The labor productivity slowdown in the United States in the 1970s was due to declining
quality of education in the United States, because no other industrialized country
experienced the same labor productivity slowdown at the same time.
The idea underlying Adam Smith’s “invisible hand” is that people tend to behave in
ways that go unnoticed in society.
The private cost of a good or service is the cost borne by the producer.
The nominal interest rate minus the inflation rate equals the real interest rate.
Each price-quantity combination on a consumer’s demand curve shows the
utility-maximizing quantity at the given price.
In economics, the optimal level of pollution is the level for which the net benefit from
reducing the pollution is the greatest.
Which of the following firms is most likely to use cost-plus pricing?
A) A firm that makes one product.
B) A firm that sells one product and has a sizable research and development budget.
C) A firm that makes several products and has a sizable research and development
budget, the cost of which cannot be easily assigned to each product.
D) A firm that makes many products but has a small research and development budget,
the cost of which can be easily assigned to the different product lines.
A firm’s accounting profit is also its
A) economic profit.
B) income statement.
C) net income.
D) statement of liabilities.
Figure 5-3 Figure 5-3 represents the market for
medical services with and without insurance, and the effect of a third-party payer
system on the demand for medical services. With insurance and a third-party payer
system, what price do consumers pay for medical services?
A) $40
B) $55
C) $65
D) >$65
Scenario 14-2 Imagine that Kristy deposits $10,000 of currency into her checking
account deposit at Bank A and that the required reserve ratio is 20%.
As a result of Kristy’s deposit, checking account deposits in the banking system as a
whole (including the original deposit) could eventually increase up to a maximum of
A) $8,000.
B) $10,000.
C) $50,000.
D) $100,000.
The purchase by a foreign government of an airplane produced in the United States is
included in U.S.
A) consumption expenditures.
B) investment expenditures.
C) government purchases.
D) net exports.
Table 8-20
Given the following information, calculate the rate of increase in the price level from
2012 to 2013.
A) 8.6%
B) 7.9%
C) -7.9%
D) -8.6%
Because the copyright on the L. Frank Baum book The Wonderful Wizard of Oz expired
many years ago, the actual written words from the book are in the public domain, which
means
A) any publisher can now can claim copyright of Baum’s words.
B) only the first publisher to reissue the book can claim copyright of Baum’s words.
C) no publisher can claim copyright of Baum’s words, but the book can be reissued by
any publisher.
D) no publisher can claim copyright of Baum’s words because the book can never be
reissued.
The largest source of tax revenue for state and local governments in the United States in
2012 was
A) sales taxes.
B) the corporate income tax.
C) the property tax.
D) the individual income tax.
Table 2-11
Table 2-11 shows the number of labor hours required to produce a motorcycle and a
guitar in Ireland and Scotland.
What is Scotland’s opportunity cost of producing one motorcycle?
A) 0.25 guitar
B) 4 guitars
C) 12 guitars
D) 16 guitars
What is accounting profit?
A) gross revenue minus explicit costs
B) gross revenue minus implicit costs
C) gross revenue minus explicit and implicit costs
D) the same as economic profit
German automobile exports were hurt in 2008 as a result of the recession. How would
this decrease in exports have affected Germany’s aggregate demand curve?
A) The aggregate demand curve would have shifted to the right.
B) The aggregate demand curve would not have shifted, but there would have been a
movement up the aggregate demand curve.
C) The aggregate demand curve would not have shifted, but there would have been a
movement down the aggregate demand curve.
D) The aggregate demand curve would have shifted to the left.
Rank these three items in terms of the elasticity of the demand for them at any given
price, from most elastic to least elastic: hot beverages, coffee and Peet’s Coffee.
A) hot beverages, coffee, Peet’s Coffee
B) Peet’s Coffee, coffee, hot beverages
C) coffee, Peet’s Coffee, hot beverages
D) coffee, hot beverages, Peet’s Coffee
Scenario 1-1 Suppose a cell phone manufacturer currently sells 20,000 cell phones per
week and makes a profit of $5,000 per week. A manager at the plant observes,
“Although the last 3,000 cell phones we produced and sold increased our revenue by
$6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per
week so I think we’re on the right track. We are producing the optimal number of cell
phones.”
Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher
or lower, and if so by how much?
A) Its profit will be $6,700 higher.
B) Its profit will be $700 higher.
C) Its profit will be $700 lower.
D) Its profit will be $6,000 lower.
Figure 12-11
If this is a constant-cost industry, what is the market price in the long-run equilibrium?
A) $5
B) $14
C) $15
D) $20
Figure 10-7
Manuri has $300 to spend on Pilates classes and Yoga classes. The price of a group
Pilates class is $20 and the price of a group Yoga class is $10. Manuri’s optimal bundle
is given by “A” in Figure 10-7. Suppose the price of Pilates sessions rises to $30 while
income and the price of Yoga sessions remain unchanged. What is her new optimal
bundle?
A) still remains at bundle A.
B) bundle B.
C) bundle C.
D) bundle D.
Lionel’s Lawn Care is a company that maintains residential yards. Lionel’s cost for his
standard package of mowing, edging, and trimming is $15, and he charges $25 for this
service. For a total price of $40, Lionel will also trim shrubs, a service that adds an
additional $10 to the total cost of the standard package. What is Lionel’s marginal cost
of adding the shrub-trimming service to the standard package?
A) $10
B) $15
C) $25
D) $40
Table 18-9
Table 18-9 shows the income tax brackets and tax rates for single taxpayers in
Monrovia.
Calculate the income tax paid by Sylvia, a single taxpayer with an income of $70,000.
A) $21,000
B) $15,740
C) $15,400
D) $13,475
How does an increase in government purchases financed by an increase in the deficit
affect exchange rates? Support your answer with graphs of the loanable funds market
and the foreign exchange market.
What are the three main exchange rate systems, and how do they operate?
People complain that inflation increases the cost of goods and services and therefore
reduces their purchasing power. If inflation and income grow at the same rate, is this
complaint valid? Explain carefully.
Using an aggregate demand graph, illustrate the impact of an increase in the price level
on aggregate demand.
Table 8-26
Given the information above, calculate the GDP deflator for both 2012 and 2013. What
does the value of the deflator in the year 2012 tell you about that year with respect to
the base year? What happened to prices in 2013 as compared to 2012?
What is the difference between explicit collusion and implicit collusion?
Protectionism is usually justified on the basis of one of four arguments. What are those
four arguments?