The marginal product of the 14th worker is 8 and the firm sells its output for $4 per unit.
If labor is the only variable cost, the value of the 14th worker’s marginal product is
A. $2.
B. $4.
C. $12.
D. $32.
Dane is a registered Democrat, but does not support every policy on that party’s
platform. According to the principle of disappearing political discourse, Dane avoids
voicing an opinion on those topics for which she disagrees with her party because Dane
is
A. unsure of her opinions.
B. afraid someone will think she is a Republican.
C. afraid that the party leadership will retaliate against her.
D. from a red state.
If the money supply equals 2,000, velocity equals 3, and real GDP equals 4,000, then
the price level equals:
A. 1.5.
B. 2.
C. 3.
D. 6,000.
Because the monopolist charges a price in excess of marginal costs, it must be the case
that the monopolist:
A. earns an excessive profit.
B. exploits the consumers who do make a purchase.
C. fails to equate the benefits to the costs of the last unit produced.
D. produces less than the socially efficient level of output.
Suppose that all workers value a safe job $2,000/year more than a risky job. The cost of
safety is $700 per worker. Firms currently pay $35,000 per year to workers, without any
effort to improve safety.
Suppose new firms began to offer workers $34,000 per year and safe jobs. The new
firms would find that
A. no workers are applying for their jobs.
B. only lower quality workers would apply for their jobs.
C. only injury prone workers would apply.
D. workers would be willing to accept their offer.
The sum of national saving and capital inflows from abroad must equal:
A. domestic investment in new capital goods.
B. capital outflows.
C. aggregate demand.
D. the trade deficit.
A positional externality:
A. can only occur in sports.
B. arises in situations where absolute performance is judged.
C. results in under investment in performance enhancement.
D. occurs when an increase is one player’s performance reduces the expected reward of
the other players.
The __________ the elasticity of demand for medical care, the __________ the extent
of over consumption of medical treatment due to insurance.
A. larger; smaller
B. smaller; greater
C. larger; greater
D. smaller; smaller
Making more frequent, but smaller cash withdrawals from banks ______ the inflation
losses from holding cash and ______ the shoe leather costs of inflation.
A. increases; increases
B. increases; reduces
C. reduces; has no impact on
D. reduces; increases
One difficulty with the exploitation view of workplace injuries is for it to be successful
over time, firms must
A. act collusively.
B. profit maximize.
C. act independently.
D. encourage worker mobility.
In the Keynesian model, a $5 billion decrease in autonomous planned investment leads
to ______ in short-run equilibrium output.
A. a $5 billion increase
B. a greater than $5 billion decrease
C. no change
D. a $5 billion decrease
The supply curve illustrates that firms:
A. increase the supply of a good when its price rises.
B. increase the quantity supplied of a good when its price rises.
C. decrease the quantity supplied of a good when input prices fall.
D. decrease the quantity supplied to earn higher profits.
Refer to the figure above. Based on the diagram, if potential output equals 5,000 and
the real interest rate is 3%, then there is ______ gap and the Fed must ______ the real
interest rate so that output will equal potential output.
A. a recessionary; raise
B. a recessionary; reduce
C. no output; not change
D. an expansionary; raise
In Macroland there is $12,000,000 in currency. The public holds half of the currency
and banks hold the rest as reserves. If banks’ desired reserve/deposit ratio is 12.5%,
deposits in Macroland equal ______ and the money supply equals _______.
A. $48,000,000; $75,000,000
B. $54,000,000; $54,000,000
C. $48,000,000; $54,000,000
D. $96,000,000; $96,000,000
In the short-run ______ determines output, and in the long-run ______ determines
output.
A. potential output; prices
B. potential output; total spending
C. total spending; potential output
D. total spending; prices
You had to pay $600 (non-refundable) for your meal plan for Fall semester which gives
you up to 150 meals. If you eat only 100 meals, your average cost for a meal equals:
A. $6.
B. $5.
C. $4.
D. $0.25.
Refer to the figure above. The welfare loss due to a first-dollar insurance plan for the
medical treatment is ________.
A. $100
B. $200
C. $300
D. $400
The biggest barrier to growth for many of the poorest countries in the world is the need
for:
A. larger populations.
B. more human capital.
C. more physical capital.
D. improved legal and political frameworks.
Lane and Riley are the only two residents in a neighborhood, and they share the same
driveway. They would like to have the driveway paved. The value of the paved
driveway is $1500 to Lane and $1000 to Riley. Irrespective of who pays for the paving
both people will benefit from it.
What is the most a contractor can charge for paving the driveway and still be hired by at
least one of them?
A. $1000
B. $1500
C. $2000
D. $2500
Suppose a treacherous stretch of road winds through Deadman’s Canyon for 5 miles. A
highway department study estimates that better lighting would reduce the traffic fatality
rates as follows:
Suppose that experts have estimated the statistical value of a life saved to be $8m. The
marginal benefit of the third light installed is ____ and the marginal cost is ____.
Therefore the third light ____ be installed.
A. $2.4m; $5m; should not
B. $8m; $5m; should
C. $300,000; $5m; should not
D. $500,000; $1m; should not
Working efficiently, Jordan can write 3 essays and outline 4 chapters each week. It must
be true that:
A. 6 essays and 0 chapter outlines would be unattainable.
B. 2 essays and 3 chapter outlines would be efficient.
C. 3 essays and 5 chapter outlines would be unattainable.
D. 4 essays and 3 chapter outlines would be both attainable and efficient.
If the slope of the demand curve is -0.167, price is $8 and quantity demanded is 12
units, then demand for this good is:
A. perfectly elastic.
B. elastic.
C. unit elastic.
D. inelastic.
A government policy to build bridges and dams is an example of a policy to promote
economic growth by:
A. increasing human capital.
B. increasing physical capital.
C. improving technology.
D. improving the social and legal environment.
In a certain economy, the components of planned spending are given by:
C = 500 + 0.8(Y – T) – 300r
Ip = 200 – 400r
G = 200
NX = 10
T = 150
Given the information about the economy above, what would be the impact on
autonomous expenditures of a one-percentage-point increase in the real interest rate?
A. Autonomous expenditures would increase by 35 units.
B. Autonomous expenditures would decrease by 700 units.
C. Autonomous expenditures would decrease by 35 units.
D. Autonomous expenditures would decrease by 7 units.
When journalists write about outsourcing, they are referring to:
A. firms that hire illegal immigrants at wages less than the minimum wage.
B. firms that import raw materials in order to produce more cheaply in the United
States.
C. exports.
D. firms that hire low-wage workers in other countries to perform some of their work.
Empirical studies suggest that as real GDP per person increases the level of pollution:
A. increases.
B. decreases.
C. remains constant.
D. first increases then decreases.
Perfect competition is efficient and monopoly is not because in perfect competition
__________ while in monopoly __________.
A. P = MC; P > MC
B. P < MR; P = MR
C. P = MR; P < MR
D. P = MC; P < MC
Which of the following is a condition that is necessary for a market to be perfectly
competitive?
A. The firms face inelastic demand for their product.
B. Market demand for the product is perfectly elastic.
C. Firms can easily buy and sell the productive resources necessary to compete in the
market.
D. Consumers display strong brand loyalty.
If the desired reserve/deposit ratio is 0.25 and the banking system receives an additional
$10 million in reserves, bank deposits will increase by:
A. $10 million.
B. $250 million.
C. $40 million.
D. $4 million.
Refer to the figure above. Suppose a price ceiling is imposed at $4. The value of the
consumer surplus is:
A. $36.
B. $20.
C. $24.
D. $28.
Higher education is a ________ and assigned textbooks are ________.
A. need; needs
B. want; wants
C. need; wants
D. want; needs