Which of the following would you expect to increase the equilibrium interest rate?
A) an increase in the percentage of income after net taxes that households save
B) an increase in the budget deficit
C) a decrease in the profitability of investment projects firms are considering
D) a change from an income tax to a consumption tax
Inflation will
A) increase aggregate demand.
B) increase the quantity of real GDP demanded.
C) decrease aggregate demand.
D) decrease the quantity of real GDP demanded.
In 2012, foreign purchases of U.S. corporate stocks and bonds
A) doubled.
B) fell.
C) grew at a faster pace than foreign investment in U.S. government bonds.
D) grew at a faster pace than foreign investment in U.S. corporate bonds.
A large majority of the personal computers (PCs) in the United States use an operating
system purchased from Microsoft. Microsoft’s relationship with PC manufacturers is an
example of which of Porter’s competitive forces?
A) the threat from new entrants
B) the bargaining power of suppliers
C) the bargaining power of buyers
D) competition from substitute goods or services
If a firm lowered the price of the product it sells and found that total revenue did not
change, then the demand for its product is
A) perfectly inelastic.
B) perfectly elastic.
C) unit-elastic.
D) relatively elastic.
The actual real wage is lower than the expected real wage if
A) actual inflation is less than expected inflation.
B) expected inflation is less than actual inflation.
C) actual unemployment is less than expected unemployment.
D) actual unemployment is less than actual inflation.
Disagreements about whether the U.S. government should regulate international trade
A) began during the Great Depression.
B) began after World War I when government officials no longer believed in
isolationism.
C) date back to the beginning of the country.
D) did not occur until the end of the Mexican War in 1848.
Both individual buyers and sellers in perfect competition
A) can influence the market price by their own individual actions.
B) can influence the market price by joining with a few of their competitors.
C) have to take the market price as a given.
D) have the market price dictated to them by government.
Following the tariff imposed on Chinese tires, some businesspeople correctly argued
that the U.S. tariff would result in
A) China retaliating by raising tariffs on some U.S. exports.
B) China halting the sale of all products in the United States.
C) U.S. firms never being able to meet the demand for U.S.-produced tires.
D) the government demanding price cuts from U.S. tire manufacturers.
A United States government patent lasts
A) forever.
B) 50 years.
C) 20 years.
D) 7 years.
Exports are domestically produced goods and services
A) sold to other countries.
B) sold to the government.
C) sold at home.
D) which are used to produce other goods and services.
Over the past 160 years in the United States, life expectancy
A) has remained fairly constant.
B) has slightly declined.
C) has more than doubled.
D) increased up to the 1950s and then declined for the next 60 years.
A corporation is owned by its
A) board of directors.
B) stockholders.
C) employees.
D) CEO.
Which of the following would result in a positive externality?
A) A local government establishes a price ceiling on rental apartments.
B) An electric utility burns coal that causes acid rain.
C) Medical research results in a cure for malaria.
D) McDonald’s adds new fat-free items to its menu.
A major difference between monopolistic competition and perfect competition is
A) the number of sellers in the markets.
B) the degree by which the market demand curves slope downwards.
C) that products are not standardized in monopolistic competition unlike in perfect
competition.
D) the barriers to entry in the two markets.
Figure 4-10 Figure 4-10 shows the
market for apartments in Bay City. Recently, the government imposed a rent ceiling at
R0. What is the area that represents the producer surplus after the imposition of the
ceiling?
A) F + G
B) F
C) D + F + G
D) A + B + D + F + G
If price exceeds average variable cost but is less than average total cost, a firm
A) should further differentiate its product.
B) should stay in business for a while longer until its fixed costs expire.
C) is making some profit but less than maximum profit.
D) should shut down.
What two factors are the keys to determining labor productivity?
A) the business cycle and the growth rate of real GDP
B) the growth rate of real GDP and the interest rate
C) technology and the quantity of capital per hour worked
D) the average level of education of the workforce and the price level
Assume that two interior design companies, Alistair and Baine, are competing for
customers and if they both advertise, they would each earn $30 million in profits. If
neither advertises, they each earn $50 million in profits. If one advertises and the other
doesn’t, the firm that advertises earns $40 million in profit while the other earns $20
million in profit.
a. Present the information above in the form of a payoff matrix. Let Baine be the row
player and Alistair the column player.
b. Does each firm have a dominant strategy and if so what is it?
c. What is the Nash equilibrium?
Zach Greinke’s marginal product as a baseball player would be about the same as a Los
Angeles Dodger and a Kansas City Royal. Why were the Dodgers willing to pay
Greinke a higher salary than he was paid as a Royal?
A) The Dodgers play needed a superstar to attract fans to their games. The Royals had
no need to attract fans to their games.
B) The Dodgers play more home games than the Royals. As a result, the Dodgers earn
more revenue from ticket sales that they can use to pay player salaries.
C) Greinke’s marginal revenue product is higher as a Dodger than it was as a Royal.
D) The owner of the Dodgers was under more pressure from the fans and the Los
Angeles media to pay Greinke a higher salary than the Royals were willing to pay.