11) Which of the following goods is directly counted in GDP? A) the lettuce that Subway purchases for its sandwiches B) the bread that Subway purchases for its sandwiches C) a 12-inch Subway sandwich purchased by a student D) the plastic bags that Subway purchases to wrap its sandwiches     12) Which of the following transactions represents the purchase of a final good? […]

  101) If an economist supports targeting inflation as opposed to monetary fine-tuning, this economist probably believes that time lags in the implementation of monetary policy are A) short but predictable. B) short but unpredictable. C) long and unpredictable. D) long but predictable. E) predictable in their short-run effects but unpredictable in the long run. 102) Long time lags in the effectiveness of monetary policy […]

  Figure 6-8     17) Refer to Figure 6-8.  Identify the two goods which are substitutes. A) Good X and Good Y B) Good Y and Good Z C) Good X and Good Z D) It is not possible to distinguish any relationship among the goods.     18) Refer to Figure 6-8.  Identify the two goods which are complements. A) Good X and […]

  51.Ifthegovernmentpassesalawrequiringbuyersofcollegetextbookstosend$5tothegovernmentforeverytextbooktheybuy,then a.thedemandcurvefortextbooksshiftsdownwardby$5. b.buyersoftextbookspay$5morepertextbookthantheywerepayingbeforethetax. c.sellersoftextbooksareunaffectedbythetax. d.Alloftheabovearecorrect. 52.Supposethereiscurrentlyataxof$50perticketonairlinetickets.Buyersofairlineticketsarerequiredtopaythetaxtothegovernment.Ifthetaxisreducedfrom$50perticketto$20perticket,thenthe a.demandcurvewillshiftupwardby$30,andthepricepaidbybuyerswilldecreasebylessthan$30. b.demandcurvewillshiftupwardby$30,andthepricepaidbybuyerswilldecreaseby$30. c.supplycurvewillshiftdownwardby$30,andtheeffectivepricereceivedbysellerswillincreasebylessthan d.supplycurvewillshiftdownwardby$30,andtheeffectivepricereceivedbysellerswillincreaseby$30. 53.Supposethereiscurrentlyataxof$50perticketonairlinetickets.Buyersofairlineticketsarerequiredtopaythetaxtothegovernment.Ifthetaxisreducedfrom$50perticketto$30perticket,thenthe a.demandcurvewillshiftupwardby$20,andtheeffectivepricereceivedbysellerswillincreaseby$20. b.demandcurvewillshiftupwardby$20,andtheeffectivepricereceivedbysellerswillincreasebylessthan c.supplycurvewillshiftdownwardby$20,andthepricepaidbybuyerswilldecreaseby$20. d.supplycurvewillshiftdownwardby$20,andthepricepaidbybuyerswilldecreasebylessthan$20. 54.Supposebuyersoffountaindrinksarerequiredtosend$0.50tothegovernmentforeveryfountaindrinktheybuy. a.Thistaxcausesthedemandcurveforfountaindrinkstoshiftdownwardby$0.50ateachquantity. b.Thepricepaidbybuyersis$0.30perdrinkmorethanitwasbeforethetax. c.Fortypercentoftheburdenofthetaxfallsonsellers. d.Alloftheabovearecorrect. 55.Ifataxisleviedonthebuyersofaproduct,thenthesupplycurvewill a.notshift. b.shiftup. c.shiftdown. d.becomeflatter. 56.Ifataxisleviedonthebuyersofaproduct,thentherewillbea(n) a.downwardshiftofthesupplycurve. b.upwardshiftofthesupplycurve. c.movementupandtotherightalongthesupplycurve. d.movementdownandtotheleftalongthesupplycurve. 57.Whichofthefollowingisnotcorrect? a.Taxesleviedonsellersandtaxesleviedonbuyersarenotequivalent. b.Ataxplacesawedgebetweenthepricethatbuyerspayandthepricethatsellersreceive. c.Thewedgebetweenthebuyers’priceandthesellers’priceisthesame,regardlessofwhetherthetaxleviedonbuyersorsellers. d.Inthenewafter-taxequilibrium,buyersandsellerssharetheburdenofthetax. 58.Ifthegovernmentremovesa$1taxonsellersofgasolineandimposesthesame$1taxonbuyersofgasoline,thenthepricepaidbybuyerswill a.increase,andthepricereceivedbysellerswillincrease. b.increase,andthepricereceivedbysellerswillnotchange. c.notchange,andthepricereceivedbysellerswillincrease. d.notchange,andthepricereceivedbysellerswillnotchange. 59.Ifthegovernmentremovesa$2taxonbuyersofcigarsandimposesthesame$2taxonsellersofcigars,thenthepricepaidbybuyerswill a.notchange,andthepricereceivedbysellerswillnotchange. b.notchange,andthepricereceivedbysellerswilldecrease. c.decrease,andthepricereceivedbysellerswillnotchange. d.decrease,andthepricereceivedbysellerswilldecrease. 60.Ifthegovernmentwantstoreducesmoking,itshouldimposeataxon a.buyersofcigarettes. b.sellersofcigarettes. c.eitherbuyersorsellersofcigarettes. d.whicheversideofthemarketislesselastic.    

  16.4   Price Discrimination   1) To be able to price discriminate, a firm must A) lower prices for all customers. B) raise prices for all customers. C) be able to identify and separate different types of buyers. D) sell a product that can be resold. E) Both answers B and C are correct.   2) Which of the following must exist for a firm […]

    71) The tendency to continue investing in a project, despite mounting evidence that it is not succeeding, often comes about because people mistakenly let sunk costs affect decision making rather than weighing the value of further investment is known as ________. A) zero-profit condition B) escalation of commitment C) progress trap D) zero-sum game 72) A real estate developer in the New Jersey […]

    78.              The Molding Department of Boswell Company has the following production data: beginning work process 40,000 units (60% complete), started into production 680,000 units, completed and transferred out 640,000 units, and ending work in process 80,000 units (40% complete). Assuming materials are entered at the beginning of the process, equivalent units for materials are: a.720,000. b.600,000. c.640,000. d.760,000.     79.              The Molding […]

  91) Refer to Scenario 1-3. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 400 t-shirts? A) gross earnings B) marginal revenue C) sales revenue D) gross profit 92) Refer to Scenario 1-3. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 400 t-shirts? A) […]

  11) In order to reduce inflationary pressure on the economy, what fiscal policy can the government use? A) raise taxes B) cut taxes C) increase government expenditure on goods and services D) cut interest rates E) increase the quantity of money 12) To eliminate an inflationary gap using fiscal policy, the government could A) increase government expenditure on goods and services and simultaneously increase […]

    31) In the figure above, the economy is at an equilibrium with real GDP of $16 trillion and a price level of 110. At this point there is A) an inflationary gap. B) a recessionary gap. C) price stability. D) a full-employment equilibrium. E) an above full-employment equilibrium. 32) In the figure above, the economy is at an equilibrium with real GDP of […]