Gross domestic product is generally ________ national income.
A) greater than
B) less than
C) equal to
D) unrelated to
The level of long-run aggregate supply is affected by all of the following except
A) changes in the price level.
B) changes in the technology.
C) changes in the capital stock.
D) changes in the number of workers.
Jake sells Star Wars memorabilia on eBay. His annual revenue is $42,000 per year, and
the explicit costs of his business are $10,000. What is his accounting profit?
A) $10,000
B) $22,000
C) $32,000
D) $42,000
If a firm raised its price and discovered that its total revenue fell, then the demand for
its product is
A) perfectly inelastic.
B) relatively inelastic.
C) perfectly elastic.
D) relatively elastic.
Table 17-4
Table 17-4 lists data for the production of Apple iPods. Apple is assumed to be a price
maker, so to increase its sales of iPods the firm must lower its price. MPL and MRPL
refer to the marginal product of labor and the marginal revenue product of labor,
respectively. What are the price and quantity of workers that result in the maximum
amount of revenue Apple would earn from selling iPods?
A) $180; 1
B) $140; 2
C) $120; 2
D) $120; 4
Merger guidelines developed by the U.S. Department of Justice and the Federal Trade
Commission use the Herfindahl-Hirschman Index as a measure of concentration. This
index measures concentration in an industry by
A) adding up the market shares of all firms in the industry, squaring this number and
then dividing by the number of firms in the industry.
B) squaring the market shares of each firm in an industry and then adding up the values
of the squares.
C) squaring the four-firm concentration ratio of the industry and dividing this number
by the total number of firms in the industry.
D) determining the market shares of the four largest firms in the industry, but unlike the
concentration ratio, the Index includes sales in the United States by foreign firms.
The idea that individuals should be taxed in proportion to the marginal benefits that
they receive from public goods is called
A) the ability-to-pay principle.
B) the horizontal-equity principle.
C) the vertical-equity principle.
D) the benefits-received principle.
Table 2-10
Table 2-10 shows the output per day of two pet groomers, Tammi and Horace. They can
either devote their time to grooming dogs or bathing cats.
What is Horace’s opportunity cost of grooming a dog?
A) half a bathed cat
B) two bathed cats
C) two-thirds of a bathed cat
D) one and a half bathed cats
Suppose the majority of the shares of British Airways stock were sold to a firm in the
United States. Assuming all else remains constant, this will
A) decrease the balance of the U.S. financial account.
B) decrease foreign direct investment in the United States.
C) decrease the balance of the U.S. current account.
D) increase net portfolio investment in the United States.
E) create a capital inflow in the United States.
The demand for labor is different from the demand for final goods and services because
A) the demand for labor is derived from the demand for the good or service the labor is
used to produce.
B) it is a demand for people, not inanimate objects.
C) the demand for labor is more inelastic than the demand for the goods and services
produced with this labor.
D) the law of demand does not apply to the demand for labor.
Foreign purchases of stocks and bonds issued by U.S. corporations ________ between
1995 and 2007 and ________ in 2012.
A) increased at a slow but steady pace; increased dramatically
B) remained stagnant; declined sharply
C) increased dramatically; declined sharply
D) decreased slightly; increased slightly
When foreign investors in Thailand began to realize that Thailand could not maintain its
peg to the dollar indefinitely, they began to sell off their investments in Thailand and
exchange the baht they received for dollars. This reduction in investment by foreigners
is termed
A) foreign direct investment.
B) capital flight.
C) capital inflow.
D) stabilizing capitalization.
Of the following high-income countries, which has the lowest mortality ratio for
cancer?
A) Canada
B) Japan
C) the United Kingdom
D) the United States
Which of the following is considered contractionary fiscal policy?
A) Congress increases the income tax rate.
B) Congress increases defense spending.
C) Legislation removes a college tuition deduction from federal income taxes.
D) The New Jersey legislature cuts highway spending to balance its budget.
Deflation occurs when
A) there is a sustained increase in the price level.
B) there is a one-time increase in the price level.
C) there is a decline in the price level.
D) there is a decrease in the expected rate of inflation.
In regulating a natural monopoly, the price strategy that ensures the highest possible
output and zero profit is one that sets price
A) equal to average total cost where it intersects the demand curve.
B) equal to marginal cost where it intersects the demand curve.
C) equal to average variable cost where it intersects the demand curve.
D) corresponding to the demand curve where marginal revenue equals zero.
If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then
in producing it, the firm
A) added more to total costs than it added to total revenue.
B) added more to total revenue than it added to total cost.
C) is maximizing marginal profit.
D) has minimized its losses.
The lawsuit the Justice Department brought against Apple regarding the pricing of
e-books for its iPad is an example of attempts by the government
A) to prevent vertical mergers which would significantly reduce competition.
B) to prevent horizontal mergers which would significantly reduce competition.
C) to regulate a natural monopoly by establishing government-regulated prices.
D) to keep firms from artificially restricting competition to raise prices.
If a country has a ________ exchange rate, its central bank must buy and sell its
holdings of currencies to maintain a given exchange rate.
A) floating
B) flexible
C) fixed
D) all of the above
Table 4-14
The equations above describe the demand and supply for Pauline’s Pickled
Pomegranates. The equilibrium price and quantity for Pauline’s Pickled Pomegranates
are $30 and 15 thousand units. What is the value of producer surplus?
A) $50 thousand
B) $112.5 thousand
C) $225 thousand
D) $337.5 thousand