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Micro Potpourri

Macro Potpourri

Micro Potpourri

Macro Potpourri

Micro Potpourri

Macro Potpourri

A single-price monopolist’s marginal revenue isa.equal to its priceb.less than its pricec.greater than its priced.negative when it maximizes revenuese.zero when it maximizes profit

B

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When marginal product exceeds average product, which of the following must be true?a.Average product is increasing.b.Average product is decreasing.c.Marginal product is increasing.d.Total product is decreasing.e.Total product is at its maximum.

A

300Marginal revenue product is defined as thea.change in income that occurs when an individual works additional hoursb.change in total revenue that occurs when one additional unit of the good is producedc.change in total revenue that occurs when one additional unit of an input is employedd.total revenue divided by the quantity of labor employede.change in total cost that occurs when one additional unit of input is employed

C

400The allocation of resources in a market economy is described by which of the following statements?I.The government decides which goods will be produced and which consumers will receive them.II.Buyers and sellers exchange goods and services on a voluntary basis.III.Prices and costs help producers decide whether they are producing too little or too much of a good.a.I onlyb.II onlyc.III onlyd.I and III onlye.II and III only

E

500

The average total cost to the firm of producing 2 units of output isa.$35b.$85c.$95d.$100e.$130

C

100

If the product price is $85, how many units of output must the firm produce in order to maximize profits?a.0b.3c.4d.5e.6

D

200Assume that the government implements a deficit-reduction policy that results in changes in aggregate income and output. Then the Federal Reserve engages in monetary policy actions that reverse the changes in income and output caused by fiscal government spending, the required reserve ratio, and the discount rate is most consistent with these policies.

Taxes Gov’t Spending RRR Discount Ratea.Increase Increase Decrease Increaseb.Increase Decrease Decrease No changec.Increase Decrease Increase Decreased.Decrease Increase No change Increasee.Decrease Decrease Decrease Increase

B

300If the economy is operating at full employment and there is a substantial increase in the money supply, the quantity theory of money predicts an increase ina.the velocity of moneyb.real outputc.interest ratesd.unemploymente.the price level

E

400Which of the following would cause the United States dollar to increase in value to the Japanese yen?a.An increase in the money supply in the United Statesb.An increase in interest rates in the United Statesc.An increase in the United States trade deficit with Japand.The United States purchase of good on the open markete.The sale of $2 billion dollars worth of Japanese television sets to the United States

B

500Assume that the supply of loanable funds increases in Country X. The international value of Country X’s currency and Country X’s exports will most likely change in which of the following ways?

Int’l Value of X’s Currency X’s Exportsa.Decrease Decreaseb.Decrease Increasec.Increase Decreased.Increase Increasee.Not change Not change

B

100

On the basis of the graph above, which of the following statements concerning changes in the demand for and supply of tomatoes is correct?a.If both the demand and supply increase, the price of tomateos will definitely increase.b.If both the demand and supply decrease, the quantity of tomatoes wold will definitely increase.c.If the demand decreases while supply increase, price of tomatoes willdefinitely increase.d.If the demand decreases while the supply increases, the quantity of tomatoes sold will definitely decrease.e.If the demand increases while the supply decreases, theprcie of tomatoes will definitely increase.

E

200Which of the following best illustrates the concept of consumer surplus?a.A thirsty athlete pays $0.85 for a cold drink when she would have gladly paid $1.50 for the drink.b.An individual who is willing to accept a job at $7.50 per hour is offered $7.00 per hour.c.An individual pays the sale price of $15.00 for the same shirt that the individual refused to purchase earlier at $18.00.d.An individual finds that the price of artichokes, a food she dislikes , has been reduced by 50 percent.e.A woodcarver has a marginal cost of $5.00 for a unit of output, but sells that unit oat $6.00

A

300Which of the following factors can cause a firm’s cost curves to shift upward?a.An increase in wages.b.An increase in the firm’s output.c.An increase in the output price.d.A decrease in the firm’s output.e.A decrease in the price of energy.

A

400

The diagram shows a perfectly competitive firm’s short-run cost curves. If the price of the output increases from $8 to $10, the profit-maximizing firm willa.Continue producing 15 units because ATC is at a minimumb.Continue producing 15 units because ATC is equal to marginal costc.Increase output to 20 units because this is the output at which price equals ATCd.Increase output to 18 units because this is the output at which price equals MCe.Decrease output to 10 units because this is the output at which average variable cost is at a minimum D

500Which of the following statements is true about a firm that sells its output in a perfectly competitive market?a.The demand for its product is a downward-sloping function.b.The firm will earn zero economic profits in long-run equilibrium.c.Advertising is an important tool of the firm.d.The firm will increase its total economic profits if it charges a price that is lower than the market price.e.The marginal revenue the firm receives from selling an additional unit of output will be different from the price at which it sells that unit.

B

100Which of the following will most likely occur in an economy if more money is demanded than is supplied?a.The amount of investment spending will increase.b.Interest rates will decrease.c.Interest rates will increase.d.The demand curve for money will shift to the left.e.The demand curve for money will shift to the right.

C

200

Which of the following is true of an economy with the production possibilities frontier shown?a.Point Q is attainable but undesirable.b.Point R is unattainable but desirable.c.A technological improvement in the production of watches would move the economy from point T to point P.d.The opportunity cost of moving from point S to point T is the number of watches give up.e.There is unemployment at point T because workers in the watch industry are without jobs.

D

300

Increases in real income per capita are made possible bya.Improved productivityb.A high labor/capital ratioc.Large trade surplusesd.Stable interest ratese.High protective tariffs

A

400Which of the following would most likely lead to a decrease in aggregate demand, that is, shift the aggregate demand curve leftward?a.A decrease in taxesb.A decrease in interest ratesc.An increase in household savingsd.An increase in household consumptione.An increase in business firms’ purchases of capital equipment from retained earnings

C

500Which of the following measures might be used to reduce a federal budget deficit?I.Raising taxesII.Reducing federal spendingIII.Lowering interest ratesa.I onlyb.II onlyc.III onlyd.I and III onlye.I, II, and III

E

100One justification for government regulation of a monopoly is that the unregulated monopolya.Earns a normal profitb.Pays its workers a lower wage than if the market were competitivec.Has a very elastic demand curved.Charges a price higher than a competitive market pricee.Sells too much of the product

D

200Which of the following is most likely to shift the demand for aircraft mechanics to the right?a.An increase in the demand for air travelb.An increase in the price of a license necessary for aircraft mechanicsc.A decrease in the price of a license necessary for aircraft mechanicsd.A decrease in the demand for air travele.A decrease in the marginal productivity of aircraft mechanics

A

300If the production of a good results in a positive externality, the government might be able to improve economic efficiency in this market bya.Eliminating private production of the goodb.Imposing a tax on private producersc.Promoting the export of the surplus outputd.Initiating antitrust actione.Granting a subsidy to private producers

E

400All of the following are sources of inequality in the distribution of personal income EXCEPTa.Progressive income taxesb.Discrimination in employmentc.Differences in personal motivationd.Differences in educational level attainede.Differences in abilities

A

500

An outward shift in the production possibilities curve of an economy can be caused by an increase ina.Unemploymentb.The labor forcec.Inflationd.Outpute.Demand

B

100

If the nominal interest rate is 6 percent and the expected inflation rate is 4 percent, the real interest rate isa.10 percentb.6 percentc.4 percentd.2 percente.-2 percent

D

200Supply side economists argue thata.A cut in high tax rates results in an increased deficit and thus increases aggregate supplyb.Lower tax rates provide positive work incentives and thus shift the aggregate supply curve to the right.c.The aggregate supply of goods can only be increased if the price level fallsd.Increased government spending should be used to stimulate the economye.The government should regulate the supply of imports

B

300If the dollar cost of the British pound decreases, United States imports from and exports to the United Kingdom will change in which of the following ways?

Imports Exportsa.Increase Decreaseb.Increase Increasec.Increase No changed.DecreaseDecreasee.DecreaseIncrease

A

400An economy that is fully employing all its productive resources but allocating less to investment than to consumption will be at which of the following positions on the production possibilities curve?a.Ab.Bc.Cd.De.E

C

500The United States government defines an individual as unemployed if the persona.Does not hold a paying jobb.Has been recently firedc.Works part-time but needs full-time workd.Is without a job but is looking for worke.Wants a job but is not searching because he or she thinks none is available

D