What is human capital?
A) a slang term for the underground labor market
B) manufactured goods that are used to produce other goods
C) accumulated knowledge and skills acquired by a worker
D) the manager or owner of a business
The most important of the factors that make a firm successful and that can be controlled
by the firm’s owners and managers are
A) the establishment of trademarks for its products and the aggressive defense of those
trademarks.
B) lobbying government to erect or enforce entry barriers in its markets and the
marketing of its products as widely as possible.
C) the differentiation of its products and the production of products at a lower average
cost than competing firms.
D) the selection of the prices of its products and the selection of the most productive
and loyal employees.
Which of the following is a normative economic statement?
A) Tobacco products should be banned in all public spaces.
B) The increase in tobacco taxes has caused an increase in the price of cigarettes.
C) Better awareness of health risks has decreased tobacco use.
D) A reduction in tobacco subsidies has caused the price of tobacco to increase.
If a decrease in income leads to an increase in the demand for macaroni, then macaroni
is
A) an inferior good.
B) a neutral good.
C) a necessity.
D) a normal good.
Generally with bond ratings, the higher the rating, the ________ the interest rate an
investor will receive and the ________ the risk that the issuer of the bond will default.
A) higher; higher
B) higher; lower
C) lower; higher
D) lower; lower
Figure 9-3
Since 1953 the United States
has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of
the quota. With a quota in place, what is the quantity supplied by domestic producers?
A) 8 million pounds
B) 10 million pounds
C) 16 million pounds
D) 18 million pounds
Figure 4-10 Figure 4-10 shows the
market for apartments in Bay City. Recently, the government imposed a rent ceiling at
R0. What is the area that represents the portion of producer surplus transferred to
consumers as a result of the rent ceiling?
A) D + E
B) D + F
C) D
D) F
Figure 3-8
The graph in this figure illustrates an initial competitive equilibrium in the market for
motorcycles at the intersection of D1 and S1 (point A). If there is a surplus of
motorcycles how will the equilibrium point change?
A) The equilibrium point will move from A to B.
B) The equilibrium point will move from A to C.
C) There will be no change in the equilibrium point.
D) The equilibrium point will move from A to E.
Figure 24-1
Ceteris paribus, a decrease in the price level would be represented by a movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
Figure 5-14 Figure 5-14 shows the market
for aviation security. Aviation security generates a positive externality because people
who are not airline passengers benefit from aviation security.
Answer the following questions. a. In the absence of any government intervention what
is the equilibrium level of security that airlines will supply? Denote this level, QXOA.
Briefly explain why this quantity is not the economically efficient level of aviation
security.
b. In the diagram, illustrate the presence of positive externalities in the aviation security
market. Label any new curve that you draw.
c. On your diagram identify the economically efficient level of aviation security. Denote
this level Qe.
d. Explain how a government subsidy for the airlines can bring about the economically
efficient aviation security level. Be sure to identify the size of the subsidy.
If real GDP per capita in the United States is $8,000 in 2013, and if real GDP per capita
is $12,000 in 2023, what is the total percent change in the growth rate of GDP per
capita between 2013 and 2023?
A) 3.33%
B) 5%
C) 33%
D) 50%
Which of the following statements is true?
A) The supply of oil is very elastic over short time periods but becomes perfectly
inelastic over time. A given shift in supply results in a greater increase in the price of oil
when the supply of oil is perfectly inelastic.
B) The supply of oil is very inelastic over short time periods but becomes more elastic
over time. A given shift in supply results in a smaller increase in the price of oil when
the supply is more elastic.
C) The supply of oil is perfectly inelastic; therefore, as the demand for oil increases
over time the price of oil increases significantly.
D) Over short periods of time, increases in the demand for oil are greater than increases
in the supply of oil. Over the long run, increases in the demand and the supply of oil are
about equal. As a result, the price of oil increases greatly in the short run but is stable in
the long run.
For each pair of items below determine which product would have the higher price
elasticity of demand (in absolute value).
a. Insulin for a diabetic or aspirin for someone suffering a headache.
b. A new Whirlpool 27 cu.ft. side-by-side refrigerator or electricity to power your
all-electric home.
c. A can of Red Bull or soft drinks in general.
Which of the following policies would not help promote economic growth?
A) a law requiring that the funds in an individual retirement account be taxed
B) a law restricting elected officials from accepting expensive gifts and trips from
private individuals
C) a law that funds prenatal care for all expectant mothers
D) a law that subsidizes research in nanotechnology
Which of the following would be most likely to induce Congress and the president to
conduct expansionary fiscal policy? A significant
A) decrease in investment spending.
B) decrease in oil prices.
C) increase in consumption spending.
D) increase in net exports.
If the marginal cost of keeping a doctor’s office open one additional hour per day is
$200, then the doctor should keep the office open for one extra hour
A) only if the marginal benefit she receives is greater than $200 plus an acceptable
profit margin.
B) as long as the marginal benefit she receives is just equal to or greater than $200.
C) as long as the marginal cost does not rise.
D) until the marginal benefit she receives reaches zero.
Technological change is a key reason why Wal-Mart has become one of the largest
firms in the world. Which of the following is a change in technology implemented by
Wal-Mart?
A) Wal-Mart developed a supply chain that allows it to manage inventories efficiently.
B) Instead of buying goods it sells from other companies, Wal-Mart makes many of
these goods in its own factories.
C) Wal-Mart employs hundreds of scientists and engineers who develop new
cost-saving techniques.
D) Wal-Mart hires managers from many of the top business schools in the United
States.
Figure 12-11
Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In
the long-run equilibrium,
A) there will be fewer firms in the industry and total industry output decreases.
B) there will be more firms in the industry and total industry output increases.
C) there will be fewer firms in the industry but total industry output increases.
D) there will be more firms in the industry and total industry output remains constant.
What does a Lorenz curve illustrate?
A) a comparison of the distribution of income in two different countries
B) the distribution of income within a country in a given time period
C) the share of taxes paid by different groups of households
D) the change over time in the percentage of households with incomes that place them
below the poverty line
If the required reserve ratio is 10 percent, an increase in bank reserves of $1,000 can
support an increase in checking account deposits (including the original deposit) in the
banking system as a whole of up to
A) $100.
B) $1,000.
C) $10,000.
D) $100,000.