Logrolling may result in
A) legislation that yields economy-wide benefits, the funding for which is borne
primarily by a few of the smallest states.
B) a majority of Congress supporting legislation that benefits the economic interests of
a few, while harming the economic interests of a much larger group.
C) members of Congress selling their votes on proposed legislation to the highest
bidder.
D) creating limited incentives for policymakers to consider the immediate
consequences of their proposed legislation.
The possibility that the economy may benefit from having market power, rather than
being very competitive, is closely identified with which famous economist?
A) Arnold Harberger
B) Joseph Schumpeter
C) Sergey Brin
D) Donald Turner
Harvey Miller owns a baseball that was hit for a home run by Ted Williams. Harvey, a
long-time Boston Red Sox fan, recently refused to sell his baseball for $75,000 even
though he would not have paid someone more than $10,000 for the baseball if he did
not already own it. Harvey explained his decision not to sell the baseball by noting that:
“Ted Williams was my hero. This baseball has a great deal of sentimental value for me.”
Which of the following can explain Harvey’s behavior?
A) the difference between implicit and explicit costs
B) the scarcity of home run baseballs hit by Ted Williams
C) the endowment effect
D) how social influences can affect consumption choices
Refer to Table 2-11. If the two countries specialize and trade, who should export
motorcycles?
A) There is no basis for trade between the two countries.
B) Ireland
C) Scotland
D) They should both be importing motorcycles.
A demand curve that is horizontal indicates that the commodity
A) has few substitutes.
B) must be very cheap.
C) is a necessity.
D) has a large number of substitutes.
In a graph with output on the horizontal axis and total revenue on the vertical axis, what
is the shape of the total revenue curve for a perfectly competitive seller?
A) U-shaped
B) inverted U-shaped
C) a horizontal line
D) a ray from the origin
Assume the market for organically-grown produce is perfectly competitive. All else
equal, as farmers find it less profitable to produce and sell organic produce in this
market
A) the demand curve will shift to the left and the equilibrium price will decrease.
B) the supply curve will shift to the left and the equilibrium price will increase.
C) the supply curve will shift to the right, the demand curve will shift to the left, and the
equilibrium price will decrease.
D) the supply curve will shift to the left, the demand curve will shift to the left, and the
equilibrium price will increase.
Figure 5-9
Companies producing toilet paper bleach the paper to make it white. The bleach is
discharged into rivers and lakes and causes substantial environmental damage. Figure
5-9 illustrates the situation in the toilet paper market.
Refer to Figure 5-9. An efficient way to get the firm to produce the socially optimal
output level is
A) for government to set a quota on the quantity of toilet paper that the toilet paper
industry can produce.
B) to impose a tax to make the industry bear the external costs it creates.
C) to grant a subsidy to enable the industry to internalize the external costs of
production.
D) to assign property rights to the firms in the industry.
Figure 12-1
Refer to Figure 12-3. If the firm is charging a price of $12 per unit
A) it breaks even.
B) it is making a profit.
C) it is selling 700 units.
D) it is not selling any output.
A good is path dependent when
A) consumers get utility from consuming goods that others are consuming, such as
restaurants.
B) the first technology that was adopted has an advantage over a better technology that
came later.
C) people who move location follow the path of people who moved before them.
D) it can only be used in one way.
The largest percentage of federal income tax revenue in the United States is paid by the
A) lowest income taxpayers.
B) middle income taxpayers.
C) highest income taxpayers.
D) All groups of taxpayerslow income, high income and middle incomepay the same
percent of federal income taxes.
The Clayton Act prohibited
A) all vertical mergers.
B) all horizontal mergers.
C) any merger if its effect was to substantially lessen competition or create a monopoly.
D) all conglomerate mergers.
Figure 1-2
Refer to Figure 1-2. Calculate the area of the triangle A.
A) $1.3 million
B) $2.6 million
C) $3.4 million
D) $5.2 million
In 2013, the dividend yield on Abercrombie & Fitch (ANF) stock rose from a low of
1.33% in May to 2.24% in October. Which of the following would have generated that
result?
A) The closing price of ANF stock rose.
B) ANF announced an increase in the dividend it would pay per share.
C) The price-earnings ratio fell.
D) ANF issued bonds with a coupon rate equal to 2.24%.
The “Buy American” provision in the 2009 stimulus package required that stimulus
money be spent only on U.S.-made goods, effectively acting as a quota of zero imports
when stimulus money was being spent. In the U.S. steel market, a “Buy American”
provision in the 2009 stimulus package would
A) convert some consumer surplus to deadweight loss.
B) transfer some deadweight loss to producer surplus.
C) transfer some producer surplus to consumer surplus.
D) reduce the producer surplus received by foreign manufacturers.
Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the
opportunity cost of her decision?
A) zero, since she will no longer be earning a salary
B) It depends on the “going rate” for home-care providers.
C) at least $125,000
D) the value she attributes to the satisfaction she receives from taking care of her
parents
China has developed a comparative advantage in the production of clothing. The source
of this comparative advantage is
A) a large supply of natural resources.
B) a large supply of unskilled workers and relatively little capital.
C) investment in capital used to produce clothing.
D) superior process technology.
The quantity demanded of tickets to the Super Bowl is always greater than the than the
quantity supplied. Which of the following in the best explanation why the National
Football League does not raise the price of tickets to the level where the quantity
demanded equals the quantity supplied?
A) Raising the price would reduce the demand for tickets; there would then be a surplus
and the game would not sell out.
B) The cost of raising the price and printing new tickets would exceed the revenue the
NFL would receive from higher ticket prices.
C) The demand for Super Bowl tickets is elastic; raising the price would reduce total
revenue.
D) The NFL is concerned that raising ticket prices would be considered unfair.
A normal rate of return refers to the ________ that investors must earn on the funds
they invest in a firm, expressed as a percentage of the amount invested.
A) minimum amount
B) maximum amount
C) total amount
D) profit
When a firm produces more output using the same inputs or the same output using
fewer inputs we say that the firm
A) experiences an increase in demand.
B) experiences positive technological change.
C) will hire more workers in order to produce more output.
D) is operating in the short run.
Some factors that allow firms to make economic profits are beyond its control. All but
one of the following is an uncontrollable factor. Which factor is controllable?
A) input prices
B) consumer tastes
C) chance events
D) product differentiation
Figure 5-7
Refer to Figure 5-7. The marginal benefit of reducing pollution curve is the same curve
as
A) the supply of pollution reduction curve.
B) the demand for pollution reduction curve.
C) the positive externality curve.
D) the external benefit curve.
In a competitive market the demand curve shows the ________ received by consumers
and the supply curve shows the ________.
A) utility; average cost.
B) marginal benefit; marginal cost
C) economic surplus; opportunity cost
D) net benefit; net cost
If official poverty statistics for the United States included transfer payments individuals
receive from the government, such as Social Security payments and other non-cash
benefits such as food stamps,
A) the poverty rate would be lower.
B) poverty would be eliminated.
C) income inequality would be greater.
D) the poverty rate would be overstated.
Health insurance companies impose deductibles on policies and co-payments on claims
A) to increase sales.
B) to reduce moral hazard problems.
C) to reduces sunk costs.
D) to increase prices.
Figure 13-17
Refer to Figure 13-17. In the long run, why will the firm produce Qfunits and not
Qgunits, which has a lower its average cost of production?
A) Although its average cost of production is lower when the firm produces Qgunits, to
be able to sell its output the firm will have to charge a price below average cost,
resulting in a loss.
B) At Qg, average cost exceeds marginal cost so the firm will actually make a loss.
C) At Qg, marginal revenue is less than average revenue which will result in a loss for
the firm.
D) The firm’s goal is to charge a high price and make a small profit rather than a low
price and no profit.
An increase in the demand for orthodontic services leads to
A) an increase in the supply of orthodontists.
B) lower prices for orthodontic care.
C) an increase in the demand for orthodontists.
D) a rise in the rates of dental insurance.
Consumers benefit from monopolistic competition by
A) being able to choose from products more closely suited to their tastes.
B) paying the lowest possible price for the product.
C) paying the same price as everyone else.
D) being able to purchase high-quality products at low prices.
Figure 3-7
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and
supply curves for almonds. Which panel best describes what happens in this market
when there is an increase in the productivity of almond harvesters?
A) Panel (a)
B) Panel (b)
C) Panel (c)
D) Panel (d)
Figure 7-1
Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit
to society, and the figure shows both the marginal private benefit and the marginal
social benefit from vaccinations.
Refer to Figure 7-1. Marginal private benefit is represented by which curve?
A) D1
B) D2
C) Supply
D) All of the above represent marginal private benefit.
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation.
Refer to Figure 2-4. Consider the following events:
a. an increase in the unemployment rate
b. a decrease in a nation’s money supply
c. a war that kills a significant portion of a nation’s population
Which of the events listed above could cause a movement from Y to W?
A) a, b and c
B) a and b only
C) a and c only
D) a only
E) c only
What do the highest stock price and the lowest stock price over the previous year
indicate?
A) Add them together and divide by two to get the stock’s current market price.
B) what the stock’s price-earnings ratio is
C) how volatile the stock’s market price has been
D) They generate the dividend yield.
Konesia is a country in which rising incomes are increasing the global demand for basic
products and services. Which of the following is the type of market featured in this
country?
A) traditional market
B) emerging market
C) feudal market
D) virtual market
How are the fundamental economic decisions determined in North Korea?
A) Individuals, firms, and the government interact in a market to make these economic
decisions.
B) These decisions are made by the country’s elders who have had much experience in
answering these questions.
C) The government decides because North Korea is a centrally planned economy.
D) The United Nations decides because North Korea is a developing economy.
Public schools in the United States get most of their operating funds from
A) government production and subsidies.
B) income taxes on corporate profits.
C) local property taxes.
D) tariffs collected on imported goods.