. profit; $114
Pat has just graduated from college and has two job offers. One pays $45,000 and
requires that Pat supervise employees doing construction work on a busy highway. The
other is an office job that pays $40,000. Chris has received the same offers from the
same firms. Pat values the added safety of the office job at $6,000 per year and Chris
values the added safety of the office job at $3,000 per year.
Pat is more ____ than Chris.
A. risk averse
B. vulnerable to adverse selection
C. careful
D. rational
If in the economy, business saving equals $240 billion, household saving equals $15
billion and government saving equals -$150 billion, what is the value of national
saving?
A. $415 billion
B. $265 billion
C. $250 billion
D. $105 billion
Any hurdle method of price discrimination is an attempt to:
A. separate consumers on the basis of their reservation prices.
B. inconvenience all consumers.
C. separate consumers on the basis of their incomes.
D. encourage consumers with high reservation prices to make a purchase they were not
going to make.
If the demand for a good is elastic, that good is likely to have:
A. many close complements.
B. few close complements.
C. many close substitutes.
D. few close substitutes.
Refer to the figure above. Demand for coffee last Monday is shown in bold and labeled
D(Monday). On Tuesday, the news featured a story about a storm that wiped out the
entire coffee crop in Brazil. On Wednesday:
A. the demand function remained at D(Monday), but the quantity demanded increased.
B. demand shifted to D(A) in anticipation of future price increases.
C. demand shifted to D(B) in anticipation of future price increases.
D. there would be no change in either the demand function or the quantity demanded
because not enough time had passed for the storm’s effects to be felt.
People’s expectations of future inflation that do not change even if inflation rises
temporarily are called _____ inflationary expectations.
A. aggregate
B. average
C. anchored
D. autonomous
Suppose 30 employee-hours can produce 50 units of output. Assuming the law of
diminishing marginal returns is present, to produce 100 units of output will require:
A. an additional 30 employee-hours.
B. more than 30 additional employee-hours.
C. a total of 60 or less employee-hours.
D. less than 30 additional employee-hours.
Suppose the price price P gives us a price elasticity of demand equal to 1. It is on the
______ portion of the demand curve.
A. elastic
B. unitary elastic
C. inelastic
D. steepest
A(n) __________ involves giving all citizens a substantial lump sum payment that is
reduced at a rate of less than 100% as income is earned.
A. positive income tax
B. in-kind transfer
C. unearned income tax credit
D. negative income tax