Question: Terms of trade…
Answer Options: A. favor larger country B. favor less comparative advantage country C. allow absolute advantage dev D. between their opportunity costs
Answer: D (between their respective opportunity costs)
Question: Bond price down from $900 to $750, coupon $60. Current yield?
Answer Options: A. 8% B. 11.11% C. 67% D. 60%
Answer: A (8%)
Question: At min ATC, earn profits by…
Answer Options: A. Decrease production costs (tech improvements) B. Decrease price C. Produce where price=demand D. Increase price
Answer: A (decreasing production costs)
Question: (Table 21.2) MC between 20 and 30 units?
Answer Options: A. $18.00 B. $1.60 C. $4.00 D. $1.80
Answer: D ($1.80)
Question: Failing to account for implicit costs leads to… Answer Options (implied): Correct interpretation: They make more money when they shut down.
Answer: “make more money when they shut down.”
Question: Economic profits signal that…
Answer Options: A. Consumers want more resources devoted B. Best mix already produced C. Price at min ATC D. Market oversupplied
Answer: A (consumers want more resources devoted to that product)
Question: Increase price above equilibrium leads to…
Answer Options: A. shift supply right B. surplus C. shortage D. shift demand right
Answer: B (cause a surplus)
Question: Collusion undesirable because…
Answer Options: A. leads to greater output than competition B. Gov’t intervention inefficient C. resources misallocated, output restricted D. unprofitable, needs gov’t bailout
Answer: C (resources are misallocated and output restricted)
Question: Comparative advantage achieved by…
Answer Options: A. Subsidizing/exporting B. Lower opportunity cost C. Better terms of trade D. Fewer inputs than others
Answer: B (having a lower opportunity cost)