A graph conveys information about a cause-and-effect relationship.
a. True
b. False
Affirmative action laws require employers to search for qualified minority applicants,
but not to necessarily give them jobs.
a. True
b. False
An example of “cream skimming” is when:
a. a firm charges the same price to all consumers, even though costs for some are higher
b. a firm offers a reduced price to the best-paying customers of their competitors
c. a firm offers a reduction in price on a package sale of two items
d. none of these
Why does quantity demanded decrease when price increases?
a. People choose to reduce consumption of the item.
b. People “drop out” of the market for the item.
c. People find substitutes for the item.
d. All of the above are correct.
How do the wages in the United States compare to those in northern Europe?
a. U.S. wage rates are higher than those of all northern European nations.
b. Northern Europe’s average wage rates are higher.
c. U.S. wage rates are higher than those in Germany and the Netherlands.
d. they are similar.
In early 2013, two economists debated the question of whether:
a. the trade deficit should be reduced rapidly or steadily
b. the United States was past its prime
c. the percentage of health care to GDP was a warning sign for the economy
d. none of these
The loan supply curve has a positive slope
a. for all savers.
b. only for savers with fixed accumulation targets.
c. for all savers except those with fixed accumulation goals.
d. only for those contemplating retirement.
Figure 4-4
Assume that Figure 4-4 shows demand for new houses. A decrease in income of buyers
will change demand from
a. D1 to D2.
b. D2 to D1.
c. D2 to D3.
d. D1 to D3.
Figure 4-21
At price P1 in Figure 4-21, what will tend to happen?
a. There will be a shortage, and the price will fall.
b. There will be a shortage, and the price will rise.
c. There will be a surplus, and the price will rise.
d. There will be a surplus, and the price will fall.
e. Equilibrium will occur in the market.
Price floors are only effective below the market equilibrium.
a. True
b. False
A study of New York City (NYC) tax rates concluded that taxes on the
nonmanufacturing sector should be higher since that sector has fewer alternatives.
Manufacturers are more mobile and may move to avoid higher taxes. This means that
a. nonmanufacturing firms have a more elastic demand for NYC locations.
b. manufacturing firms have an inelastic demand for the NYC locations.
c. nonmanufacturing firms have relatively inelastic demand for the NYC locations.
d. nonmanufacturing demand for NYC locations is perfectly elastic.
Figure 5-17
Which of the following statements about Figure 5-17 must be correct?
a. The consumer pays a higher dollar price per unit for good Y at A than at D.
b. The consumer pays the same dollar price per unit for good Y at A and at B.
c. The consumer pays a higher dollar price per unit for good X at D than at A.
d. The consumer pays a higher dollar price per unit for good X at A than at C.
Figure 14-1
In Figure 14-1, a cost-reducing technological breakthrough in calculator production
would cause which movement?
a. A to D
b. A to C
c. A to B
d. A to E
Once the profit-maximizing output where MR = MC is determined, price is set by
a. adding a standard markup percentage to marginal cost.
b. the demand curve.
c. making it equal to MR = MC.
d. subtracting the marginal cost from total revenue.
Property taxes are the main source of funding for public schools.
a. True
b. False
All industrialized countries have become ‘service economies.” Which factor helps
explain this shift?
a. Trade unionism and failure of the manufacturing sector to grow.
b. Information age and labor saving innovation in manufacturing.
c. Non availability of industrial labor with required skills.
d. Absence of competition in the service sector.
Many detrimental externalities occur because
a. persons do not pay the full social cost of using a resource.
b. persons do not pay the full private cost of using a resource.
c. companies do not pay the market price for natural resources.
d. companies pay more than the full social cost of using a resource.
Which of the following activities is most likely to be considered rent seeking?
a. buying an apartment building
b. hiring a lobbyist
c. voting for a politician who supports government spending
d. buying common stock
About what percentage of the poor are children?
a. 13
b. 24
c. 36
d. 60
A horizontal line has a slope of 0.
a. True
b. False
The term “laissez faire” was given to a system of free markets by
a. twentieth-century American economists.
b. a seventeenth-century Scottish economist.
c. eighteenth-century French economists.
d. nineteenth-century Italian economists.
The demand by sterile couples for babies to adopt has grown rapidly, while the supply
has dwindled because of improved contraception, liberal abortion laws, and an increase
in the probability that unwed mothers will keep their children. It violates the law to sell
human beings at any age, but for every twenty legal adoptions there seemingly is one
baby sale at a price up to $50,000 The generic term economists apply to the market
produced by this type of shortage is
a. “black market.”
b. “white slave market.”
c. “the adoption market.”
d. “baby market.”
Marginal land is land that is not worth anything under any circumstances.
a. True
b. False
Consider an industry consisting of four firms with market shares of 30 percent, 25
percent, 25 percent, and 20 percent. Calculate the Herfindahl Hirschman Index and
interpret your result.
Describe how a pollution-control authority might use an emissions permits system to
reduce pollution.
Explain how mutual funds are advantageous to small investors.
The demand for home computers has increased, yet the price has fallen. Explain this
apparent paradox.
How can tariffs lead to a situation in which all parties to a trade lose?
Explain why the long-run average cost is typically U-shaped.
Carefully distinguish between an economic theory and economic model.