An increase in the demand for green tea raises the price of apples from $16 a pound to
$20 a pound. As a result, quantity supplied increases by 30 percent. Using the midpoint
formula, calculate the value of the price elasticity of supply?
A) 1.35
B) 1.875
C) 2.22
D) 7.5
Which of the following is the correct way to describe equilibrium in a market?
A) At equilibrium, demand equals supply.
B) At equilibrium, quantity demanded equals quantity supplied.
C) At equilibrium, market forces no longer apply.
D) At equilibrium, scarcity is eliminated.
If the number of unemployed workers is 200 million, and the number in the labor force
is 500 million, what is the unemployment rate?
A) 0.4%
B) 4%
C) 14%
D) 40%
Despite evidence that companies will find it more profitable to use a commission
system of compensation rather than a salary system, many companies continue to pay
their workers salaries. Which of the following is one reason why firms choose a salary
system?
A) Most business owners and managers are not trained economists; therefore, they are
unaware of the research that shows a commission system is more profitable than a
salary system.
B) Firms often use salary systems to overcome their principal-agent problems.
C) Firms that have salary systems do not have to use compensating differentials to
attract employees to do hazardous jobs.
D) Many workers dislike risk and prefer to be paid a salary rather than to be paid by
commission.
Table 2-13
Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can
either devote their time to grooming dogs or bathing cats.
What is Tammi’s opportunity cost of bathing a cat?
A) half a groomed dog
B) two groomed dogs
C) two-thirds of a groomed dog
D) one and a half groomed dogs
What’s the difference between foreign direct investment and foreign portfolio
investment?
A) Foreign direct investment involves purchases of foreign stock or bonds by
individuals or firms, while foreign portfolio investment involves a firm purchasing or
building a facility in a foreign country.
B) Individuals engage in foreign portfolio investment, but only firms can engage in
foreign direct investment.
C) Foreign direct investment only takes place when governments make official
purchases or foreign investments, while foreign portfolio investment takes place when
firms, individuals, or the government purchase foreign investments.
D) Foreign direct investment can give a low-income country access to funds and
technology it would not otherwise have, but foreign portfolio investment does not
expand that access.
For the federal deficit to be lowered,
A) the federal government must decrease its spending and increase net exports.
B) the federal government’s expenditures must be lower than its tax revenue.
C) the Federal Reserve must raise interest rates and lower the required reserve ratio.
D) the Federal Reserve must reduce the money supply.
Table 27-1
Figure 7-2 Figure 7-2 represents the market
for vaccinations. Vaccinations are considered a benefit to society, and the figure shows
both the marginal private benefit and the marginal social benefit from vaccinations.
Marginal social benefit is represented by which curve?
A) D1
B) D2
C) Supply
D) All of the above represent marginal social benefit.
Which of the following is an example of positive technological change?
A) A firm offers workers a higher wage to work on weekends and at night. As a result,
the firm is able to increase its weekly production of surf boards.
B) A firm buys an additional machine that it uses to make surf boards. As a result, the
firm is able to increase its weekly production of surf boards.
C) A firm conducts a new advertising campaign. As a result, the demand for the firm’s
surf boards increases.
D) A firm’s workers participate in a training program designed to increase the number
of surf boards they can produce per day.
Table 7-6 Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 7-6 shows the
production and consumption quantities without trade, and the production numbers with
trade. Which country has a comparative advantage in producing swords?
A) Estonia
B) Morocco
C) both countries
D) neither country
Figure 7-2
Figure 7-2 represents the market for
medical services with and without insurance, and the effect of a third-party payer
system on the demand for medical services.
The efficient price of medical services is
A) $25.
B) $40.
C) $55.
D) >$55.
Figure 17-1
Figure 17-1 shows the
marginal revenue product for Dale’s Hand-Sewn Doilies, a producer of linen doilies. If
Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker?
A) $28
B) 28 doilies
C) 14 doilies
D) $56