The Sarbanes-Oxley Act of 2002 requires that each member of the board of directors
personally certify the accuracy of financial reports.
Assume that price exceeds average variable cost over the relevant range of demand. If a
monopolistically competitive firm is producing at an output where marginal revenue is
$111.11 and marginal cost is $118, then to maximize profits the firm should increase its
output.
The decisions General Motors makes in determining production levels for its Chevy
Volt is an example of a microeconomics topic.
Money will fail to serve as a medium of exchange if it ceases to be a store of value.
Economists believe that consumers would be better off if markets were perfectly
competitive rather than monopolistically competitive.
Both countries involved in a pegging of currency must agree to the terms of the
pegging.
The long-run aggregate supply curve is vertical.
If economies of scale are relatively unimportant in an industry, the typical firm’s
long-run average total cost curve will reach a minimum at a level of output that is a
________ fraction of total industry sales. The industry will be ________.
A) large; competitive
B) large; an oligopoly
C) small; competitive
D) small; an oligopoly
What is a factor market?
A) It is a market where financial instruments are traded.
B) It is a market where stocks and bonds are traded.
C) It is a market producers buy consumption and capital goods.
D) It is a market where resources used to produce final goods are traded.
The production function shows
A) the total cost of producing a given quantity of output.
B) the maximum output that can be produced from each possible quantity of inputs.
C) the technology used to produce output.
D) the incremental output gained by improving the production process.
Figure 4-11
Suppose the market is initially in equilibrium at price P1 and then the government
imposes a tax on every unit sold. Which of the following statements best describes the
impact of the tax?
A) The consumer will bear a greater share of the tax burden if the demand curve is D1.
B) The consumer’s share of the tax burden is the same whether the demand curve is D1
or D2.
C) The consumer will bear a greater share of the tax burden if the demand curve is D2.
D) The consumer will bear the entire burden of the tax if the demand curve is D1 and
the producer will bear the entire burden of the tax if the demand curve is D2.
If a decrease in income leads to in a decrease in the demand for mac and cheese, then
mac and cheese is
A) a normal good.
B) a neutral good.
C) a complement.
D) a necessity.
Which of the following statements is true?
A) A decrease in demand causes a decrease in equilibrium price; the decrease in price
causes supply to decrease.
B) A decrease in demand causes equilibrium price to fall; the decrease in price then
results in a decrease in quantity supplied.
C) If both demand and supply increase, there must be an increase in equilibrium price;
equilibrium quantity may either increase or decrease.
D) If demand decreases and supply increases, one cannot determine if equilibrium price
will increase or decrease without knowing which change is greater.
Suppose you are considering buying stock in the stock market, and your objective is to
maximize your net worth. Furthermore, your study of the market reveals that the
economy will be slowing down over the next several months. Under these conditions, it
would be best to purchase stock in companies that produce
A) normal goods.
B) luxury goods.
C) inferior goods.
D) price elastic goods.
Suppose the U.S. government encouraged new medical school graduates to take over
existing practices from doctors wishing to retire by paying both the new and retiring
doctors $100,000. These doctors would be exemplifying the economic idea that
A) people are rational.
B) people respond to economic incentives.
C) optimal decisions are made at the margin.
D) equity is more important than efficiency.
The term ________ in economics refers to a group of buyers and sellers of a product
and the arrangement by which they come together to trade.
A) collective
B) cooperative
C) market
D) trade-off
Disinflation refers to
A) a decrease in the price level.
B) a rapid increase in the price level.
C) a reduction in the rate of inflation.
D) an increase in the rate of inflation.
Figure 2-9 Figure 2-9
shows the production possibilities frontiers for Greenland and Iceland. Each country
produces two goods, snow cones and popsicles. What is the opportunity cost of
producing 1 snow cone in Greenland?
A) 2/3 of a popsicle
B) 5/6 of a popsicle
C) 1 1/5 popsicles
D) 200 popsicles
Ted’s Pancake Kitchen suffers a short-run loss. When should Ted decide to shut down
rather than continue to produce?
A) if his Kitchen’s revenue is less than its variable costs
B) if his Kitchen’s revenue is less than its fixed costs
C) if his Kitchen’s revenue is less than its explicit costs
D) if his Kitchen’s revenue is less than its total costs
Explain the effect of price elasticities of supply and demand on tax incidence.
Economists think that the marginal propensity to consume for the U.S. economy is
somewhere around 0.9. Based on our simple multiplier formula, this would imply that
the multiplier for the United States should be around 10. However, economists agree
that the spending multiplier is closer to 2. What might explain this supposed anomaly?
Nearly a quarter of China’s 1.3 billion people are under the age of 15. How will this
affect high school enrollment over the next fifteen years? The labor market over the
next fifteen years?
Discuss the correct and incorrect economic analysis in the following statement. “If a
disease kills a large number of turkeys, the supply of turkeys will decrease. This will
result in a price increase, which will then cause the supply of turkeys to increase.”
Compare the distribution of income in the United States with the distribution of income
in other high-income countries.