Archives: Quiz

If the purchasing power of a dollar is greater than the purchasing power of the yen, purchasing power parity would predict that A) in the short run, exchange rates will move to equalize the purchasing power of the dollar and […]

Under autarky, domestic producer 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. […]

What does the phrase “internalizing an external cost” mean? A) limiting the extent to which domestic firms can outsource production B) prohibiting economic activities that create externalities C) forcing producers to factor into their production costs the cost of the […]

What characteristic of a competitive market has made the “long run pretty short” in the market for iPhone applications? A) few firms in the market B) identical products C) ease of entry D) blocked entry Figure 28-6 If firms and […]

Suppose that when the price of strawberries decreases, Simone increases her purchase of whipped cream. To Simone A) strawberries and whipped cream are complements. B) strawberries and whipped cream and substitutes. C) strawberries and whipped cream are normal goods. D) […]

What is an inside director? A) a movie director who also appears in the movie B) a member of a corporate board of directors that is also a manager of the business C) the CEO that is selected by the […]

Suppose a developing country experiences a reduction in machinery and capital equipment as foreign entrepreneurs decrease the amount of investment in the economy. As a result, A) the long-run aggregate supply curve will shift to the right. B) the long-run […]

The intention of the U.S. tariff on Chinese tries was to A) protect jobs in the U. S. tire industry. B) protect infant industries in tire U.S. tire market. C) insure that Chinese tires meet U.S. quality and safety standards. […]

Active changes in tax and spending by government intended to smooth out the business cycle are called ________, and changes in taxes and spending that occur passively over the business cycle are called ________. A) automatic stabilizers; discretionary fiscal policy […]

When unemployment is above its natural rate, the inflation rate will eventually A) increase. B) decrease. C) move to its natural rate. D) become equal to the natural rate of unemployment. The ability of a firm to charge a price […]

Which of the following is one reason why the income of small family farms has decreased over time? A) Technology has increase farm productivity and market supply. B) The demand for farm products is price elastic. C) The demand for […]

The marginal rate of technical substitution is measured by A) the slope of the isoquant. B) the relative input prices. C) the slope of the isocost line. D) the ratio of the product’s price to the product’s cost of production. […]

Mortgages issued to borrowers whose credit histories include failures to make payments on bills are known as ________ mortgages. A) catastrophic B) variable rate C) subprime D) Alt-A If the price of train tickets decreases, what will be the impact […]

a. Define the term “globalization.” b. Describe the benefits of globalization. c. Who is likely to oppose globalization and why? Which of the following items is likely to have the highest income elasticity of demand? A) a luxury cruise to […]

Who operates and controls a corporation in its day-to-day activities? A) the board of directors B) stockholders C) employees D) management Economist Jerry Hausman estimated the price elasticity of demand for “Post Raisin Bran” and “All types of breakfast cereals.” […]

The perfectly competitive market structure benefits consumers because A) firms do not produce goods at the lowest possible price in the long run. B) firms are forced by competitive pressure to be as efficient as possible. C) firms add a […]

How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S. dollar.) A) The equilibrium exchange rate will […]

China began pegging its currency, the yuan, to the dollar in 1994. Because the yuan has been ________ at the pegged exchange rate, the Chinese government ________ its reserves of dollars as the government purchased more ________ to maintain the […]

When banks gain ________, they can ________ their loans; and the money supply ________. A) reserves; increase; contracts B) withdrawals; increase; expands C) withdrawals; decrease; expands D) reserves; increase; expands The quantity theory of money was derived from the quantity […]

The Athenian Theatre sells play tickets for the same play at different prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the […]

If society decides it wants more of one good and all resources are fully utilized, then A) it is unable to do this unless technology advances. B) additional resource supplies will have to be found. C) it has to give […]

Net foreign investment is equal to A) capital inflows minus capital outflows. B) foreign direct investment. C) the balance of trade. D) net foreign portfolio investment plus net foreign direct investment. Table 2-1 Production choices for Tomaso’s Trattoria Assume Tomaso’s […]

Figure 5-1 Figure 5-1 shows a market with an externality. The current market equilibrium output of Q1 is not the economically efficient output. The economically efficient output is Q2. If, because of an externality, the economically efficient output is Q2 […]

Suppose the price of capital and labor remain constant but that the average educational level of workers has increased and therefore, productivity of labor increases. This would lead a firm A) to adopt a more capital-intensive production technology. B) to […]

Figure 7-1 Figure 7-1 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations. Marginal social benefit is represented by which curve? […]

Economists use game theory to analyze oligopolies because A) real markets are too complicated to analyze without using games. B) it is more enjoyable for economists and students to learn by playing games. C) game theory helps us to understand […]

To offset the effect of households and firms deciding to hold more of their money in checking account deposits and less in currency, the Federal Reserve could A) raise bank taxes. B) sell Treasury securities. C) raise government spending. D) […]

Table 9-11 Production and Consumption Production Without Trade With Trade Denmark and Belize can produce both clocks and hats. Table 9-11 shows the production and consumption quantities without trade, and the production numbers with trade. Which country has an absolute […]

In making decisions about what to consume, a person’s goal is to A) allocate her limited income among all the products she wishes to buy so that she receives the highest total utility. B) buy low-priced goods rather than high-priced […]

Figure 15-4 Figure 15-4 shows the demand and cost curves for a monopolist. What is the amount of the monopoly’s total revenue? A) $21,600 B) $20,400 C) $19,740 D) $7,800 Suppose Dublin Electronics charges regular customers $90 for a Blu-ray […]

Economists believe the most persuasive argument for protectionism is to A) save jobs. B) protect high wages. C) protect national security. D) protect infant industries. Which of the following willshift the demand curve for a good? A) a change in […]

Table 4-7 Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley. Suppose that the quantity of labor demanded decreases by 80,000 at each wage level. What are the new free market equilibrium hourly […]

Suppose you have just opened a store to sell espresso machines. Both you and a competing store buy this machine from a manufacturer for $130 each. Your competitor who has a store of the same size as yours is currently […]

When a credit card company offers different services with its card, like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card, the credit card company is trying to A) […]

How does the increasing use of MP3 players affect the market for compact discs? A) The demand curve for compact discs shifts to the right. B) The supply curve for compact discs shifts to the left. C) The supply curve […]

Table 11-1 Table 11-1 shows the technology of production at the Matsuko’s Mushroom Farm for the month of May. What is the marginal product of the 4th worker? A) 137 pounds B) 50 pounds C) 12.5 pounds D) 5 pounds […]

The long-run supply curve for a perfectly competitive, constant-cost industry A) is upward sloping. B) is horizontal. C) is downward sloping. D) is found by adding up the marginal cost curves for all firms in the industry. The following appeared […]

Linesha, a college student working part-time receives a wage increase. An avid movie buff, she increased her purchases of Blu-ray discs and reduced her purchases of DVDs. Based on this information A) DVDs and Blu-ray discs are substitutes. B) Blu-ray […]

Which of the following correctly describes what the Fed used as monetary targets in the past? A) The Fed used M1 and M2 as targets after 1993. B) The Fed focused on M1 as a target after deregulation of the […]

Figure 6-3 Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f. A) 0.32 B) 0.4 C) 2.5 D) 3.125 A decrease in ________ can put your job at risk if aggregate […]

Figure 4-9 Figure 4-9 shows the market for cigarettes. The government plans to impose a unit tax in this market. The price buyers pay after the tax is A) $12. B) $8. C) $5. D) $3. A curve that shows […]

Table 19-11 Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Real GDP for Tyrovia for 2013 using 2005 as the base year equals A) $1,140. B) $880. C) $690. D) $560. Toot […]

Which is the least common type of business? A) corporation B) partnership C) sole proprietorship D) impossible to determine without further information Which of the following causes the unemployment rate to understate the true extent of joblessness? A) Many full […]

What is the name of the organization that defines business cycle peaks and troughs in the United States? A) the Bureau of Labor Statistics B) the Federal Reserve C) the National Bureau of Economic Research D) the National Peak and […]

Of the following high-income countries, which has the lowest number of MRI units per 1 million population? A) Canada B) Japan C) the United Kingdom D) the United States Figure 3-6 The figure above represents the market for coffee grinders. […]

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services? A) It has become more price inelastic. B) It has become more price elastic. C) It has become more […]

Figure 16-1 Suppose the economy is in short-run equilibrium below potential GDP and no fiscal or monetary policy is pursued. Using the static AD–AS model in the figure above, this would be depicted as a movement from A) A to […]

Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen. One can conclude that A) the law of demand has been violated. B) the number of tarot card […]

An average tax rate is calculated as A) total taxable income taxes paid. B) total taxable income · taxes paid. C) taxes paid · total taxable income. D) (total taxable income – taxes paid) · taxable income. Dr. Goldfinger decides […]

Figure 13-3 The marginal revenue from one additional unit sold is the sum of the gain in revenue from selling the additional unit and the loss in revenue from having to charge a lower price to sell the additional unit. […]