Archives: Quiz

Figure 4-1 Figure 4-1 shows Arnold’s demand curve for burritos. If the market price is $2.00, what is the consumer surplus on the second burrito? A) $0 B) $1.00 C) $2.00 D) $4.50 Indicate whether each of the following situations […]

Figure 9-5 Suppose the U.S. government imposes a $0.75 per pound tariff on coffee imports. Figure 9-5 shows the impact of this tariff. The loss in domestic consumer surplus as a result of the tariff is equal to A) $5 […]

In a competitive market equilibrium, A) total consumer surplus equals total producer surplus. B) marginal benefit and marginal cost are maximized. C) consumers and producers benefit equally. D) the marginal benefit equals the marginal cost of the last unit sold. […]

The basic activity of a firm is A) to set the prices of its products as high as possible. B) to compete with other firms that produce similar products. C) to provide jobs for its employees. D) to use inputs […]

One difference between stocks and bonds is that A) stocks are financial securities, while bonds are labor market securities. B) stocks are usually issued in electronic form, while bonds are usually issued in paper form. C) stocks represent ownership in […]

A partnership is ________ type of business. A) the most common. B) the least common C) the least risky D) the most profitable Figure 7-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. […]

The cyclically adjusted budget deficit or surplus measures what the deficit or surplus would be if the economy was A) in a recession. B) in an expansion. C) at potential GDP. D) at potential tax revenue. When you buy at […]

Scenario 25-2 Imagine that Kristy deposits $10,000 of currency into her checking account deposit at Bank A and that the required reserve ratio is 20%. As a result of Kristy’s deposit, Bank A’s reserves immediately increase by A) $2,000. B) […]

As a firm hires more labor in the short run, the A) level of total product stays constant. B) output per worker rises. C) extra output of another worker may rise at first, but eventually must fall. D) costs of […]

Figure 10-5 Which of the following statements is true? A) The consumer gets more utility from bundle than from bundle v. B) The consumer gets less utility from bundle w than from bundle v. C) Bundles r, s, t and […]

Figure 9-3 Since 1953 the United States has imposed a quota to limit the imports of peanuts. Figure 9-3 illustrates the impact of the quota. What is the area of domestic producer surplus without a quota? A) C B) C […]

Which of the following is an example of a way in which a firm in oligopoly can escape the prisoner’s dilemma? A) producing more of its product B) advertising that it will match its rival’s price C) reneging on a […]

In international exchange markets, a rise in interest rates in the United States will cause the demand for dollars to ________ and the supply of dollars to ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease […]

The marginal product of labor is calculated using the formula A) L/Q. B) L/Q. C) Q/L. D) Q/L. Figure 12-2 If the U.S. economy is currently at point K, which of the following could cause it to move to point […]

Table 20-7 Suppose that the data in the table above reflect price levels in the economy. What is the inflation rate between 2012 and 2013? A) 2.9% B) 3.5% C) 4.6% D) 5% E) 7.5% The minimum wage is an […]

The Internet has created a new category in the book selling market, namely, the “barely used” book. How does the availability of barely used books affect the market for new books? A) The demand curve for new books shifts to […]

The public choice model can be used to examine voting models that contrast the manner in which collective decisions are made by governments (state, local and federal) and the manner in which individual choices are made in markets. Which of […]

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. What is the opportunity cost of one dozen orchids? A) 0.4 dozen roses B) 2.5 dozen roses C) 7.25 […]

Firms do not have market power in which of the following market structures? A) perfect competition only B) perfect competition and monopolistic competition C) oligopoly D) monopoly If a firm produces 20 units of output and incurs a total cost […]

Foreign investment can give a low-income country A) access to funds for investment and access to technology. B) the means to slow down growth. C) a path to dependency and low growth. D) no hope to break the vicious cycle […]

If interest rates in the United States fall, A) the value of the dollar will fall as foreign investors decrease their holdings of U.S. investments. B) the value of the dollar will rise as foreign investors increase their holdings of […]

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100. A) CPI; real GDP; nominal GDP B) GDP deflator; real GDP; nominal GDP C) GDP deflator; nominal GDP; real […]

Marginal utility can be A) negative. B) zero. C) positive. D) positive, negative or zero. Figure 4-5 The figure above represents the market for pecans. Assume that this is a competitive market. If the price of pecans is $9, A) […]

Figure 16-1 What is the economically efficient output level? A) Q1 units B) Q2 units C) Q3 units D) Q4 units When net capital flows are positive, A) capital inflows are greater than capital outflows. B) net foreign investment is […]

Which of the following must a firm in a market economy do today to succeed? A) Produce the goods and services that consumers want at a lower cost than consumers themselves can produce. B) Organize the factors of production into […]

Which of the following is part of an economic model? A) preferences of economic agents B) data C) norms D) opinions Figure 11-11 Figure 11-11 illustrates the long-run average cost curve for a firm that produces picture frames. The graph […]

Firms A) have no influence on the circular flow in a market economy. B) purchase resources in the product market. C) sell goods in the product market. D) sell resources in the factor market. Personal income is defined as A) […]

If the consumption function is defined as C = 7,250 + 0.8Y, what is the value of the multiplier? A) 0.2 B) 0.8 C) 1.25 D) 5 Figure 1-2 Calculate the area of the triangle A. A) $1.3 million B) […]

Table 14-4 Alistair Luggage and Baine Baggage are the only firms selling luggage in the upscale town of Montecito. Each firm must decide on whether to increase its advertising spending to compete for customers. If one firm increases its advertising […]

Consumption is $5 million, planned investment spending is $8 million, government purchases are $10 million, and net exports are equal to $2 million. If GDP during that same time period is equal to $27 million, what unplanned changes in inventories […]

Consumption is $5 million, planned investment spending is $8 million, government purchases are $10 million, and net exports are equal to $2 million. If GDP during that same time period is equal to $27 million, what unplanned changes in inventories […]

Unemployment insurance is usually available to workers in ________ for a shorter period of time than it is in ________. A) the United States; Canada B) Canada and some Western European countries; the United States C) Canada; some Western European […]

Which of the following models advocate that the quantity of money should be increased at a constant rate? A) the monetarist model B) the new classical model C) the real business cycle model D) the new Keynesian model A sequential […]

Prisoner’s dilemma games imply that cooperative behavior between two people or two firms always breaks down. But reality teaches us that people and firms often cooperate successfully to achieve their goals. Why do the results from prisoner’s dilemma games fail […]

Figure 6-1 A perfectly inelastic demand curve is shown in A) Panel A. B) Panel B. C) Panel C. D) Panel D. If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then […]

Which of the following is motivated by an efficiency concern? A) In 2009, the Obama administration increased unemployment benefits. B) As part of an economic stimulus package, each taxpayer received a $3,000 tax rebate check. C) Following a six-month drought, […]

When the government makes a firm the exclusive legal provider of a good or service, it grants the firm A) a copyright. B) a network externality. C) a quota. D) a public franchise. Some firms practice odd pricing because A) […]

The more excess reserves banks choose to keep, A) the larger the deposit multiplier. B) the smaller the deposit multiplier. C) the higher the required reserve ratio. D) the lower the required reserve ratio. Countries that engage in trade will […]

Figure 19-3 Which of the following is not true? A) U.S imports are cheaper at exchange rates greater than $.03/baht than at the equilibrium exchange rate. B) The baht is overvalued at exchange rates greater than $.03/baht. C) To achieve […]

If the U.S. government places tariffs on imports from countries that have been accused of deliberately undervaluing their currencies, the price of these imports will ________ and the demand for the undervalued currency will ________. A) rise; rise B) rise; […]

The currency adopted by most countries in Western Europe is referred to as the A) euro. B) Eurodollar. C) yen. D) pound. The expenses you encounter when you buy in one market and sell in a distant market are known […]

Figure 3-2 A decrease in the number of firms in the market would be represented by a movement from A) A to B. B) B to A. C) S1 to S2. D) S2 to S1. ________ involves undertaking an activity […]

David Card and Alan Kruger conducted a study of fast-food restaurants in New Jersey and Pennsylvania. The study found that A) there was a large reduction in employment of low-skilled workers when the minimum wage was raised in these states. […]

The size of a deadweight loss in a market is reduced by A) government legislating a ceiling price. B) government legislating a price floor. C) market price being close to marginal cost. D) creative destruction. Figure 16-5 Suppose the firm […]

________ consumption is consumption that depends upon the level of GDP and ________ consumption is consumption that does not depend upon the level of GDP. A) Autonomous; induced B) Induced; autonomous C) Voluntary; autonomous D) Autonomous; voluntary The popularity of […]

Consider two single-malt whiskey distillers, Laphroaig and Knockando. If they advertise, they can both sell more whiskey and increase their revenue. However, the cost of advertising more than offsets the increased revenue so that each distiller ends up with a […]

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. Suppose the current market equilibrium output of Q1 is not the […]

In reference to the federal income tax system, a tax bracket is A) the estimated amount of federal income tax firms withhold from their employees’ paychecks. B) the formula the federal government uses to determine the dollar amount of the […]

Firms disclose financial statements in ________ and in ________. A) periodic filings to the federal government; annual reports to shareholders B) daily filings to the federal government; daily reports to shareholders C) monthly reports to shareholders; 5-year balance statements to […]

Which of the following is not an example of an economic trade-off that a firm has to make? A) whether it is cheaper to produce with more machines or with more workers B) whether it is to outsource the production […]