Which of the following is an advantage of starting a new business as a proprietorship?
A) The owner has limited personal liability.
B) A proprietorship has few government rules and regulations to comply with.
C) Business profits are not taxed.
D) A proprietorship can easily attain additional funding.
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 thousands pounds of apples in the short run and earn an
economic profit. In the long run the firm will break even.
Table 3-2
The table above shows the demand schedules for caviar of two individuals (Ari and
Sonia) and the rest of the market. If the price of caviar rises from $65 to $75, the market
quantity demanded would
A) decrease by 36 oz.
B) increase by 52 oz.
C) increase by 36 oz.
D) decrease by 52 oz.
Which of the following cause the unemployment rate as measured by the Bureau of
Labor Statistics to understatethe true extent of joblessness?
A) inflation
B) discouraged workers
C) people employed in the underground economy
D) unemployed persons falsely report themselves to be actively looking for a job
In preparing their estimates of the stimulus package’s effect on GDP, Obama
administration economists estimated a government purchases multiplier of 1.57.
Economist Robert Barro argues that ________, the government purchases multiplier
would be lower than the administration’s estimate, and economists Lawrence
Christiano, Martin Eichenbaum, and Sergio Rebelo argued that ________, the
multiplier would be higher than the administration’s estimate.
A) during a recession; when the inflation rate is relatively low
B) when the unemployment rate is high; when the value of the dollar is depreciating
against foreign currencies
C) when the federal budget is in surplus; when government transfer payments are
declining
D) during wartime; when short-term interest rates are near zero
When you buy newly-issued shares of Facebook stock, this transaction takes place in
the
A) primary market.
B) bond market.
C) secondary market.
D) bear market.
In the modern U.S. economy, the typical unemployed person stays unemployed for
A) a relatively long time, over a year.
B) a relatively short time, less than six months.
C) a long time during expansions and a short time during recessions.
D) an amount of time that is hard to quantify.
Holding everything else constant, the absolute value of the price elasticity of demand
for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.
A) less than
B) equal to
C) twice as great as
D) greater than
Which of the following would shift a nation’s production possibilities frontier inward?
A) discovering a cheap way to convert sunshine into electricity
B) producing more capital equipment
C) an increase in the unemployment rate
D) a law requiring workers to retire at age 50
When foreign investors in Thailand began to realize that Thailand could not maintain its
peg to the dollar indefinitely, they began to sell off their investments in Thailand and
exchange the baht they received for dollars. This reduction in investment by foreigners
is termed
A) foreign direct investment.
B) capital flight.
C) capital inflow.
D) stabilizing capitalization.
Which of the following would not be considered an automatic stabilizer?
A) legislation increasing funding for job retraining passed during a recession
B) decreasing unemployment insurance payments due to decreased jobless during an
expansion
C) rising income tax collections due to rising incomes during an expansion
D) declining food stamp payments due to more persons finding jobs during an
expansion
Suppose that when the price of oranges decreases, the Sarita decreases her purchases of
peaches. To Sarita,
A) oranges and peaches are complements.
B) oranges and peaches are inferior goods.
C) oranges and peaches are normal goods.
D) oranges and peaches are substitutes.
Draw a demand curve and label it D1. On the graph, illustrate an increase in demand
and a decrease in demand, and label the curves D2 and D3, respectively. Starting on
demand curve D1, explain the shift that would result from each of the following events:
a. an increase in income and the good is a normal good
b. an increase in income and the good is an inferior good
c. a decrease in the price of a substitute good
d. a decrease in the price of a complementary good
e. an increase in the taste for the good
f. a decrease in population
g. an increase in the expected future price of the good
The entry and exit of firms in a monopolistically competitive market guarantee that
A) marginal revenue equals marginal cost and average total cost is minimized.
B) firms can earn economic profits in the long run.
C) price equals average total cost in the long run.
D) firms can earn economic profits in the short run.
Some firms require consumers to pay an initial fee for the right to buy their product and
an additional fee for each unit of the product they purchase. This practice is referred to
as
A) odd pricing.
B) dual pricing.
C) a two-part tariff.
D) intertemporal pricing.
BHP Billiton is a Canadian company that owns mines in Canada that
A) produce nickel. After World War II, BHP Billiton began to compete with another
Canadian firm, the International Nickel Company. This competition eventually ended
International Nickel’s monopoly in this market.
B) produces bauxite, the mineral needed to produce aluminum. BHP Billiton began to
mine bauxite after World War II. This competition eventually ended the Aluminum
Company of America (ALCOA)’s monopoly in this market.
C) produces coal. Until World War II, BHP Billiton had a monopoly on coal in Canada.
D) produce diamonds.