Question: The rationale for allowing a monopoly supplier of government-provided goods is that ________.
Answer Choices:
rent seeking is prevented
inefficient duplication is avoided
all rents go to the government
the goods are of consistent quality
Answer: inefficient duplication is avoided
Question: Which of the following are problems with the CPI? (choose all that are correct)
Answer Choices:
The number of households that are surveyed about spending is considered too low to provide accurate results about prices.
Because of substitution bias, changes in the CPI will over-estimate the impact of inflation on consumer well-being.
Because of substitution bias, changes in the CPI will under-estimate the impact of inflation on consumer well-being.
Because the introduction of new consumer products is not immediately incorporated into the CPI market basket, changes in the CPI will misrepresent the impact of inflation on consumer well-being.
Answer: Because of substitution bias, changes in the CPI will over-estimate the impact of inflation on consumer well-being.
Because the introduction of new consumer products is not immediately incorporated into the CPI market basket, changes in the CPI will misrepresent the impact of inflation on consumer well-being.
Question: Leading change requires a vision.
Answer Choices:
True
False
Answer: True
Question: Technocratically determined demand means that ________.
Answer Choices:
the demand for labor will depend on techniques of production and on technological progress
the demand for product will require that more technology be added to the production function
demand is calculated based on how much technology is involved in the final product
consumers determine demand by using technology such as the internet to indicate preferences
Answer: the demand for labor will depend on techniques of production and on technological progress
Question: An increase in the general price level (inflation) serves to transfer wealth from borrowers to lenders.
Answer Choices:
True
False
Answer: False
Question: Why are oligopoly firms often reluctant to change the price of their product?
Answer Choices:
They fear that their competitors will follow price decreases but ignore price increases.
They fear that their competitors will ignore price decreases but follow price increases.
They know that their competitors will always match their price changes.
They fear losing sales, because demand is always inelastic in oligopoly markets.
Answer: They fear that their competitors will follow price decreases but ignore price increases.
Question: Dara is a US citizen. She has a company based in Portland, Oregon that produces oven mitts, kitchen towels, and cloth napkins. All of the inputs used in producing these goods are purchased in the US. In 2019, Dara’s company sold $22,000 worth of product to a retail shop located in Buenos Aires, Argentina. The value of this output will be counted in:
Answer Choices:
US GDP, but not US GNP
US GNP, but not US GDP
Both US GDP and US GNP
Neither US GDP nor US GNP
Answer: US GDP, but not US GNP
Question: Which of the following is true regarding increases in nominal GDP?
Answer Choices:
Nominal GDP can increase only if total output is increasing.
Nominal GDP can decrease even if prices are rising and output is rising.
Nominal GDP can increase even if total output is declining.
Nominal GDP can increase even if prices are rising and output is rising.
Answer: Nominal GDP can increase even if total output is declining.
Question: When there is an equilibrium price for a certain soccer ball—as determined by the intersection of the demand and supply curves for that soccer ball—everyone who ________.
Answer Choices:
is willing to pay that price or more will get a soccer ball, and everyone who is willing to produce a soccer ball for that price or less will be able to sell it
wants to buy a soccer ball will be able to get it
wants to sell a soccer ball will be able to sell it
Answer: is willing to pay that price or more will get a soccer ball, and everyone who is willing to produce a soccer ball for that price or less will be able to sell it
Question: Based on the graph shown here, what is the equilibrium market price of this good with no government intervention?
Price ($)
25
15
Price ($)
25
15
Answer Choices:
$8
$12
$15
$25
Answer: $15
Question: When an economy is operating at the natural rate of unemployment, cyclical unemployment is zero.
Answer Choices:
True
False
Answer: True
Question: When a tax is imposed on the sale of a good, the seller will raise the price of the good by the amount of the tax, and the tax will be paid entirely by the consumer.
Answer Choices:
True
False
Answer: False
Question: Which two of the following market types have the most potential for firms to earn positive economic profits in the long run? <Choose 2>
Answer Choices:
Monopoly
Oligopoly
Monopolistic competition
Perfect competition
Answer: Monopoly
Oligopoly
Question: Luke is an engineering consultant who lives in North Carolina and works around the world. In 2019 Luke traveled to Costa Rica for 2 weeks and provided consulting services to a Costa Rican developer. All of the work took place in Costa Rica. He was paid $14,000 USD by the developer. Luke claimed this income on his 2019 U.S. tax return. Which of the following is correct regarding how the final value of this service will appear in national income accounts? (choose all that are correct)
Answer Choices:
$14,000 will appear in US GDP.
$14,000 will appear in US GNP.
$14,000 will appear in Costa Rica’s GDP.
$14,000 will appear in Costa Rica’s GNP.
Answer: $14,000 will appear in US GNP.
$14,000 will appear in Costa Rica’s GDP.
Question: Positive and negative externalities are two common cases of “market failure.” What does this mean? What is it that some markets fail to do?
Answer Choices:
Market failure means the market is not providing the lowest possible price to consumers.
Market failure means that the equilibrium price and quantity are not fair to some buyers of the good.
Market failure means that the market is not maximizing net gains to society.
Market failure means that businesses in the market will eventually fail due to negative economic profits.
Answer: Market failure means that the market is not maximizing net gains to society.
Question: Which of the following best describes the utility-maximizing rule for finding the optimal combination of 2 or more goods?
Answer Choices:
Find the affordable combination where marginal utility per dollar is equal across the goods.
Find the affordable combination with the lowest prices.
Always purchase goods that provide the highest utility regardless of price.
Consume goods up to the point of diminishing marginal utility.
Answer: Find the affordable combination where marginal utility per dollar is equal across the goods.