A perfectly competitive firm’s horizontal demand curve implies that the firm does not
have to lower its price to sell more output.
Corporations are legally owned by their shareholders.
A normal good is a good for which the demand decreases as income decreases, holding
everything else constant.
Rapid economic growth tends to increase the degree of income mobility.
Being a price-taker, a perfectly competitive firm cannot receive a producer surplus in
the short run.
Scarcity refers to a situation in which unlimited wants exceed the limited resources
available to fulfill those wants.
If the absolute value of the price elasticity of demand for gasoline is 0.5, then a 10
percent increase in the price of gasoline leads to a 0.5 percent decrease in the quantity
demanded.
A monopoly is a firm that is the only seller of a good or service that does not have a
close substitute.
Consumers and make all economic decisions in a mixed economy.
On a diagram of a production possibility frontier, opportunity cost is represented by the
slope of the production possibility frontier.
An increase in the price of grape juice causes an increase in the marginal revenue
product of labor used to produce grape juice.
National income is equal to
A) personal income minus personal taxes.
B) GDP minus depreciation.
C) disposable personal income plus depreciation plus personal taxes.
D) GNP plus depreciation.
Because producers do not bear the external cost of pollution
A) the economically efficient level of production is achieved.
B) private production is below the economically efficient level.
C) private production exceeds the economically efficient level.
D) the market price is too high.
Which of the following is an example of a worker experiencing frictional
unemployment?
A) A worker quits his job at the Post Office to find more interesting work.
B) A computer programmer loses her job because it is outsourced to India.
C) An employee is laid off because the economy is suffering a recession.
D) A United Airlines pilot loses her job because of lack of demand for air travel.
The size of the underground economy would tend to decrease if the government of a
country
A) decreased government regulations on businesses.
B) made over-the-counter drugs illegal.
C) increased income tax rates.
D) increased business taxes.
Suppose that when the price of pickles decreases, Teddy increases his purchase of
ketchup. To Teddy,
A) pickles and ketchup are complements.
B) pickles and ketchup and substitutes.
C) pickles and ketchup are normal goods.
D) pickles are a normal good and ketchup is an inferior good.
Congress and the president carry out fiscal policy through changes in
A) interest rates and the money supply.
B) taxes and the interest rate.
C) government purchases and the money supply.
D) government purchases and taxes.
Of the following industries, which are perfectly competitive? For those that are not
perfectly competitive, explain why. a. Restaurants
b. Corn
c. College education
d. Local radio and television
The economic growth model predicts that ________ across countries will converge
over time.
A) income levels
B) GDP per capita
C) foreign direct investment rates
D) growth rates
One reason why the average salary of Major League Baseball players is higher than the
average salary of college professors is
A) the careers of most baseball players are much shorter than the careers of most
college professors.
B) the marginal revenue product of baseball players is greater than the marginal
revenue product of college professors.
C) college professors accept lower salaries in exchange for better working conditions.
D) competition among baseball club owners forces player salaries to be much higher
than the players’ marginal revenue products.
Between 1990 and 2012, which of these leading industrial countries of the world had
the highest average annual growth rate in GDP per capita?
A) the United States
B) Germany
C) Japan
D) Canada
In monopolistic competition there is/are
A) many sellers who each face a downward-sloping demand curve.
B) a few sellers who each face a downward-sloping demand curve.
C) only one seller who faces a downward-sloping demand curve.
D) many sellers who each face a perfectly elastic demand curve.
On average, people in high-income countries ________ than people in low-income
countries.
A) have a shorter life expectancy
B) are subject to a higher infant mortality rate
C) are taller
D) are exposed to more severe diseases
Which of the following is motivated by an equity concern?
A) Some U.S. colleges have cut back on merit scholarships since these programs siphon
money from need-based programs, thus harming lower-income students with greater
financial need.
B) Following the removal of subsidies in urban water use, household demand for water
decreased quite significantly in Bogor, Indonesia.
C) In November 2003, the Federal Communications Commission implemented the
“local number portability” rule which gives cell phone customers the option of keeping
their number when they switch carriers within the same geographic region.
D) The United States protects intellectual property rights, allowing inventors to prevent
others from using their inventions without payment.
Suppose that in Canada, the government places a $1,500 tax on the buyers of new
snowmobiles. After the purchase of a new snowmobile, a buyer must pay the
government $1,500. How would the imposition of the tax on buyers be illustrated in a
graph?
A) The tax will shift the supply curve to the left by $1,500.
B) The tax will shift the demand curve to the right by $1,500.
C) The tax will shift both the demand and supply curve to the right by $1,500.
D) The tax will shift the demand curve to the left by $1,500.
In the 1930s, the United States charged an average tariff rate ________. Today, the rate
is ________.
A) of 100 percent; 20 percent
B) above 50 percent; less than 1.5 percent
C) of less than 10 percent; over 40 percent
D) of 17 percent; 33 percent
Explain the economic concept of price elasticity of supply. How is price elasticity of
supply calculated?
State the law of diminishing marginal returns.
List two ways the labor force experience is different between workers in Europe and in
the United States. How do these differences influence productivity?
Many state governments use lotteries to raise revenue. If a lottery is viewed as a tax, is
it most likely a progressive tax or a regressive tax? What information would you need
to determine whether the burden of a lottery is progressive or regressive?
Use production functions from the economic growth model to explain why the United
States grew at a much faster rate than the Soviet Union in the latter half of the 20th
century.