If the number of firms producing electric cars increases and consumer preference for
electric cars increases, the equilibrium quantity of electric cars will definitely increase.
An important reason why diseconomies of scale arise is because firms may have to hire
lower skilled workers as firms expand.
If a per-unit tax on output sold is imposed on a monopoly’s product, the monopolist will
increase its market price by the full amount of the tax.
There is a shortage of every good that is scarce.
A decrease in the unemployment rate may be represented as a movement from a point
on the production possibilities frontier to a point outside the frontier.
Labor demand is considered a derived demand because producers do not demand labor
for itself but only because labor is used to produce output that consumers desire.
Banks hold 100% of their checking deposits as vault cash to ensure that bank runs do
not occur.
Since 1960, out-of-pocket spending on health care has increased sharply as a fraction of
all health care spending.
Macroeconomic equilibrium can occur at any point on the 45-degree line.
An increase in government spending will result in an increase in the price level and an
increase in real GDP in the long run.
A decrease in the unemployment rate may be represented as a movement from a point
inside the production possibilities frontier to a point on the frontier.
If in the market for peaches, the supply curve has shifted to the left
A) the supply of peaches has increased.
B) the supply of peaches has decreased.
C) the quantity of peaches supplied has increased.
D) the quantity of peaches supplied has decreased.
In 1930, the U.S. government attempted to help domestic firms that were harmed by the
Great Depression by
A) establishing the General Agreement on Tariffs and Trade (GATT).
B) passing the Smoot-Hawley Tariff.
C) establishing the World Trade Organization (WTO).
D) passing the North American Free Trade Agreement (NAFTA).
Which of the following is the best example of a voluntary export restraint?
A) a limit imposed by the U.S. government on the number of cell phones that the
United States can import from Korea
B) a subsidy granted by the U.S. government to domestic cell phone manufacturers so
they can compete more effectively with foreign cell phone manufacturers
C) a limit set by the Korean government on the number of cell phones that the United
States can import from Korea.
D) a $50 per-cell phone-fee imposed on all cell phones vehicles imported into the
United States
What is the primary difference between a sole proprietorship and a partnership?
A) Proprietorships have unlimited liability while partnerships have limited liability.
B) Partnerships can issue stocks and bonds while proprietorships cannot.
C) Partnerships have more owners than do proprietorships.
D) There is no real difference between the two types of firms.
Figure 17-9
A follower of the new classical macroeconomics would argue that ________ like that
pursued by Paul Volcker in 1979, would result in a movement from C to A.
A) expansionary monetary policy
B) contractionary monetary policy
C) expansionary fiscal policy
D) contractionary fiscal policy
If Southwest Airlines borrows $20 million from a bank to finance the renovation of
their corporate offices, this is an example of
A) a bond market transaction.
B) indirect finance.
C) a stock market transaction.
D) direct finance.
How can economic growth help a country combat “brain drain”?
A) Economic growth increases the incomes of low-skilled workers relative to
high-skilled workers.
B) Economic growth opens up opportunities for better jobs and higher incomes for
skilled workers.
C) Economic growth allows highly skilled persons to earn more in a foreign country
than in their native country.
D) Economic growth combined with decreasing returns to human capital require
workers to achieve steadily higher and higher levels of education over time.
The unemployment rate equals the number of unemployed divided by the ________, all
times 100.
A) number of employed
B) labor force
C) working-age population
D) total population
An explicit cost is
A) a nonmonetary opportunity cost.
B) a cost specifically related to government rules and regulations.
C) a cost that involves spending money.
D) a cost unique to corporations.
Which of the following statements is true about revenue?
A) Revenue is the total amount received for selling a good or service.
B) Revenue is calculated by dividing the price per unit by the number of units sold.
C) The terms “revenue” and “profit” can be used interchangeably.
D) A firm’s revenue will increase as its costs increase.
Which of the following would decrease the current account balance of the United
States?
A) a decrease in imports
B) a decrease in the amount of money the U.S. government sends in foreign aid to other
countries
C) a decrease in the balance of trade
D) a decrease in the amount of income U.S. companies pay out to foreigners who own
investments in the U.S.
Table 4-7
Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley.
If a minimum wage of $12.50 an hour is mandated, what is the quantity of labor
supplied?
A) 80,000
B) 550,000
C) 630,000
D) 1,180,000
If a perfectly competitive apple farm’s marginal revenue exceeds the marginal cost of
the last bushel of apples sold, what should the farm do to maximize its profit?
A) determine what the total revenue and total cost of production are
B) increase output
C) decrease output
D) lower its price to sell more
Outline the various actions the government sector could take to promote growth.
What does it mean when one currency is “pegged” against another currency?
Workers at a local construction company are paid $32.50 per hour, and they have
incorporated a 4 percent annual raise in their contracts to account for expected inflation.
Explain how unexpected inflation of 2 percent will affect the real wages earned by these
workers and the unemployment rate of these workers.
What effect does the entry of new firms in a monopolistically competitive market have
on the economic profits of existing firms in the market? How might existing firms
attempt to counteract this effect?
What is the principle monetary policy tool used by the Fed. Why?
Explain three reasons why the productivity slowdown of 1974-1995 occurred.
In which types of business do owners have unlimited personal liability and in which do
owners have limited personal liability?
Article Summary. According to Edmunds.com, incentives for the purchase of
automobiles rose to an average of $2,500 per vehicle in the United States in May
2013, or about 8 percent of market value. The incentives offered by the big 3 U.S.
auto companies were higher than the average, with Chrysler at 10.3 percent of
market value, General Motors at 10 percent, and Ford at 9 percent. Despite the
increase in incentives, there was little change in sales volume for the first half of
2013. Source: Kyle Stock, “Lauderdale CVB ramps up LGBT summer
marketing,” Bloomberg Businessweek, June 11, 2013.
What happens to the profit a car company makes on each car sold if it offers incentives
such as cash rebates to customers? What happens to the company’s profit per car if it
offers zero percent financing as an incentive? How might a car company decide which
of these strategies to use?
What is fiscal policy, and who is responsible for fiscal policy?