A competitive price-searcher market is characterized by firms
a. being able to choose their price and by low barriers preventing firms from entering or
leaving the market.
b. being able to choose their price and by high barriers preventing firms from entering
or leaving the market.
c. having to accept the market price for their product and by high barriers preventing
firms from entering or leaving the market.
d. having to accept the market price for their product and by low barriers preventing
firms from entering or leaving the market.
Isabella is on a temporary layoff from her factory job. If Isabella participates in the BLS
survey, she will be classified as
a. unemployed and in the labor force.
b. unemployed and out of the labor force.
c. employed and in the labor force.
d. employed and out of the labor force.
Unanticipated expansionary monetary policy will increase economic growth and push
inflation upward while lowering real interest rates. This will cause
a. an increase in the demand for foreign currencies and a decline in the foreign
exchange value of the dollar.
b. a decrease in the demand for foreign currencies and a decline in the foreign exchange
value of the dollar.
c. an increase in the demand for foreign currencies and an increase in the foreign
exchange value of the dollar.
d. a decrease in the demand for foreign currencies and an increase in the foreign
exchange value of the dollar.
If complete equality of income were legislated, which of the following would
economics predict?
a. People would become richer.
b. Society would gain utility from the extra goods produced.
c. Individuals would willingly work longer hours and thus produce more.
d. The incentive to produce and perform efficiently would be virtually eliminated.
If a large percentage increase in the price of a good results in a small percentage
increase in the quantity supplied of the good, supply is said to be
a. horizontal.
b. relatively inelastic.
c. relatively elastic.
d. income proof.
A demand curve for flowers would show the
a. number of flowers the floral shop is willing to sell at various prices.
b. number of people who need flowers.
c. quantity of people who want to buy these flowers.
d. number of flowers that will be purchased at various prices.
If most people found the lifestyle of an assembly-line worker less desirable relative to
that of persons in other professions, one would expect the return on the human capital
investment of
a. assembly-line workers to be higher than that of persons in other professions.
b. assembly-line workers to be lower than that of persons in other professions.
c. assembly-line workers and that of persons in other professions to be nonetheless
equal.
d. both assembly-line workers and persons in other professions to be unaffected by the
subjective preferences of investors.
The Fed’s sale of U.S. government securities in its open market operations constitutes
a. a restrictive policy because it lowers the amount of total reserves in the banking
system.
b. a restrictive policy because it raise the amount of required reserves in the banking
system.
c. an expansionary policy because it raises the amount of total and excess reserves in
the banking system.
d. an expansionary policy because it raises the amount of excess reserves and lowers the
amount of required reserves in the banking system.
e. an expansionary policy because it raises the amount of required reserves in the
banking system.
Figure 17-10
Refer to Figure 17-10. Producer surplus with trade and without a tariff is
a. G.
b. C + G.
c. A + C + G.
d. A + B + C + G.
Use the table below, which outlines the production possibilities of Qatar and Botswana
in wine and wheat, to answer the following question.
The law of comparative advantage suggests that
a. neither country would gain from trade, even if the costs for transporting the products
were zero.
b. Qatar would not gain from trade because it has an absolute advantage in producing
both goods.
c. both countries would gain if Botswana traded wine made in Botswana for Qatar’s
wheat.
d. both countries would gain if Botswana traded wheat grown in Botswana for Qatar’s
wine.
A firm producing cans buys three tons of aluminum per day at $200 per ton. If it buys
four tons per day, it receives a quantity discount on all units and pays only $175 per ton.
The marginal cost of the fourth ton per day is
a. $100.
b. $175.
c. $700.
d. $225.
International trade is advantageous because trade makes it possible for people in each
country to
a. import more than they export.
b. export more than they import.
c. employ more of their domestic resources producing things that are costly for them to
produce domestically.
d. acquire goods from foreigners more economically than they could be produced
domestically.
e. do all of the above.
Between 2001-2005,
a. both sub-prime and adjustable rate mortgages decreased as a share of the total.
b. both sub-prime and adjustable rate mortgages increased as a share of the total.
c. sub-prime loans increased, but adjustable rate loans decreased as a share of the total.
d. sub-prime loans decreased, but adjustable rate loans increased as a share of the total.
The difference between zero accounting profit and zero economic profit is that
a. economists include opportunity cost in zero economic profit, while accountants do
not include opportunity cost in zero accounting profit.
b. economists do not include opportunity cost in zero economic profit, while
accountants do include opportunity cost in zero accounting profit.
c. economists include opportunity cost in zero accounting profit, while accountants do
not include opportunity cost in zero economic profit.
d. economists do not include opportunity cost in zero accounting profit, while
accountants do include opportunity cost in zero economic profit.
Given the current structure of the Social Security and Medicare programs, the
retirement of the baby boom generation during the years following 2012 will be most
likely to
a. reduce government expenditures on health care and income transfers.
b. increase government expenditures on health care and income transfers.
c. result in large budget surpluses.
d. result in lower tax rates.
Figure 10-1
Given the cost and demand conditions in Figure 10-1, what price should this
competitive price-searcher firm charge in order to maximize profits?
a. P1
b. P2
c. P3
d. P4
If a $500 tax is placed legally (statutorily) on the buyers of new couches and as a result
the price of couches at stores rises by $200, the actual burden of the tax
a. falls completely on couch buyers.
b. falls completely on couch sellers.
c. is $200 on couch buyers and $300 on sellers.
d. is $300 on couch buyers and $200 on sellers.
The following table indicates the production possibilities of food and clothing per
worker day in the United States and Japan.
Which of the following is true?
a. No gains from trade are possible.
b. Joint output would be maximized if the United States specialized in producing
clothing and Japan in producing food.
c. Mutual gains from trade could be realized if the United States specialized in food
production and Japan in clothing production.
d. The Japanese are the high-cost producers of both food and clothing.
When output is less than the economy’s long-run capacity, which of the following is
most likely to occur?
a. an abnormally low rate of unemployment
b. reductions in real interest rates and real resource prices
c. a sharp increase in imports
d. a government budget surplus
One key characteristic that is distinctive of an oligopoly market is that
a. the demand curve facing each firm is downward sloping, with a marginal revenue
curve that lies below the firm’s demand curve.
b. the decisions of one seller often influence the price of products, the output, and the
profits of rival firms.
c. there is only one firm that produces a product for which there are no good substitutes.
d. there are many sellers in the market and each is small relative to the total market.
Which of the following is a problem with discretionary fiscal policy as an economic
stabilization tool?
a. Discretionary changes in fiscal policy can be easily anticipated by private decision
makers.
b. It is difficult to properly time discretionary changes in fiscal policy.
c. Discretionary fiscal policy is only effective during a recession.
d. Discretionary fiscal policy is only effective during an economic boom.
If a reform of the tax laws encourages greater saving, the result would be
a. higher interest rates and greater investment.
b. higher interest rates and less investment.
c. lower interest rates and greater investment.
d. lower interest rate and less investment.
The average fixed costs of a firm equal
a. implicit costs divided by output.
b. explicit costs divided by output.
c. total cost minus variable cost.
d. (total cost minus variable cost) divided by output.
Full employment
a. exists when everyone in the economy has a job
b. exists when everyone who wants a job has one
c. exists when the unemployment rate is zero
d. exists when everyone in the labor force has a job
e. will always include some unemployment
If the U.S. price level increased relative to price levels in foreign countries, what would
be the impact on domestic aggregate supply and aggregate demand curves?
a. the aggregate supply curve would shift outward and the aggregate demand curve
would remain unchanged
b. the aggregate supply curve would shift inward and the aggregate demand curve
would remain unchanged
c. the aggregate demand curve would shift outward and the aggregate supply curve
would remain unchanged
d. the aggregate demand curve would shift inward and the aggregate supply curve
would remain unchanged
e. the domestic aggregate demand and supply curves would remain unchanged
Which of the following is true?
a. Poor countries are unable to ignite the growth process unless they receive financial
aid from richer countries.
b. Countries that fail to adopt institutions and policies supportive of trade,
entrepreneurial discovery, and private investment will remain poor in the foreseeable
future.
c. Countries that lack an abundance of natural resources have been unable to grow and
achieve high income levels.
d. Countries with a large population relative to their land area are destined to remain
poor.
An increase in the real interest rate will
a. lead to an increase in the expected inflation rate.
b. increase the real cost of purchasing goods and services in the current period relative
to future periods.
c. encourage borrowers to demand a larger quantity of funds.
d. reduce the quantity of funds supplied to the loanable funds market.
The stock price of a firm is primarily a reflection of the
a. firm’s current net earnings per share.
b. firm’s expected future net earnings per share.
c. discounted value of the firm’s expected future net earnings per share.
d. firm’s current net earnings per share multiplied by the interest rate.
e. book value of the firm.
If a large percentage increase in the price of a good results in a small percentage
reduction in the quantity demanded of the good, demand is said to be
a. horizontal.
b. relatively inelastic.
c. relatively elastic.
d. income proof.
If a nation’s currency depreciates, this will tend to
a. shift a nation’s balance of trade toward a deficit.
b. cause a deficit in the government’s budget (expenditures revenues).
c. make foreign goods more expensive for the nation’s citizens.
d. make foreign goods cheaper for the nation’s citizens.
Refer to Table 11-1. The marginal cost of the fourth unit is
a. $7.
b. $12.
c. $25.
d. $60.
Two products that are usually consumed jointly would be referred to as
a. substitutes.
b. complements.
c. inferior goods.
d. unrelated goods.
Regardless of quantity in long-run equilibrium, the competitive price-taker market price
cannot exceed the
a. long-run average cost of supplying that quantity.
b. total variable cost of supplying that quantity.
c. long-run total cost of supplying that quantity.
d. minimum long-run marginal cost of supplying that quantity.
When economists say the demand for a product has decreased, they mean
a. the demand curve has shifted to the left.
b. the product price has increased, and as a consequence, consumers are buying less of
the product.
c. consumers are now willing and able to buy more of this product at each possible
price.
d. the demand curve has shifted to the right.
Which of the following is not a component of the M1 money supply?
a. demand deposits
b. large-denomination (more than $100) bills
c. interest-earning checking deposits
d. outstanding balances on credit cards