Table 8-11
Consider the following data for Tyrovia, a country that produces only two products:
guns and butter.
Real GDP for Tyrovia for 2013 using 2005 as the base year equals
A) $1,140.
B) $880.
C) $690.
D) $560.
In analyzing the decision to shut down in the short run we assume that the firm’s fixed
costs are
A) implicit costs.
B) capital costs.
C) nonmonetary opportunity costs.
D) sunk costs.
If full-employment GDP is equal to $4.2 trillion, what does the long-run aggregate
supply curve look like?
A) It is a horizontal line at $4.2 trillion of GDP.
B) It is a vertical line at a level of GDP below $4.2 trillion.
C) It is a vertical line at $4.2 trillion of GDP.
D) It is a vertical line at a level of GDP above $4.2 trillion.
How do a sole proprietorship and a corporation Differ?
A) Proprietorships have unlimited liability while corporations have limited liability.
B) Corporations can issue stocks and bonds, while proprietorships cannot.
C) Corporations face more taxes than do proprietorships.
D) All of these are Differences between the two types of businesses.
The demand for loanable funds is downward sloping because the ________ the interest
rate, the ________ the number of profitable investment projects a firm can undertake,
and the ________ the quantity demanded of loanable funds.
A) lower; greater; greater
B) lower; smaller; greater
C) greater; greater; greater
D) greater; smaller; greater
Discuss the likely impact of each of the following on the unemployment rate:
a. The length of time workers are eligible to receive unemployment insurance payments
is cut in half.
b. The government passes a law making labor unions illegal.
c. The minimum wage is raised by 50 percent.
d. The government funds an Internet site where companies can post job openings at no
charge.
For each surfboard that Australia produces, it gives up the opportunity to make 25
boomerangs. New Zealand can produce 1 surfboard for every 15 boomerangs it
produces. Which of the following is true about the comparative advantage between the
two countries?
A) Australia has the comparative advantage in surfboards.
B) Australia has the comparative advantage in boomerangs.
C) New Zealand has the comparative advantage in surfboards and boomerangs.
D) New Zealand has the comparative advantage in boomerangs.
For each pound of salami that Hungary produces, it gives up the opportunity to make 10
bottles of beer. Slovakia can produce 1 pound of salami for every 8 bottles of beer it
produces. Which of the following is true about the comparative advantage between the
two countries?
A) Hungary has the comparative advantage in salami.
B) Hungary has the comparative advantage in beer.
C) Slovakia has the comparative advantage in salami and beer.
D) Slovakia has the comparative advantage in beer.
Figure 16-2 Plato
Playhouse, a theatre company in the university town of Wegg, caters to two groups of
customers: students and the non-student population. Figure 16-2 shows the demand
curves for the two groups of customers.
Suppose Plato Playhouse charges a single price of Pd for each performance. Which of
the following statements is true?
A) The company is selling more than the profit-maximizing quantity in the non-student
market and less than the profit-maximizing quantity in the student market.
B) The company is selling less than the profit-maximizing quantity in the non-student
market and more than the profit-maximizing quantity in the student market.
C) The company is selling less than the profit-maximizing quantity in both markets, but
it is maximizing its revenue.
D) The company is selling less than the profit-maximizing quantity in both markets.
Which of the following explains why the marginal cost curve has a U shape?
A) Initially, the marginal product of labor falls, then rises.
B) Initially, the average product of labor rises, then falls.
C) Initially, the marginal product of labor rises, then falls.
D) Initially, the average cost of production rises, then falls.
Of the following high-income countries, which has the lowest infant mortality rate?
A) Canada
B) Japan
C) the United Kingdom
D) the United States
A decrease in cyclical unemployment will
A) shift the long-run Phillips curve to the left.
B) decrease the natural rate of unemployment.
C) shift the short-run Phillips curve to the left.
D) All of the above are correct.
E) None of the above is correct.