The United Kingdom has a health care system under which the government owns most
of the hospitals and employs most of the doctors.
The slope of an isoquant is equal to the ratio of the price of the input on the horizontal
axis divided by the price of the input on the vertical axis, multiplied by -1.
Small differences in economic growth rates result in small differences in living
standards.
Buying a house during a recession may be a good idea if your job seems secure because
the Federal Reserve often lowers interest rates during a recession.
Economies cannot function without money.
In a sequential game, one firm will act first and then other firms will respond.
A consumer maximizes her total utility from a bundle of goods when her marginal
utility from each good is equal.
When the Federal Reserve System was established in 1913, its main policy goal was
A) encouraging strong economic growth.
B) promoting price stability.
C) preventing bank panics.
D) keeping employment high.
Domestic producers require time to gain experience and lower their unit costs; this will
allow these producers to compete successfully in international markets. This statement
describes the ________ argument for protectionism.
A) diseconomies of scale
B) protecting national security
C) anti-dumping
D) infant industry
The five most important variables that determine the level of ________ are disposable
income, wealth, expected future income, price level, and interest rate.
A) consumption
B) government purchases
C) planned investment
D) net exports
Marginal productivity theory implies that in a perfectly competitive market economy, a
worker will receive income
A) equal to the value of her marginal contribution to the production process.
B) that is greater than the value of her marginal contribution to production process.
C) that is less than the value of her marginal contribution to the production process.
D) greater than, less than, or equal to the value of her marginal contribution to the
production process, depending on her ability to negotiate with employers.
The lawsuit the Justice Department brought against Apple regarding the pricing of
e-books for its iPad is an example of attempts by the government
A) to prevent vertical mergers which would significantly reduce competition.
B) to prevent horizontal mergers which would significantly reduce competition.
C) to regulate a natural monopoly by establishing government-regulated prices.
D) to keep firms from artificially restricting competition to raise prices.
Market supply is found by
A) vertically summing the relevant part of each individual producer’s marginal cost
curve.
B) horizontally summing the relevant part of each individual producer’s marginal cost
curve.
C) vertically summing each individual producer’s average total cost curve.
D) horizontally summing each individual producer’s average total cost curve.
According to an article the Wall Street Journal, “The big car makers are pushing a wide
array of new technology into production, responding to relentless competitive pressure,
rising energy prices and consumer demand for better safety.
Source: Joseph B. White, “Ford, GM Eye Shift in Buying Habits,” Wall Street Journal,
May 22, 2006. Which of Porter’s competitive forces does this statement allude to?
A) the threat of competition from new entrants
B) competition from foreign auto manufacturers
C) competition from existing firms within the industry
D) competition from substitute products from outside the industry
Costs that have already been incurred, and which cannot be recovered, are known as
A) short-run fixed costs.
B) implicit costs.
C) unavoidable costs.
D) sunk costs.
How would an increase in the U.S. federal budget deficit affect the exchange rate in the
market for dollars?
A) The exchange rate will increase.
B) The exchange rate will decrease.
C) The exchange rate will not be affected by a change in the federal budget deficit.
D) The impact of the increase in the federal budget deficit on the exchange rate cannot
be predicted.
Using the Taylor rule, if the current inflation rate exceeds the target inflation rate and
real GDP exceeds potential GDP, then the federal funds target rate ________ the sum of
the current inflation rate plus the real equilibrium federal funds rate.
A) will be greater than
B) will be less than
C) will be the same as
D) may be greater than or less than
How does a decrease in the federal budget deficit affect the demand for dollars and the
supply of dollars on the foreign exchange market?
A) The demand for dollars falls, and the supply of dollars falls.
B) The demand for dollars rises, and the supply of dollars rises.
C) The demand for dollars rises, and the supply of dollars falls.
D) The demand for dollars falls, and the supply of dollars rises.
Which of the following describes what the Fed would do to pursue an expansionary
monetary policy?
A) use open market operations to buy Treasury bills
B) use open market operations to sell Treasury bills
C) use discount policy to raise the discount rate
D) raise the reserve requirement
An income tax system is ________ if marginal tax rates increase as income increases.
A) progressive
B) regressive
C) efficient
D) equitable
Labor unions cause unemployment because the union contract wage is set
A) below the market wage, causing a shortage of labor.
B) below the market wage, causing a surplus of labor.
C) above the market wage, causing a surplus of labor.
D) above the market wage, causing a shortage of labor.
What is the difference between a market equilibrium and a competitive market
equilibrium?
What is a private benefit from consumption? What is a social benefit from
consumption? When is the private benefit from consumption equal to the social benefit
from consumption?
Table 9-4
Output Per Hour of Work
Table 9-4 shows the output per hour of work for handbags and jackets in Cambodia and
in Thailand. Fill in the following table with the opportunity costs of producing
handbags and jackets for Cambodia and Thailand.
What is the difference between aggregate expenditure and aggregate demand?
One of the results of Paul Romer’s new growth theory is that investment in research and
development will be too low in an economy. Explain how he comes to this conclusion.
What is the difference between accounting profit and economic profit?
Why are many companies concerned about brand management?
Define a corporation.
You have been hired as an economic advisor for a developing country. You have been
asked to focus on education as a means for the country’s development. Explain to the
prime minister how improving education and training can contribute to his country’s
economic growth, and why it is important for the government to take a pro-active role
in promoting education.