Sally’s Ski Shoppe maximizes total revenue when the price elasticity of demand for skis
is
A) greater than 10.
B) greater than 1 but less than 10.
C) zero.
D) 1.
E) -1.
Use the table below to answer the following questions.
Table 11.4.1
Swanky’s output levels
Refer to Table 11.4.1, which represents Swanky’s production possibilities as the firm
varies the quantities of knitting machines and workers per day. If Swanky increases the
number of knitting machines from 2 to 3 and increases the number of workers
employed from 2 to 3, the factory experiences
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) constant marginal product.
E) minimum efficient scale.
A monopoly leads to
A) overproduction.
B) underproduction.
C) efficient production.
D) maximization of consumer surplus.
E) zero deadweight loss.
Use the information below to answer the following questions.
Fact 10.2.1
Consider the following three methods of preparing your tax return. Method A uses a
personal computer (cost equal to $1,000) and 1 hour of your time. Method B uses a
calculator (cost equal to $30) and 12 hours of your time. Method C uses pen and paper
(cost equal to $1) and 2 days (16 hours) of your time.
Consider Fact 10.2.1. Which production method is technologically inefficient?
A) A
B) B
C) C
D) all of the above
E) none of the above
If the marginal propensity to save is 0.2, then
A) the marginal propensity to consume is larger than 0.8.
B) the marginal propensity to consume is 0.8.
C) the marginal propensity to consume is also 0.2.
D) the slope of the consumption function is 0.2.
E) the slope of the saving function is 0.8.
A progressive income tax
A) taxes lower income people a larger percentage than higher income people.
B) taxes income at an average rate that increases with income.
C) receives more tax from rich people, but taxes them at the same rate as poor people.
D) taxes everyone at the same rate.
E) is rarely used in advanced economies.
The components of aggregate expenditure that are influenced by real GDP are
A) investment, exports, and imports.
B) consumption expenditure, government expenditure, investment, and imports.
C) consumption expenditure, investment, and imports.
D) consumption expenditure and imports.
E) wages, transfer payments, and government expenditure.
Long-run equilibrium occurs in a competitive market when
A) economic profit and economic loss have been eliminated.
B) no barriers to entry exist.
C) all firms are operating at their shutdown points.
D) price equals marginal cost.
E) total revenue is maximized.
Use the figure below to answer the following questions.
Figure 1A.3.9
Refer to Figure 1A.3.9. Which one of the graphs shows a line with a zero slope?
A) (a)
B) (b)
C) (c)
D) (d)
E) (a), (b), and (c)
From Fact 2.4.1, we know that
A) Andy has the lower opportunity cost of producing bread, while Andy and Rolfe have
equal opportunity costs of producing butter.
B) Andy has the lower opportunity cost of producing both bread and butter.
C) Andy has the lower opportunity cost of producing bread, while Rolfe has the lower
opportunity cost of producing butter.
D) Andy has the lower opportunity cost of producing butter, while Rolfe has the lower
opportunity cost of producing bread.
E) Andy has the higher opportunity cost of producing both bread and butter.
The equation of a line is y = 4 + 2x. What is the slope of this line?
A) 4
B) 2
C) 1/2
D) 1/4
E) 0
Consider Fact 27.3.1. The increase in real GDP is
A) $2 billion.
B) $4 billion.
C) $202 billion.
D) $404 billion.
E) $1.6 billion.
Suppose the Lethbridge Computer Company decides to increase the quantity of
computers it sells by 6 percent. If the price elasticity of demand is 3.5, the company
must
A) raise the price of a computer by 1.714 percent.
B) raise the price of a computer by 0.21 percent.
C) lower the price of a computer by 0.21 percent.
D) lower the price of a computer by 1.714 percent.
E) lower the price of a computer by 0.58 percent.
Figure 17.3.2 shows the marginal private cost cure, marginal social cost curve, and
marginal social benefit curve for raising goats on a common pasture. To achieve an
efficient quantity, the price of an ITQ is set at
A) $7.50 per litre of milk.
B) $2.00 per litre of milk.
C) $6.00 per litre of milk.
D) $1.50 per litre of milk.
E) $4.50 per litre of milk.
Refer to Table 3.5.3. A new store opens up on the edge of campus, Great Wild North
Sportswear, which has the capacity to do as much business as all the existing
businesses. The quantity of t-shirts supplied doubles at each price. The new equilibrium
price is $________ and the new equilibrium quantity is ________ t-shirts per month.
A) 8; 400
B) 3; 300
C) 0; 400
D) 16; 200
E) 4; 400
Suppose the government starts with a debt of $0. Then in year 1, there is a deficit of
$100 billion, in year 2 there is a deficit of $60 billion, in year 3 there is a surplus of $40
billion, and in year 4 there is a deficit of $20 billion. What is government debt at the
end of year 4?
A) $20 billion
B) $140 billion
C) $180 billion
D) somewhat greater than $220 billion, depending on the interest rate
E) somewhat greater than $140 billion, depending on the interest rate
In the relationship between the owner of a bakery and the baker, the owner is
A) an agent, as is the baker.
B) an agent and the baker is a principal.
C) a principal and the baker is an agent.
D) a principal, as is the baker.
E) neither a principal nor an agent, but the baker is an agent.
When the production of a good has an external cost, the
A) marginal social cost curve lies below the marginal private cost curve.
B) marginal social benefit curve lies above the marginal private benefit curve.
C) equilibrium quantity in an unregulated, competitive market has a marginal social
cost greater than the marginal social benefit.
D) equilibrium quantity in an unregulated, competitive market has a marginal social
cost less than the marginal social benefit.
E) good should not be produced.
Marginal cost equals
A) TC/Q.
B) Q/TVC.
C) (TC – TVC)/Q.
D) TC/ΔQ.
E) ΔTC/ΔQ.
Use the information below to answer the following questions.
Fact 13.3.1 What the Apple-Samsung Verdict Means for Your Smartphone
A California jury found Samsung guilty of violating the majority of the patents in
question, including software features like double-tap zooming and scrolling. It
recommended that Apple be awarded more than $1 billion in damages. This verdict
could significantly affect both smartphone users and producers.
Refer to Fact 13.3.1. Suppose Apple becomes a monopoly in the smartphone market.
Choose the statement that is incorrect.
A) Samsung loses.
B) The government gains.
C) Consumers lose.
D) Apple gains.
E) The market for smartphones becomes less efficient.
Usually the removal of trade barriers affecting a particular good benefits ________
people domestically, each of whom gains a ________.
A) a few; little
B) a few; lot
C) many; little
D) many; lot
E) We can’t determine the relative benefits from the removal of trade barriers.
Ernie’s Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of
this cost is fixed. What is Ernie’s average variable cost?
A) $400
B) $8
C) $2
D) $2,400
E) $1,600
The slope of a perfectly competitive firm’s demand curve is
A) infinity.
B) zero.
C) 1.
D) greater than 1.
E) negative.
The tendency for a government budget deficit to decrease investment is called the
A) government dissaving effect.
B) crowding-out effect.
C) Ricardo-Barro effect.
D) capital investment effect.
E) deficit effect.
Refer to Figure 23.2.2. In Figure 23.2.2, an increase in expected profit will result in a
movement from point E to
A) point F.
B) point G.
C) point H.
D) point I.
E) either point I or point F.
Refer to Figure 11.4.2, which illustrates the short-run average total cost curves for four
different plant sizes. Which plant has the lowest average total cost for an output rate of
5 sweaters a day?
A) Plant A
B) Plant B
C) Plant C
D) Plant D
E) none of the above
In Figure 2.2.1, when 2,000 bicycles are produced each month,
A) the marginal benefit from another bicycle is greater than the marginal cost of another
bicycle.
B) more bicycles must be produced to reach the efficient level of output.
C) fewer bicycles must be produced to reach the efficient level of output.
D) the economy is efficient at this level of production of bicycles.
E) both A and B.
In the market for loanable funds, if the interest rate is above the equilibrium level
A) a shortage of loanable funds exists.
B) a surplus of loanable funds exists.
C) expected profit falls.
D) government expenditure decreases.
E) wealth increases.
Advertising costs of a monopolistically competitive firm are
A) greater than a monopoly and the same as a perfectly competitive firm.
B) greater than a perfectly competitive firm.
C) less than a perfectly competitive firm.
D) the same as a monopoly.
E) less than a monopoly.
Consider all the effects on fiscal policy. A cut in the tax on capital income
A) shifts the AD curve rightward.
B) shifts the SAS curve rightward.
C) shifts the LAS curve rightward.
D) all of the above
E) only B and C
The multiplier is greater than 1 because a change in autonomous expenditure leads to
A) more investment.
B) more induced expenditure.
C) move saving.
D) more exports.
E) even more autonomous expenditure.
An increase in the money wage rate shifts
A) both the SAS curve and the LAS curve rightward.
B) both the SAS curve and the LAS curve leftward.
C) the SAS curve leftward, but leaves the LAS curve unchanged.
D) the LAS curve rightward, but leaves the SAS curve unchanged.
E) the SAS curve rightward, but leaves the LAS curve unchanged.
In Canada, the highest income tax rates are in
A) Quebec.
B) Manitoba.
C) Alberta.
D) Ontario.
E) British Columbia.