Archives: Quiz

If the market clearing price of computer tablets falls from $400 to $300, and the market clearing output increases from 5 million to 7 million units, A) demand decreased and supply remained unchanged. B) supply increased and demand remained unchanged. […]

Which one of the following twentieth-century nations eliminated the problem of scarcity? A) Socialist Cuba B) Socialist China C) Fascist Italy D) The United States of America E) None of the above. Henry David Thoreau faced a choice: Stay in […]

National output and national income are essentially the same because A) every purchase implies a sale. B) every cost implies a benefit. C) every profit implies a loss. D) every gain implies a sacrifice. Suppose a Chinese restaurant provides free […]

The usefulness of money in commercial societies comes from the fact that A) money is backed by gold. B) most people will change their behavior at least a little in response to money incentives. C) most people will do anything […]

Suppose an economy has the following characteristics: 100 people in the noninstitutional population; 60 people employed; 20 people not in the labor force. How many people are unemployed? A) 20 B) 40 C) 60 D) 80 E) 100 According to […]

If freezing weather in Florida destroys a large portion of the current orange crop, A) prices of Florida oranges will rise and quantity demanded will fall. B) the supply of and the demand for Florida oranges will both fall. C) […]

Roughly what was the Democratic Republic of Congo’s per capita GDP in 2011? A) $110 B) $1,100 C) $11,000 D) $110,000 Cooperation among different people can occur A) even if most people know nothing about one another. B) only if […]

Complete this sentence: in a market system income is generally earned A) independently of acts of exchange and production. B) arbitrarily and randomly. C) unproductively. D) in the process of its creation. If total consumer expenditures (in dollars) for bus […]

Suppose an economist claims there are substitutes for wetlands. The person is saying A) wetlands are of no value. B) wetlands are worth less than their substitutes. C) there is a cost to maintaining a wetland. D) there is a […]

An effective price ceiling tends to A) increase quantity supplied. B) decrease quantity demanded. C) leave quantity supplied and demanded unchanged. D) do none of the above. Ann Trepreneur was formerly a landlord, renting her building for $1,200 a month. […]

Suppose the Utopian economy has the following characteristics: 100,000 people in the noninstitutional population; 80,000 people employed; 20,000 people not in the labor force. What’s the unemployment rate? A) -20 percent B) 0 percent C) 25 percent D) 60 percent […]

Rationing when goods have suddenly become more scarce, by asking people to make sacrifices voluntarily for the sake of others, discriminates against people who are A) considerate. B) poor. C) unethical. D) unwilling to sacrifice. E) wealthy. iTunes offers samples […]

Profits resulting from luck can be distinguished from profits attributable to shrewd predictions by A) calculating the opportunity cost of earning the profits. B) comparing the profits with interest rates. C) finding out whether they lead to reduced revenue or […]

We do not have reliable information on the time lags between expansionary fiscal and monetary policy actions and their effect on production and prices because A) Congress has reduced the funds available to the Bureau of Economic Analysis. B) economists […]

People who disagree vehemently about whether or not it is efficient to clear-cut forests or strip-mine for coal are basically disagreeing about A) the importance of material wealth. B) the importance of the economy. C) the proper relationship of human […]

Suppose a university refunds students 75% of their tuition if they drop out before the third week of class, 50% if they drop out between their third and fifth week, 25% if they drop out between their sixth and eighth […]

Suppose the market-clearing price of wheat is $2.50 per bushel. What would happen if wheat farmers persuaded the government to set a legally-mandated price support of $3.75 per bushel? A) The quantity demanded of wheat would fall. B) The quantity […]

Marginal revenue is A) revenue earned by increasing the margin between cost and price. B) revenue earned by purchasing stock on credit. C) revenue on which a seller is not dependent for survival. D) the additional monetary receipts that result […]

Roughly what was the change in Chile’s per capita GDP between 1960 and 2011? A) 2.65% B) 26.5% C) 265% D) 2,650% Pick the true statement regarding the notion of competition as a process versus the model of perfect competition. […]

Competition would probably be abolished if society could find a way to abolish A) inequality. B) scarcity. C) money. D) economists. Suppose it costs a farmer $1.00 to produce 1 unit of corn, $2.10 to produce 2 units of corn, […]

Higher relative wages for labor tends to A) increase the supply of labor. B) decrease the demand for labor. C) encourage firms to find substitutes, such as automation. D) accomplish all of the above. If the price of sandals is […]

Pick the best answer using the economic way of thinking. If information is a scarce good, then ignorance might be A) a sin. B) stupid. C) bliss. D) rational. E) inefficient. According to your textbook, the notion of price “gouging” […]

In the economic way of thinking, speculation can only occur A) in a capitalist economy. B) in a society where time-travel is possible. C) under uncertainty. D) under perfect information. E) in an underground or illegal market system. Which statement […]

Fill in the blank: ________ is another term for a decline in real GDP is A) Deflation. B) Inflation C) Economic growth D) Recession E) Unemployment Let’s assume producers in Canada can make 200 units of beef or 50 units […]

If a legal ceiling price causes the quantity of a good demanded to be greater than the quantity supplied A) competition among both buyers and sellers is prevented. B) competition among buyers is prevented. C) competition among sellers is prevented. […]

According to the text, a government policy of promoting competition must A) assure small businesses they won’t fail because of below-cost pricing or other predatory practices by larger businesses. B) assure small businesses they won’t fail under any circumstances. C) […]

According to the authors of your text, the phrase “property rights” can be substituted with the phrase A) “property wrongs.” B) “what people think they can get away with.” C) “animal rights.” D) “rugged individualism.” E) “free market capitalism.” Specialization […]

A fish hatchery raises brook trout and rainbow trout. An increase in the market price of brook trout therefore tends to A) reduce the demand for brook trout. B) increase the hatchery’s cost of raising rainbow trout. C) increase the […]

All else constant, an improvement in technology at each scale of operation would cause: A) a movement up an industry’s LRAC curve. B) a movement down an industry’s LRAC curve. C) an upward shift of an industry’s LRAC curve. D) […]

The central bank of the United States is the: A) First American Bank. B) Federal Reserve. C) Federal Deposit Insurance Corporation. D) U.S. Treasury. Imports are: A) positively related to the level of domestic income and negatively related to the […]

An expansionary monetary policy, all else equal, will: A) depreciate the domestic currency. B) appreciate the domestic currency. C) all of the above. D) none of the above. Because firms produce a differentiated product, each of the firms in a […]

Average duration of unemployment is an example of a: A) leading indicator. B) coincident indicator. C) lagging indicator. D) none of the above. A restrictive monetary policy, all else equal, will: A) depreciate the domestic currency. B) appreciate the domestic […]

In which of the following examples cited in the text is there the least amount of evidence of the potential for input substitution? A) Automobile production. B) Pipe organ production. C) French fry production. D) Production of health care services. […]

The natural rate of unemployment is also called: A) non-accelerating inflation rate of unemployment. B) accelerating inflation rate of unemployment. C) accelerating deflation rate of unemployment. D) none of the above. Under a fixed exchange rate system, the central bank […]

Referring to the previous question, all else constant, a 5 unit increase in the wage index would cause: A) quantity supplied to increase by 9 units and be shown by a movement up the supply curve. B) quantity supplied to […]

A decrease in the supply of dollars on the foreign exchange market, all else equal, will result in: A) appreciation of the U.S. dollar and depreciation of the foreign currency. B) appreciation of the U.S. dollar and appreciation of the […]

In the foreign exchange market, foreign residents wishing to purchase U.S. exports or U.S. real and financial assets must: A) demand U.S. dollars by supplying their foreign currency. B) demand U.S. dollars by supplying U.S. dollars. C) supply U.S. dollars […]

The elasticity of supply is measured by: A) the quantity supplied divided by price. B) the change in quantity supplied divided by the change in price. C) the percentage change in quantity supplied divided by the percentage change in quantity […]

All of the following are limitations of direct consumer surveys except: A) the possibility that consumers’ responses may not reflect their actual behavior in the market place. B) the possibility of response biases because survey respondents may not want to […]

Long-run macroeconomic policies concentrate on: A) minimizing fluctuations around potential GDP. B) maximizing fluctuations around potential GDP. C) incentives for increasing productivity and the potential output of the economy. D) none of the above. A decrease in price will result […]

One of the major motivations for labor resistance to productivity enhancing changes in a production process is the resulting threat to job security. Policymakers often use the natural rate of unemployment as a basis in policy formulations. Answer: TRUE In […]

Once a firm incurs diminishing marginal returns, total product will begin to decline as more of the variable input is employed. While the demand for beer is relatively price inelastic, the price elasticity of demand for a particular brand is […]

Adding an independent variable to a regression model will always reduce the coefficient of determination. The typical short-run production function is incapable of distinguishing among the different types of labor that might be hired by the firm. Answer: FALSE Certain […]

In the case of Matsushita v. Zenith, the fact that the foreign television manufacturers were able to charge lower prices than their domestic competitors in the U.S. market for televisions was sufficient evidence to conclude that the Japanese firms were […]

Assume a firm is currently producing 800 units of output, P = $10, MC = $10, ATC = $8, and AVC = $6. In this case, the firm is maximizing its profit, which equals $1,600. Under a fixed exchange rate […]

U.S. export spending is not affected by U.S. real income but is influenced by the economic activity of its major trading partners and the exchange rate, hence export spending is taken as autonomous. As the amount of time a consumer […]

McDonald’s can offset the decline in demand by influencing the different variables that affected the demand function for their products. The quantity of money demanded is positively related to the interest rate. Answer: FALSE The level of potential GDP does […]

A decrease in the incomes of people who buy canoes would cause the demand for canoes to decrease. The largest expenditure component in the U.S. is investment expenditures. Answer: FALSE The income elasticity of demand for health care is generally […]

So long as marginal cost is greater than average variable cost, both average variable cost and average total cost must increase as output is increased. Because it does not face competition from other firms, a monopolist is guaranteed to make […]

When market price is higher than the equilibrium price, a surplus is created. This will put downward pressure on price, causing quantity demanded to increase and quantity supplied to decrease until equilibrium is reestablished. The weak euro in 1999-2000 put […]