Figure 3-2
A decrease in the number of firms in the market would be represented by a movement
from
A) A to B.
B) B to A.
C) S1 to S2.
D) S2 to S1.
________ involves undertaking an activity until its marginal benefits equal marginal
costs.
A) Scarcity reduction
B) Central planning
C) Marginal analysis
D) Market intervention
Table 2-7
Table 2-7 shows the output per week of two people, Minnie and Mickey. They can
either devote their time to making hats or making umbrellas. What is Minnie’s
opportunity cost of making a hat?
A) 1/5 of an umbrella
B) 1/4 of an umbrella
C) 4 umbrellas
D) 10 umbrellas
Potential GDP refers to
A) the level of GDP attained when all firms are producing at capacity.
B) the level of GDP attained by the country with the highest growth in real GDP in a
given year.
C) the difference between the highest level of real GDP per quarter and the lowest level
of real GDP per quarter within any given year.
D) the extent to which real GDP is above or below nominal GDP.
Which of the following is a positive economic statement?
A) The inflation rate in the United States is too high.
B) Unemployment insurance payments increase when the unemployment rate rises.
C) The government should defund Obamacare.
D) States should be able to enact their own marijuana legalization laws.
Since 1950, recessions in the United States
A) have not occurred.
B) have become more severe than before 1950.
C) have become less severe than before 1950.
D) are about as severe as they were before 1950.
Which of the following is an example of spending on goods and services in the circular
flow model?
A) Belinda purchases a new computer for her tax-preparation business.
B) Javier buys 800 square feet of wood flooring for his vacation home.
C) Celeste buys fresh herbs at the farmers’ market to use in her restaurant.
D) Timmy purchases a new examination table for use in his veterinary clinic.
The largest government-run health care system in the world, with 1.7 million
employees, is the National Health Service (NHS) in the United Kingdom. The NHS
receives its funding primarily from
A) tariffs.
B) the World Health Organization.
C) income taxes.
D) private businesses.
Which of the following goods would see the largest decline in demand during a
recession?
A) automobiles
B) food
C) clothing
D) haircuts
Which of the following statements applies to a monopolist but not to a perfectly
competitive firm at their profit maximizing outputs?
A) Marginal revenue is less than price.
B) Marginal revenue equals marginal cost.
C) Price equals marginal cost.
D) Average revenue equals average cost.
Two economists from Northwestern University estimated the benefit households
received from subscribing to broadband Internet service. The economists found that
A) the consumer surplus from dial-up Internet service exceeded the consumer surplus
from broadband Internet service.
B) the average consumer of broadband Internet service received a marginal benefit
equal to $36.
C) most consumers of broadband Internet service were not willing to pay more than $36
per month.
D) one month’s benefit to consumers who subscribe to broadband Internet service is
about $890 million.
Allocative efficiency is achieved when firms produce goods and services
A) at the lowest possible cost.
B) that consumers value most.
C) at the lowest opportunity cost.
D) at a marginal cost of zero.