The wages and salaries that people earn differ partly because of differences in:
A. wealth.
B. ability.
C. Social Security payments.
D. in-kind transfer payments.
Economic resources in the capitalist system are brought together by:
A. government units.
B. entrepreneurs.
C. labor unions.
D. the managerial elite.
Refer to the above data. If the firm’s minimum average variable cost is $10, the firm’s
profit-maximizing level of output would be:
A. 2.
B. 3.
C. 4.
D. 5.
If Fred’s annual real income rises by 8 percent each year, his annual real income will
double in about:
A. 8-9 years.
B. 10-11 years.
C. 5-6 years.
D. 19-20 years.
Mutual interdependence means that:
A. product differentiation exists, that is, firms produce close substitutes but not identical
products.
B. each seller faces a completely inelastic demand curve.
C. each firm must consider the possible reactions of rivals when establishing price
policy.
D. when a pure monopolist chooses a price, it also necessarily chooses some specific
level of output.
Answer the question based on the table below.
At what point on the table would a purely competitive firm cover all of its costs and
earn only normal profits?
A. Q = 5
B. Q = 10
C. Q = 15
D. Q = 20
GDP in an economy is $4600 billion. Consumer expenditures are $3500 billion,
government purchases are $900 billion, and gross private domestic investment is $400
billion. Net exports are:
A. +$400 billion.
B. -$400 billion.
C. +$200 billion
D. -$200 billion.
An increase in the price of a product will reduce the amount of it purchased because:
A. supply curves are upsloping.
B. the higher price means that real incomes have risen.
C. consumers will substitute other products for the one whose price has risen.
D. consumers substitute relatively high-priced for relatively low-priced products.
Which would be one of the factors that increase aggregate demand?
A. An increase in personal income tax rates.
B. An increase in the productivity of labor.
C. An increase in consumer wealth.
D. An increase in real interest rates.
Refer to the above graph, which shows the supply and demand for money where Dm1,
Dm2, and Dm3 represent different demands for money and Sm1, Sm2, and Sm3 represent
different levels of the money supply. The initial equilibrium point is A. What will be the
new equilibrium point following an increase in the money supply?
A. C.
B. D.
C. G.
D. H.
Refer to the above graph of the representative firm in monopolistic competition. The
long-run equilibrium price and output for this firm will be:
A. A and C.
B. B and D.
C. A and D.
D. B and C.
If D equals the maximum amount of new demand-deposit money that can be created by
the banking system on the basis of any given amount of excess reserves, E equals the
amount of excess reserves, and m is the monetary multiplier, then:
A. m = E/D.
B. D = E m.
C. D = E – 1/m.
D. D = m/E.
A single firm in pure competition in the short run has a:
A. vertical supply curve.
B. vertical demand curve.
C. horizontal supply curve.
D. horizontal demand curve.
Which statement is true?
A. Monopoly will result in a higher price and a larger output than pure competition.
B. Monopoly will result in a higher price and a larger output than monopolistic
competition.
C. Pure competition will result in a lower price and a higher output than monopolistic
competition.
D. Monopolistic competition will result in a lower price and a lower output than pure
competition.
The following is budget information for a hypothetical economy. All data are in billions
of dollars.
Refer to the above data. In which year is there a budget surplus?
A. Year 1
B. Year 2
C. Year 3
D. Year 4
The following is budget information for a hypothetical economy. All data are in billions
of dollars.
Refer to the above data. What year is the budget deficit $250 billion?
A. Year 2
B. Year 3
C. Year 4
D. Year 5
The single most important source of productivity for economic growth for the United
States has been:
A. improved resource allocation.
B. education and training.
C. technological advance.
D. economies of scale.
Refer to the above diagram, which shows three demand curves for coffee. Which would
cause the change in the demand for coffee illustrated by the shift from D1 to D3?
A. A decrease in the price of tea
B. An increase in consumer incomes
C. A decrease in the price of sugar
D. A technological improvement in the production of coffee
For which of the following goods would you most likely observe the characteristic of
excludability?
A.A concert in the city park
B.A professional baseball game
C.Exterior Christmas lights
D.An interstate highway
Refer to the above graph. At total revenue of $8,000, the price elasticity of demand is:
A. elastic.
B. inelastic.
C. unit-elastic.
D. perfectly inelastic.
In the above diagram, total product will be at a maximum at:
A. Q3 units of labor
B. Q2 units of labor
C. Q1 units of labor
D. some point that cannot be determined with the above information.
Macroeconomics is the study of economics from the standpoint of:
A. individual economic units.
B. a typical firm.
C. a typical household.
D. the overall economy.
Which statement is correct?
A. In the short run, the pure monopolist will maximize total profits by producing at that
level of output where the difference between price and average total cost is greatest.
B. In the short run, the pure monopolist will charge the highest price it can get for its
product.
C. Because of its ability to administer prices, the pure monopolist can increase its price
and increase its volume of sales simultaneously.
D. Pure monopolists do not always realize economic profits.
Refer to the above graph. Which factor will shift AD1 to AD2?
A. An increase in business taxes.
B. An increase in real interest rates.
C. An increase in national income abroad.
D. An increase in household indebtedness.
The shift of labor out of agriculture to industry in the United States has tended to:
A. reduce the rate of productivity growth.
B. increase unemployment in the agriculture sector.
C. reduce unemployment in the industrial sector.
D. increase labor productivity.
A trough in the business cycle occurs when:
A. cyclical unemployment is at a minimum point.
B. employment and output reach their lowest levels.
C. the natural rate of unemployment is at a minimum point.
D. structural and frictional unemployment are at their highest levels.
The crowding-out effect from government borrowing to finance the public debt is
reduced when:
A. the economy is experiencing a period of high inflation.
B. the economy is operating at the full-employment level of output.
C. public investment complements private investment.
D. the distribution of income becomes more equal.
When gross investment is positive, net investment:
A. is always zero.
B. must be negative.
C. must be positive.
D. may be either positive or negative.
Demand can be said to be inelastic when:
A. an increase in price results in a reduction in total revenue.
B. a reduction in price results in an increase in total revenue.
C. a reduction in price results in a decrease in total revenue.
D. the elasticity coefficient exceeds one.
The study of how a single business firm sets its prices would fall under the study of:
A. macroeconomics.
B. microeconomics.
C. income distribution.
D. economic growth.
If a product has a short-run elasticity of supply equal to zero, then an increase in the
demand for the product will:
A. have no effect on price or quantity sold.
B. increase price and leave quantity sold unchanged.
C. increase price and reduce the quantity sold to zero.
D. leave the price unchanged and reduce the quantity sold.
The long-run average total cost curve:
A. will rise if diminishing returns are encountered.
B. will fall if diminishing returns are encountered.
C. will rise if economies of scale are incurred.
D. is based on the assumption that all resources are variable.
What are the two characteristics that distinguish public goods from private goods?
A.Liability rules and lawsuits
B.The Coase theorem and efficiency
C.Positive and negative externalities
D.Nonrivalry and nonexcludability