Figure 4-9
Figure 4-9 shows the demand and
supply curves for the almond market. The government believes that the equilibrium
price is too low and tries to help almond growers by setting a price floor at Pf. What
area represents the portion of consumer surplus that has been transferred to producer
surplus as a result of the price floor?
A) B
B) B + C
C) B + E
D) E
A firm cannot control all of the factors that allow it to make economic profits. Which of
the following is an example of an uncontrollable factor?
A) product differentiation
B) input prices
C) producing at a lower average total cost than competing firms
D) hiring competent managers
Table 2-8
Table 2-8 shows the number of labor hours required to produce a digital camera and a
pound of wheat in China and South Korea. If the two countries specialize and trade,
who should export wheat?
A) There is no basis for trade between the two countries.
B) China
C) South Korea
D) They should both be exporting wheat.
If consumers decide to be more frugal and save more out of their income, then this will
cause
A) a shift in the supply curve for loanable funds to the right.
B) a shift in the supply curve for loanable funds to the left.
C) a movement to the right along the supply curve for loanable funds.
D) a movement to the left along the supply curve for loanable funds.
Table 9-6
Production and
Consumption Production
Without Trade With Trade
Denmark and Belize can produce both clocks and hats. Table 9-6 shows the production
and consumption quantities without trade, and the production numbers with trade.If the
actual terms of trade are 1 hat for 1.8 clocks and 150 hats are traded, how many hats
will Belize gain compared to the “without trade” numbers?
A) -100
B) 0
C) 150
D) 250
When colleges use yield management techniques, they
A) rank students on the basis of academic merit and award higher financial aid offers to
those at the top of the ranking.
B) increase financial aid offers to students whose demand for college education is likely
to be more price elastic and reduce financial aid offers to students whose demand for
college education is likely to be less price elastic.
C) rank students on the basis of academic merit and award higher financial aid offers to
those at the bottom of the ranking.
D) increase financial aid offers to students whose demand for college education is likely
to be more price inelastic and reduce financial aid offers to students whose demand for
college education is likely to be less price inelastic.
Paul Romer, an economist at Stanford University, is most closely associated with what
economic theory?
A) new growth theory
B) labor productivity theory
C) the process of creative destruction
D) the Communist Manifesto
Which of the following would you expect to increase both interest rates and exchange
rates?
A) expansionary monetary policy
B) contractionary monetary policy
C) expansionary fiscal policy
D) Both B and C will increase both interest rates and exchange rates.
For many small firms, providing health insurance for their workers
A) has decreased in cost over the past 10 years.
B) represents their most rapidly increasing cost.
C) costs virtually nothing under the ACA.
D) encourages them to hire more full-time workers.
Figure 11-13
The lines shown in the diagram are isocost lines. Which of the following shows an
increase in the firm’s total cost while the price of labor and capital remain unchanged?
A) the movement from CE to BF
B) the movement from CE to AF
C) the movement from BD to AF
D) the movement from BD to CE
Article Summary. Starting as a Chicago antique store that sold sandwiches on the
side, Potbelly has grown from this 1977 beginning into a company which today
operates approximately 300 sandwich shops in the United States. In October 2013,
Potbelly sold stock for the first time through an initial public offering (IPO), with
shares jumping in price from the initial offering price of $14 to more than $32 on
the same day. Since 2011, Potbelly has seen an increase in in both sales and
revenue, and earned a profit of $2.8 million in the first half of 2013.
Source: Matt Krantz, “Potbelly IPO shares more than double on open,” USA
Today, October 4, 2013.
When Potbelly sold stock to the public in its IPO, it did so through the NASDAQ
market. This was an example of Potbelly raising funds through
A) reinvesting retained earnings.
B) a financial intermediary.
C) dividend reinvestment.
D) a financial market.
Trade that is within a country or between countries is based on the principle of
A) absolute advantage.
B) scarcity.
C) competition.
D) comparative advantage.
In a monopolistically competitive market, a successful new restaurant
A) can earn economic profits in the long run if it uses barriers to restrict entry by new
restaurants.
B) will earn zero economic profit in the long run because of free entry, but competition
will lead restaurants to offer different versions of the same product.
C) will face high entry barriers because of health and safety regulations to which all
restaurants are subject.
D) must obtain a trademark to ensure that it will break even in the long run.
When there is an externality in a market,
A) the externality will move the market to an economically efficient equilibrium.
B) the externality will cause the market price to be less than or greater than the
equilibrium price.
C) the government should use price controls to enable the market to reach equilibrium.
D) government intervention may increase economic efficiency.
All of the following can be used to compute average profit except
A) marginal profit minus marginal cost.
B) total profit divided by quantity.
C) average revenue minus average total cost.
D) price minus average total cost.
Carmelita can perform either a combination of 35 manicures and 70 pedicures or a
combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and
70 pedicures, what is the opportunity cost of performing an additional 15 manicures?
A) 5 pedicures
B) 20 pedicures
C) 25 pedicures
D) 45 pedicures