When voluntary exchange takes place, neither party usually gains from the exchange.
If the price elasticity of demand is unit-elastic, a 10 percent increase in price will result
in a 10 percent increase in revenue.
Any output combination along a production possibility frontier is associated with fully
utilized resources.
If consumers believe the price of tablet computers will increase in the future, this will
cause the demand for tablet computers to decrease now.
A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.
Charging different prices to different consumers for the same product when the price
differences are not due to differences in cost is called arbitrage.
Those who favor changes in the market for health care that would make it more like the
markets for other goods and services favor what are generally known as market-based
reforms.
Developing countries with large informal sectors tend to have firms that invest less in
capital equipment.
The payment received by suppliers of entrepreneurial skills is called wages.
A Lorenz curve summarizes the information provided by a Gini coefficient.
An increase in government spending will force an appreciation of the dollar, which
causes net exports to fall.
A perfectly competitive firm’s horizontal demand curve implies that the firm does not
have to lower its price to sell more output.
One problem with using a command-and-control approach to pollution reduction is that
the monitoring costs may be too high.
Which of the following countries is not one of the top three exporting countries in the
world?
A) China
B) Germany
C) South Korea
D) the United States
Table 9-11 Production and
Consumption Production
Without Trade With Trade
Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production
and consumption quantities without trade, and the production numbers with trade.
With trade, what is the total gain in clock production?
A) 150
B) 300
C) 2,100
D) 2,250
Table 13-2
Eco Energy is a monopolistically competitive producer of a sports beverage called
Power On. Table 13-2 shows the firm’s demand and cost schedules. What is the
marginal profit from producing and selling the 5th case?
A) $275
B) $145
C) $35
D) $20
A production possibilities frontier with a ________ shape indicates increasing
opportunity costs as more and more of one good is produced.
A) linear
B) bowed inward
C) bowed outward
D) perfectly horizontal
The quantity theory of money was derived from the quantity equation by asserting that
A) real output was fixed.
B) the money supply was fixed.
C) the velocity of money was fixed.
D) the velocity of money was zero.
For consumers who opt to pay a $10 monthly fee to have unlimited texting on their cell
phones, but choose not to pay a $5 monthly fee to have unlimited call minutes, the
unlimited texting option has a ________ than the unlimited minutes option.
A) higher price elasticity of demand
B) higher cross-price elasticity of demand
C) lower price elasticity of demand
D) lower cross-price elasticity of demand
In each of the following situations, list what will happen to the equilibrium price and
the equilibrium quantity for a particular product, which is an inferior good. a. The
population increases and productivity increases.
b. The income increases and the price of inputs decrease.
c. The number of firms in the market decreases and income increases.
d. Consumer preference increases and the price of a complement decreases.
e. The price of a substitute in consumption decreases and the price of a substitute in
production decreases.
The decline in the value of the yen after 2012 occurred as a result of the Japanese
central bank, the Bank of Japan, following an expansionary monetary policy. Investors
expected that the result would be lower
nominal Japanese interest rates and a higher inflation rate. In response, investors
________, causing the value of the yen to decline against the dollar.
A) sold Japanese financial assets and bought U.S. financial assets
B) sold Japanese financial assets and sold U.S. financial assets
C) bought Japanese financial assets and sold U.S. financial assets
D) bought Japanese financial assets and bought U.S. financial assets
The financial situation at Starbucks in the late 2000s illustrates the fact that maintaining
long-run profits in a monopolistically competitive market is
A) impossible.
B) very difficult.
C) fairly easy.
D) almost always guaranteed.
In long-run competitive equilibrium, the perfectly competitive firm produces where
price equals minimum average total cost.
a. What is this efficiency criterion called?
b. How does it benefit consumers?
Figure 12-17
The graphs in Figure 12-17 represent the perfectly competitive market demand and
supply curves for the apple industry and demand and cost curves for a typical firm in
the industry.
Which of the following statements is true?
A) The firm will produce 30 thousand pounds of apples in the short run and earn an
economic profit. New firms will enter the market and shift the market supply curve to
the left.
B) The firm will produce 30 thousand pounds of apples in the short run and earn an
economic profit, but it would earn a greater profit if it produced at the lowest point on
the ATC curve.
C) The firm will produce 30 thousand pounds of apples in the short run and earn an
economic profit. New firms will enter the industry; as a result, the firm will be forced to
exit the industry in the long run.
D) The firm will produce 30 thousand pounds of apples in the short run and earn an
economic profit. In the long run, the firm will break even.
Which of the following is an advantage of starting a new business as a corporation?
A) double taxation
B) ease in setting up
C) low expenses of legally organizing
D) greater ability to raise funds
The market demand for a public good can be determined by
A) adding up the total private benefits and external benefits that each quantity provides
the citizens of a country.
B) adding up how much each citizen expects to consume at each possible price.
C) adding up how much each consumer is willing to pay for each unit of the public
good.
D) estimating the value of the benefit that each unit provides and multiplying that by
the number of consumers.
Figure 15-2
Figure 15-2 above shows the demand and cost curves facing a monopolist.
The firm’s profit-maximizing price is
A) P1.
B) P2.
C) P3.
D) P4.
An increase in capital outflows from the United States will
A) decrease the balance on the financial account.
B) increase the balance on the financial account.
C) decrease the balance on the capital account.
D) increase the balance on the current account.
Identify two ways by which the government controls monopolies?
Why are there superstar baseball players but no superstar chiropractors?
What is “human capital,” and how does human capital affect labor productivity and
economic growth?
If a union successfully negotiates for higher wages and benefits for steel workers, what
impact would this have on the supply and demand in the market for steel, assuming no
other changes take place in this market?
Book publishers use price discrimination routinely, but the form of price discrimination
they use is different from the form used by airlines and other industries. Explain.
Suppose a bank has the following balance sheet:
If the required reserve ratio is 10 percent, how much excess reserves does the bank
have? What is the maximum amount that the bank can expand its loans?
What is a firm’s balance sheet?