Archives: Quiz

Generally, ______ motivate firms to enter an industry while ______ motivate firms to exit an industry. A. economic profits; economic losses B. accounting profits; accounting losses C. accounting profits; economic losses D. economic profits; accounting losses In a certain economy, […]

Psychological factors that may influence the saving rate are ______ and _______. A. the real interest rate; the demonstration effect B. self-control problems; the demonstration effect C. capital gains; the real interest rate D. the desire to leave a bequest; […]

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. For simplicity, assume that labor is the only input. How many workers will be […]

Refer to the figure above. If Pat and Chris were to specialize in the task for which each has a comparative advantage: A. Chris would plant bulbs and Pat would remove trash. B. Chris would remove trash and Pat would […]

Suppose the economy is currently operating at potential output; an expansionary gap may be caused by each of the following EXCEPT: A. a positive demand shock. B. a positive inflation shock. C. an increase in government spending. D. an increase […]

Shel and Fran are neighbors. They work at the same firm and hold the same title. Shel finds that when Fran’s consumption rises, Shel feels worse off. Fran feels the same way towards Shel’s consumption. Refer to the information given […]

Refer to the figure above. The law of diminishing marginal utility A. applies to Food but not Rooms. B. does not apply to either Food or Rooms. C. applies to Rooms but not Food. D. applies to both Food and […]

Following the 1960 and 1973 period, average real earnings of workers grew more ______ from 1973 to 1996 and then ______ from 1996 to 200 A. slowly; grew more rapidly B. slowly; slowed even more C. slowly; grew at about […]

In deciding the number of guitars to buy for his shop before the Christmas season, Mark is making a(n) __________________ decision. A. microeconomic B. macroeconomic C. economic surplus D. marginal choice In a market where government has set the maximum […]

Refer to the figure above. The diagram shows Sven’s Production Possibilities for one day. For Sven, the opportunity cost of spending one more hour studying: A. is diminishing with each additional hour. B. is increasing with each additional hour. C. […]

The textbook states that empirical studies have found that the demand for public goods like public parks, environmental protection and public safety A. is quite price inelastic. B. has a small, positive income elasticity. C. is price elastic. D. has […]

If the Luddites had succeeded in ______ the introduction of labor-saving machinery, economic growth in Great Britain may have been ______. A. blocking; slower B. blocking; more rapid C. promoting; slower D. promoting; more rapid Pepsi One is a close […]

Features of the labor market that are likely to cause structural unemployment include all of the following EXCEPT: A. labor unions. B. minimum wage laws. C. unemployment compensation. D. differences in the skills and experience of workers. John is trying […]

When Cody went to the physician with a sore elbow, after hearing Cody’s symptoms and examining the elbow manually, Cody’s physician had two options: (1) prescribe an anti-inflammatory drug and advise Cody to abstain from vigorous physical activity for a […]

The nominal exchange rate is the: A. market on which currencies of various nations are traded for one another. B. price of the average domestic good or service relative to the price of the average foreign good or service, when […]

Graphically, long-run equilibrium occurs at the intersection of the aggregate demand curve and: A. the aggregate supply curve and potential output. B. the planned aggregate expenditure line. C. the aggregate supply curve. D. potential output. If an automobile manufacturer pays […]

From the perspective of an externality, most communities have zoning laws to: A. control external benefits. B. control external costs. C. encourage positive externalities. D. raise government revenues. Sam owns a candy factory and hires workers in a competitive labor […]

Suppose that the salary range for recent college graduates with a bachelor’s degree in economics is $30,000 to $50,000, with 25% of jobs offering $30,000 per year, 50% offering $40,000 per year and 25% offering $50,000 per year and that […]

Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each company’s stock currently sells for $100 per share. If the temperature next year is lower than average, […]

Samantha is lending Jack $1,000 for one year. The CPI is 1.60 at the time the loan is made, and they both expect it to be 1.68 in one year. If Samantha and Jack agree that Samantha should earn a […]

Which of the following is NOT an example of an activity with external benefits? A. Eating a sandwich in the dining hall B. Planting flowers in your front yard C. Attending class when you have the flu D. Having your […]

The marginal product of the 14th worker is 8 and the firm sells its output for $4 per unit. If labor is the only variable cost, the value of the 14th worker’s marginal product is A. $2. B. $4. C. […]

Refer to the figure above. Suppose the economy is in a short-run equilibrium at output Y3 and inflation rate π2. The economy is currently experiencing ______, and the correct fiscal policy response to this situation, to return the economy to […]

According to the Congressional Budget Office, over the past twenty years, the natural rate of unemployment in the United States has: A. increased. B. remained constant. C. fallen. D. fallen to zero, and is now becoming negative. An example of […]

Mike and Tom debone chicken breasts for Ted’s Chicken Co. Mike is new and can only debone 30 chicken breasts per hour, while Tom’s experience allows him to debone 60 chicken breasts per hour. Both Mike and Tom work 40 […]

Points that lie below the production possibilities curve are inefficient because: A. more of one or both goods could be produced using currently available resources without giving up production of another good. B. producers are not specializing. C. producers face […]

Refer to the figure above. After the price ceiling at price G is imposed, producer surplus _________ and is represented by the area _______. A. increases; DBC B. decreases; DGF C. increases; 0GFQ2 D. decreases; 0DFQ2 Pat has 4 hours […]

Workplace safety laws are ___ in developed countries because A. rare; policy makers believe that they undermine the free market system. B. rare; corporate lobbyists convince legislators to vote against them. C. necessary; without them firms that hire workers in […]

Price discrimination means charging: A. higher prices to women and minorities. B. different prices to different consumers because production costs are different. C. the same price to all consumers even if production costs are different. D. different prices to different […]

The following data show the relationship between the number of drivers who leave for work at 8:00 am, their average commute times, and their marginal benefit associated with the commute times. Refer to the information given above. An argument for […]

Which of the following statements is true for both General Motors and a locally owned restaurant? A. Both are perfect competitors. B. Both confront perfectly elastic demand for their products. C. Neither firm is able to influence the price of […]

The following graphs depict a perfectly competitive firm and its market. Assume that all firms in this industry have identical cost functions. The long run equilibrium quantity in this industry is A. 300. B. 500. C. 700. D. more than […]

Point A on a linear production possibilities curve represents a combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. […]

The excess of government spending over tax collections is: A. national income. B. national saving. C. national wealth. D. the government budget deficit. The opportunity cost of an activity is the value of: A. an alternative forgone. B. the next-best […]

In models of labor supply, the opportunity cost of spending an hour enjoying leisure activities is A. the price paid to engage in those activities. B. the hourly wage that could have been earned during that hour. C. zero. D. […]

There are two separate labor markets in Toontown, illustrated by the graphs below. Both labor markets currently pay $6.00 per hour, and both require the same skills and qualifications. The Toontown City Council is considering enacting a $7.50 living wage […]

The economy is in short-run equilibrium: A. when the AD and AS curves intersect at potential output Y*. B. when the AD and AS curves intersect at a level of real GDP that is above or below Y*. C. when […]

Which of the following is consistent with a political and legal framework that discourages economic growth? A. The allocation of bank credit by the government rather than by markets B. A speedy approval process for new businesses C. Agricultural prices […]

The small city of Pleasantville is considering building a public swimming pool that costs $1,000. Each resident’s marginal benefit of the swimming pool is shown below.It takes a 4/5 majority to pass any tax measure, and all residents must vote. […]

An increase in an economy’s productive resources will lead the production possibilities curve to: A. shift inward. B. shift outward. C. become flatter. D. stay the same. Suppose you have $200 with which you can buy shares of stock from […]

Assume that Joe is willing to produce another hamburger that costs $1 to make. Mary is hungry and is willing to buy a hamburger for $3. According to the No Cash on the Table Principle, Joe and Mary: A. will […]

Most economists agree that ______ are the single most important source of productivity improvements. A. increases in human capital B. increases in physical capital C. technological advances D. discoveries of natural resources What might cause a demand function to shift […]

If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below. If viewing a fight were free to anyone who tuned in, total economic surplus would be ______. A. […]

For a given nominal exchange rate and foreign price level, a decrease in the domestic price level ______ the real exchange rate. A. increases B. decreases C. may either increase or decrease D. offsets any change in The absolute price […]

Economic theory assumes that a firm’s goal is to: A. earn an accounting profit. B. earn an economic profit. C. maximize its accounting profit. D. maximize its economic profit. Positive economic principles are those that: A. are always correct. B. […]

The lemons problem gives the owners of above-average-quality used cars an incentive to: A. exaggerate the quality of their cars when selling them. B. offer a warranty when selling their cars. C. understate the true quality of their cars when […]

The total income of capital and labor must equal the value of total: A. production. B. profits. C. revenue. D. investment. Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of […]

Suppose Ginger is going to buy a house and a dishwasher. Assuming the marginal cost of searching for both is the same, one can predict that Ginger will: A. spend more time searching for the house than the dishwasher. B. […]

Suppose the figure below shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist. The profit-maximizing level of output for this monopolist is ______ units per day. A. F B. G C. H D. I Suppose […]

If the demand curve fails to capture all of the benefits of consumption, then the: A. equilibrium price will be efficient but the equilibrium quantity will be inefficiently large. B. equilibrium price will be inefficiently low. C. government needs to […]