Table 2-8
Table 2-8 shows the number of labor hours required to produce a digital camera and a
pound of wheat in China and South Korea. What is China’s opportunity cost of
producing one digital camera?
A) 0.04 pounds of wheat
B) 4 pounds of wheat
C) 25 pounds of wheat
D) 40 pounds of wheat
Figure 3-4
If the price is $15,
A) there would be a surplus of 300 units.
B) there would be a shortage of 300 units.
C) there would be a surplus of 400 units.
D) there would be a shortage of 400 units.
A tariff
A) makes domestic consumers better off.
B) makes both domestic producers and consumers better off.
C) makes everyone worse off.
D) makes domestic producers better off.
An outward shift of a nation’s production possibilities frontier can occur due to
A) a reduction in unemployment.
B) a natural disaster like a hurricane or bad earthquake.
C) a change in the amounts of one good desired.
D) an increase in the labor force.
Which of the following describes the difference between ‘scarcity” and ‘shortage”?
A) There is no difference; either word can be used to describe the situation that exists
when there is less of a good or service available than people want.
B) In the economic sense, almost everything is scarce. A shortage of a good or service
occurs when the quantity demanded is greater than the quantity supplied at the current
market price.
C) There is a shortage of almost everything. Scarcity occurs only if the quantity
demanded of a good or service is greater than the quantity supplied at the current
market price.
D) In the economic sense, almost everything is scarce. A shortage of a good or service
occurs when the quantity demanded is greater than the quantity supplied at the
equilibrium price.
The central role of ________ in a market economy is bringing together savers and
borrowers.
A) corporations
B) sole proprietors
C) financial intermediaries
D) stock exchanges
On average, people in low-income countries ________ than people in high-income
countries.
A) have a longer life expectancy
B) are subject to a lower infant mortality rate
C) are shorter
D) are exposed to fewer severe diseases
Because of the ________ of vaccinations, economic efficiency would be improved if
more people were vaccinated.
A) negative externality
B) positive externality
C) moral hazard
D) adverse selection
Suppose that when the price of raspberries increases, Lonnie increases his purchases of
papayas. To Lonnie,
A) raspberries and papayas are complements.
B) raspberries and papayas are inferior goods.
C) raspberries and papayas are normal goods.
D) raspberries and papayas are substitutes.
The prevalence of Alzheimer’s dementia is very high among residents living in nursing
homes. A student concludes that it is likely that living in a nursing home causes
Alzheimer’s dementia. What is the flaw in the student’s reasoning?
A) The student has failed to take into account other causes of Alzheimer’s disease.
B) The student is drawing a false conclusion; he is confusing cause and effect.
C) The student is using an inadequate sample size.
D) The student is drawing a false conclusion by making the mistake of omitting critical
variables such as the age and gender of the residents.
A central bank can help stop a bank panic by
A) raising the required reserve ratio.
B) calling in consumer loans.
C) acting as a lender of last resort.
D) decreasing income taxes.
The rules of accounting generally require that ________ costs be used for purposes of
keeping a company’s financial records and for paying taxes. These costs are sometimes
called ________ costs.
A) economic; legal
B) real; explicit
C) total; economic
D) explicit; accounting
Figure 6-12
The diagram shows two supply curves, SA and SB. As price rises from P0 to P1, which
supply curve is more elastic?
A) SA
B) SB
C) They are equally inelastic.
D) They are equally elastic.
The natural resources used in production are made available in the
A) goods and services market.
B) product market.
C) government market.
D) factor market.
In 2002, the Enron corporation was accused of falsifying information regarding
liabilities on Enron’s balance sheets, thereby
A) increasing Enron’s assets on the balance sheet.
B) reducing Enron’s profit on the balance sheet.
C) increasing Enron’s net worth on the balance sheet.
D) reducing Enron’s net income on the income statement.
The balance of trade includes trade in
A) goods only.
B) services only.
C) both goods and services.
D) neither goods nor services.
Article Summary. Unlike in many nations, when the financial crisis hit in 2008 the
Polish economy continued to grow, but due to a current slowdown in exports and
domestic demand, Poland is expecting a large outflow of workers. Unemployment
was expected to grow to 14 percent in Poland in 2013, and according to Krystyna
Iglicka, a demographer at Lazarski University in Warsaw, “€¦Poles have always
treated emigration as a way of improving their lot.” Despite earning relatively low
salaries in Western European countries, on average just over ¬2,000 (about $2,660)
a month according to the National Bank of Poland, this is still four times more
than workers would earn on average by staying in Poland. Iglicka predicts that
between 500,000 and 800,000 Poles will emigrate from Poland over the next five
years.
Source: Jan Cienski, “Poland braces for fresh exodus of workers,” Washington
Post, January 22, 2013.
If an outflow of workers leaves Poland with a smaller but more productive workforce
and the capital per hour worked does not change, there will be ________ the per-worker
production function in Poland.
A) a movement up
B) a movement down
C) an upward shift of
D) a downward shift of
In the United States, the average person mostly patronizes firms that operate in
A) perfectly competitive markets.
B) monopolistically competitive markets.
C) oligopoly markets.
D) monopoly markets.
Which of the following statements is true about a simple circular flow model?
A) Producers are neither buyers nor sellers in the product market.
B) Households are neither buyers nor sellers in the input market.
C) Producers are buyers in the factors market.
D) Households are sellers in the product market.
Economists use the concept of ________ to measure how one economic variable, such
as quantity, responds to a change in another economic variable, such as price.
A) slope
B) efficiency
C) relativity
D) elasticity