If a country has a comparative advantage in producing a product, it may not have an
absolute advantage in producing that product.
The U.S. economy would gain from the elimination of tariffs and quotas even if other
countries do not reduce their tariffs and quotas.
In the market for factors of production, households earn income by supplying factors of
production to firms.
Autarky is a situation where one country does not trade with other countries.
Insurance companies use deductibles and coinsurance to reduce moral hazard.
If the CPI falls from 142 to 140 between two consecutive years, this implies that prices
fell by 2% between those two years.
Maintaining a strong dollar in international currency markets is not one of the four
monetary policy goals of the Fed listed in the textbook.
Allocative efficiency is achieved in an industry when firms supply those goods and
services that provide consumers with a marginal benefit equal to the marginal cost of
producing those goods and services.
A decrease in liabilities will reduce a firm’s net worth.
Between 1981 and 2011, deaths from cancer have increased in the United States.
New Keynesian macroeconomic theory emphasizes the role of ‘sticky” prices in the
economy.
Japan has a single-payer health care systemin which the government provides national
health insuranceto all Japanese residents.
If a perfectly competitive firm achieves productive efficiency then
A) it will raise its price in order to earn an economic profit.
B) the price of the good it sells is equal to the benefit consumers receive from
consuming the last unit of the good sold.
C) it is producing at minimum efficient scale.
D) it is producing the good it sells at the lowest possible cost.
Since 1948, the labor force participation rate for adult men has ________ and for adult
women has ________.
A) increased; increased
B) increased; decreased
C) decreased; increased
D) decreased; decreased
Figure 13-1
Ceteris paribus, an increase in the price level would be represented by a movement
from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
Consider an industry that is made up of nine firms each with a market share (percent of
sales) as follows:
a. Firm A: 30%
b. Firm B: 20%
c. Firms C, D and E: 10% each
d. Firms F, G, H and J: 5% each What is the value of the four-firm concentration ratio
and how is the industry categorized?
A) 50%; monopolistic competition
B) 70%; oligopoly
C) 75%; oligopoly
D) 80%; strongly oligopolistic
The marginal product of labor is
A) the payment made to workers for their contribution to the output they produce.
B) equal to the demand for labor.
C) the change in a firm’s revenue as a result of hiring one more worker.
D) the additional output a firm produces as a result of hiring one more worker.
By offering less generous unemployment insurance programs, the United States can
expect
A) citizens to pay more in taxes than citizens pay in Europe.
B) workers to be slow in gaining new skills in response to fluctuations in the labor
market.
C) shorter periods of unemployment for their workers.
D) longer periods of unemployment for their workers.
If the consumption function is defined as C = 7,250 + 0.8Y, what is the autonomous
level of consumption expenditure?
A) $5,800
B) $7,250
C) $9,062.50
D) $9,700
If real GDP per capita in the United States is $8,000, what will real GDP per capita in
the United States be after 5 years if real GDP per capita grows at an annual rate of
3.2%?
A) $8,520
B) $9,280
C) $9,365
D) $10,560
If a corporation goes bankrupt, bondholders have ________ on the firm’s assets.
A) no claim
B) third claim, after the IRS and stockholders,
C) second claim, after stockholders,
D) first claim
If the total cost of producing 20 units of output is $1,000 and the average variable cost
is $35, what is the firm’s average fixed cost at that level of output?
A) $65
B) $50
C) $15
D) It is impossible to determine without additional information.
What is the natural rate of unemployment, and what types of unemployment constitute
the natural rate of unemployment?
Nearly a quarter of China’s 1.3 billion people are under the age of 15. How will this
affect high school enrollment over the next fifteen years? The labor market over the
next fifteen years?
In 2003, Congress passed a tax cut that included a reduction in the marginal tax rate on
stock dividends. This essentially increased the after-tax rate of return on stocks that
offer dividends. Using the loanable funds market, describe what will happen to saving,
investment, economic growth, the real interest rate, and the quantity of loanable funds
exchanged.
Would the invention of money, as opposed to barter, increase the growth rate of real
GDP in a country over time? Why or why not?
What are the key differences between how we illustrate a contractionary fiscal policy in
the basic aggregate demand and aggregate supply model and in the dynamic aggregate
demand and aggregate supply model?
Explain why the marginal cost of production must increase if the marginal product of a
variable resource is decreasing.
Table 18-3
The table above outlines the rankings of three members of the U.S. Senate on three
spending alternatives. Assume that Congress can spend additional revenue on only one
of the three spending alternatives and that Bart, Lisa, and Maggie, all members of the
Senate, participate in a series of votes in which they are to determine which of the
spending alternatives should receive funding. Three votes will be taken: (1)
Immigration Reform and Unemployment Benefits (2) Immigration Reform and Social
Security Reform and (3) Unemployment Benefits and Social Security Reform. Show
the results of each vote and determine whether the voting paradox will occur as a result
of these votes.
Describe the three types of unemployment.
The following table contains the actual prices charged by four Web sites for a Blu-ray
disc of the movie The Twilight Saga: Breaking Dawn – Part 2 in October 2013.
Explain whether the information in this table contradicts the law of one price.
How do firms and households interact in markets?