21) In the above figure, the market is at its equilibrium. Area A is equal to A) consumer surplus. B) total revenue. C) marginal benefit. D) producer surplus. E) total surplus. 22) In the above figure, the market is at its equilibrium. Area B is equal to A) consumer surplus. B) total revenue. C) marginal benefit. D) producer surplus. E) total surplus. […]

    21) In the range of disposable income where the consumption function lies above the 45° line, A) disposable income is negative. B) saving is negative. C) saving is positive. D) disposable income equals planned expenditures. E) induced consumption is zero.   22) On a graph of the consumption function, where the consumption function crosses the 45 degree line, A) disposable income is zero. […]

  101.Supposeacompetitivemarkethasahorizontallong-runsupplycurveandisinlong-runequilibrium.Ifdemanddecreases,wecanbecertainthatintheshort-run, a.atleastsomefirmswillshutdown. b.pricewillfallbelowmarginalcostforsomefirms. c.pricewillfallbelowaveragetotalcostforsomefirms. d.atleastsomefirmswillentertheindustry. 102.Thelong-runmarketsupplycurveinacompetitivemarketwill a.alwaysbehorizontal. b.betheportionoftheMCthatliesabovetheminimumofAVCforthemarginalfirm. c.typicallybemoreelasticthantheshort-runsupplycurve. d.beabovethecompetitivefirm’sefficientscale. 103.Inthelongrunthemarketsupply a.mustalwaysbehorizontal. b.couldbeupwardslopingifthecostofproductionfallsasnewfirmsenterthemarket. c.couldbeupwardslopingifthecostofproductionrisesasnewfirmsenterthemarket. d.couldbeupwardslopingiftechnologicalimprovementslowerthecostofproducinginthemarket. 104.Supposethatacompetitivemarketisinitiallyinequilibrium.Thendemandincreases.Ifsomeresourcesusedinproductionarenotavailableinsufficientquantitiesforenteringfirms, a.thelong-runmarketsupplycurvewillbeupwardsloping. b.thelong-runmarketsupplycurvewillbeperfectlyelastic. c.inthelongrunfirmswillsuffereconomiclosses,leadingthemtoexittheindustry. d.thenumberoffirmswilldecrease,andthemarketwillbecomeamonopoly. 105.Supposethatacompetitivemarketisinitiallyinequilibrium.Thendemandincreases.Ifenteringfirmsfacethesamecostsasexistingfirmsandsufficientresourcesareavailableforenteringfirms, a.thelong-runmarketsupplycurvewillbeupwardsloping. b.thelong-runmarketsupplycurvewillbeperfectlyelastic. c.inthelongrunfirmswillsuffereconomiclosses,leadingthemtoexittheindustry. d.thenumberoffirmswilldecrease,andthemarketwillbecomeamonopoly. 106.Inamarketwithafixednumberoffirms,aslongaspriceisaboveaverage a.variablecost,eachfirm’smarginal­costcurveisitssupplycurve. b.variablecost,eachfirm’saverage­total­costcurveisitssupplycurve. c.totalcost,eachfirm’smarginal­costcurveisitssupplycurve. d.totalcost,eachfirm’saverage­total­costcurveisitssupplycurve. 107.Supposethelong-runsupplycurveforagoodisupward-sloping.Theupwardslopecouldbeexplainedby a.increasesinproductioncostsresultingfrommorefirmscomingintothemarket. b.abreakdownofthe“freeentryandexit”featureofcompetition. c.abreakdownofthe“pricetaking”featureofcompetition. d.astabledemandcurveforthegood,thatis,ademandcurvethatnevershifts. 108.Supposethelong-runsupplycurveforagoodisupward-sloping.Theupwardslopecouldbeexplainedby a.decreasesinproductioncostsresultingfrommorefirmscomingintothemarket. b.abreakdownofthe“freeentryandexit”featureofcompetition. c.abreakdownofthe“pricetaking”featureofcompetition. d.thefactthataresourceusedintheproductionofthegoodisavailableonlyinlimitedquantities. Figure14-14                                   109.RefertoFigure14-14.Whenthemarketisinlong-runequilibriumatpointWinpanel(b),thefirmrepresentedinpanel(a)will a.haveazeroeconomicprofit. b.haveanegativeaccountingprofit. c.exitthemarket. d.choosetoincreaseproductiontoincreaseprofit. 110.RefertoFigure14-14.AssumethatthemarketstartsinequilibriumatpointWinpanel(b).AnincreaseindemandfromD0toD1willresultin […]

  31) Which of the following is an example of a two-part tariff? A) price discrimination based on the buyers’ willingness to pay B) charging a hookup fee plus a monthly charge equal to marginal cost C) higher sales tax on specific products D) different prices based on the cost of production and quantity bought E) A regulated firm uses marginal cost pricing for some […]

  11.Adirectorpositiverelationshipexistsbetweenacountry’s a.productivityanditsstandardofliving. b.amountofgovernmentspendinganditsproductivity. c.totalpopulationanditsaveragecitizen’sincome. d.rateofpopulationgrowthandtheextentofitstradewithothercountries. 12.Theprimarydeterminantofacountry’sstandardoflivingis a.thecountry’sabilitytoprevailoverforeigncompetition. b.thecountry’sabilitytoproducegoodsandservices. c.thetotalsupplyofmoneyintheeconomy. d.theaverageageofthecountry’slaborforce. 13.ThehistoricalriseinlivingstandardsofAmericanworkersisprimarilyaresultof a.theinfluenceoflaborunionsinAmerica. b.tariffprotectionimposedbytheAmericangovernment. c.theenactmentofminimum-wagelawsinAmerica. d.theriseinAmericanproductivity. 14.Thefactthatdifferentcountriesexperiencedifferentstandardsoflivingislargelyexplainedbydifferencesinthosecountries’ a.populations. b.productivitylevels. c.locations. d.Noneoftheaboveiscorrect.Economistsarepuzzledbydifferencesinstandardsoflivingaroundtheworld. 15.SupposetheaverageincomeofacitizenofPolandishigherthantheaverageincomeofacitizenofRomania.Youmightconcludethat a.PolishfirmsarefacedwithstrictergovernmentregulationsthanRomanianfirms. b.totalincomeisdividedamongfewerworkersinPolandsinceithasasmallerlaborforcethanRomania. c.Romania’sclimateallowsforlongergrowingseasonsandthereforeRomaniacanproducelargequantitiesofgrainandothercrops. d.productivityinPolandishigherthaninRomania. 16.TheslowgrowthofU.S.incomesduringthe1970sand1980scanbestbeexplainedby a.unstableeconomicconditionsinEasternEurope. b.increasedcompetitionfromabroad. c.adeclineintherateofincreaseinU.S.productivity. d.astrongU.S.dollarabroad,hurtingU.S.exports. 17.SlowgrowthinUSincomesduringthe1970sand1980swasprimarilydueto a.slowproductivitygrowthintheUS. b.increasedcompetitionfromJapan. c.increasedcompetitionfromEuropeancountries. d.arapiddecreaseinthequantityofmoneyintheeconomy. 18.SupposeatypicalworkerinIndiacanproduce32unitsofproductinaneight-hourday,whileatypicalworkerinBangladeshcanproduce30unitsofproductina10-hourday.Wecanconcludethat a.workerproductivityinBangladeshishigherthaninIndia. b.thestandardoflivingwilllikelybehigherinIndiathaninBangladesh. c.productivityis4unitsperhourfortheworkerinBangladeshand3unitsperhourfortheworkerinIndia. d.therewillbenodifferencebetweenthestandardoflivinginIndiaandBangladesh. 19.Suppose that in Brazil total annualoutput is worth $600 millionand people work 30 million hours.InPerutotalannualoutput is worth$800 millionand people work50 millionhours.Productivityishigher a.inBrazil.Mostvariationinthestandardoflivingacrosscountriesisduetodifferencesinproductivity. b.inBrazil.Differencesinproductivityexplainverylittleofthevariationinthestandardoflivingacrosscountries. c.inPeru.Mostvariationinthestandardoflivingacrosscountriesisduetodifferencesinproductivity. […]

  51. Carolina Potato Inc. currently sells cut sweet potatoes for $.85 per can. The cost of producing the sweet potatoes is $.18 per can. Carolina Potato is considering starting a line of mashed sweet potatoes. The additional processing costs would be $.06 per can and each can would sell for $.95. Which of the following pieces of information is not relevant to the decision to […]

  51.Perfectly effective hedges using interest rate swaps will always a.exactly match maturity dates with the underlying debt. b.minimize interest expense. c.maximize gains in bond values caused by interest rate fluctuations. d.all of the above. 52.McCourt Investment Advisors purchased newly issued bonds on October 1, 2010, paying $108,983.  The bonds had a face value of $100,000, maturing on September 30, 2015, and pay interest semiannually […]

  21.Emerilistheownerofarestaurant.Hedecidestoraisethewagesofhisworkerseventhoughhefacesanexcesssupplyoflabor.Hisdecision a.mightincreaseprofitsifitattractsabetterpoolofworkerstoapplyforjobsathisrestaurant. b.willreducetheexcesssupplyoflabor. c.isanexampleofthebenefitsofaminimum-wagelaw. d.Alloftheabovearecorrect. 22.Michaeldecidestohiresomeadditionalworkersforhisroofingcompany.Theequilibriumwageis$17perhour.EfficiencywagetheorysuggeststhatitisreasonableforMichaeltooffer a.$17perhour. b.lessthan$17perhourbecausesomepeoplewouldbewillingtoworkforless. c.lessthan$17anhourtopreventshirking. d.morethan$17perhourinordertoattractabetterpoolofapplicants. 23.Rafaelisthenewly­appointedplantmanagerforacompanythatmanufacturesheadphones.Rafael’sseniorsupervisorstoldhimthattheoutputthefirmproduces,giventhenumberofworkersemployed,indicatesthatsomeworkersmaybeshirking.Accordingtoefficiencywagetheory,whatshouldhedo? a.payallworkersmorethantheequilibriumwagerate b.payallworkersbelowtheequilibriumwageratetomakeupforthelossfromshirking c.makesurethatworkersaregettingpaidexactlytheequilibriumwagerate d.firetheworkerswiththemostseniority 24.Afirmmaypayefficiencywagesinanattemptto a.reduceincentivestoshirk. b.reduceturnover. c.attractawell-qualifiedpoolofapplicants. d.Alloftheabovearecorrect. 25.Whichof the followingisnotareasonthatpayingefficiencywagesmayincreaseafirm’sprofit? a.Efficiencywagesincreaseworkerhealthandthereforeincreaseworkerproductivity. b.Efficiencywagesdecreaseworkerturnoverandthereforedecreasehiringandtrainingcosts. c.Efficiencywagesdecreaseworkershirkingandthereforeincreaseworkerproductivity. d.Efficiencywagesarebelowtheequilibriumwageratebutstillattractasufficientnumberofworkers. 26.ArianaistheCEOofacorporationthathiresnonunionlabor.Accordingtothetheoryofefficiencywages,ifshedecidestopayherworkersmorethanthecompetitiveequilibriumwage,then a.theprofitsofherfirmmightincrease. b.shewillfaceashortageoflabor. c.theturnoverofherworkersmayincrease. d.Noneoftheaboveiscorrect. 27.Threeemployershavejustifiedtheiractionsasfollows.Whoselogicisnotconsistentwiththelogicofefficiencywagetheory? a.Insteadofspendingmoneyonanelectronictimingsystemthatmonitorsworkerhours,Tomspendsanequivalentamountofmoneyonhigherwages. b.Dickpayshisworkerslessthantheequilibriumwagesothattheywillnothavethetimeormoneytolookforworksomewhereelse. c.Harrypayshisworkersinadevelopingcountrymorethanthegoingwagehopingthattheywillgetabetterdietandsobemoreproductive. d.Noneoftheaboveisconsistentwiththelogicofefficiencywagetheory. 28.Inwhichofthefollowingsituationsshouldafirmpayefficiencywages? a.Ahiringmanagercaneasilyjudgethequalityofapplicants,andafterworkershaveworkedforthefirmawhile,theytendnottolookforotherjobs. b.Ahiringmanagercaneasilyjudgethequalityofapplicants,andafterworkershaveworkedforthefirmawhile,theytendtolookforotherjobs. c.Ahiringmanagercannoteasilyjudgethequalityofapplicants,andafterworkershaveworkedforthefirmawhile,theytendtolookforotherjobs. d.Ahiringmanagercannoteasilyjudgethequalityofapplicants,andafterworkershaveworkedforthefirmawhile,theytendnottolookforotherjobs. 29.Accordingtothetheoryofefficiencywages,ifafirmstopspayingefficiencywagesitislikelytoseea(n) a.increaseinthenumberofjobapplicantsandanincreaseinhowlongworkersstayonthejob. b.increaseinthenumberofjobapplicantsandadecreaseinhowlongworkersstayonthejob. c.decreaseinthenumberofjobapplicantsandanincreaseinhowlongworkersstayonthejob. d.decreaseinthenumberofjobapplicantsandadecreaseinhowlongworkersstayonthejob. 30.Sectoralchangesindemand a.createfrictionalunemployment,whilefirmspayingwagesaboveequilibriumtoattractabetterpoolofcandidatescreatesstructuralunemployment. b.createstructuralunemployment,whilefirmspayingwagesaboveequilibriumtoattractabetterpoolofcandidatescreatesfrictionalunemployment. c.andfirmspayingwagesaboveequilibriumtoattractabetterpoolofcandidatesbothcreatestructuralunemployment. d.andfirmspayingwagesaboveequilibriumtoattractabetterpoolofcandidatesbothcreatefrictionalunemployment.    

    14.4   The Five Competitive Forces Model   1) Which of the following is not among Porter’s competitive forces? A) power of buyers B) power of suppliers C) threat of new entrants D) changing consumer tastes   2) Which of the following is most likely to exert the bargaining power of a buyer? A) Barnes and Noble purchases books from publishers for sale in […]

    25.              All of the following are features frequently applicable to preferred stock except: A)cumulative B)recumulative C)redeemable D)participating   26.   The redeemable feature of preferred stock allows the preferred stockholder: A)  To buy more shares of preferred stock at a set price. B)  To redeem preferred stock for common stock with the right to vote. C)  To sell the preferred stock for a set […]