Which of the following would explain why accounting profit might be greater than
economic profit?
A) A firm has implicit costs as well as explicit costs.
B) A firm has only explicit costs.
C) A firm’s net income is greater than its accounting profit.
D) A firm’s net income is less than its accounting profit.
If the United States placed an embargo on Swedish products, what would happen in the
U.S. market for Swedish furniture?
A) The supply curve would shift to the left.
B) The supply curve would shift to the right.
C) The demand curve would shift to the right.
D) The demand curve would shift to the left.
A monopolistically competitive firm will
A) charge the same price as its competitors do.
B) always produce at the minimum efficient scale of production.
C) have some control over its price because its product is differentiated.
D) produce an output level that is productively and allocatively efficient.
Who controls a sole proprietorship?
A) stockholders
B) bondholders
C) the owner
D) all of these
If economies of scale are relatively important in an industry, the typical firm’s
A) marginal cost curve will decline continuously until it reaches minimum efficient
scale.
B) long-run average cost curve will begin rising before it reaches minimum efficient
scale.
C) long-run average cost curve will reach a minimum at a level of output that leaves
room for a large number of firms to enter the industry.
D) long-run average cost curve will reach a minimum at a level of output that is a
relatively large fraction of total industry sales.
Article Summary. As a part of its 2013 marketing campaign, the Greater Fort
Lauderdale Convention & Visitors Bureau (CVB) set its sights on increasing travel
to the region by with promotions to the lesbian, gay, bisexual and transgender
community (LGBT). From August through November, the CVB has events
scheduled across the United States and globally in an effort to attract a larger
share of this travel segment. According to the CVB, Fort Lauderdale is the state’s
largest and most popular diverse gay capital, and their marketing efforts helped
attract 1.2 million LGBT tourists who spent $1.4 billion in 2012. Source: Arlene
Satchell, “Lauderdale CVB ramps up LGBT summer marketing,” Sun Sentinel,
June 29, 2013.
By marketing to the LGBT community, Fort Lauderdale and the CVB are trying to set
the city apart from competing travel destinations. This is an example of
A) defending a brand name.
B) blocking entry into the market.
C) legally enforcing a trademark.
D) product differentiation.
From 1983-2013, ________ for the United States were negative.
A) planned inventories
B) net exports
C) unplanned inventories
D) transfer payments
In 1995, the General Agreement on Tariffs and Trade (GATT), which was established in
1948, was replaced by the World Trade Organization (WTO). Why did members of the
GATT push for the establishment of the WTO?
A) The GATT agreement only covered trade in goods. The WTO was created to cover
trade in goods, services and intellectual property.
B) The charter of the GATT had run out and a new organization was needed to promote
international trade.
C) The creation of the European Union (EU) made the GATT obsolete. The WTO was
formed to regulate trade between the EU and other nations.
D) By 1995 tariffs had been eliminated. The WTO was created to reduce non-tariff
trade barriers.
Table 9-3
Bryce and Tina are artisans who produce homemade candles and soap. Table 9-3 lists
the number of candles and bars of soap Bryce and Tina can each produce in one month.
Select the statement that accurately interprets the data in the table.
A) Bryce has an absolute advantage in making candles and soap.
B) Tina has an absolute advantage in making candles and soap.
C) Neither Bryce nor Tina has an absolute advantage in making candles.
D) Neither Bryce nor Tina has an absolute advantage in making soap.
The equilibrium wage and quantity of labor in the market for skilled workers is
determined by
A) the strength of labor unions.
B) the monopsony power of firms.
C) the demand and supply of labor.
D) the market value created by the output of these skilled workers.
A monopoly is characterized by all of the following except
A) there are only a few sellers each selling a unique product.
B) entry barriers are high.
C) there are no close substitutes to the firm’s product.
D) the firm has market power.
A persistent shortage of yen at a given fixed exchange rate (in dollars per yen) is
evidence that the yen is ________ versus the dollar. This shortage can be reduced or
eliminated through a ________ of the yen.
A) undervalued; devaluation
B) undervalued; revaluation
C) overvalued; revaluation
D) overvalued; devaluation
Figure 26-5
In the figure above, the movement from point A to point B in the money market would
be caused by
A) an increase in the price level.
B) a decrease in real GDP.
C) an open market sale of Treasury securities by the Federal Reserve.
D) an increase in the required reserve ratio by the Federal Reserve.
Figure 3-4
If the current market price is $15, the market will achieve equilibrium by
A) a price increase, increasing the supply and decreasing the demand.
B) a price decrease, decreasing the supply and increasing the demand.
C) a price decrease, decreasing the quantity supplied and increasing the quantity
demanded.
D) a price increase, increasing the quantity supplied and decreasing the quantity
demanded.
The tax multiplier is smaller in absolute value than the government purchases multiplier
because some portion of the
A) decrease in taxes will be saved by households and not spent, and some portion will
be spent on imported goods.
B) decrease in taxes will be saved by households and not spent, and some portion will
be spent on consumer durable goods.
C) increase in government purchases will be saved by households and not spent, and
some portion will be spent on imported goods.
D) increase in government purchases will be saved by households and not spent, and
some portion will be spent on consumer durable goods.
What impact does monetary policy have on the long-run Phillips curve?
A) Monetary policy can only shift the long-run Phillips curve to the left.
B) Monetary policy shifts the long-run Phillips curve to the right or left, depending on
whether monetary policy is expansionary or contractionary.
C) Monetary policy can only shift the long-run Phillips curve to the right.
D) Monetary policy has no impact on the long-run Phillips curve.
Figure 6-1
A perfectly inelastic demand curve is shown in
A) Panel A.
B) Panel B.
C) Panel C.
D) Panel D.
“The price of compact fluorescent light bulbs fell because of improvements in
production technology. As a result, the demand for incandescent light bulbs decreased.
This caused the price of incandescent light bulbs to fall; as the price of incandescent
light bulbs fell the demand for incandescent light bulbs decreased even further.”
Evaluate this statement.
A) The statement is false. A decrease in the price of compact fluorescent light bulbs
would decrease the demand for incandescent light bulbs, but a decrease in the price of
incandescent light bulbs would not cause the demand for incandescent light bulbs to
decrease.
B) The statement is false because the demand for incandescent light bulbs would
increase as the price of compact fluorescent light bulbs fell.
C) The statement is false because compact fluorescent light bulbs producers would not
reduce their prices as a result of improvements in technology; doing so would reduce
their profits.
D) The statement is false because it confuses the law of demand with the law of supply.