A perfectly competitive apple farm produces 1,000 bushels of apples at a total cost of
$36,000. The price of each bushel is $50. Calculate the firm’s short-run profit or loss.
A) loss of $14,000
B) profit of $14,000
C) profit of $50,000
D) There is insufficient information to answer the question.
The efficient level of paper production will occur where the
A) marginal private benefit from consuming paper is equal to the marginal social cost
of production.
B) marginal social benefit from consuming paper is equal to the marginal social cost of
production.
C) the economically efficient level of the output of paper is equal to the economically
efficient level of inputs.
D) production of paper no longer produces negative externalities.
The top policy goal for Paul Volcker when he became chairman of the Federal Reserve’s
Board of Governors in 1979 was
A) fighting inflation.
B) increasing employment.
C) increasing economic growth.
D) increasing regulation of commercial banks.
E) a low current account deficit.
Table 20-18
Looking at the table above, what is the rate of growth of real average hourly earnings
from 2012 to 2013?
A) 7.7%
B) 6.25%
C) 4%
D) -4%
Investment spending will decrease when
A) the interest rate falls.
B) the corporate income tax decreases.
C) business cash flow decreases.
D) firms become more optimistic about earning future profits.
What is the rationale behind a marketable emission allowance scheme?
A) to create of a market for externalities: the scheme brings together buyers and sellers
of marketable permits
B) to discipline polluting firms by specifying the maximum amount of emissions
allowed and giving them permits to pollute up to their allowance
C) to raise revenue for the government through the sale of emission permits and at the
same time set an emissions target
D) to provide firms with the incentive to consider less costly alternatives to pollution
reduction by making firms pay for the right to pollute beyond their specified allowance
Figure 3-5
At a price of $5, the quantity sold
A) is 2 units.
B) is 4 units.
C) is 6 units.
D) cannot be determined.
Figure 2-4
Figure 2-4 shows various points on three Different production possibilities frontiers for
a nation.
Consider the following events:
a. a reduction in the patent protection period to no more than 2 years
b. a war that destroys a substantial portion of a nation’s capital stock
c. the lack of secure and enforceable property rights system Which of the events listed
above could cause a movement from W to V?
A) a only
B) a and b only
C) a and c only
D) b and c only
E) a, b, and c
What is the shape of the labor supply curve implied by the following statements?
a. “I’m sorry, kids, but now that I’m earning more, I just can’t afford to come home early
in the afternoon, so I won’t be here when you get home from school.”
b. “They can pay me a lot or they can pay me a little. I’ll still put in my 8 hours a day.”
c. “Now that I have received a salary increase, I am going to work 36 hours instead of
40 hours a week”
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
An increase in the demand for peanuts due to changes in consumer tastes, accompanied
by an increase in the supply of peanuts as a result of favorable growing conditions, will
result in
A) an increase in the equilibrium quantity of peanuts and no change in the equilibrium
price.
B) an increase in the equilibrium price of peanuts and no change in the equilibrium
quantity.
C) an increase in the equilibrium price of peanuts; the equilibrium quantity may
increase or decrease.
D) an increase in the equilibrium quantity of peanuts; the equilibrium price may
increase or decrease.
What is the United States government’s formal definition of the poverty line?
A) It is a level of annual income equal to total income in society divided by the
population, adjusted for a family of four.
B) It is a level of annual income equal to the amount of money necessary to purchase
the minimal quantity of food required for adequate nutrition.
C) It is the annual income level below which a household is exempt from taxes.
D) It is a level of annual income equal to three times the amount of money necessary to
purchase the minimal quantity of food required for adequate nutrition.
Marginal utility is the
A) total satisfaction received from consuming a given number of units of a product.
B) average satisfaction received from consuming a product.
C) extra satisfaction received from consuming one more unit of a product.
D) satisfaction achieved when a consumer has had enough of a product.
Which of the following equations is correct?
A) AVC – ATC = AFC
B) AVC + ATC = AFC
C) AFC + AVC = ATC
D) ATC + AVC = AFC
Which of the following would increase the value of the dollar in the long run?
A) an increase in inflation in the United States relative to other countries
B) an increase in the demand for American goods relative to goods from other countries
C) a decrease in U.S. tariffs on foreign goods
D) an increase in the supply of dollars on the foreign exchange market
Consumption spending will ________ when disposable income ________.
A) increase; increases
B) increase; decreases
C) decrease; increases
D) change unpredictably; decreases
Article Summary. According to a study by the Center for Neighborhood
Technology, homes located within one-half mile of frequently-used public
transportation held their value much better during the recent housing market
downturn than did those without easy access to public transportation, and the
greater home values reflect greater demand for neighborhoods in close proximity
to public transportation. In addition to higher home values, the study found that
close proximity to public transportation offers lower transportation costs, a wider
variety of travel options, and access to more employment opportunities.
Source: Meg Handley, “Study: Proximity to Public Transit Boosts Home Values,”
U.S. News & World Report, March 22, 2013.
Higher home values which result from close proximity to public transportation are an
example of a ________ due to the public transportation.
A) positive externality.
B) negative externality.
C) private cost.
D) social cost.
Figure 23-2
If the U.S. economy is currently at point K, which of the following could cause it to
move to point N?
A) The price level in the United States rises relative to the price level in other countries.
B) Congress passes investment tax incentives.
C) The interest rate rises.
D) Household wealth declines.
You’re traveling in Ireland and are thinking about buying a new digital camera. You’ve
decided you’d be willing to pay $125 for a new camera, but cameras in Ireland are all
priced in euros. If the camera you’re looking at costs 115 euros, under which of the
following exchange rates would you be willing to purchase the camera? (Assume no
taxes or duties are associated with the purchase.)
A) 0.56 euros per dollar
B) 0.89 euros per dollar
C) 0.92 euros per dollar
D) You would purchase the new camera at any of the above exchange rates.
Willingness to pay measures
A) the maximum price a buyer is willing to pay for a product minus the amount the
buyer actually pays for it.
B) the amount a seller actually receives for a good minus the minimum amount the
seller is willing to accept for the good.
C) the maximum price that a buyer is willing to pay for a good.
D) the maximum price a buyer is willing to pay minus the minimum price a seller is
willing to accept.