11) If all households in a nation receive the same income, the nation’s Lorenz curve A) is horizontal. B) is vertical. C) is a 45° line. D) runs along the horizontal axis until it reaches 50 percent of households and then runs vertically up to 100 percent of income. E) runs along the horizontal axis until it reaches 100 percent of households and then […]

  11) Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas. Hotels are a capital good that,once built, will help produce still more consumption goods. If Puerto Rico produces more hotels than Hawaii, A) Hawaii’s PPF will shift outward further than Puerto Rico’s PPF. B) Hawaii’s […]

    21) Automatic stabilizers decrease the impact of a recession on the level of economic activity because they A) reduce the interest rate and so allow firms to increase their level of investment. B) increase taxes so the budget is always balanced. C) raise the exchange rate so U.S. exports become more attractive to foreigners. D) mean disposable income does not change by as […]

  120.Stalk Products has $27,000 of underapplied overhead at the end of the year.Management has asked you what the impact on income will be if you prorate the underapplied overhead to the appropriate accounts.What will you tell them? A.Income will be higher if the underapplied overhead is prorated than if it is closed to cost of goods sold. B.Income will be lower if the underapplied […]

    88.Hanson Sports has three product lines: footballs, basketballs, and bats. Common costs are allocated based on relative sales. A product line income statement for the year ended December 31, 2014 follows: Footballs     Basketballs   Bats  Total Sales$600,000$800,000$400,000$1,800,000 Cost of goods sold260,000     400,000     230,000     890,000 Gross margin340,000400,000170,000910,000 Less other variable costs85,000120,000     80,000285,000 Contribution margin255,000280,00090,000625,000 Less direct salaries50,00060,00045,000155,000 Less common fixed costs85,000100,000     55,000240,000 Net income$120,000     $120,000     ($10,000)    $  230,000   Since the profit for bats is relatively […]

    11) Which of the following is used to explain why a consumer’s willingness to buy Microsoft Office increases as the number of other people who use Microsoft Office increases? A) network externalities B) market failure C) diminishing marginal utility D) the income effect of a price change   12) A good is path dependent when A) consumers get utility from consuming goods that […]

  11.Agency costs refer to a.the costs associated with managing the demands of federal agencies. b.the costs involved when converting an entity from a proprietorship to a corporation. c.the costs that arise due to conflicts of interest between shareholders and managers. d.none of the above. 12.Prior to the Tax Relief Act of 2003, if a corporation has pre-tax earnings of $110,000 while the corporation is […]

  23) One result of the minimum wage is A) a black market for labor that pays more than the minimum wage. B) a black market for labor that pays less than the minimum wage. C) decreased job search activity. D) a decrease in unemployment among poor and unskilled workers. E) an increase in employment among poor and unskilled workers.   24) One result of […]

      21) The above figure shows the market for gourmet ice cream. In effort to reduce obesity, government places a $2 tax per gallon on suppliers in this market, shifting the supply curve from S0 to S1. The quantity of ice cream consumed before the tax is ________ gallons and the quantity consumed after the tax is ________ gallons. A) 300,000; 200,000 B) […]

  31) Allison’s Auto Art is a company that applies pinstripes to vehicles. Allison’s cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is Allison’s marginal […]