21) Under purchasing power parity (PPP), if U.S. monetary growth leads to a long run doubling of the U.S. price level, while Germany’s price level remains constant, PPP predicts that the A) long-run DM price of the dollar will be doubled. B) long-run DM price of the dollar will be halved. C) long-run DM price of the dollar will remain the same. D) short-run […]
81) The figure above shows the market for annual influenza immunizations the United States. If there is NO external benefit from health care and the government does not intervene in the market, then the equilibrium price of immunizations is A) $30 B) $20 C) $40 D) $60 E) $70 82) The figure above shows the market for annual influenza immunizations the United States. The […]
21) The Latin phrase economists use that means all else equal is A) ceteris paribus. B) cogito ergo sum. C) carpe diem. D) caveat emptor. 22) Stanley Jevons, an economist in the nineteenth century, noted a high correlation between economic prosperity and sunspots. Based on this observation he developed a “sunspot theory” of how the economy operated. We now know that Jevons A) committed […]
3.1 Production Possibilities 1) The United States produced approximately ________ worth of goods and services in 2011. A) $15 trillion B) $15 billion C) $150 trillion D) $150 billion E) $1,500 trillion 2) Which of the following is an assumption used when drawing a production possibilities frontier? i.Human wants and desires are limited to what is available. ii.Only two goods are considered. iii.The […]
7.4 Behavioral Economics: Do People Make Their Choices Rationally? 1) What is behavioral economics? A) the study of how people make wealth-maximizing decisions B) the study of how people behave in the face of scarcity C) the study of situations in which people act in ways that are not economically rational D) the study of how people make decisions at the margin 2) The […]
21) Production efficiency occurs A) anywhere inside or on the production possibilities frontier. B) when the total cost of production is minimized. C) at all points on the production possibilities frontier. D) at only one point on the production possibilities frontier. E) at all points inside the production possibilities frontier. 22) When production efficiency does NOT occur, i.an economy is producing at […]
43.A firm is considering investing $10 million today to start a new product line. The future of the project is unclear however and depends on the state of the economy. The project will last 5 years. The yearly cash flows for the project are shown below for the different states of the economy. What is the expected NPV for the project if the […]
41) When the cost of the CPI market basket increases from one year to the next, we know that A) on the average, current prices are less than past year prices. B) the quantities of the goods and services contained in the CPI market basket have increased on the average. C) the prices of the goods and services contained in the CPI market […]
39) Vaccinating people against a communicable disease such as influenza not only reduces the chances that the person vaccinated will catch the disease but also reduces the probability that an epidemic of the disease will occur. Which of the following statements is true? A) Reducing the chances that the person vaccinated will catch the disease is a private cost while reducing the probability […]
3.3 Market Equilibrium: Putting Demand and Supply Together 1) Which of the following is the correct way to describe equilibrium in a market? A) At equilibrium, demand equals supply. B) At equilibrium, quantity demanded equals quantity supplied. C) At equilibrium, market forces no longer apply. D) At equilibrium, scarcity is eliminated. 2) At a product’s equilibrium price A) the product’s demand curve is the […]
101) Suppose a firm is producing 500 units of output, incurring a total cost of $700 000 and total fixed cost of $100 000. It can be concluded that average variable cost is
A) $200.
B) $600.
C) $1200.
D) $1400.
E) $1600.
102) Suppose a firm is producing 250 units of output. At this level of output, average fixed costs are $20 per unit and average variable costs are $80 per unit. It can be concluded that total cost is
A) $100.
B) $0.40 per unit.
C) $40 per unit.
D) $2500.
E) $ 25 000.
103) Suppose a firm is producing 10 000 units of output. At this level of output, average total cost is $200 and average fixed cost is $20. It can be concluded that total variable cost is
A) $180.
B) $1800.
C) $18 000.
D) $ 180 000.
E) $1 800 000.
104) Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short-run costs are as follows:
A) Marginal product of the variable factor must be decreasing.
B) Marginal product of the variable factor must be increasing.
C) The point of diminishing average product of the variable factor has not yet been reached.
D) Average product of the variable factor must be increasing.
E) Marginal product of the variable factor is at its minimum point.
105) Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short run costs are as follows:
A) The firm is operating with excess capacity.
B) The firm is operating at capacity.
C) The firm is operating above capacity.
D) The firm has no capacity constraints.
E) The firm is producing a level of output where capacity is increasing.
106) Consider the short-run costs of a firm. Suppose the firm's total fixed costs are $100 and average variable costs are constant regardless of output. Which of the following is then true?
A) Marginal cost will equal average total cost.
B) Average total cost will decrease when output is increased.
C) Marginal cost will be less than average variable cost.
D) Average total costs will be constant.
E) Marginal cost will be rising as output rises.
107) Suppose that a firm's capital is fixed and one more unit of labour is hired, thereby increasing the firm's total output. Which of the following statements can be correct?
A) 1 only
B) 2 only
C) 3 only
D) Any of 1, 2, and 3 is possible.
E) None are possible.
108) A firm's capacity is defined as the level of output where
A) the upper limit on what can be produced is reached.
B) average total cost is at its maximum.
C) marginal cost equals average variable cost.
D) average fixed costs are at a minimum.
E) short-run average total cost is at its minimum.
109) When a plant is operating at the level of output where its short-run average total cost is at its minimum,
A) average fixed cost is at a minimum.
B) marginal cost is at a minimum.
C) average variable cost is at a minimum.
D) the plant is operating at its capacity.
E) more of the variable factor of production should be employed.
110) Short-run cost curves for a firm are eventually upward-sloping because of the effects of
A) the increasing price of variable inputs.
B) diminishing marginal product.
C) increasing fixed costs.
D) increasing marginal productivity of the variable inputs.
E) decreasing total product.
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