41) If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08, what is the marginal external cost? A) $0.18 B) $0.10 C) $0.08 D) $0.02 E) $0.80 42) If the marginal social cost of producing a ton of cement is $4,000 and the marginal private cost is $3,500, then the A) marginal benefit of […]

    81.              In a make-or-buy decision, which costs can be considered relevant? a.Unavoidable variable costs, incremental fixed costs, and sunk costs b.Incremental variable costs, unavoidable fixed costs, and opportunity costs c.Incremental variable costs, incremental fixed costs, and sunk costs d.Incremental variable costs, incremental fixed costs, and opportunity costs     82.              Billings Company has the following costs when producing 100,000 units: Variable costs$600,000 Fixed […]

  Multiple Choice – Section 03: The Market for Loanable Funds 1.Thesourceofthesupplyofloanablefunds a.issavingandthesourceofdemandforloanablefundsisinvestment. b.isinvestmentandthesourceofdemandforloanablefundsissaving. c.andthedemandforloanablefundsissaving. d.andthedemandforloanablefundsisinvestment. 3.Thefollowingtablepresentsinformationaboutaclosedeconomywhosemarketforloanablefundsisinequilibrium.   GDP $8.7trillion ConsumptionSpending $6.1trillion TaxesNetofTransfers $1.0trillion GovernmentPurchases $0.8trillion 2.RefertoTable26-3.Determinethequantityofprivatesaving. a.$0.2trillion b.$1.6trillion c.$1.8trillion d.$2.6trillion 3.RefertoTable26-3.Determinethequantityofloanablefundsdemanded. a.$1.8trillion b.$1.6trillion c.$1.4trillion d.$0.8trillion 4.Theslopeofthedemandforloanablefundscurverepresentsthe a.positiverelationbetweentherealinterestrateandinvestment. b.negativerelationbetweentherealinterestrateandinvestment. c.positiverelationbetweentherealinterestrateandsaving. d.negativerelationbetweentherealinterestrateandsaving. 5.TheEyeofHorusincensecompanyhas$10millionincashwhichithasaccumulatedfromretainedearnings.Itwasplanningtousethemoneytobuildanewfactory.Recently,therateofinteresthasincreased.Theincreaseintherateofinterestshould a.notinfluencethedecisiontobuildthefactorybecauseTheEyeofHorusdoesn’thavetoborrowanymoney. b.notinfluencethedecisiontobuildthefactorybecauseitsstockholdersareexpectinganewfactory. c.makeitmorelikelythatTheEyeofHoruswillbuildthefactorybecauseahigherinterestratewillmakethefactorymorevaluable. d.makeitlesslikelythatTheEyeofHoruswillbuildthefactorybecausetheopportunitycostofthe$10millionisnowhigher. 6.Otherthingsthesame,whentheinterestraterises, a.peoplewouldwanttolendmore,makingthesupplyofloanablefundsincrease. b.peoplewouldwanttolendless,makingthesupplyofloanablefundsdecrease. c.peoplewouldwanttolendmore,makingthequantityofloanablefundssuppliedincrease. d.peoplewouldwanttolendless,makingthequantityofloanablefundssupplieddecrease. 7.Kathleenisconsideringexpandingherdressshop.Ifinterestratesrisesheis a.lesslikelytoexpand.Thisillustrateswhythesupplyofloanablefundsslopesdownward. b.morelikelytoexpand.Thisillustrateswhythesupplyofloanablefundsslopesupward. c.lesslikelytoexpand.Thisillustrateswhythedemandforloanablefundsslopesdownward. d.morelikelytoexpand.Thisillustrateswhythedemandforloanablefundsslopesupward. 8.Theslopeofthesupplyofloanablefundscurverepresentsthe a.positiverelationbetweentherealinterestrateandinvestment. b.positiverelationbetweentherealinterestrateandsaving. c.negativerelationbetweentherealinterestrateandinvestment. d.negativerelationbetweentherealinterestrateandsaving. 9.Otherthingsthesame,ahigherinterestrateinducespeopleto a.savemore,sothesupplyofloanablefundsslopesupward. b.saveless,sothesupplyofloanablefundsslopesdownward. c.investmore,sothesupplyofloanablefundsslopesupward. […]

  41) If perfectly competitive firms are making an economic profit, the economic profit A) attracts entry by more firms, which lowers the price. B) can be earned both in the short run and the long run. C) is less than the normal profit. D) leads to a decrease in market demand. E) generally leads to firms exiting as they seek higher profit in other […]

  6.3   Unemployment and Full Employment 1) Frictional unemployment is the result of A) an economic recession. B) the economic decline of major industries. C) the normal process of jobs being created and destroyed. D) people not getting along (having friction) with their employers. E) changing weather throughout the year. 2) As firms search for the best employee to fill an opening and the unemployed […]

    31) To show the values of an economic variable for different groups in a population at a point in time, it is best to use a A) scatter diagram. B) time-series graph. C) linear graph. D) cross-section graph. E) trend-section diagram.   32) A graph that shows how the amount of advertising expenditure differs among various industries can be shown A) by a […]

  25) Moving from a point inside the production possibilities frontier to a point on the production possibilities frontier, the opportunity cost of producing more of the good on the horizontal axis A) increases. B) decreases. C) is constant. D) is 0. E) is infinite.   26) Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis. As […]

    141.The cash disposal value of old equipment is considered to be a (an) a.irrelevant cost. b.avoidable cost. c.sunk cost. d.relevant cost.     142.Which of the following is not relevant information in a decision whether old equipment presently being used should be replaced by new equipment? a.The cash price of the new equipment b.The salvage value of the old equipment c.The book value […]

    61) The table above gives the production and prices for a small nation that produces only bread and soda. The base year is 2010. What is real GDP in 2010? A) $530 B) $1080 C) $510 D) $210 E) $300   62) When calculating real GDP, the reference base year A) allows us to account for changes in GNP compared to GDP. B) […]

  41) Refer to Table 24-1. How is the adjustment asymmetry demonstrated when comparing Economy A to Economy E? A) The size of the output gap is the same in Economies A and E, but wages are rising in A and falling in E. B) The output gap is larger in Economy A, yet wages are changing more slowly. C) The output gap is much […]