61.CountryAhasrealGDPperpersonof250,000whileCountryBhasrealGDPperpersonof500,000.Allelseconstant,CountryAwilleventuallyhaveahigherstandardoflivingthanCountryBif a.thelevelofsavingperpersonis5.000inCountryAand7,500inCountryB. b.thelevelofsavingperpersonis 3,000 inCountry Aand 6,000 inCountry B. c.Bothoftheabovearecorrect. d.Noneoftheabovearecorrect. 62.Whichofthefollowingcountriesbenefitedsignificantlyfromthecatch-upeffectinthelasthalfofthetwentiethcentury? a.Ethiopia b.theUnitedStates c.Canada d.SouthKorea 63.Whichofthefollowingisconsistentwiththecatch-upeffect? a.TheUnitedStateshadahighergrowthratebefore1900thanafter. b.AfterWorldWarIItheUnitedStateshadlowergrowthratesthanwar-ravagedEuropeancountries. c.AlthoughtheUnitedStateshasarelativelyhighlevelofoutputperperson,itsgrowthrateisrathermodestcomparedtosomecountries. d.Alloftheabovearecorrect. 64.Overtheperiod1960-1990, a.SouthKoreahadahighergrowthratethantheUnitedStatesbecauseithadahigherratioofinvestmenttoGDP. b.theUnitedStateshadahighergrowthratethanSouthKoreabecauseithadahigherratioofinvestmenttoGDP. c.SouthKoreahadahighergrowthratethantheUnitedStateseventhoughithadasimilarratioofinvestmenttoGDP. d.theUnitedStateshadahighergrowthratethanSouthKoreaeventhoughithadasimilarratioofinvestmenttorealGDP. 65.FretoniaandLibstienarethesameexceptFretoniahasalargercapitalstock.Bothcountriesundertakepoliciesthatraisetheirsavingratestothesamehigherlevel.Wewouldexpectthat a.bothcountrieswouldhavepermanentincreasesintheirgrowthrates,buttheincreasewouldinitiallybelargerinFretonia. b.bothcountrieswouldhavepermanentincreasesintheirgrowthrates,buttheincreasewouldinitiallybesmallerinFretonia. c.bothcountrieswouldhavetemporaryincreasesintheirgrowthrates,buttheincreasewouldbelargerinFretonia. d.bothcountrieswouldhavetemporaryincreasesintheirgrowthrates,buttheincreasewouldbesmallerinFretonia. 66.FretoniaandLibstienarethesameexceptFretoniahasalargercapitalstock.Bothcountriesundertakepoliciesthatraisetheirsavingratestothesamehigherlevel.Wewouldexpectthat a.bothcountrieswouldhavepermanentincreasesintheirgrowthrates,buttheincreasewouldinitiallybelargerinFretonia. b.bothcountrieswouldhavepermanentincreasesintheirgrowthrates,buttheincreasewouldinitiallybesmallerinFretonia. c.bothcountrieswouldhavetemporaryincreasesintheirgrowthrates,buttheincreasewouldbelargerinFretonia. d.bothcountrieswouldhavetemporaryincreasesintheirgrowthrates,buttheincreasewouldbesmallerinFretonia. 67.IfanAmerican-basedfirmopensandoperatesanewclothingfactoryinHonduras,thenitisengagingin a.foreignportfolioinvestment. b.foreignfinancialinvestment. c.foreigndirectinvestment. d.indirectforeigninvestment. 68.IfanAmerican-basedfirmopensandoperatesafactoryinChina,thenitisengagingin a.foreignportfolioinvestment. b.foreignfinancialinvestment. c.foreigndirectinvestment. d.indirectforeigninvestment. 69.Inthe1800s,EuropeanspurchasedstockinAmericancompaniesthatusedthefundstobuildrailroadsandfactories.TheEuropeanswhodidthisengagedin a.foreignportfolioinvestment. b.indirectdomesticinvestment. c.foreigndirectinvestment. d.foreignindirectinvestment. 70.InrecentdecadesAmericanshaveincreasedtheirpurchaseofstocksofforeign-basedcompanies.TheAmericanswhohaveboughtthesestockswereengagedin a.foreignportfolioinvestment. b.indirectdomesticinvestment. c.foreigndirectinvestment. d.foreignindirectinvestment.    

    41) The Farm Factory, a booth at the local Farmer’s Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk? A) 1 2/3 dozen eggs B) 3/5 of a dozen eggs C) $2.50 D) $1.50     42) The decision about what goods and services will be […]

      11) The table above shows a nation’s production possibilities frontier. If the nation wants to produce 4 robots and 34 pizzas, A) it will shift the production possibilities frontier. B) the opportunity cost is 9 pizzas. C) the nation will be producing inefficiently. D) it will be unable to do so because the production point is unattainable. E) the nation will then […]

  3.1   The Demand Side of the Market 1) The market for tablet computers has grown rapidly over the past few years, due in part to the overwhelming success of the Apple iPad. Following the successful launch of the iPad in 2010, companies such as Toshiba, Samsung, Dell, and Amazon have all introduced products to compete with the iPad. The tablet computers introduced to compete […]

  151.Whichofthefollowingcausesasurplusofagood? a.a bindingpricefloor b.abindingpriceceiling c.ataxonthegood d.Morethanoneoftheaboveiscorrect. 152.Apayrolltaxisa a.fixednumberofdollarsthateveryfirmmustpaytothegovernmentforeachworkerthatthefirmhires. b.taxthateachfirmmustpaytothegovernmentbeforethefirmcanhireworkersandoperateitsbusiness. c.taxonthewagesthatfirmspaytheirworkers. d.taxonallwagesabovetheminimumwage. 153.Whenapayrolltaxisenacted,thewagereceivedbyworkers a.falls,andthewagepaidbyfirmsrises. b.falls,andthewagepaidbyfirmsfalls. c.rises,andthewagepaidbyfirmsfalls. d.rises,andthewagepaidbyfirmsrises. 154.Akeylessonfromthepayrolltaxisthatthe a.taxisataxsolelyonworkers. b.taxisataxsolelyonfirmsthathireworkers. c.taxeliminatesanywedgethatmightexistbetweenthewagethatfirmspayandthewagethatworkersreceive. d.trueburdenofataxcannotbelegislated. 155.Youreceiveapaycheckfromyouremployer,andyourpaystubindicatesthat$300wasdeductedtopaytheFICA(SocialSecurity/Medicare)tax.Whichofthefollowingstatementsiscorrect? a.The$300thatyoupaidisnotnecessarilythetrueburdenofthetaxthatfallsonyou,theemployee. b.Youremployerisrequiredbylawtopay$300tomatchthe$300deductedfromyourcheck. c.Thistypeoftaxisanexampleofapayrolltax. d.Alloftheabovearecorrect. 156.Youreceiveapaycheckfromyouremployer,andyourpaystubindicatesthat$400wasdeductedtopaytheFICA(SocialSecurity/Medicare)tax.Whichofthefollowingstatementsiscorrect? a.Thistypeoftaxisanexampleofapaybacktax. b.Youremployerisrequiredbylawtopay$400tomatchthe$400deductedfromyourcheck. c.The$400thatyoupaidisthetrueburdenofthetaxthatfallsonyou,theemployee. d.Alloftheabovearecorrect. 157.ThemayorofWorkervilleproposesalocalpayrolltaxtofundanewwaterparkforthecity.Themayorproposestocollecthalfthetaxfromworkersandhalfthetaxfromfirms.Themayorwillbeabletosuccessfullydividetheburdenofthetaxequallyifthe a.demandforlaborismoreelasticthanthesupplyoflabor. b.supplyoflaborismoreelasticthanthedemandforlabor. c.demandforlaborandsupplyoflaborareequallyelastic. d.Itisnotpossibleforthetaxburdentofallequallyonfirmsandworkers. 158.ThemayorofWorkervilleproposesalocalpayrolltaxtofundanewwaterparkforthecity.Themayorproposestocollecthalfthetaxfromworkersandhalfthetaxfromfirms.Workerswillbear a.anequalshareofthetaxincomparisontofirms. b.agreatershareofthetaxincomparisontofirms. c.asmallershareofthetaxincomparisontofirms. d.Alloftheabovearepossible. 159.Mostlaboreconomistsbelievethatthesupplyoflaboris a.lesselasticthanthedemand,and,therefore,firmsbearmostoftheburdenofthepayrolltax. b.lesselasticthanthedemand,and,therefore,workersbearmostoftheburdenofthepayrolltax. c.moreelasticthanthedemand,and,therefore,workersbearmostoftheburdenofthepayrolltax. d.moreelasticthanthedemand,and,therefore,firmsbearmostoftheburdenofthepayrolltax. 160.ThefederalgovernmentusestherevenuefromtheFICA(FederalInsuranceContributionAct)taxtopayfor a.unemploymentcompensation. b.thesalariesofmembersofCongress. c.SocialSecurityandMedicare. d.housingsubsidiesforlow-incomepeople.    

  41.Philsellsduckcallsinaperfectlycompetitivemarket.Ifduckcallssellfor$10eachandaveragetotalcostperunitis $11 at the profit-maximizingoutput level, then in thelong run a.morefirmswillenterthemarket. b.somefirmswillexitfromthemarket. c.the equilibriumpriceperduckcallwillfall. d.averagetotalcostswillfall. 42.Rogerownsasmallhealthstorethatsellsvitaminsinaperfectlycompetitivemarket.Ifvitaminssellfor$12perbottleandtheaveragetotalcostperbottleis$12.50attheprofit-maximizingoutputlevel,theninthelongrun a.morefirmswillenterthemarket. b.somefirmswillexitfromthemarket. c.theequilibriumpriceperbottlewillfall. d.averagetotalcostswillfall. 43.Rogerownsasmallhealthstorethatsellsvitaminsinaperfectlycompetitivemarket.Ifvitaminssellfor$12perbottleandtheaveragetotalcostperbottleis$11.50attheprofit-maximizingoutputlevel,theninthelongrun a.morefirmswillenterthemarket. b.somefirmswillexitfromthemarket. c.theequilibriumpriceperbottlewillrise d.averagetotalcostswillrise. 44.Whenmarketconditionsinacompetitiveindustryaresuchthatfirmscannotcovertheirtotalproductioncosts,then a.thefirmswillsufferlong-runeconomiclosses. b.thefirmswillsuffershort-runeconomiclossesthatwillbeexactlyoffsetbylong-runeconomicprofits. c.somefirmswillexitthemarket,causingpricestoriseuntiltheremainingfirmscancovertheirtotalproductioncosts. d.allfirmswillgooutofbusiness,sinceconsumerswillnotpaypricesthatenablefirmstocovertheirtotalproductioncosts. 45.Ifoccupationalsafetylawswerechangedsothatfirmsnolongerhadtotakeexpensivestepstomeetregulatoryrequirements,wewouldexpectthat a.thedemandforproductsinthisindustrywouldincrease. b.themarketpriceofproductsinthisindustrywoulddecreaseintheshortrunbutnotinthelongrun. c.thefirmsintheindustrywouldmakealong-runeconomicprofit. d.competitionwouldforceproducerstopassthelowerproductioncostsontoconsumersinthelongrun. 46.Thetextileindustryiscomposedofalargenumberofsmallfirms.Inrecentyears,thesefirmshavesufferedeconomiclosses,andmanysellershavelefttheindustry.Economictheorysuggeststhattheseconditionswill a.shiftthedemandcurveoutwardsothatpricewillrisetothelevelofproductioncost. b.causetheremainingfirmstocolludesothattheycanproducemoreefficiently. c.causethemarketsupplytodeclineandthepriceoftextilestorise. d.causefirmsinthetextileindustrytosufferlong-runeconomiclosses. 47.Supposethattheorganic-produceindustryiscomposedofalargenumberofsmallfirms.Inrecentyears,thesefirmshavesufferedeconomiclosses,andmanysellershavelefttheindustry.Economictheorysuggeststhattheseconditionswill a.shiftthedemandcurveoutwardsothatpricewillrisetothelevelofproductioncost. b.causetheremainingfirmstocolludesothattheycanproducemoreefficiently. c.causethemarketsupplytodeclineandthepriceoforganicproducetorise. d.causefirmsintheorganic-produceindustrytosufferlong-runeconomiclosses. 48.Ifthereisanincreaseinmarketdemandinaperfectlycompetitivemarket,thenintheshortrun a.therewillbenochangeinthedemandcurvesfacedbyindividualfirmsinthemarket. b.thedemandcurvesforfirmswillshiftdownward. c.thedemandcurvesforfirmswillbecomemoreelastic. d.profitswillrise. 49.Ifthereisanincreaseinmarketdemandinaperfectlycompetitivemarket,thenintheshortrunpriceswill a.rise. b.remainunchangedattheminimumofaveragetotalcost. c.fall. d.remainunchangedattheminimumofmarginalcost. 50.Whichofthefollowingstatementsisnotcorrect? a.Inalong-runequilibrium,marginalfirmsmakezeroeconomicprofit. b.Tomaximizeprofit,firmsshouldproduceatalevelofoutputwherepriceequalsaveragevariablecost. c.Theamountofgoldintheworldislimited.Therefore,thegoldjewelrymarketprobablyhasalong-runsupplycurvethatisupwardsloping. d.Long-runsupplycurvesaretypicallymoreelasticthanshort-runsupplycurves.    

  9.4   The Case Against Protection   1) If supporters of restrictions on imports argue that protection is needed to preserve a strategic industry, which of the following is being used? A) Save domestic jobs argument B) National security argument C) Dumping argument D) Infant-industry argument E) Protecting national culture argument 2) Which of the following is the national security argument against free trade? A) […]

  19.5   Free Trade or Protection?   1) The case for ________ is based on the theory of ________ advantage. A) trade barriers; comparative B) free trade; absolute C) trade barriers; absolute D) free trade; comparative   2) Which of the following statements is true? A) Trade is beneficial because it allows more efficient allocation of resources. B) Trade is beneficial because it allows consumers […]

    121.If producers incorrectly set the price of their product too high: A. a shortage will result. B. a surplus will result. C. equilibrium will result. D. the industry will soon die out. 122.If producers incorrectly set the price of their product too low: A. a shortage will result. B. a surplus will result. C. equilibrium will result. D. the industry will soon die out. 123.If producers incorrectly set the price of […]

  11) When producers are hard to monitor and property rights are too costly, ________ are an effective method to achieve efficient use of a ________. A) individual transfer quotas; public good B) making a government payment equal to the marginal private benefits; public good C) individual transferable quotas; common resource D) individual transferable quotas; excludable good E) making a government payment equal to the […]