Archives: Quiz

A final good is one that A) is used in the production of another good. B) is a natural resource used to produce a good. C) is purchased as an input in the production process. D) is purchased by its […]

Figure 4-3 Figure 4-3 shows Kendra’s demand curve for ice-cream cones. What is the total amount that Kendra is willing to pay for 1 ice cream cone? A) $0.50 B) $3.50 C) $9.00 D) $13.50 Figure 19-6 Which of the […]

Figure 13-2 Ceteris paribus, an increase in the expected price of an important natural resource would be represented by a movement from A) SRAS1 to SRAS2. B) SRAS2 to SRAS1. C) point A to point B. D) point B to […]

An increase in a perfectly competitive firm’s demand for labor could be caused by A) a decrease in the market wage rate. B) an increase in the amount of human capital among the labor force. C) an increase in the […]

Suppose thatAmerican firms claim that protectionism in Canada is on the rise as the Canadian government attempts to protect its infant industries. This protectionism will cause the greatest harm to A) Canadian manufacturers. B) the Canadian government. C) manufacturers who […]

The supply of loanable funds has a ________ slope because the greater the interest rate, the ________ the reward to saving, and the ________ the quantity of loanable funds supplied. A) positive; lesser; lesser B) positive; greater; lesser C) negative; […]

A perfectly competitive wheat farmer in a constant-cost industry produces 1,000 bushels of wheat at a total cost of $50,000. The prevailing market price is $48. What will happen to the market price of wheat in the long run? A) […]

Ariel is a Canadian citizen who works in Montreal, Canada and owns a winter home in Palm Beach, Florida. When Ariel spends the winters in Palm Beach, an increase in the value of the Canadian dollar relative to the U.S. […]

You’re traveling in Japan and are thinking about buying a new kimono. You’ve decided you’d be willing to pay $175 for a new kimono, but kimonos in Japan are all priced in yen. If the kimono you’re looking at costs […]

The interest payment on a bond is called A) the coupon payment. B) principal. C) the interest rate. D) the face value. Because of the slope(s) of the ________, we can say that a decrease in the price level leads […]

Which of the following is a positive economic statement? A) People should not buy imported fruits and vegetables. B) The government should subsidize solar power for homeowners. C) The minimum wage law causes unemployment. D) The number of work visas […]

When a firm has been granted a trademark, which grants legal protection against other firms using the name of the product that has been granted the trademark, the firm A) still faces the possibility that the name will become widely […]

Suppose you lend $1,000 at an interest rate of 10 percent over the next year. If the expected real interest rate at the beginning of the loan contract is 4 percent, then what rate of inflation over the upcoming year […]

An increase in individual income taxes ________ disposable income, which ________ consumption spending. A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases Figure 5-5 Figure 5-5 shows a market with an externality. The current market equilibrium output […]

The ratio of the increase in equilibrium real GDP to the increase in autonomous expenditure is called the A) MPC. B) multiplier. C) MPS. D) consumption function. For a monopolistically competitive firm, marginal revenue A) equals the price. B) is […]

In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller A) the greater the difference between marginal cost and price. B) the smaller the […]

Table 14-2 Table 14-2 shows the payoff matrix for Wal-Mart and Target from every combination of pricing strategies for the popular PlayStation 3. At the start of the game each firm charges a low price and each earns a profit […]

Figure 17-4 Which of the following is true at W2? A) The income effect is larger than the substitution effect. B) The substitution effect is larger than the income effect. C) The income effect and the substitution effect are equal. […]

Figure 3-1 A decrease in the price of the product would be represented by a movement from A) A to B. B) B to A. C) D1 to D2. D) D2 to D1. U.S. taxpayers spend many hours during the […]

How much is a bond that pays $50 in coupon payments for 3 years and $1,000 at the end of the third year worth if the interest rate is 10%? A) $876 B) $952 C) $1,045 D) $1,150 Which of […]

Hewlett-Packard will not raise the prices of its personal computers without first considering how Dell might respond. This is evidence of A) interdependence. B) collusion. C) cutthroat competition. D) price fixing. Figure 2-15 Figure 2-15 shows the production possibilities frontiers […]

Which of the following statements is true about profit? A) Profit refers to the revenue received from the sale of a quantity of goods. B) Profit is calculated by multiplying price and quantity sold. C) The terms “accounting profit” and […]

Which of the following would explain why accounting profit might be greater than economic profit? A) A firm has implicit costs as well as explicit costs. B) A firm has only explicit costs. C) A firm’s net income is greater […]

A nonmonetary opportunity cost is called a(n) ________, while a cost that involves spending money is called a(n) ________. A) accounting cost; explicit cost B) implicit cost; explicit cost C) accounting profit; economic profit D) normal rate of return; asset […]

Figure 2-5 If the economy is currently producing at point X, what is the opportunity cost of moving to point Y? A) 5 million tons of steel B) 9 million tons of paper C) 5 million tons of paper D) […]

Figure 9-2 Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure 9-2 shows the impact of this tariff. Without the tariff in place, the United States consumes A) 9 million pounds of rice. B) 15 […]

If net exports are positive, A) net foreign investment is also positive. B) capital inflows must be greater than capital outflows. C) net foreign investment is negative. D) Both A and B are correct. A period of expansion in the […]

Figure 12-13 Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity. If the firm represented in the diagram continues to stay in business, in the long-run equilibrium A) it will reduce its output to […]

Suppose the required reserve ratio is 20 percent. If banks are conservative and choose not to loan all of their excess reserves, the real-world deposit multiplier is A) less than 5. B) equal to 5. C) greater than 5. D) […]

All of the following are ways in which health insurance companies can potentially reduce adverse selection except A) by insuring only large groups of people. B) by lowering the co-payments and deductibles on the policies they issue. C) by refusing […]

Suppose your grandfather earned a salary of $12,000 in 1964. If the CPI is 31 in 1964 and 219 in 2013, then the value of your grandfather’s salary in 2013 dollars is approximately A) $84,775. B) $63,830. C) $37,200. D) […]

Health insurance plans which typically reimburse doctors and hospitals with payment for each service they provide are known as A) fee-for-service plans. B) preferred provider organizations. C) single-health-payer systems. D) health maintenance organizations. When demand is unit-elastic, a change in […]

If policy makers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply, the appropriate fiscal policy response is to A) increase taxes. B) increase government spending. C) use expansionary […]

How does the owner of a sole proprietorship relate to the business? A) The owner and the business are separate legal entities. B) The owner and the business are not separate legal entities. C) The assets of the owner are […]

Figure 13-13 What is the output price? A) P4 B) P3 C) P2 D) P1 If demand is taken into account, firms that use cost-plus pricing can adjust price by A) letting sales fall, but hold the markup constant if […]

Table 3-2 The table above shows the demand schedules for cashews of two individuals (Jordy and Amy) and the rest of the market. If the price of cashews falls from $4 to $2, the market quantity demanded would A) decrease […]

Which of the following has not contributed to the overall decline in death rates in the United States since 1981? A) a decline in smoking B) the decline in the population C) the availability of new prescription drugs D) new […]

Figure 4-11 Figure 4-11 shows the demand and supply curves for the coffee market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at $7.00. What is the […]

Figure 2-1 Point B is A) technically efficient. B) unattainable with current resources. C) inefficient in that not all resources are being used. D) the equilibrium output combination. When firms benefit from the results of research and development they didn’t […]

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. What is the opportunity cost of producing 1 ton of coconuts in Guatemala? A) 1/2 of a ton […]

The horizontal-equity principle of taxation is not easy to use in practice because A) some people engage in rent seeking to reduce their taxes below the level other people pay. B) people can use tax loopholes to reduce their incomes […]

Which of the following is an example of human capital? A) a computer B) a factory building C) a college education D) a software program Figure 6-12 Suppose the diagram shows the supply curves for a product in the short […]

Most economists believe that the biases in the consumer price index cause the CPI to overstate the true inflation rate by about A) one-half to one percentage point. B) one to two percentage points. C) one quarter percentage point. D) […]

Figure 12-9 Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. At price P2, the firm would produce A) Q2 units. B) Q3 units. C) Q4 units. D) zero units. Which of the following describes a […]

Figure 11-10 Suppose for the past 8 years the firm has been producing Qdunits per period using plant size ATC4. Now, following a permanent change in demand, it plans to cut production to Qc units. What will happen to its […]

Assume a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. Which of the following statements regarding economic surplus in each market structure is true? A) Under perfectly competitive conditions, economic surplus in this industry […]

The long-run adjustment to a negative supply shock results in A) the short-run aggregate supply curve shifting to the right. B) the price level rising. C) unemployment rising. D) workers being willing to accept higher wages. Article Summary. Arguing that […]

When Sophie, a French citizen, purchases a Dell computer in Paris that was produced in Texas, the purchase is A) both a U.S. and an French import. B) a U.S. import and an French export. C) a U.S. export and […]

From an initial long-run equilibrium, if aggregate demand grows more slowly than long-run and short-run aggregate supply, then Congress and the president would most likely A) increase the required reserve ratio and decrease government spending. B) decrease government spending. C) […]

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