The Walt Disney Company uses cost-plus pricing to determine the prices it charges for
admission and rides at Disneyland and Walt Disney World.
Answer:
A successful trademark is one that becomes a generic name for a product, for example,
“Kleenex” has become a generic term for tissues.
Answer:
Optimal decisions are made at the point where marginal cost equals zero.
Answer:
The income effect of a price increase causes a decrease in the quantity demanded of a
normal good.
Answer:
A voluntary export restraint is an agreement negotiated between two countries that
places a numerical limit on the quantity of a good that can be imported by one country
from the other country.
Answer:
Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.
Then, the plumber should not stay open for the extra hour if she can only generate
additional revenue of $145 for that hour.
Answer:
A supplier of paper napkins to the fast food industry is unlikely to have significant
bargaining power.
Answer:
Rising nominal GDP will increase the demand for money and short-term interest rates.
Answer:
Each person goes about her daily business seeking to maximize her own self interests.
In doing so, she contributes to the welfare of society at large. This is the idea underlying
Adam Smith’s “invisible hand.”
Answer:
Exchange rates under the Bretton Woods system were determined by relative supplies
of gold held by countries within the system.
Answer:
Before 1980, U.S. investors rarely invested in foreign capital markets.
Answer:
When there is a positive externality in a free market, too much of the good is produced
and consumed.
Answer:
Being a price-taker, a perfectly competitive firm cannot receive a producer surplus in
the short run.
Answer:
If the demand for labor is unchanged, population growth will increase the supply of
labor and increase the equilibrium wage.
Answer:
If, at the current exchange rate between the dollar and the South African rand of 6.92
rand per dollar, the dollar is “undervalued,” how do you expect demand and supply in
the foreign exchange markets to respond?
A) The demand for the dollar will rise, while the supply of the rand will fall.
B) The demand for the dollar will fall, while the supply of the rand will rise.
C) The supply of the dollar will fall, while the demand for the rand will fall.
D) The supply of the dollar will fall, while the demand for the rand will rise.
Answer:
What impact would including members of the military in employment, labor force, and
working-age population statistics have on the unemployment rate and the labor force
participation rate?
A) Including members of the military would increase the unemployment rate and
reduce the labor force participation rate.
B) Including members of the military would reduce the unemployment rate and
increase the labor force participation rate.
C) Including the military would increase both the unemployment rate and the labor
force participation rate.
D) Including the military would reduce both the unemployment rate and the labor force
participation rate.
Answer:
If the selling price of a firm’s product is $500 and the estimated average cost of
producing this product is $400, what is the firm’s markup?
A) 15 percent
B) 20 percent
C) 25 percent
D) 40 percent
Answer:
The quantity equation states that
A) the money supply (M) divided by the velocity of money (V) equals the price level
(P) divided by real output (Y), i.e., M/V = P/Y.
B) M V = P Y.
C) M + V = P + Y.
D) M – V = P – Y.
Answer:
Figure 11-7 Figure 11-7 shows the cost
structure for a firm.
If output is 100 units, what is the fixed cost of production?
A) $8
B) $800
C) $1,000
D) This cannot be determined from the diagram.
Answer:
Which of the following statements is true?
A) The marginal revenue of a monopolistically competitive firm will be positive at high
prices and negative at low prices.
B) Because the demand curve for a monopolistically competitive firm is downward
sloping, its marginal revenue will be negative.
C) The marginal revenue of a monopolistically competitive firm will be always be
positive.
D) The marginal revenue of a monopolistically competitive firm will be positive at low
prices and negative at high prices.
Answer:
You are an economic advisor to the president. You are asked to recommend a policy to
promote long-term economic growth in the economy. Which of the following policies
would you choose?
A) a reduction in sales taxes
B) an investment tax credit
C) a reduction in taxes on luxury yachts
D) all of the above
Answer:
In a study conducted by Marianne Bertrand and Sendhil Mullianthan, identical resumes
were sent in response to help wanted ads in newspapers, with half of the resumes
assigned an African-American-sounding name and half assigned a white-sounding
name. The study found that
A) employers were equally likely to interview workers with white-sounding names and
with African-American-sounding names.
B) employers were 50 percent less likely to interview workers with
African-American-sounding names.
C) employers were 50 percent less likely to interview workers with white-sounding
names.
D) no employers chose to interview workers with African-American-sounding names.
Answer:
Diseconomies of scale occur when
A) long-run average costs rise as a firm increases its output.
B) long-run average costs fall as a firm expands its plant size.
C) short-run average costs rise as a firm expands its plant size.
D) long-run labor costs rise as a firm increases its output.
Answer:
If the economy is producing at potential GDP,
A) unemployment is at its natural rate.
B) the Phillips curve must be positively sloped.
C) the short-run aggregate supply curve must be vertical.
D) inflation in the economy is at its natural rate.
Answer:
Using the points on the diagram below, identify which combinations of these points
illustrate diminishing returns to capital. Give a brief explanation to support your
answer.
Answer:
What is health insurance?
Answer:
Suppose 180,000 people are employed, 20,000 people are unemployed, the
working-age population is 250,000, and 50,000 people are out of the labor force.
Calculate the unemployment rate.
Answer:
Who is the seller in a primary market and who is the seller in a secondary market?
Answer:
What features made England in the eighteenth century the place where the Industrial
Revolution occurred?
Answer:
What is rent seeking and how is it related to regulatory capture?
Answer:
Why would a higher tax rate lower the government purchases multiplier? What does the
tax rate have to do with the government purchases multiplier?
Answer:
What are the most important differences between perfectly competitive markets and
monopolistically competitive markets?
Answer: