41) In a typical year, ________ new firms open in the United States. A) more than 600,000 B) more than 1 million C) less than 200,000 D) approximately 125,000     42) On average, jobs at small firms pay ________ wages than jobs at large firms and are ________ likely to offer fringe benefits such as health insurance and retirement accounts. A) higher; more […]

    41) If a firm in a perfectly competitive market faces an equilibrium price of $5, its marginal revenue A) will be greater than $5. B) will be less than $5. C) maybe either greater or less than $5. D) will also be $5. E) will be any amount but $5.   42) If demand for a seller’s product is perfectly elastic, which of […]

  41.Apainterpays$500forpaintheusestorepaintahouse.Hethenpresentsabillfor$1200thatcovershistimeandexpensestothehomeowner.HowmuchdothesetransactionsaddtoGDP? a.$500 b.$700 c.$1200 d.$1700 42.WholesomeWheatBakerybuys$10.00worthofflourfromMikes’Millandusestheflourtomakebread.WholesomeWheatsellsthebreadtothepublicfor$22.00.Takingthesetwotransactionsintoaccount,whatistheeffectonGDP? a.GDPincreasesby$10.00 b.GDPincreasesby$12.00 c.GDPincreasesby$22.00 d.GDPincreasesby$32.00 43.Atiremanufacturerproduces400tiresvaluedat$20each.Threehundredtiresaresoldtoatireshop,whichthensellsthemtohouseholdsfor$50each.Theremainingtiresareunsoldandareaddedtothetiremanufacturer’sinventory.HowmuchisaddedtoGDP? a.$8,000 b.$15,000 c.$17,000 d.$13,000 44.Janetboughtflourandusedittobakebreadsheate.ABCBakeryboughtflourwhichitusedtobakebreadthatcustomerspurchased.Inwhichcasewilltheflourbecountedasafinalgood? a.Janet’spurchaseandABCBakery’spurchase. b.ABCBakery’spurchasebutnotJanet’spurchase. c.Janet’spurchasebutnotABCBakery’spurchase. d.NeitherJanet’spurchasenorABCBakery’spurchase. 45.Timmowstheyardforhisneighbors.Hespends$1ongasandchargesthem$20foreachlawnhemows.What’sthetotalcontributiontoGDPeachtimeTimmowsayard? a.$1 b.$19 c.$20 d.$21 46.A dairybuys$50,000worthofmilk andspend$5,000oncartonsandutilities.Itsellsthecartonsofmilktoagrocerystorefor$60,000thatthensellsallofthecartonstoconsumersfor$65,000.HowmuchdotheseactionsaddtoGDP? a.$55,000 b.$65,000 c.$120,000 d.Noneoftheabovearecorrect. 47.AU.S.-ownedautomobilefactoryuses$100,000worthofpartspurchasedfromforeigncountriesalongwithU.S.inputstoproduce30carsworth$20,000each.Twentyofthesecarsaresoldand10areleftininventory.HowmuchdidtheseactionsaddtoGDP? a.$300,000 b.$500,000 c.$600,000 d.$700,000 48.AU.S.-ownedcarfactoryinMexicoproduces$5millionofcars.$2.5millionofthesecarsaresoldinMexicoandtheother$2.5millionaresoldintheU.S.Inbothcases$1millionofthevalueofthecarswasduetoU.S-ownedequipmentlocatedinMexicoandU.S.managersworkinginMexico.HowmuchdidthisproductioncontributetoU.S.GDP? a.$0 b.$1million c.$2million d.Noneoftheabovearecorrect 49.Supposethereareonlytwofirmsinaneconomy:Cowhide,Inc.producesleatherandsellsittoCouches,Inc.,whichproducesandsellsleatherfurniture.Witheach$1,000worthofleatherthatitbuysfromCowhide,Inc.,Couches,Inc.producesacouchandsellsitfor$2,600.Neitherfirmhadanyinventoryatthebeginningof2015.Duringthatyear,Cowhideproducedenoughleatherfor25couches.Couches,Inc.bought80%ofthatleatherfor$20,000andpromisedtobuytheremaining20%for$5,000in2016.Couches,Inc.produced20couchesduring2015andsoldeachoneduringthatyearfor$2,600.Whatwastheeconomy’sGDPfor2015? a.$25,000 b.$52,000 c.$57,000 d.$65,000 50.Supposethereareonlytwofirmsinaneconomy:RollingRawhideproducesrawhideandsellsittoChewyChomp,Inc.,whichusestherawhidetoproduceandselldogchews.Witheach$1worthofrawhidethatitbuysfromRollingRawhide,ChewyChomp,Inc.producesadogchewandsellsitfor$2.50.Neitherfirmhadanyinventoryatthebeginningof2014.Duringthatyear,RollingRawhideproducedenoughrawhidefor2000dogchews.ChewyChomp,Inc.bought90%ofthatrawhidefor$1800andpromisedtobuytheremaining10%for$200in2015.ChewyChomp,Inc.produced1800dogchewsduring2014andsoldeachoneduringthatyearfor$2.50.Whatwastheeconomy’sGDPfor2014? a.$3,800 b.$4,500 c.$4,700 d.$5,000    

    21) Suppose the nominal interest rate on a savings bond is 7 percent a year and the inflation rate is 4.5 percent a year. How much is the real interest rate? A) 1.56 percent B) 11.5 percent C) 2.5 percent D) 7 percent E) 4.5 percent   22) If the inflation rate is 2.5 percent and the nominal interest rate is 10 percent, […]

  101.Ifthenumberofsellersinamarketincreases,thenthe a.demandinthatmarketwillincrease. b.supplyinthatmarketwillincrease. c.supplyinthatmarketwilldecrease. d.demandinthatmarketwilldecrease. 102.Adecreaseinthenumberofsellersinthemarketcauses a.thesupplycurvetoshifttotheleft. b.thesupplycurvetoshifttotheright. c.amovementupandtotherightalongastationarysupplycurve. d.amovementdownwardandtotheleftalongastationarysupplycurve. 103.Anincreaseinwhichofthefollowingwouldshiftthesupplycurveforgasolinetotheright? a.demandforgasoline b.priceofgasoline c.numberofproducersofgasoline d.priceofoil,aninputintotheproductionofgasoline 104.Whichofthefollowingeventscouldcauseanincreaseinthesupplyofceilingfans? a.Thenumberofsellersofceilingfansincreases. b.Thereisanincreaseinthepriceofairconditioners,andconsumersregardairconditionersandceilingfansassubstitutes. c.Thereisanincreaseinthepriceofthemotorthatpowersceilingfans. d.Alloftheabovearecorrect. Figure4-14   105.RefertoFigure4-14.WhichofthefollowingbestdescribesthemovementfromE1toE2? a.adecreaseinsupply b.anincreaseinsupply c.amovementalongthesupplycurve d.adecreaseindemand 106.RefertoFigure4-14.WhichofthefollowingwouldexplainamovementfromE1toE2? a.Thereisanimprovementinthetechnologyusedtoproducethisgood. b.Thecostofaninputtotheproductionofthisgoodincreases. c.Thisgoodbecomesverypopular. d.Thepriceofasubstitutegooddecreases. Figure4-15   107.RefertoFigure4-15.WhichofthefollowingwouldcausethesupplycurvetoshiftfromSupplyAtoSupplyCinthemarketforbeachtowels? a.anincreaseinthepriceofbeachtowels b.anexpectationbyfirmsthatthepriceofbeachtowelswillincreaseintheverynearfuture c.adecreaseinthepriceofcotton d.adecreaseinthenumberoffirmssellingbeachtowels 108.RefertoFigure4-15.WhichofthefollowingwouldcausethesupplycurvetoshiftfromSupplyAtoSupplyCinthemarketforsailboats? a.anincreaseinthepriceofsailboats b.adecreaseinthenumberoffirmssellingsailboats c.adecreaseinthepriceoffiberglassandsailcloth d.adecreaseinthepriceofAmerica’sCupsailingt­shirts 109.RefertoFigure4-15.WhichofthefollowingwouldcausethesupplycurvetoshiftfromSupplyBtoSupplyAinthemarketforbutter? a.adecreaseinthepriceofbutter b.anincreaseinthepriceofmargarine c.anincreaseinthepriceofmilk d.animprovementintechnologythatallowsfirmstouselesslaborintheproductionofbutter 110.RefertoFigure4-15.WhichofthefollowingwouldcausethesupplycurvetoshiftfromSupplyBtoSupplyAinthemarketforbeer? a.adecreaseinthepriceofbeer b.anexpectationbyfirmsthatthepriceofbeerwillincreaseintheverynearfuture c.adecreaseinthepriceofhops d.animprovementintechnologythatallowsfirmstouselesslaborintheproductionofbeer   Figure4-16   111.RefertoFigure4-16.TheshiftfromStoS’iscalleda(n) a.decreaseinsupply. b.decreaseinquantitysupplied. c.increaseinsupply. d.increaseinquantitysupplied. 112.RefertoFigure4-16.TheshiftfromStoS’couldbecausedbyan a.increaseinthepriceofthegood. […]

  7.1   Price Ceilings   1) A price ceiling A) is an illegal price. B) is the price that exists in a black market. C) is the maximum price that can legally be charged. D) Both answers A and B are correct. E) Both answers B and C are correct.   2) A price ceiling is A) a maximum legal price. B) a minimum legal […]

  11) Which of the following actions would most likely have an external benefit? A) eating a peanut butter sandwich B) throwing trash out your car window as you drive to class C) sleeping D) attending college E) developing a better marketing strategy for Honda   12) Which of the following is an example of an external benefit? A) a ton of coal burned in […]

    51) A price-discriminating monopoly is a monopoly that A) sells its output at a single price to all of its customers. B) sells different units of a good or service at different prices. C) has control over the resources used to produce the product. D) has a license to sell the product. E) illegally charges different customers different prices for the good it […]

  51.Considerthreedifferentclosedeconomieswiththefollowingnationalincomestatistics.CountryAhastaxesof$40billion,transfersof$20billion,andgovernmentexpendituresongoodsandservicesof$30billion.CountyBhasprivatesavingsof$60billion,andinvestmentexpendituresof$40billion.CountryChasGDPof$300billion,investmentof$90,consumptionof$180billion,taxesof$60billionandtransfersof$20billion.Fromthisinformation,weknowthat a.countryAhasthelargestgovernmentbudgetdeficit. b.countryBhasthelargestgovernmentbudgetdeficit. c.countryChasthelargestgovernmentbudgetdeficit. d.Thegovernmentbudgetdeficitisequalinallthreecountries. 52.InexaminingthenationalincomeaccountsoftheclosedeconomyofNepotocracyyouseethatthisyearithadtaxesof$100billion,transfersof$20billion,andgovernmentpurchasesofgoodsandservicesof$70billion.Youalsonoticethatlastyearithadprivatesavingof$70billionandinvestmentof$50billion.InwhichyeardidNepotocracyhaveabudgetdeficitof$20billion? a.thisyearandlastyear b.thisyearbutnotlastyear c.lastyearbutnotthisyear d.neitherthisyearnorlastyear 53.Youhavesomeestimatesofnationalaccountsnumbersforaclosedeconomyforthecomingyear.Underonesetofexpectations,governmentpurchaseswillbe$30billion,transferpaymentswillbe$10billion,andtaxeswillbe$45billion.Underanothersetofexpectations,GDPwillbe$200billion,taxeswillbe$50billion,transferpaymentswillbe$20 billion, consumptionwill be $120million, and investmentwill be $40billion. Based onthese numbers inthefirstcasethereshouldbea a.$15billionsurplus,andinthesecondcasea$10billionsurplus. b.$15billionsurplus,andinthesecondcasea$30billiondeficit. c.$5 billionsurplus,andinthe secondcasea$10billiondeficit. d.$5 billionsurplus,andinthe secondcasea$30billiondeficit. 54.ThecountryofGrowpawdoesnottradewithanyothercountry.ItsGDPis$20billion.Itsgovernmentpurchases$3billionworthofgoodsandserviceseachyear,collects$4billionintaxes,andprovides$2billionintransferpaymentstohouseholds.PrivatesavinginGrowpawis$4billion.WhatisinvestmentinGrowpaw? a.$5billion b.$4billion c.$3billion d.$11billion 55.ThecountryofCedarlanddoesnottradewithanyothercountry.ItsGDPis$17billion.Itsgovernmentpurchases$5billionworthofgoodsandserviceseachyearandcollects$6billionintaxes.PrivatesavinginCedarlandis$5billion.ForCedarland, a.investmentis$6billionandconsumptionis$7billion. b.investmentis$6billionandconsumptionis$6billion. c.investmentis$7billionandconsumptionis$7billion. d.investmentis$7billionandconsumptionis$6billion. 56.ThecountryofYokoviadoesnottradewithanyothercountry.ItsGDPis$20billion.Itsgovernmentcollects$2billion intaxes.Consumption equals$15billionand investmentequals$2 billion.Whatispublic savinginYokovia,andwhatisthevalueofthegoodsandservicespurchasedbythegovernmentofYokovia? a.-$2billionand$1billion. b.$1billionand$1billion. c.-$1billionand$3billion. d.-$2billionand$3billion. 57.ThecountryofBienmundodoesnottradewithanyothercountry.ItsGDPis$30billion.Itsgovernmentpurchases$5billionworthofgoodsandserviceseachyearandcollects$6billionintaxes.PrivatesavinginBienmundoamountsto$5billion.WhatareconsumptionandinvestmentinBienmundo? a.$17 billionand$8billion, respectively. b.$19 billionand$6billion, respectively. c.$19 billionand$8billion, respectively. d.$17 billionand$6billion, respectively. […]

    Table 4-9 Price per Bushel (dollars) Quantity Demanded (bushels) Quantity Supplied (bushels) $2 40,000         0   4 34,000   4,000   6 28,000   8,000   8 24,000 16,000 10 20,000 20,000 12 18,000 28,000 14 12,000 36,000 16   6,000 40,000   Table 4-9 above contains information about the corn market. Answer the following questions based on this table.   114) […]