32) The figure above shows the production possibilities frontier for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is A) unattainable. B) attainable and production efficient. C) attainable and production inefficient. D) unattainable and production efficient. E) More information is needed to determine if the point is attainable or not. 33) The figure above […]

  101) When the labor market is in equilibrium, A) there is excess labor supplied, which keeps real GDP less than potential GDP. B) there is full employment, which means that real GDP equals potential GDP. C) the real wage rate falls to equal the nominal wage rate because real GDP is greater than potential GDP. D) the real wage rate rises to allow real […]

  3.4   The Effect of Demand and Supply Shifts on Equilibrium   1) Let D= demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged? A) D decreases, S no change, P and Q decrease B) S decreases, D no change, P […]

  121) When the production of a good has a marginal external cost, which of the following occurs in an unregulated market? i.Overproduction relative to the efficient level will occur. ii.The market price is less than the marginal social cost at the equilibrium quantity. iii.A deadweight loss occurs. A) i only B) ii only C) iii only D) i and ii E) i, ii, and […]

  91.RefertoTable3-24.Theopportunitycostof1unitofbreadforSpainis a.1/2unitofcheese. b.1/2houroflabor. c.2unitsofcheese. d.8hoursoflabor. 92.RefertoTable3-24.Englandhasanabsoluteadvantageintheproductionof a.cheeseandSpainhasanabsoluteadvantageintheproductionofbread. b.breadandSpainhasanabsoluteadvantageintheproductionofcheese. c.bothgoodsandSpainhasanabsoluteadvantageintheproductionofneithergood. d.neithergoodandSpainhasanabsoluteadvantageintheproductionofbothgoods. 93.RefertoTable3-24.Englandhasacomparativeadvantageintheproductionof a.cheeseandSpainhasacomparativeadvantageintheproductionofbread. b.breadandSpainhasacomparativeadvantageintheproductionofcheese. c.bothgoodsandSpainhasacomparativeadvantageintheproductionofneithergood. d.neithergoodandSpainhasacomparativeadvantageintheproductionofbothgoods. 94.RefertoTable3-24.Englandshouldspecializeintheproductionof a.cheeseandSpainshouldspecializeintheproductionofbread. b.breadandSpainshouldspecializeintheproductionofcheese. c.bothgoodsandSpainshouldspecializeintheproductionofneithergood. d.neithergoodandSpainshouldspecializeintheproductionofbothgoods. 95.RefertoTable3-24.AssumethatEnglandandSpaineachhas40laborhoursavailable.Originally, eachcountrydivideditstimeequallybetweentheproductionofcheeseandbread.Now,eachcountryspendsallitstimeproducingthegoodinwhichithasacomparativeadvantage.Asaresult,thetotaloutputofcheeseincreasedby a.15. b.20. c.25. d.40. 96.RefertoTable3-24.AtwhichofthefollowingpriceswouldbothEnglandandSpaingainfromtradewitheachother? a.16unitsofbreadfor16unitsofcheese b.16unitsofbreadfor24unitsofcheese c.16unitsofbreadfor48unitsofcheese d.EnglandandSpaincouldnotbothgainfromtradewitheachotheratanyprice. 97.RefertoTable3-24.IfEnglandandSpaineachspendsallitstimeproducingthegoodinwhichithasacomparativeadvantageandthecountriesagreetotrade2unitsofbreadfor6unitsofcheese,thenEnglandwillconsume a.34unitsofcheeseand2unitsofbreadandSpainwillconsume6unitsofcheeseand3unitsofbread. b.34unitsofcheeseand2unitsofbreadandSpainwillconsume16unitsofcheeseand3unitsofbread. c.34unitsofcheeseand12unitsofbreadandSpainwillconsume6unitsofcheeseand3unitsofbread. d.34unitsofcheeseand12unitsofbreadandSpainwillconsume16unitsofcheeseand3unitsofbread. 98.RefertoTable3-24.Withouttrade,Englandproducedandconsumed32unitsofcheeseand2unitsofbreadandSpainproducedandconsumed6unitsofcheeseand2unitsofbread.Then,eachcountryagreedtospecializeintheproductionofthegoodinwhichithasacomparativeadvantageandtrade7unitsofcheesefor2.5unitsofbread.Asaresult,Englandgained a.0unitsofcheeseand0.5unitofbreadandSpaingained1unitofcheeseand0.5unitofbread. b.1unitofcheeseand0.5unitofbreadandSpaingained1unitofcheeseand0.5unitofbread. c.7unitsofcheeseand2.5unitsofbreadandSpaingained7unitsofcheeseand2.5unitsofbread. d.33unitsofcheeseand2.5unitsofbreadandSpaingained7unitsofcheeseand2.5unitsofbread. Table3-25   AssumethatMayaandMiguelcanswitchbetweenproducingmixersandproducingtoastersataconstantrate.     HoursNeededToMake1 AmountProducedin40Hours mixer toaster mixers toasters Maya 8 5 5 8 Miguel 20 10 2 4   99.RefertoTable3-25.Theopportunitycostof1mixerforMayais […]

  16.4   Chapter Figures       The figure above shows a nation’s aggregate demand curve, aggregate supply curve, and potential GDP.   1) In the figure above, the ________ gap is one trillion dollars. To close the gap, the government can change expenditure by ________ one trillion dollars. A) recessionary; less than B) inflationary; exactly C) inflationary; more than D) recessionary; more than E) […]

  54) ________ can trigger a recession. A) An increase in autonomous expenditure B) A decrease in autonomous expenditure C) Equality between aggregate expenditure and real GDP D) An increase in the expenditure multiplier E) An increase in induced expenditure   55) ________ can trigger an expansion. A) An increase in autonomous expenditure B) A decrease in autonomous expenditure C) Equality between aggregate expenditure and […]

  51) All of the following facts pertain to China except: A) China is in the upper-middle-income category. B) China is the largest single destination for foreign investment in the developing world. C) China is a member of the World Trade Organization. D) China has sprawling bureaucracy. E) China lacks infrastructure. 52) Prahalad and Hammond have identified several assumptions and misconceptions about the “bottom of […]

  Figure 3-8       48) Refer to Figure 3-8.  The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D2 and S1 (point C). If the price of motorcycle side cars (a complement to motorcycles) decreases, and the wages of motorcycle workers increase, how will the equilibrium point change? A) The equilibrium point will […]

    11. JNR Products produces and sells plastic soda cups with specialized logos on the front. They sell the cups in batches of 500 for $125 per batch. The company has the capacity to produce 100 batches per month but averages much less. When 75 batches are sold a month, each batch has $40 worth of variable costs and $5 worth of fixed overhead costs […]