61.The concept of bounded rationality holds that:  A.our perception of a rational reality is bounded by nonrationality. B.decision makers process limited and imperfect information and therefore rarely select the best choice. C.decision makers have limited alternatives to make decisions. D.decision makers are bound to project images of themselves as rational thinkers. E.our realities are bounded by our own perceptions so that everyone’s reality is […]

  61) If neither the demand nor supply of a good is perfectly elastic or inelastic, a tax on the good ________ consumer surplus and ________ producer surplus. A) decreases; decreases B) increases; increases C) decreases; increases D) increases; decreases E) decreases; does not change   62) When a product is taxed, A) part of the initial consumer surplus goes to the government as revenue. […]

  21.RefertoFigure27-2.SupposeBritneybeginswith$1,050inwealth.Whichofthefollowingcoin-flipbetswouldshedefinitelynotbewillingtoaccept? a.Ifitis“heads,”shewins$100?ifitistails,sheloses$95. b.Ifitis“heads,”shewins$150?ifitistails,sheloses$150. c.Ifitis“heads,”shewins$150?ifitistails,sheloses$140. d.Shedefinitelywouldnotacceptanyofthesebets. Figure27-3 ThefollowingfigureshowstheutilityfunctionforPaul.   22.RefertoFigure27-3.Supposetheverticaldistancebetweenthepoints(0,A)and(0,B)is10.Ifhiswealthincreasedfrom$700to$900,then a.Paul’sutilitywouldincreasebylessthan10units. b.Paul’sutilitywouldincreasebymorethan10units. c.Paul’sutilitywouldincreasebyexactly10units. d.Anyoftheabovecouldbecorrect. 23.RefertoFigure27-3.SupposePaulbeginswith$900inwealth.Startingfromthere, a.Paulwouldbewillingtoacceptacoin­flipbetthatwouldresultinhimwinning$200iftheresultwas“heads”orlosing$200iftheresultwas“tails.” b.thepainoflosing$200ofhiswealthwouldequalthepleasureofadding$200tohiswealth. c.thepainoflosing$200ofhiswealthwouldexceedthepleasureofadding$200tohiswealth. d.thepleasureofadding$200tohiswealthwouldexceedthepainoflosing$200ofhiswealth. Figure27-4.ThefigureshowsautilityfunctionforAlex.   24.RefertoFigure27-4.FromtheappearanceofAlex’sutilityfunction,weknowthat a.thepainthatAlexwouldexperienceifhelost$500ofhiswealthwouldexceedthepleasurethathewouldexperienceifheadded$500tohiswealth. b.thepleasurethatAlexwouldexperienceifheadded$500tohiswealthwouldexceedthepainthathewouldexperienceifhelost$500ofhiswealth. c.thepropertyofincreasingutilitydoesnotapplytoAlex. d.thepropertyofdiminishingmarginalutilitydoesnotapplytoAlex. 25.RefertoFigure27-4.FromtheappearanceofAlex’sutilityfunction,weknowthat a.ifAlexownsahouse,thenhedefinitelywouldbuyfireinsuranceprovidedthecostoftheinsurancewasreasonable. b.Alexwouldvoluntarilyexchangeaportfolioofstockswithahighaveragereturnandahighlevelofriskforaportfoliowithalowaveragereturnandalowlevelofrisk. c.Alexisriskaverse. d.Alexisnotriskaverse. 26.RefertoFigure27-4.Ifmostpeople’sutilityfunctionslooklikeAlex’sutilityfunction,thenitiseasytoexplain a.peoplebuyvarioustypesofinsurance. b.weobserveatrade-offbetweenriskandreturn. c.mostpeopleprefertoholddiversifiedportfoliosofassetstoundiversifiedportfoliosofassets. d.Noneoftheabovearecorrect. Figure27-5.ThefigureshowsautilityfunctionforDexter.   27.RefertoFigure27-5.Inwhatway(s)doesthegraphdifferfromtheusualcase? a.Theutilityfunctionshownhereisupward-sloping,whereasintheusualcasetheutilityfunctionisdownward-sloping. b.Theutilityfunctionshownhereisboweddownward(convex),whereasintheusualcasetheutilityfunctionisbowedupward(concave). c.Onthegraphshownhere,wealthismeasuredalongthehorizontalaxis,whereasintheusualcasesavingismeasuredalongthehorizontalaxis. d.Onthegraphshownhere,utilityismeasuredalongtheverticalaxis,whereasintheusualcasesatisfactionismeasuredalongtheverticalaxis. 28.RefertoFigure27-5.Fromtheappearanceofthegraph,weknowthat a.Dexter’slevelofsatisfactionincreasesbymorewhenhiswealthincreasesfrom$1,001to$1,002thanit b.Dexter’slevelofsatisfactionincreasesbylesswhenhiswealthincreasesfrom$1,001to$1,002thanitdoes c.Dexter’slevelofsatisfactionincreasesbythesameamountwhenhiswealthincreasesfrom$1,001to d.Noneoftheaboveanswerscanbeinferredfromtheappearanceoftheutilityfunction. 29.RefertoFigure27-5.Fromtheappearanceoftheutilityfunction,weknowthat a.Dexterisriskaverse. b.DextergainslesssatisfactionwhenhiswealthincreasesbyXdollarsthanhelosesinsatisfactionwhenhiswealthdecreasesbyXdollars. c.thepropertyofdiminishingmarginalutilitydoesnotapplytoDexter. d.Alloftheabovearecorrect. 30.RefertoFigure27-5.Fromtheappearanceoftheutilityfunction,weknowthat a.Dexterisriskaverse. b.DextergainsmoresatisfactionwhenhiswealthincreasesbyXdollarsthanhelosesinsatisfactionwhenhiswealthdecreasesbyXdollars. c.thepropertyofdecreasingmarginalutilityappliestoDexter. d.Alloftheabovearecorrect.    

  8.4   The Relationship between Short-Run Production and Short-Run Cost   1) Marginal cost is equal to the A) change in total cost divided by the change in output. B) change in average total costs divided by the change in output. C) change in total product divided by the change in output. D) change in average product divided by the change in output.   2) […]

  51.Supposethatanincreaseinthepriceofmelonsfrom$1.30to$1.80perpoundincreasesthequantityofmelonsthatmelonfarmersproducefrom1.2millionpoundsto1.6millionpounds.Usingthemidpointmethod,whatistheapproximatevalueofthepriceelasticityofsupply? a.0.67 b.0.89 c.1.00 d.1.13 52.Anincreaseinthepriceofcheesecrackersfrom$2.25to$2.45perboxcausessuppliersofcheesecrackerstoincreasetheirquantitysuppliedfrom125boxesperminuteto145boxesperminute.Usingthemidpointmethod,supplyis a.elastic,andthepriceelasticityofsupplyis1.74. b.elastic,andthepriceelasticityofsupplyis0.57. c.inelastic,andthepriceelasticityofsupplyis1.74. d.inelastic,andthepriceelasticityofsupplyis0.57. 53.Abakerywouldbewillingtosupply500bagelsperdayatapriceof$0.50each.Atapriceof$0.80,thebakerywouldbewillingtosupply1,100bagels.Usingthemidpointmethod,thepriceelasticityofsupplyforbagelsisabout a.0.62. b.0.77. c.1.24. d.1.63. 54.At-shirtmakerwouldbewillingtosupply75t-shirtsperdayatapriceof$18.00each.Atapriceof$20.00,thet-shirtmakerwouldbewillingtosupply100t-shirts.Usingthemidpointmethod,thepriceelasticityofsupplyfort-shirtsisabout a.0.37,andsupplyiselastic. b.0.37,andsupplyisinelastic. c.2.71,andsupplyiselastic. d.2.71,andsupplyisinelastic. 55.InJanuarythepriceofdarkchocolatecandybarswas$2.00,andWilly’sChocolateFactoryproduced80pounds.InFebruarythepriceofdarkchocolatecandybarswas$2.50,andWilly’sproduced110pounds.InMarchthepriceofdarkchocolatecandybarswas$3.00,andWilly’sproduced140pounds.ThepriceelasticityofsupplyofWilly’sdarkchocolatecandybarswasabout a.0.70whenthepriceincreasedfrom$2.00to$2.50and0.76whenthepriceincreasedfrom$2.50to$3.00. b.0.88whenthepriceincreasedfrom$2.00to$2.50and1.08whenthepriceincreasedfrom$2.50to$3.00. c.1.42whenthepriceincreasedfrom$2.00to$2.50and1.32whenthepriceincreasedfrom$2.50to$3.00. d.1.50whenthepriceincreasedfrom$2.00to$2.50and1.18whenthepriceincreasedfrom$2.50to$3.00. 56.InJanuarythepriceofwidgetswas$1.00,andWendy’sWidgetsproduced80widgets.InFebruarythepriceofwidgetswas$1.50,andWendy’sWidgetsproduced110widgets.InMarchthepriceofwidgetswas$2.00,andWendy’sWidgetsproduced140widgets.ThepriceelasticityofsupplyofWendy’sWidgetswasabout a.0.79whenthepriceincreasedfrom$1.00to$1.50and0.84whenthepriceincreasedfrom$1.50to$2.00. b.1.27whenthepriceincreasedfrom$1.00to$1.50and1.19whenthepriceincreasedfrom$1.50to$2.00. c.0.79whenthepriceincreasedfrom$1.00to$1.50and1.19whenthepriceincreasedfrom$1.50to$2.00. d.1.27whenthepriceincreasedfrom$1.00to$1.50and0.84whenthepriceincreasedfrom$1.50to$2.00. 57.Atpriceof$1.20,alocalpencilmanufactureriswillingtosupply150boxesperday.Atapriceof$1.40,themanufactureriswillingtosupply170boxesperday.Usingthemidpointmethod,thepriceelasticityofsupplyisabout a.2.0. b.1.23. c.1.00. d.0.81. 58.Atpriceof$1.30perpound,alocalappleorchardiswillingtosupply150poundsofapplesperday.Atapriceof a.1.14. b.1.00. c.0.875. d.0.50. 59.Atpriceof$1.25,apapermanufactureriswillingtosupply150spiralnotebooksperday.Atapriceof$1.50,thepapermanufactureriswillingtosupply175spiralnotebooksperday.Usingthemidpointmethod,thepriceelasticityofsupplyisabout a.1.18. b.1.00. c.0.85. d.0.25. Figure5-14 60.RefertoFigure5-14.Overwhichrangeisthesupplycurveinthisfigurethemostelastic?a.$16to$40 b.$40to$100 c.$100to$220 d.$220to$430    

  3.4   Specialization and Trade   1) If Wendy can produce more of all goods than Tommy in an hour, then A) Wendy has an absolute advantage in all goods. B) Wendy does not need to trade with Tommy in order to achieve the gains from trade. C) Wendy has a comparative advantage in all goods. D) Tommy has an absolute advantage in all goods. […]

    31) A diagram of a productivity curve has A) real GDP per hour of labor on the y-axis and capital per hour of labor on the x-axis. B) real GDP per hour of labor on the y-axis and hours of labor on the x-axis. C) capital per hour of labor on the y-axis and real GDP per hour of labor on the x-axis. […]

  19.4   Integrative Questions 1) Which of the following generally becomes positive when the value of U.S. exports exceeds the value of U.S. imports? A) the exchange rate B) the balance of payments account C) capital and financial account D) current account E) the official settlements account 2) For many years, U.S. investment has exceeded savings and government expenditure has exceeded taxes. These imbalances (deficits) […]

    11) The Federal Reserve System is organized into ________ Federal Reserve districts. A) 6 B) 10 C) 12 D) 15 E) 50 Answer:  C Topic:  Federal Reserve System Skill:  Level 1: Definition Section:  Checkpoint 11.3 Status:  CT   12) All of the following are elements in the structure of the Fed EXCEPT the A) Federal Open Market Committee. B) Executive Council to the […]

  Table 2-14     One Motorcycle One Guitar Ireland 20 hours 4 hours Scotland   8 hours 2 hours   Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.     67) Refer to Table 2-14.  If the two countries specialize and trade, who should export motorcycles? A) There is no basis for […]