Figure 2-6     79) Refer to Figure 2-6.  If the economy is currently producing at point A, what is the opportunity cost of moving to point B? A) 8 thousand wrenches B) 6 thousand hammers C) 30 thousand wrenches D) 23 thousand hammers   80) Refer to Figure 2-6.  If the economy is currently producing at point C, what is the opportunity […]

  5.3   Cross Elasticity and Income Elasticity   1) The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the A) income elasticity of demand. B) cross elasticity of demand. C) price elasticity of demand. D) price elasticity of supply. E) cross income elasticity of demand. 2) The […]

  11) Which statement best describes the “law of demand”? Other things being equal, the quantity of tennis rackets demanded will be greater if the A) incomes of tennis players are higher. B) price of tennis rackets is lower. C) price of badminton rackets is higher. D) number of tennis players is higher. E) demand for tennis rackets rises. 12) The “law of demand” describes […]

    31) Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument? A) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity. B) A consumer who won a lottery […]

    111.Budget Electronics is planning to sell 2,200 and produce 2,000 wicker baskets during June. Each unit requires 120 linear feet of wicker and 0.70 hours of direct labor. Wicker costs $0.35 per linear foot and employees of the company are paid $13.00 per hour. Manufacturing overhead is applied at a rate of 140% of direct labor costs. The company wants to have 10% […]

  11) Which of the following goods is directly counted in GDP? A) the lettuce that Subway purchases for its sandwiches B) the bread that Subway purchases for its sandwiches C) a 12-inch Subway sandwich purchased by a student D) the plastic bags that Subway purchases to wrap its sandwiches 12) Which of the following transactions represents the purchase of a final good? A) Starbucks […]

    41) As additional units of labor hours are employed, holding all other factors constant, along the production function, A) real GDP increases at an increasing rate. B) nominal GDP decreases at an increasing rate. C) real GDP increases at a decreasing rate. D) real GDP increase at a constant rate. E) real GDP initially decreases and then starts to increase. 42) The idea […]

    27) If a 5 percent increase in income leads to a 10 percent increase in quantity demanded for airline travel, then airline travel is A) a necessity. B) a substitute for another good. C) a luxury. D) an inferior good.   28) If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books, the income […]

    81.              What happens to the vapor pressure, boiling point, and freezing point of a liquid when a solute is dissolved in the liquid to form a solution? A)vapor pressure increases, boiling point decreases, and freezing point decreases B)vapor pressure decreases, boiling point decreases, and freezing point decreases C)vapor pressure decreases, boiling point increases, and freezing point decreases D)vapor pressure increases, boiling point decreases, […]

  21) If the demand curve faced by a firm is downward sloping, we can reasonably believe that the A) firm can influence the price of the product it sells. B) firm will have no effect on the price of the product it sells. C) firm must lower prices if it hopes to increase its profits. D) firm’s contributions to total output of the product […]