Archives: Quiz

According to projections for 2013 by the Tax Policy Center, the 20 percent of U.S. taxpayers who make the highest incomes A) use loopholes and tax exemptions to reduce their share of federal income taxes to less than 20 percent. […]

Damian shares a small food truck with his sister. His share of the expenses is $500 per month. He has decided to get his own, newer food truck which he will not have to share with anyone. His expenses for […]

Demand in factor markets differs from demand in product markets in that A) the demand for a factor of production is difficult to determine. B) the demand for a factor of production is influenced by workers’ productivity and by the […]

Compensating differentials are associated most closely with which of the following? A) hazardous jobs B) comparable worth C) economic discrimination D) differences in education Assume that Bulgaria has a comparative advantage in producing sandals and Finland imports sandals from Bulgaria. […]

Table 17-3 Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labor at a constant wage rate of $800 per week and sells microwave ovens at a constant price […]

Of the following high-income countries, which has the lowest mortality ratio for cancer? A) Canada B) Japan C) the United Kingdom D) the United States The paradox of American farming is A) the demand for imported luxury food products has […]

Table 2-1 Production choices for Tomaso’s Trattoria Refer to Table 2-1. Assume Tomaso’s Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear A) along Tomaso’s production possibilities frontier. B) inside Tomaso’s production possibilities […]

Which of the following are separate flows in the circular flow model? A) the flow of goods and the flow of services B) the flow of costs and the flow of revenue C) the flow of income earned from the […]

Figure 4-6 Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure […]

Consider a downward-sloping demand curve. When the price of a normal good increases, the income and substitution effects A) work in the same direction to increase quantity demanded. B) work in the same direction to decrease quantity demanded. C) work […]

Total revenue is equal to A) the amount of funds earned by a firm minus its costs of production. B) the total quantity sold of a product over a given period of time. C) the price of a product multiplied […]

Economist Jerry Hausman estimated the price elasticity of demand for “Post Raisin Bran” and “All types of breakfast cereals.” He found that the price elasticity of demand for Post Raisin Bran was -2.5 and the price elasticity of demand for […]

Figure 1-1 Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2008 and 2011. A) 23.1% B) 23.8% C) 30% D) 42.9% Figure 5-6 Answer: D Figure 5-6 […]

In the real world we don’t observe countries completely specializing in the production of goods for which they have a comparative advantage. One reasons for this is A) comparative advantage works better in theory than in practice. B) some countries […]

Figure 1-4 Refer to Figure 1-4. Which of the following statements is false? A) The slope of the tangent at E is positive. B) The slope of the tangent at F is negative. C) The slope of the tangent at […]

Reporters from the Wall Street Journal found that the office supply store Staples charged different prices for the same product to different online customers based primarily on A) the age of the customer. B) how close the customer’s zip code […]

Because leisure is a normal good, an increase in the wage rate will result in A) an increase in the quantity of labor supplied because of both the substitution effect and the income effect. B) a decrease in the quantity […]

If a firm decreases its plant size and finds that its long-run average costs have decreased, then A) its labor is more productive in a smaller plant. B) its diseconomies of scale are less. C) the firm should reduce its […]

Briefly describe are the 6 main provisions of the Patient Protection and Affordable Care Act (ACA)? Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power. Harberger found that A) the loss of […]

Economists have used the ultimatum game and the dictator game in experiments designed to determine A) whether consumers care about fairness when they make decisions. B) whether consumers believe it is fair for producers to raise the price of a […]

Under autarky, consumer surplus is represented by the area A) above the supply curve and below the equilibrium price. B) above the supply curve and below the demand curve. C) below the demand curve and above the equilibrium price. D) […]

Peet’s Coffee and Teas produces some flavorful varieties of Peet’s brand coffee. Is Peet’s a monopoly? A) Yes, there are no substitutes to Peet’s coffee. B) No, although Peet’s coffee is a unique product, there are many different brands of […]

Figure 15-9 Figure 15-9 shows the demand and cost curves for a monopolist. Refer to Figure 15-9. At the profit-maximizing quantity, what is the difference between the monopoly’s price and the marginal cost of production? A) $8 B) $11.50 C) […]

Consider this quote from an article in the Wall Street Journal: “The stock of educated workers isn’t increasing fast enough to keep up with rising demand…. Employers are paying the typical four-year college graduate [without graduate school] 75% more than […]

Figure 3-4 Refer to Figure 3-4. If the current market price is $15, the market will achieve equilibrium by A) a price increase, increasing the supply and decreasing the demand. B) a price decrease, decreasing the supply and increasing the […]

Two stores – Lazy Guys and Ralph’s Recliners – are located in the same city. Both stores buy recliner chairs from the same manufacturer at the same price and both stores are about the same size, so that the fixed […]

Which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximizing outputs? A) Marginal revenue is less than price. B) Marginal revenue equals marginal cost. C) Price equals marginal cost. D) […]

Logrolling may result in A) legislation that yields economy-wide benefits, the funding for which is borne primarily by a few of the smallest states. B) a majority of Congress supporting legislation that benefits the economic interests of a few, while […]

Assume that two interior design companies, Alistair and Baine, are competing for customers and if they both advertise, they would each earn $30 million in profits. If neither advertises, they each earn $50 million in profits. If one advertises and […]

If production displays increasing marginal returns, then A) total product rises by a constant amount throughout. B) each new worker hired adds more to output than previous hires. C) the firm must be adding new capital to keep boosting productivity. […]

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 Which of the following will […]

Anything of value owned by a person or a firm is A) an asset. B) a liability. C) wealth. D) owner’s yield. Which of the following is true for a monopolist? A) Being the only seller in the market, the […]

Because consumers who have insurance provided by their employers usually only pay a deductible for a visit to the doctor’s office A) they demand a larger quantity of health care services than they would if they paid a price that […]

The law of one price holds exactly only if A) antitrust laws are being enforced. B) buyers have complete information. C) transactions costs are zero. D) it is impossible for buyers to resell the good. Figure 12-18 Use the figure […]

At the minimum efficient scale A) all possible economies of scale have not been exhausted. B) the firm has achieved the lowest possible average cost of production. C) any increases in the scale of operation will encounter further economies of […]

How do the owners of a partnership relate to the business? A) The owners and the business are not separate legal entities. B) The owners and the business are separate legal entities. C) The assets of the owners are considered […]

Table 10-6 Table 10-6 lists Jay’s marginal utilities for burgers and Pepsi. Jay has $7 to spend on these two goods. The price of a burger is $2 and the price of a can of Pepsi is $1. Refer to […]

Which of the following would not occur as a result of a monopolistically competitive firm suffering a short-run economic loss? A) The firm could exit the industry in the long run. B) If the firm does not exit the industry […]

According to the law of one price, identical products should sell for the same price everywhere if A) consumers have knowledge of the prices charged for products in different markets. B) transactions costs are zero. C) firms can prevent consumers […]

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as A) a decrease in demand. B) a decrease in quantity demanded. C) a change in consumer income. D) […]

Table 17-5 Refer to Table 17-5. Oil Can Harry’s, a new automobile service shop, is ready to start hiring. The table above shows the relationship between the number of mechanics the firm hires and the quantity of oil changes it […]

Consider a good whose consumption takes place publicly. Your decision to buy that good depends A) both on the characteristics of the product and on how many other people are buying the good. B) only on the characteristics of the […]

The following equations represent the demand and supply for bottles of nail polish. QD = 25 – P QS = -15 + 3P What is the equilibrium price (P) and quantity (Q – in thousands) of bottles of nail polish? […]

As former competitors in many industries link up to challenge others on a worldwide basis, ________ occurs. A) segregation B) denationalization C) consolidation D) technological stagnation The town of Saddle Peak has a fixed supply of mountain view lots. In […]

A merger between firms at different stages of production of a good A) is a vertical merger. B) was made illegal by the Sherman Act. C) was made legal by the Clayton Act. D) is a horizontal merger. The rules […]

Figure 14-3 Rainbow Writer (RW) is a small online company selling a highly rated software package for printing color labels directly onto CDs. The firm currently earns a profit of $2 million per year selling its package exclusively on its […]

Firms in perfect competition produce the productively efficient output level in the short run and in the long run. Holding everything else constant, government approval of horizontal mergers is more likely to be granted if the “market” that firms are […]

If you purchase a share of stock from your friend who initially purchased the stock three years ago, your purchase of the stock represents a transaction in the secondary financial market When there is a negative externality, the competitive output […]

Seth’s grandmother gave him a $50 savings bond for his birthday. The bond pays $50 at maturity, which is in five years. If the interest rate is 5%, the bond has a present value of $43.19. Suppose the supply curve […]

Rent seeking behavior, unlike profit maximizing behavior in competitive markets, wastes society’s scarce resources. Market equilibrium occurs where supply equals demand. Answer: FALSE Joe Santos owns the only pizza parlor in a small town that is also home to a […]