Q&A Hero

Q: All of the following are regulatory agencies EXCEPT A) the National Rifle Association.B) the Environmental Protection Agency. C) the Food and Drug Administration.D) the Occupational Safety and Health Administration.

Q: If Target were to merge with Wal-Mart, this would be referred to as a(n) A) horizontal merger. B) vertical merger.C) conglomerate merger. D) anti-competitive merger.

Q: Refer to the above figure. Which panel shows a possible short -run equilibrium for monopolistic competition, but is not also a long-run equilibrium?A) Panel A. B) Panel B. C) Panel C. D) Panel D.

Q: The owner of a patented inventionA) may or may not have a legal monopoly.B) is guaranteed a profit since her idea cannot be copied.C) will always have demand high enough and costs low enough to ensure a profit.D) will only earn a profit if average total cost is less than price.

Q: In a monopoly market structure, the firm (the monopolist) alwaysA) is the whole industry. B) produces too much.C) sells faulty products. D) earns economic profit.

Q: Refer to the above figure. Profits will equal zeroA) when the price equals $1. B) when the price equals $2.C) when the price equals $4.D) at prices between $1 and $2.

Q: The long run isA) over one year.B) over five years.C) when all factors of production are fixed.D) the time period in which all factors of production can be varied.

Q: In the above table, how many workers are employed when marginal product reaches its maximum?A) 1 B) 2 C) 3 D) 4

Q: Tim has a toenail clipping business that is a sole proprietorship. If he is sued for a botched pedicure,A) he has limited liability.B) he has separation of ownership and control.C) all of his personal assets are at risk. D) he will be taxed doubly.

Q: Use the above figure. The consumerʹs choice changes from Y B to YA. Which of the following statements is true?A) This change in the consumerʹs choice results from a rise in the price of good Y. B) This change in the consumerʹs choice results from a fall in the price of good X. C) This change in the consumerʹs choice results from a rise in the price of good X.D) This change in the consumerʹs choice results from an increase in the consumerʹs income.

Q: Quantity of Magazines/WkTotal UtilityQuantity of Paperback Books/WkTotal Utility00001501300290250031203600413046505132567561326680The price of a magazine is $2, the price of a paperback book is $5, and the consumer has $33. According to the above table, the rational consumer will purchaseA) 1 magazine and 2 books. B) 2 magazines and 3 books.C) 4 magazines and 5 books. D) 5 magazines and 6 books.

Q: If your income rises by 25 percent and, as a result, you buy fewer packages of Ramen Noodles, then Ramen Noodles are a(n)A) substitute. B) normal good. C) complement. D) inferior good.

Q: If the demand curve for a product is vertical, thenA) the demand for the good is perfectly elastic.B) consumers are highly responsive to price changes. C) its price elasticity of demand is equal to zero.D) consumers may purchase all they want to at the established market price.

Q: When property rights are clearly defined, there is generally aA) law that must be passed to ensure fairness.B) regulatory agency that handles externalities. C) common property problem.D) voluntary agreement that can be reached.

Q: The effects of the national health care program on goods and services markets will A) increase the marginal cost of the firm. B) increase the quantity produced of the firm. C) consumers will pay lower prices for many goods and services. D) decrease the quantity demanded for all goods and services.

Q: All of the following are criticisms of the Lorenz curve EXCEPT A) The Lorenz curve does not include in -kind transfers.B) The Lorenz curve does not account for age differences.C) The Lorenz curve does not account for differences in the sizes of families.D) The Lorenz curve does not account for differences in education levels.

Q: A right-to-work law isA) a federal law making the closed shop illegal.B) a federal law making the union shop illegal. C) a state law making the union shop illegal.D) a state law making the open shop illegal.

Q: If the price of labor increases, the typical perfectly competitive firm in the short run willA) produce more output. B) hire less labor.C) hire the same labor and produce the same output. D) hire more labor.

Q: The Supreme Court has defined the offense of monopolization as involving all of the following elements EXCEPTA) the possession of monopoly power in the relevant market. B) the willful acquisition of monopoly power.C) the ability to grow a business as a consequence of a superior product.D) the maintenance of monopoly power.

Q: The major goal of social regulation is A) a better quality of life through a less polluted environment, better working conditions, and safer and better products. B) to make sure that firms are not earning monopoly profits. C) to make sure that prices are kept low enough so that every person can purchase the good. D) to make sure that the firm produces at the socially optimal point of production.

Q: If a company that drilled for and produced oil acquired a firm which refined oil into gasoline, this would be referred to as aA) horizontal merger. B) vertical merger. C) conglomerate merger. D) reverse merger.

Q: Refer to the above figure. A long-run equilibrium in monopolistic competition is pictured byA) Panel A. B) Panel B. C) Panel C. D) Panel D.

Q: In the above figure, a monopolist will set its level of output and price atA) Q2 and C, respectively. B) Q3 and F, respectively. C) Q1 and A, respectively. D) Q1 and B, respectively.

Q: A firm can be the only firm in an industry and still not be a monopoly if A) the firm is not large. B) the firm is not making economic profits. C) the firm produces a good similar to a good in another industry. D) the firm produces a good that is not considered a necessity.

Q: A perfectly competitive firm is maximizing profits in the short run. This implies that the firm is earning the most economic profits possible, whichA) must be positive.B) must be either zero or positive.C) can be positive, negative, or zero.D) exist at the point at which price equals total cost.

Q: A firmʹs long-run average cost curve isA) the locus of points representing the minimum unit cost of producing any given rate of output when all inputs may be adjusted.B) the locus of points made up of the minimum point on each short -run average total cost curve when only one input may be adjusted.C) the envelope of the firmʹs variable cost curves.D) identical to the lowest short-run average cost curve the firm has.

Q: In the above table, when the firm employs 3 workers, the marginal product will beA) 42 snowboards. B) 30 snowboards. C) 36.67 snowboards. D) 208 snowboards.

Q: When a business is owned and operated by a single individual who receives all of the profits and is responsible for all debts, it is known as aA) partnership. B) conglomerate. C) corporation.D) proprietorship.

Q: Suppose that the quantity of hamburgers is measured along the vertical axis and that the number of bags of popcorn is measured along the horizontal axis. The budget constraint has a vertical intercept of 10 hamburgers, and the slope of the line is -1. If the price of popcorn doubles, we know thatA) the consumer will buy half as many bags of popcorn as before.B) the new equilibrium will have a marginal rate of substitution of -2. C) the new equilibrium will have a marginal rate of substitution of -0.5. D) the vertical axis of the budget line shifts to 5 hamburgers.

Q: When Stephanie increases the consumption of pizza and decrease the consumption of soda, her marginal utility ofA) pizza falls and the marginal utility of soda will increase. B) both pizza and soda will decrease.C) pizza increases and the marginal utility of soda will fall.D) both pizza and soda will increase.

Q: PeriodIncome/WeekPounds of ArtisanBread SoldJars ofJam Sold1$2502102$50058Use the above table. Based on the information in the table, jam is a(n)A) normal good. B) necessary good.C) inferior good. D) negative good.

Q: A vertical demand curve hasA) infinite elasticity. B) positive elasticity. C) zero elasticity. D) negative elasticity.

Q: The costs associated with the negotiation and enforcement of an agreement are A) property costs. B) resource factor costs. C) transaction costs. D) attorney fees.

Q: The effects of the national health care program on labor markets will A) increase the quantity supplied of labor. B) decrease the quantity supplied of labor. C) increase the quantity demanded for labor. D) decrease the quantity demanded for labor.

Q: Changes in the Lorenz curve since 1929 in the United States indicate that A) the distribution of income today is identical to what it was in 1929. B) the distribution of income is slightly less equal today than in 1929. C) the distribution of income is slightly more equal today than in 1929.D) the distribution of income is much more equal today than it was in 1929.

Q: A situation in which a worker can be hired without being in a union but has to join a union after a specified period of time is aA) closed shop. B) union shop.C) open shop. D) restricted shop.

Q: As the wage rate rises, other things constant, perfectly competitive firms will employA) more workers. B) less capital.C) the same number of workers. D) fewer workers.

Q: Discuss the important provisions of the Sherman Antitrust Act of 1890.

Q: The purpose of social regulation isA) to force a firm to produce at the point where marginal cost equals marginal revenue. B) to control the quality of service provided by a monopolist.C) to control the price that regulated enterprises are allowed to charge.D) to focus on the impact of production on the environment and society, the working conditions under which goods and services are produced, and sometimes the physical attributes of goods.

Q: FirmAnnual Sales ($ millions)1702303284225106 through 2540Total200Use the above table. If firms 4 and 5 merge, the four -firm concentration ratio will beA) 80 percent. B) 75 percent. C) 64 percent. D) 50 percent.

Q: Refer to the above figure. Which panel represents the long-run situation for a monopolistically competitive firm?A) Panel A. B) Panel B. C) Panel C. D) Panel D.

Q: In the above figure, the distance between A and B represents this monopoly firmʹsA) total profit. B) total revenue.C) average profit per unit. D) average cost per unit.

Q: In a monopoly, A) the firm is large in an absolute sense. B) the market is small in an absolute sense. C) the firm and the industry are the same thing. D) the monopolist determines how much each firm will produce.

Q: Profit per unit is the difference betweenA) average revenue and average total cost. B) marginal revenue and marginal cost. C) total revenue and total cost. D) average revenue and marginal cost.

Q: The long-run average cost curveA) is always a downward sloping straight line.B) is a curve which is tangent to each member of a set of short -run average cost curves. C) is identical to the marginal cost curve.D) should always be horizontal.

Q: In the above table, when the firm employs 4 workers, the marginal product will beA) 140 snowboards.B) 30 snowboards. C) 35 snowboards. D) 208 snowboards.

Q: All of the following are advantages of organizing a business as a sole proprietorship EXCEPT A) ease of formation. B) limited liability.C) ease of decision-making. D) single taxation.

Q: Suppose that the quantity of hamburgers is measured along the vertical axis and that the quantity of popcorn is measured along the horizontal axis. The vertical intercept is 10 hamburgers, and the slope of the budget line is -2. If the price of popcorn falls from $1 to $0.50, then we know that A) the vertical intercept shifts to 20 hamburgers. B) the vertical intercept shifts to 5 hamburgers. C) the horizontal intercept shifts to 10 bags of popcorn. D) the horizontal intercept shifts to 20 bags of popcorn.

Q: Quantity of Hamburgers/WkTotal UtilityQuantity of Movies/WkTotal Utility000012512002452260355330046043205615325Refer to the above table. Assume the consumer spends his entire income. The price of a hamburger is $1, the price of a movie is $6, and the consumer has $15. What is the consumerʹs optimum?A) 2 hamburgers and 2 movies B) 3 hamburgers and 2 moviesC) 4 hamburgers and 4 movies D) 0 hamburgers and 2.5 movies

Q: PeriodIncome/WeekPounds of ArtisanBread SoldJars ofJam Sold1$2502102$50058Use the above table. The income elasticity of jam isA) -0.33. B) 0.33. C) 3.00. D) -3.00.

Q: If the demand curve for a product is horizontal, then A) the demand for the product is perfectly inelastic. B) the demand for the product is perfectly elastic.C) only a certain amount of the product will be consumed regardless of price.D) the price elasticity of the product approaches zero.

Q: Developing countries are damaged by dead capital becauseA) it replaces too many workers, creating unemployment.B) resulting inefficiencies greatly reduce the rate of return on investment.C) it must be sold as scrap. D) none of the above.

Q: All of the following would increase the natural rate of unemployment EXCEPT A) union activity restricts the mobility of labor.B) government licensing of teachers restricts employment. C) a mismatch of skills and jobs.D) a downturn in the economy.

Q: Empirical evidence across numerous countries indicates that changes in the are associated with nearly equiproportional changes in . A) money supply, real GDP per year B) money supply, price level C) price level, money supply D) real GDP per year, income velocity of money

Q: Which of the following has been a problem faced by the FDIC in its provision of federal deposit insurance?A) Moral hazard arising from the tendency for the highest -risk banks to be those most interested in obtaining deposit insurance in the first placeB) Adverse selection arising from the tendency for banks to take on more risk after they receive deposit insuranceC) Moral hazard arising from the tendency for banks to take on more risk after they receive deposit insuranceD) A relatively low number of bank failures each year, which has reduced the need for deposit insurance

Q: An item to which a business holds legal claim is called a(n)A) asset. B) liability. C) loan. D) time deposit.

Q: In the short run, a fiscal policy action that results in a reduction in the size of the budget deficit will causeA) an increase in real GDP with stable prices if the economy was below full employment. B) a reduction in real GDP with falling prices if the economy was below or at full employment.C) an inflationary gap if the economy was initially operating at full employment.D) an inflationary gap if the economy was initially operating below full employment.

Q: If the government pays for a new library in your neighborhood that you regularly visit, and you stop going to Barnes and Noble to buy books, this is an example ofA) the free rider problem. B) externalities.C) laissez-faire. D) a direct expenditure offset.

Q: In a closed economy, equilibrium real Gross Domestic Product (GDP) occurs whereA) the C + I + G line crosses the 45-degree line.B) planned expenditures exceed national income.C) saving exceeds planned investment.D) all of these.

Q: The break-even point on the consumption function represents the point where A) consumption equals spending. B) income equals consumption plus spending. C) consumption is zero. D) consumption equals income.

Q: Refer to the above figure. The classical aggregate supply curve is represented by and the Keynesian short-run aggregate supply curve is represented by .A) curve 2; curve 1 B) curve 2; curve 3C) curve 3; curve 4 D) curve 2; curve 4

Q: Which of the following would likely result in a decrease in aggregate demand? A) tax increases B) a reduction in the real interest rate C) increased job and future income security D) a rise in the quantity of money in circulation

Q: Entrepreneurs often undertake the innovations that are necessary to bring inventions to the marketplace. Accordingly, what empirical pattern should be expected in an international comparison?A) Countries with higher rates of entrepreneurship have higher rates of poverty.B) Countries with higher rates of entrepreneurship have lower rates of immigration.C) Countries with higher rates of entrepreneurship have lower rates of economic growth. D) Countries that protect the property rights of entrepreneurs will have higher rates of economic growth.

Q: Measuring total aggregate production in constant dollars uses which of the following measures?A) real personal income B) real gross domestic productC) nominal gross domestic product D) nominal net domestic product

Q: Suppose you drive downtown, pay for parking at a private parking garage, and go to see an investment advisor. He charges you a $100 fee to advise you to purchase 500 shares of stock, which you do. Which of these transactions is NOT included in GDP?A) the purchase of gas for the tripB) paying the parking feeC) paying the $100 fee to the investment advisorD) your purchase of the stock

Q: In the United States, most often the changes first, and the follows.A) CPI; PPI B) GDP deflator; CPIC) PPI; CPI D) PCE; CPI

Q: Which of the following would NOT be considered unemployed? A) A new entrant to the labor force B) A job leaver who is looking for a better job C) An individual fired by her employer D) A newly retired worker

Q: The significance of dead capital is thatA) it is difficult to allocate to its most efficient use. B) its fixed cost is too high.C) it is being removed from its most efficient use. D) it replaces too many workers.

Q: NAIRU is the rate of unemployment at whichA) the rate of inflation will be constant. B) the price level will be constant.C) the money supply will be constant.D) the labor force participation rate will be constant.

Q: The income velocity of money is the absolute number of times, on average, thatA) people purchase goods and services during a year.B) each monetary unit is spent on final goods and services. C) each unit of real GDP is produced by business firms.D) each one-unit increase in the price level occurs.

Q: The FDIC was created becauseA) banks failed to create money the way the Fed wanted them to.B) people worried about bank failures after World War I, even though very few banks actually failed.C) there were so many bank failures in the 1930s. D) the Fed kept the required reserve ratio too low.

Q: Suppose you place your savings in a time deposit at the bank, and that bank lends some of those funds to a business that desires a loan. This is an example ofA) direct finance. B) indirect finance.C) asymmetric information. D) adverse selection.

Q: When analyzing the effects of the government budget deficit,A) no distinction must be made between an economy where full employment exists and one where substantial unemployment exists.B) it is important to examine the effects of the reported capital budget and the reported operating budget separately.C) there should be a comparison of the effect of the deficit to the effects of higher taxes needed to eliminate it.D) the baseline budget should be used since it is the most accurate.

Q: Suppose that Congress passes a budget that increases government spending. Also, suppose that this increase in government spending causes an increase in interest rates and a reduction in planned investment. The effect of this fiscal policy action on planned investment is known as which of the following?A) cost-push inflation B) demand-pull inflationC) automatic stabilizers D) none of the above

Q: Real consumption is a function of real disposable income, but the simple Keynesian model uses real GDP instead of real disposable income. This is appropriate sinceA) real disposable income tends to move proportionately with real GDP. B) real disposable income is a fixed percentage of real GDP.C) real GDP is a fixed percentage of real disposable income.D) we cannot measure either exactly and the purpose of the exercise is theoretical only.

Q: Planned ConsumptionPlanned SavingPlanned InvestmentReal GDP$6,000-$1,000$1,000$5,00010,0000-10,00014,0001,000-15,00018,0002,000-20,00022,000--25,00026,000--30,000According to the above table, if real Gross Domestic Product (GDP) equals $30,000, what is the average propensity to consume?A) 0.67 B) 0.75 C) 0.8 D) 0.87

Q: The short-run aggregate supply curve is horizontal whenA) prices are inflexible and the economy is at full employment.B) there are unemployed resources and prices do not increase when aggregate demand increases.C) there are unemployed resources and prices do not decrease when aggregate supply increases.D) there are no unemployed resources and prices do not increase when aggregate demand or supply increases.

Q: An increase in aggregate demand is shown by A) a rightward shift in the aggregate demand curve. B) a leftward shift in the aggregate demand curve. C) a movement up along the aggregate demand curve. D) the movement down along the aggregate demand curve.

Q: The protection of property rights leads toA) more poverty. B) more illiteracy. C) more capital formation. D) unemployment.

Q: When one converts nominal GDP to real GDP, one takes into account which of the following?A) changes in the population B) changes in the quality of goodsC) changes in the distribution of incomeD) none of the above