If the exchange rate changes from $2.00 = 1 euro to $1.98 = 1 euro then
A) the dollar has depreciated.
B) the dollar has appreciated.
C) the euro has appreciated.
D) the euro has stayed constant in value.
Which of the following is a factor of production?
A) a sofa produced by a furniture manufacturer
B) 20 shares of Microsoft stock
C) the janitor at the local elementary school
D) $500 in cash
A firm’s net income is also its
A) economic profit.
B) balance sheet.
C) accounting profit.
D) opportunity cost.
Figure 12-9
Figure 12-9 shows cost and demand
curves facing a profit-maximizing, perfectly competitive firm.
At price P3, the firm would produce
A) Q2 units
B) Q3 units.
C) Q4 units.
D) Q5 units.
The Aluminum Company of America (Alcoa) had a monopoly until the 1940s because
A) it was a public enterprise.
B) it had a patent on the manufacture of aluminum.
C) the company had a secret technique for making aluminum from bauxite.
D) it had control of almost all the available supply of bauxite.
The Organization of Petroleum Exporting Countries (OPEC) controls about 75 percent
of the world’s proven oil reserves. Economists refer to OPEC as a cartel because
A) OPEC is a monopoly, but it is located outside of the boundaries of any one country.
This is the definition of a cartel.
B) this is the term used for an oligopoly that is controlled by national governments
rather than private firms.
C) it is a group of firms that collude to restrict output to increase prices and profits.
D) this is the term economists use to describe an oligopoly that sells a standardized
product, such as oil, rather than a differentiated product, such as automobiles.
If the Federal Reserve announces that its target for the federal funds rate is rising from 4
percent to 4.25 percent, how do you expect workers and firms to react?
A) As long as the Fed’s announcement is credible, workers and firms will increase their
consumption and investment spending, which will increase aggregate demand and
inflation.
B) As long as the Fed’s announcement is credible, workers and firms will reduce their
consumption and investment spending, which will reduce aggregate demand and reduce
inflation.
C) If the Fed’s announcement is not credible, workers and firms will not expect inflation
to fall so they will reduce their consumption and investment spending, which will
increase aggregate demand and reduce inflation.
D) Workers and firms will incorporate the increase in interest rates into their
expectations of inflation, and they will expect inflation to rise as a result of Fed’s policy
announcement.
Table 2-1 Production Choices for Dina’s Diner
Dina faces ________ opportunity costs in the production of sliders and hot wings.
A) increasing
B) decreasing
C) constant
D) negative
The combined effect (both income and substitution) of a wage increase is that
A) the substitution effect always dominates, leading to more work at a higher wage.
B) the income effect always dominates, leading to less work at a higher wage.
C) if the substitution effect outweighs the income effect, the labor supply curve slopes
upward, but if the income effect outweighs the substitution effect, the labor supply
curve is backward bending.
D) if the substitution effect outweighs the income effect, the labor supply curve is
backward bending, but if the income effect outweighs the substitution effect, the labor
supply curve slopes upward.
According to the short-run Phillips curve, if unemployment is 3.2% and inflation is
1.3%, an increase in the inflation rate might result in which of the following?
A) an increase in the unemployment rate to 3.4%
B) a decrease in the unemployment rate to 3.0%
C) a decrease in the demand for labor in the economy
D) a return to the original inflation rate of 1.3%
Figure 3-5
At a price of $15, the quantity sold
A) is 2 units.
B) is 4 units.
C) is 6 units.
D) cannot be determined.
The Clayton Act is an antitrust law that was passed to
A) outlaw monopolization.
B) address loopholes in the Sherman Act.
C) prohibit charging buyers different prices if the result would reduce competition.
D) toughen restrictions on mergers by prohibiting mergers that reduce competition.
If interest rates in the United States fall,
A) the value of the dollar will fall as foreign investors decrease their holdings of U.S.
investments.
B) the value of the dollar will rise as foreign investors increase their holdings of U.S.
investments.
C) the value of the dollar will fall as foreign investors increase their holdings of U.S.
investments.
D) the value of the dollar will rise as foreign investors decrease their holdings of U.S.
investments.
Which of the following would cause a decrease in the equilibrium price and an increase
in the equilibrium quantity of salmon?
A) a decrease in demand and an increase in supply
B) an increase in supply
C) an increase in supply and an increase in demand greater than the increase in supply
D) a decrease in demand and a decrease in supply
The idea that two taxpayers in the same economic circumstances should pay the same
level of taxes is known as the
A) ability-to-pay principle.
B) vertical-equity principle.
C) horizontal-equity principle.
D) benefits-received principle.
Table 2-7
The Shellfish Shack produces only shrimp and oysters. The table aboveshows the
maximum possible output combinations of the two types of shellfish using all resources
and currently available technology. a. Suppose The Shellfish Shack is currently
producing at point E. What is the opportunity cost of producing an additional 11,000
pounds of oysters?
b. Suppose The Shellfish Shack is currently producing at point E. What happens to the
opportunity cost of producing more and more shrimp? Does it increase, decrease or
remain constant? Explain your answer.
c. Suppose The Shellfish Shack is currently producing at point B. What happens to the
opportunity cost of producing more and more oysters? Does it increase, decrease or
remain constant? Explain your answer.
d. Suppose The Shellfish Shack is plagued by a disease which destroys oyster beds but
not shrimp habitats. What would happen to its PPF?