31) The figure above shows a perfectly competitive firm. If the market price is $20 per unit, then the firm produces ________ units and makes an economic profit that is ________. A) more than 30; more than $100 B) 30; more than $100 C) 20; less than $400 D) 0; zero E) 30; zero 32) Bill owns a lawn-care company in Windermere, Florida, whose […]

  12.4   Chapter Figures   1) The demand for money curve is shown in the figure above. A movement from point B to point C could be the result of A) a fall in the nominal interest rate. B) a decrease in the total benefit from holding money. C) an increase in the quantity of money held by banks. D) a rise in the real […]

    21) In an oligopoly in which the firms have entered into a cartel agreement, the Nash equilibrium exhibits which of the following? A) firms jointly maximizing profits B) the firms cheating on the cartel agreement, which benefits society C) production at a price and output level close to monopolistic competition in the long run D) the firms cheating on the cartel agreement, which […]

  6.4   Are Markets Efficient?   1) In a competitive market with no externalities, A) the consumer surplus is equal to zero because of competition. B) buyers cannot control the price, so the consumer surplus is zero. C) at the equilibrium price, marginal benefit exceeds marginal cost. D) at the equilibrium price, marginal benefit equals marginal cost. E) at the equilibrium price, the total amount […]

    31) An avocado orchard employs five full-time workers. Currently, the average product of labor is 120 pounds of avocados per day. The orchard hires a 6th full-time worker and his marginal product is 150 pounds of avocados. The average product of the six workers will now be A) more than 120 pounds. B) less than 120 pounds. C) equal to 120 pounds. D) […]

    It’s Gonna Be Big (IGBB) It’s Gonna Be Big (IGBB) is seeking venture capital investment of $8 million. The founder and the venture capital fund agree the firm is worth $15 million today, and the venture capital investor asserts it requires a 35% (compounded annually) expected return. IGBB and the venture capital investor foresee an IPO in four years, at which time IGBB […]

    61.We calculate many different kinds of price indexes: A. in order to capture a complete picture of how price changes are affecting the economy. B. to see how the prices of different groups of goods are changing. C. to measure how different groups of people in the economy are being affected by changing prices. D. All of these statements are true. 62.The GDP deflator: A. measures price changes […]

    31) The money demand curve has a negative slope because A) lower interest rates cause households and firms to switch from money to financial assets. B) lower interest rates cause households and firms to switch from financial assets to money. C) lower interest rates cause households and firms to switch from money to stocks. D) lower interest rates cause households and firms to […]

    115.You will need $12,000 at the end of each of the next four years. If an interest rate of 6% is appropriate, how much must you deposit today to receive these payments? A.$41,581 B.$2,880 C.$50,880 D.$38,021   116.Calculate the present value of an annuity of $42,000 per year for each of the next 15 years. Use a required rate of return of 6%. […]

  101) Consider the basic AD/AS model, and suppose there is a negative output gap. If an expansionary fiscal policy is pursued and the AS curve shifts right unexpectedly, the fiscal policy may be ________, and real GDP may ________ potential GDP. A) too weak; stay below B) too weak; rise above C) too strong; stay below D) too strong; rise above E) appropriate; equal […]