Archives: Quiz

You explain to your roommate Surya, who makes beaded headbands, about an economic theory which asserts that consumers will purchase more of a product at lower prices than they will at higher prices. She contends that the theory is incorrect […]

The proposition that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle is called A) the mean (or average) voter theorem. B) the voting paradox. C) the Arrow […]

If technological change increases the profitability of new investments for firms, then the ________ curve for loanable funds will shift to the ________. A) supply; right B) supply; left C) demand; right D) demand; left Tanesha sells homemade candles over […]

Some economists argue that the short-run Phillips curve is not vertical, and that monetary policy can be effective in the short run. Which one of the following is not one of the reasons for this skepticism? A) Empirical evidence shows […]

If the demand for iPods is price elastic, then A) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). B) the percentage change in quantity demanded is less than the percentage change […]

Figure 11-7 Figure 11-7 shows the cost structure for a firm. When output level is 100, what is the total cost of production? A) $20 B) $1,000 C) $1,200 D) $2,000 The level of real GDP in the long run […]

Which of the following is an implicit cost of production? A) the loss in the value of capital equipment due to wear and tear B) the salary you pay yourself for running your business C) the utility bill paid to […]

Contractionary monetary policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________. A) higher; higher B) higher; lower C) lower; higher D) lower; lower Growth […]

Table 11-7 Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. What is the variable cost of production when the firm produces 115 lanterns? A) $1,556 B) $1,157 C) $956 D) $10.05 The current exchange […]

Which of the following is not a consequence of minimum wage laws? A) Low skilled workers are hurt because minimum wage reduces the number of jobs providing low skilled workers with training. B) Employers will be reluctant to offer low-skill […]

Table 4-4 Table 4-4 shows the demand and supply schedules for labor market in the city of Pixley. Suppose that the quantity of labor supplied increases by 40,000 at each wage level. What are the new free market equilibrium hourly […]

If the economy is currently in equilibrium at a level of GDP that is below potential GDP, which of the following would move the economy back to potential GDP? A) an increase in wealth B) an increase in interest rates […]

Figure 6-4 Which of the following statements is true about the price elasticity of demand? A) The elasticity coefficient is constant along the demand curve. B) The elastic portion of a straight-line downward sloping demand curve corresponds to the segment […]

Which aggregate supply curve has a positive slope? A) long-run only B) short-run only C) both long-run and short-run D) neither long-run nor short-run When a negative externality exists, the private market produces A) more than the economically efficient output […]

If the probability of losing your job remains ________, a recession would be a good time to purchase a home because the Fed usually ________ interest rates during this time. A) low; lowers B) low; raises C) high; lowers D) […]

What happens in the secondary market? A) secondary inputs like electricity are sold B) a corporate financial manager will raise funds for expansion of the firm C) newly issued claims are sold by the borrowing firm to the initial buyer […]

The economic model of consumer behavior predicts that A) consumers will try to earn as much income as they can over their lifetimes. B) consumers will choose to buy the combination of goods and services that make them as well […]

When an economy faces diminishing returns, A) the slope of the per-worker production function becomes steeper as capital per hour worked increases. B) the slope of the per-worker production function becomes flatter as capital per hour worked increases. C) the […]

You own a business that answers telephone calls for physicians after their offices close. You have an incentive to substitute capital for labor if the A) price of capital increases. B) price of labor decreases. C) price of labor increases. […]

An income tax system is ________ if marginal tax rates increase as income increases. A) progressive B) regressive C) efficient D) equitable Which of the following statements is correct? A) Economic profit takes into account all costs involved in producing […]

Many economists are critical of proposals to pass comparable worth legislation. Which of the following is the best explanation for this criticism? A) Comparable worth legislation will only lead to efficient market outcomes if women in low-paying jobs suffer from […]

To what do economists attribute the rapid growth of labor productivity in the United States relative to other countries? A) the flexibility of U.S. labor markets and the efficiency of the U.S. financial system B) the strict government rules in […]

Which of the following would increase gross private domestic investment in an economy? A) an increase in the shares of Apple stock households own B) an increase in the number of workers Apple hires C) an increase in the level […]

A firm using a two-part tariff can produce the economically efficient outcome by A) making the fixed-fee portion of the price as low as possible. B) setting the per-unit portion of the price equal to the marginal cost of production. […]

The justification for occupational licensing laws is that they protect the public from incompetent practitioners (for example, lawyers and medical doctors), but the laws also result in A) higher prices and restrictions on the number of people who can enter […]

Marginal analysis involves undertaking an activity A) until its marginal costs start declining. B) only when its marginal benefits are positive. C) until its marginal benefits equal marginal costs. D) only if its marginal costs are greater than its marginal […]

Figure 16-3 Chantal owns a hairdressing salon which caters to two main groups of customers: residents of “The Chateau,” a retirement community, and other residents in the neighborhood. Figure 16-3 shows the demand curves for the residents of the retirement […]

A decrease in the wage rate causes A) an increase in the quantity of labor demanded. B) a rightward shift of the firm’s labor demand curve. C) a leftward shift of the firm’s labor demand curve. D) a decrease in […]

What does the PPI measure? A) the average change in the prices paid for all goods produced in the economy over a given year B) the average of the prices received by producers of goods and services at all stages […]

Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant? A) Demand is likely to be […]

Figure 13-18 The diagram demonstrates that A) in the short run, the monopolistic competitor produces an output Q but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa. B) it is not […]

In an open economy, the current account balance equals ________. (Assume that the capital account is zero and net transfers are zero.) A) net foreign investment + domestic investment B) net capital outflows C) the financial account balance + net […]

Figure 5-4 Suppose there are several paper mills producing paper for a market. These mills, located upstream from a fishing village, discharge a large amount of wastewater into the river. The waste material affects the number of fish in the […]

Figure 12-4 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. If the market price is $30 and the firm is producing output, what is the amount of the firm’s profit or […]

In which of the following countries does health insurance not pay for most preventive care procedures? A) Canada B) Japan C) the United Kingdom D) the United States Table 10-2 Using the table above, what is the approximate growth rate […]

The aggregate demand curve will shift to the right ________ the initial increase in government purchases. A) by less than B) by more than C) by the same amount as D) sometimes by more than and other times by less […]

Figure 5-2 Figure 5-2 shows a market with a negative externality. The marginal benefit of the last unit produced is represented by the price A) Pa. B) P. C) Pc. D) Pf. If an airport decides to expand by building […]

Figure 6-1 The demand curve on which elasticity changes at every point is given in A) Panel A. B) Panel B. C) Panel C. D) none of the above graphs. A perfectly competitive firm faces a demand curve that is […]

If the long-run aggregate supply curve is vertical, A) the economy stays at the natural rate of inflation in the long run. B) the short-run Phillips curve must be vertical. C) unemployment and inflation are positively related in the long […]

The relationship between sales and revenue is A) an inverse relationship. B) a direct relationship. C) a negative relationship. D) independent. We should never assume that an inelastic demand curve is a perfectly inelastic demand curve because A) there has […]

In 2013, the dividend yield on Abercrombie & Fitch (ANF) stock rose from a low of 1.33% in May to 2.24% in October. Which of the following would have generated that result? A) The closing price of ANF stock rose. […]

A decrease in the demand for incandescent light bulbs due to changes in consumer tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result of government restrictions, will result in A) a decrease in the […]

The ABC Company manufactures routers that are used to provide high-speed Internet service. ABC sells an average of 1,000 routers each month, but to exhaust economies of scale in its industry ABC would have to sell 3,000 routers each month. […]

Money market mutual funds sell shares to investors and use the money to buy A) mortgage-backed securities. B) foreign currency. C) short-term securities. D) overseas assets through foreign direct investment. Arnold Harberger was the first economist to estimate the loss […]

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. At the efficient equilibrium A) economic surplus is […]

Suppliers will be willing to supply a product only if A) the price received is less than the additional cost of producing the product. B) the price received is at least equal to the additional cost of producing the product. […]

Table 8-11 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. In […]

Bubba’s Hula Shack bar and bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. This is an example of A) arbitrage. B) two-part […]

Which of the following is a disadvantage of trademarking a firm’s product? A) A trademark differentiates a firm’s product. B) A trademark conveys information about the product to the public. C) A trademark may become so widely used to denote […]

In 1935, the U.S. Patent and Trademark Office issued Parker Brothers a trademark on the use of the name Monopoly for a board game. Hasbro bought Parker Brothers in 1991. Which of the following statements is true regarding the trademark […]