Archives: Quiz

Elasticity of demand for labor measures the percentage change in quantity demanded of labor that is brought about by a percentage change in the a. demand for the product produced by labor. b. price of the product. c. quantity supplied […]

The existence of a third party in the medical care market separates the buying of medical care from the paying for medical care. a. True b. False Exhibit 28-7 As the firm increases employment from 30 to 40 workers, its […]

Which of the following is false? a. For bond buyers, the higher the yield the better it is for them. b. For bond buyers, the higher the price of the bond the better it is for them. c. For bond […]

Exhibit 38-4 If the closing price of Black Motor’s stock on the previous day was $76.95, what value goes in blank (C)? a. +1.95 b. -1.95 c. +0.95 d. -0.95 e. There is not enough information given to answer this […]

Simple majority voting sometimes leads to projects being undertaken whose costs are greater than the benefits. How is this possible? a. It is not possible, unless the voting results are rigged. b. Because voters have no way to express the […]

In general, agricultural price supports a. raise food prices. b. have no impact on food prices. c. are designed to lower food prices. d. c and d Firm X is a single seller of good X. There are, however, two […]

A good is unit elastic in demand if as the price changes there is no resulting change in total revenue. a. True b. False We take one dollar from a pauper and give it to a millionaire. Assuming a diminishing […]

Amy’s opportunity cost of going to the movies is a. the price of the ticket. b. zero, if she has a free pass to the movie. c. the price of the ticket plus the value to Amy of what she […]

In moving along a demand curve for good X, which of the following is NOT held constant? a. the prices of substitute goods for good X b. the prices of complementary goods for good X c. incomes of consumers of […]

Exhibit 34-10 Danielle’s opportunity cost of cleaning the house is a. 0.50 mowed lawns. b. 1.00 mowed lawns. c. 2.00 mowed lawns. d. 0.60 mowed lawns. In a political election, a candidate whose positions are on the left will tend […]

Exhibit 34-10 Who has the comparative advantage when it comes to mowing lawns? a. Danielle b. Jason c. neither Jason nor Danielle d. both Danielle and Jason Exhibit 3-5 In the market shown, a rightward shift in demand from D1 […]

Exhibit 3-6 If an increase in income causes the demand for good X to shift from D1 to D2,then good X is a. a normal good. b. an inferior good. c. a substitute good. d. a complementary good. e. a […]

At a price of $12, there is a ____________ unit____________ of good X. a. 195; shortage b. 230; shortage c. 195; surplus d. 230; surplus e. 180; shortage Labor unions have caused a. the fraction of national income that goes […]

As presented in the textbook, research on neuroeconomics has shown that when individuals are presented with present-future choices the a. analytic system (which weights the future heavily) seems to win out over the limbic system (which weights the present heavily). […]

A labor union undertakes a training program for its members. The objective of the training program is to a. increase substitute factor prices. b. increase the marginal physical product of its members and therefore increase the demand for their services. […]

Exhibit 28-2 One of the things that the labor union probably can do to convince management that the supply curve is S’S instead of SS is a. make a credible threat of a strike. b. ask workers to take a […]

As the marginal physical product curve rises, a. the marginal cost curve rises. b. the marginal cost curve falls. c. the total cost curve rises. d. the total cost curve falls. The side effect of an action that increases the […]

There are more white persons in the United States living below the poverty line than African- American persons living below the poverty line. a. True b. False Which of the following is not one of the four broad categories of […]

One implication of the median voter model is that candidates running for political office take polls because a. everyone does it. b. they want to know if they should maintain their current positions or modify them. c. it is good […]

Which of the following statements is false? a. Specialization and trade allow a country’s inhabitants to consume at a level beyond its production possibilities frontier. b. Some of the goods the U.S. exports include cars, coal, and wheat. c. Some […]

A __________ good is one that once produced and provided to one person, provides benefits to other persons. a. consumption b. investment c. private d. public In all cases, positive economics deals with a. what is. b. what should be. […]

Consumers receive more consumers’ surplus when __________. a. tariffs exist. b. tariffs and quotas do not exist. c. quotas exist. d. a and c If demand for a given good is elastic, then a given percentage change in price will […]

The sale of goods abroad at a price below their cost and below the price charged in the domestic market is called a. priming. b. coping. c. invading. d. dumping. Suppose a consumer is purchasing Coke (c) and pretzels (p) […]

A positive externality is internalized when a. demand shifts to the right until the socially optimum level of output is obtained. b. demand shifts to the left until the socially optimum level of production is obtained. c. supply shifts to […]

Which of the following statements represents a correct and sequentially accurate economic explanation? a. Good X is an inferior good and good Y is a substitute for X. Income rises, the demand for X falls, the price of X falls, […]

Exhibit 39-4 The government feels that the present level of farmers’ total revenues is insufficient to support a reasonable standard of living and wants to raise it to exactly $3,000. This can be achieved by a. restricting supply so that […]

Entrepreneurs a. operate within markets. b. increase trade by satisfying an unmet demand for a good or service. c. increase trade by increasing the transaction costs of making trades. d. a and b e. a, b and c The economy […]

For a factor price taker, the demand for labor curve is horizontal at the going market wage. a. True b. False Exhibit 39-4 At the government-established support price of $5 per bushel, the wheat surplus that government buys equals a. […]

Exhibit 28-8 An effective price floor set at W3 would a. increase employment from Q1 to Q2. b. increase employment from Q3 to Q4. c. decrease employment from Q5 to Q2. d. decrease employment from Q5 to Q4. It is […]

The quantity demanded of good A rises as income rises. It follows that income elasticity of demand is __________than 0, and good A is a(n) __________ good. a. greater; inferior b. greater; normal c. greater; substitute d. greater; complementary e. […]

The act which empowered the Federal Trade Commission to deal with false and deceptive acts or practices was the a. Wheeler-Lea Act. b. Federal Trade Commission Act. c. Robinson-Patman Act. d. Sherman Act. e. Clayton Act. At the minimum wage […]

The assumption that precludes economic profits in monopolistic competition in the long run is that a. there are many buyers and sellers. b. the firms produce a homogeneous product. c. there is easy entry and exit in this market structure. […]

Suppose firm X is a monopolist and is receiving positive economic profits. What prevents other firms from directly competing away the profits? a. high barriers to entry b. antitrust laws c. low barriers to entry d. diseconomies of scale e. […]

Exhibit 21-7 For graph (1), if the price of X is $20, the price of Y is a. $10. b. $40. c. $80. d. $100. e. $160. Exhibit 20-5 Answer: b For graph (1), what is the price elasticity of […]

Exhibit 34-11 If the world price (PW) is operational in the market, then U.S. imports equal a. Q4 – Q2. b. Q2 – Q3. c. Q4 – Q3. d. Q2 – Q1. e. Q3 – Q1. Suppose that when the […]

Why must profits be zero in long-run competitive equilibrium? a. If profits are not zero, firms will enter or exit the industry. b. If profits are not zero, firms will produce higher-quality goods. c. If profits are not zero, marginal […]

Exhibit 27-5 Marginal physical product of the fourth unit of labor a. equals 60. b. equals 40. c. equals 24. d. equals 310. e. cannot be determined. One of the conditions necessary for price discrimination is that the seller be […]

The monopoly firm may earn positive economic profits in the long run because a. it produces a homogeneous product. b. it is the only firm that wishes to produce the product. c. of high barriers to entry. d. a and […]

Exhibit 24-1 If the product is produced under single-price monopoly, what do profits equal at the profit maximizing level of output? a. area 0P1BQ1 b. area BCA c. area P1P2CB d. area P2CAP1 e. none of the above If fewer […]

Profit can be earned by buying _____________ and selling ____________________. a. at one price; at the same price b. low; high c. high: low d. none of the above Suppose the production of a good results in positive externalities. If […]

Exhibit 22-13 What dollar amounts go in blanks (M) and (N), respectively? a. $200; $125 b. $120; $150 c. $230; $125 d. $150; $300 e. There is not enough information to answer this question. The nominal interest rate is the […]

For a perfectly competitive firm, a decrease in the price of the product it sells will shift a. the demand curve of its product to the left. b. the demand curve of its product to the right. c. its MRP […]

According to economists, competition exists because of a. scarcity. b. capitalism. c. money. d. unintended effects. Ceteris paribus means a. one variable too many. b. the correct relationship specified. c. assuming economic motives. d. all other things held constant or […]

Decision making “at the margin” means making a choice based on __________ of a decision. a. the total benefits b. the total costs c. comparing the total benefits and costs d. comparing the additional benefits and costs Exhibit 3-2 Suppose […]

Exhibit 34-1 If country A is to specialize in the production of one of the two goods (and then trade that good with Country B), which good should it be and why? If Country B is to specialize in the […]

Situation 32-1 In the early 1980s, the U.S. automobile industry managed to influence the government to negotiate a voluntary export restraint agreement with Japan that was in effect from 1981 until 1985. The predictable result was an average increase in […]

If, through collective bargaining, a union is able to raise the wage above the existing competitive equilibrium wage, a. fewer workers will be employed than before the wage increase. b. more workers will be employed than before the wage increase. […]

The owner of a firm signs a binding one-year lease on a factory for $10,000 rent a month and pays the first month’s rent. The $10,000 rent is a. a fixed cost but not a sunk cost. b. a sunk […]

The “voluntary bumping plan” used by airlines to resolve the problem of overbooked flights was developed by economist a. Adam Smith. b. John Maynard Keynes. c. Alan Greenspan. d. Julian Simon. Exhibit 39-6 A major change in weather conditions favorable […]

Special interest group Z receives a 1/200th slice of the economic pie.Its net benefit from both an economic growth policy and a transfer policy is $30,000.How much does the size of the economic pie (Real GDP) need to grow before […]