Globalization has made economies of scope:
A. more important to firms because global corporations can segment the production
process.
B. more important to firms because global corporations do not have to segment the
production process.
C. less important to firms because global corporations can segment the production
process.
D. less important to firms because global corporations do not have to segment the
production process.
Answer:
Suppose that the U.S. dollar buys 100 Japanese yen, gold costs $500 per ounce in New
York, and gold costs 20,000 yen per ounce in Tokyo. What does the law of one price
predict will happen?
A. Nothing will happen.
B. Traders will avoid the U.S. market and exchange only in Tokyo, where the price of
gold is lower.
C. Traders will buy gold in the United States and sell it in Japan.
D. Traders will buy gold in Japan and sell it in the United States.
Answer:
A Pareto optimal policy improves:
A. the welfare of Pareto.
B. the welfare of more people than it hurts.
C. the welfare of at least 50 percent of the population.
D. everyone’s welfare.
Answer:
Which of the following is eroding the U.S. comparative advantage?
A. The spread of technology.
B. The law of one price.
C. A depreciating dollar.
D. Intellectual property rights.
Answer:
One of the 10 sources of U.S. comparative advantage mentioned in the text is:
A. religious diversity.
B. a large military.
C. a high ratio of lawyers to the population.
D. stable U.S. government institutions.
Answer:
The Marxist critique of capitalism was based on the notion that:
A. a capitalist system ignored traditional class roles.
B. efficient allocation of resources was not a worthwhile goal.
C. the proletariat class exploited the capitalist class, which created all the value inherent
in goods.
D. the capitalist class exploited the proletariat class, which created all the value inherent
in goods.
Answer:
Some U.S. chicken slaughterhouses that export poultry to Russia did not pass health
inspections by Russian inspectors. The facilities that did not pass inspection could not
export chickens to Russia. What advantage to Russia does food safety have as a means
of reducing imports into that country?
A. Because the main effect of inspections is to protect the consumer, it is less harmful
than a tariff or quota.
B. It is difficult to separate reasonable from unreasonable regulations, and so such
inspections often are allowed under trade agreements.
C. Unlike a quota, a government obtains a flow of revenue from these regulations.
D. Unlike a tariff, it is voluntary and thus only those who agree are affected.
Answer:
In practice, distribution under socialism is primarily determined by:
A. individual altruism and cooperation.
B. the ability of each individual to produce.
C. central planners within the government.
D. market forces of supply and demand.
Answer:
Refer to the graph below.
Which of the shifts explains what will happen to the production possibility curve if the
cost of producing books goes down while the cost of producing CDs goes up?
A. I
B. II
C. III
D. IV
Answer:
Suppose people believe that prices will continue to fall in the future, and so they put off
buying things now. As a result, prices fall. In economics we refer to this as:
A. a Nash equilibrium.
B. an endowment effect.
C. a self-confirming equilibrium.
D. a precommitment strategy.
Answer:
To keep the price of gas from rising quickly after Katrina, the government instituted
price ceilings on the price of gasoline in some states. These price ceilings caused
______ in the gasoline market.
A. surpluses
B. movement of the demand curve
C. movement along the demand curve
D. shortages
Answer:
Implicit and explicit revenues minus implicit and explicit costs equals:
A. accounting profit.
B. economic profit.
C. zero profit.
D. implicit profit.
Answer:
A movie theater is a price-discriminating monopolist and charges a higher ticket price
for late-evening showings. From this we know that:
A. late-evening moviegoers have perfectly inelastic demand schedules.
B. late-evening moviegoers have less elastic demands than daytime or early-evening
moviegoers.
C. late-evening moviegoers have more elastic demands than daytime or early-evening
moviegoers.
D. daytime and early-evening moviegoers have perfectly elastic demands.
Answer:
According to the text, economics is the study of how:
A. governments allocate resources in the face of constraints.
B. government policies can be used to meet individuals’ wants and desires.
C. human beings coordinate their wants and desires.
D. scarce resources are allocated to their most productive uses.
Answer:
Propositions that are logically true based on the assumptions of a model are known as:
A. precepts.
B. theorems.
C. insights.
D. policies.
Answer:
The balance of trade measures the:
A. difference between the value of imports and that of exports.
B. share of U.S. imports coming from various regions of the world.
C. share of U.S. exports going to various regions of the world.
D. exchange rate needed to make imports equal exports.
Answer:
Country A’s cost of widgets is $4.00 and cost of wadgets is $8.00. Country B’s cost of
widgets is 8 euros and cost of wadgets is 16 euros. Which of the following would you
suggest?
A. Country A should specialize in widgets and Country B in wadgets.
B. Trade of widgets for wadgets would not benefit the countries.
C. Country A should specialize in wadgets and Country B in widgets.
D. Both countries should produce an equal amount of each.
Answer:
At a Chicago Bulls game 20,000 tickets were sold at $30 apiece. The game was sold out
and some people did not get tickets. This suggests that the selling price:
A. was at equilibrium.
B. was below equilibrium.
C. was above equilibrium.
D. could not have been any higher.
Answer:
Refer to the graph shown. Holding cost conditions constant, if the monopolistically
competitive firm represented were suddenly to find itself in a perfectly competitive
market, the long-run equilibrium price would adjust to:
A. $4.
B. $6.
C. $7.
D. $8.
Answer:
The standard long-run model assumes that:
A. technology improves at an increasing rate over time.
B. technological advance is impossible.
C. technology is fixed.
D. costs of production are fixed.
Answer:
If the quantity of labor supplied increases by 5 percent when the wage increases by 10
percent, the elasticity of labor supply is:
A. 1/5.
B. 1/2.
C. 2.
D. 5.
Answer:
Charlie Black will purchase 10 percent more cans of Coke if the price of a can of Coke
falls by 5 percent. Charlie’s price elasticity of demand for cans of Coke is:
A. 10.
B. 5.
C. 2.
D. ½.
Answer:
An economist who is studying the relationship between the money supply, interest
rates, and the rate of inflation is engaged in:
A. microeconomic research.
B. macroeconomic research.
C. theoretical research because there are no data on these variables.
D. empirical research because there is no economic theory related to these variables.
Answer:
When wages rise:
A. the quantity of labor supplied always declines.
B. neither the opportunity cost of an hour of leisure nor the quantity of labor supplied is
likely to change.
C. the opportunity cost of an hour of leisure declines.
D. the opportunity cost of an hour of leisure increases.
Answer:
Heuristic models are:
A. highly mathematical models that are impossible to solve.
B. based on scattergrams of two variables.
C. models expressed informally by graphs.
D. models expressed informally in words.
Answer:
Businesses are on the:
A. supply side of factor markets and the demand side of goods markets.
B. demand side of factor markets and the supply side of goods markets.
C. supply side of both factor markets and goods markets.
D. demand side of both factor markets and goods markets.
Answer:
An old canceled U.S. stamp of an upside-down airplane is worth $80,000, but a newer
stamp in 2008 that features Bette Davis is worth only $0.42. This is explained by the
fact that the:
A. more available the product, the higher the marginal utility and the lower the price.
B. scarcer the product, the higher the marginal utility and the lower the price.
C. scarcer the product, the higher the marginal utility and the higher the price.
D. scarcer the product, the higher the total utility and the higher the price.
Answer:
Which of the following organizations works with developing countries to secure
low-interest loans that foster economic growth?
A. World Trade Organization
B. World Bank
C. Group of Five
D. Group of Eight
Answer:
If the average cost of producing 9 sweaters is $6.50 and the marginal cost of producing
the tenth sweater is $6.25, the average cost of producing 10 sweaters will:
A. be $6.50.
B. be more than $6.50.
C. be less than $6.50.
D. be exactly $6.25.
Answer:
The principle of diminishing marginal utility states that:
A. you don’t enjoy consuming more of a good.
B. you enjoy consuming more of a good if it is good.
C. as you consume more of a good, you enjoy the additional units less than you did the
previous units.
D. as you consume more of a good, you enjoy the additional units more than you did
the initial units.
Answer: