When it comes to voting in a presidential election, we would expect, ceteris paribus,
a. a lower percentage of eligible voters will vote if the weather is bad and this makes it
harder to get to the polls on election day (than would have voted if the weather was
good).
b. a higher percentage of eligible voters will vote if the weather is bad on election day
(than would have voted if the weather was good).
c. many people to vote who are rationally ignorant.
d. a higher voter turnout in the North than in the South.
e. a and c
Under the traditional view of unions, unionization leads to __________ prices because
unions __________.
a. higher; have a negative impact on the productivity of the workers
b. lower; have a positive impact on the productivity of the workers
c. stable; demand long and stable wage contracts from their employers
d. none of the above
Because of one assumption in the theory of monopolistic competition, the excess
capacity theorem exists. What is the assumption?
a. There are many sellers and buyers.
b. Each firm produces and sells a slightly differentiated product.
c. There is easy entry into the industry.
d. There is easy exit from the industry.
Consider the following combinations of guns and butter that can be produced: 0 guns,
20,000 units of butter; 5,000 guns, 15,000 units of butter; 10,000 guns, 10,000 units of
butter; 15,000 guns, 5,000 units of butter; 20,000 guns, 0 units of butter. The PPF
between guns and butter is
a. a downward-sloping bowed-out curve.
b. a downward-sloping straight line.
c. an upward-sloping straight line.
d. It is impossible to answer this question without knowing which good would be
plotted on the vertical axis.
A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers
fatalities per accident from 0.12 to 0.08 while raising the number of accidents per
period from 400,000 to any more than
a. 480,000.
b. 600,000.
c. 660,000.
d. 770,000.
The existence of switching costs in the use of computer software means that buyers of
computer software are __________ likely to change software programs than would be
the case in the absence of switching costs, and therefore, the maker of the software
program may have __________ reason to innovate.
a. less; more
b. less; less
c. more; more
d. more; less
There is no difference between building a theory and evaluating a theory.
a. True
b. False
We start with a 3 percent real interest rate in the United States and in Japan. Next, the
real interest rate in Japan falls to 2 percent, and the U.S. real interest remains constant.
As a result,
a. the yen will depreciate and the dollar will appreciate.
b. both the yen and the dollar will depreciate.
c. the yen will appreciate and the dollar will depreciate.
d. both the yen and the dollar will appreciate.
Under a marketing quota system,
a. the government sets a limit on the quantity of a product that a farmer is allowed to
bring to market.
b. farmers are paid to take part of their land out of cultivation.
c. farmers are given limits as to the number of acres that can be used to produce a
particular product.
d. farmers are paid the difference between the market price of their product and a
governmentally determined price that would maintain an established price parity.
e. the government establishes a minimum price that farmers will be paid for their
product, which causes the farmers to cut back on the number of acres planted.
Which of the following conditions does not characterize long-run competitive
equilibrium?
a. Economic profit is zero.
b. Price is greater than marginal cost.
c. No firm has an incentive to change its plant size.
d. No firm has an incentive to produce more or less output.
If the price for loanable funds is greater than the return on capital, then firms will
a. borrow in the loanable funds market and invest in capital goods, and as this happens,
the quantity of capital decreases and its return rises.
b. borrow in the loanable funds market and invest in capital goods, and as this happens,
the quantity of capital increases and its return falls.
c. not borrow in the loanable funds market, and over time the capital stock will decrease
and the return on capital will fall.
d. not borrow in the loanable funds market, and over time the capital stock will decrease
and the return on capital will rise.
To an economist, utility means:
a. additional.
b. usefulness.
c. satisfaction.
d. marginal.
When the perfectly competitive firm produces the quantity of output at which marginal
revenue equals marginal cost, it naturally
a. produces the quantity of output at which marginal cost equals price, since for the
perfectly competitive firm price equals marginal revenue.
b. produces the quantity of output at which short-run average total cost equals price,
since for the perfectly competitive firm short-run average total cost equals marginal
revenue.
c. earns a profit, since equating marginal revenue and marginal cost guarantees profit.
d. takes a loss.