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According to this theory, individuals with different abilities are better off when they specialize in what they do best and then trade with other people doing the same.
a. opportunity cost
b. Positive consumption
c. Occupation savings
d. Normative production
e. Gains from trade
e. Gains from trade
A creator of a new medical device is granted a patent for her invention. This device is most likely to be produced in a(n) ____ during the life of the patent.
a. Monopolistically competitive market
b. Perfectly competitive market
c. Natural monopoly
d. Government-created monopoly
d. Government-created monopoly
e. Oligopoly
a. Monopolistically competitive market
A profit maximizing firm currently has a marginal cost of $15 and charges a price of $20. Which of the following is NOT a possible market type for this firm?
a. Perfect competition
b. Natural Monopoly
c. Monopoly
d. Monopolistic competition
e. Oligopoly
a. Perfect competition
Suppose Issa values having a silent apartment at $300 per month. her neighbor, Jason, listens to loud music without headphones, which disturbs Issa. He values this at $200 per month. If the two can negotiate at very low cost, what is the likely outcome?
a. Jason listens to his music loudly and pays nothing
b. Issa gets her silence and pays nothing
c. Issa gets her silence and pays nothing
d.Jason pays Issa and turns his music down
e. Issa pays Jason to turn his music down
e. Issa pays Jason to turn his music down
The government launches a campaign encouraging people to save for their own retirement. This is likely to do what in the financial market for loanable funds?
a. no change
b. increase supply
c. increase demand
d. decrease demand
e. decrease supply
b. increase supply
Why should investment in capital be encouraged up to a point?
a. More investment required less current consumption, has diminishing marginal returns, and the benefits of investment may take time to realize
b. More investment has diminishing marginal returns
c. The benefits of investment may take time to realize
d. More investment has increasing marginal returns
e. more investment required less current consumption
a. More investment required less current consumption, has diminishing marginal returns, and the benefits of investment may take time to realize
Concerning Pareto efficiency, if an economy consists of twelve people who produce $60 worth of goods and services, Which of the following scenarios is not efficient?
a. Each person receives $5 of benefits from the production
b. Three persons each receive $11 of benefits and everyone else each receives $3 of benefits
c. Two persons each receive $25 of benefits and everyone else each receives $1 of benefits
d. One person receives $49 of benefits and everyone else each receives $1 of benefits
e. Four persons each receive $10 fo benefits and everyone else each receives $2 of benefits
e. Four persons each receive $10 of benefits and everyone else each receives $2 of benefits
Suppose a very successful banker was laid off from his Wall Street firm in 2009 as a result of the "great recession". What BEST describes his type of unemployment?
a. cyclical
b. frictional
c. structural
d. under
e. discouraged
a. cyclical
A music streaming service offers a discount for students which is not available otherwise. This is most likely due to which of the following?
a. Government subsidies for providing student services
b. The owners desire to help struggling college students
c. A court order
d. price discrimination
e. lower cost of providing the service
d. price discrimination
How can a saver that is uneducated about good opportunities reduce their risk of investing?
a. personality finding someone to make a loan to
b. personally choosing a few stocks to buy
c. By placing money in a bank to be lent out and by placing money in a mutual fund
d. by placing money in a bank to be lent out
e. by placing money in a mutual fund
c. By placing money in a bank to be lent out and by placing money in a mutual fun
Suppose that the only difference in the economy between year 1 and year 2 is a 15% increase in every price. There are no differences in quantity. Which of the following is TRUE?
a. Nominal GDP rises if the expenditure approach is used, but not the income approach
b. Real GDP rises if the expenditure approach is used, but not the income approach
c. Nominal GDP rises 15%, while real GDP is constant
d. Real GDP rises 15%, while nominal GDP is constant
e. Both real and nominal GDP rises 15%
c. Nominal GDP rises 15%, while real GDP is constant
Suppose environmental concerns cause a society to care more about pollution. As a result, the quantity demanded of gasoline at every price decreases. This shift in demand is due to a change in ______.
a. Number of suppliers
b. Expectations
c. Technology
d.taste
e. number of buyers
d.taste
Ford produces $3,000,000 worth of trucks in Mexico and sells them in the U.S.. Subaru produces $5,000,000 worth of trucks in Arizona and sells them in Canada. What is the contribution to US GDP?
a. $3,000,000
b. $2,000,000
c. -$2,000,000
d. $8,000,000
e. $5,000,000
e. $5,000,000
According to data collected by the BLS in July 2020, there were significant increases in the U.S. unemployment rate due to the _________.
a. great financial crisis
b. supply chain distractions
c. inflation pressures
d. Covid-19 pandemic
e. Great Recession
d. Covid-19 pandemic
Which of the following situations exhibits a negative externality?
a. A consumer must pay to unlock additional features in a video game
b. a firm passes the costs of its materials on to its consumers
c. A homeowner invests in a security system that deters crime on her entire block
d. a landlord invests in better locks that improve the safety of only her apartments
e. a new video game is so popular that it slows down internet access for all individuals
e. a new video game is so popular that it slows down internet access for all individuals
The idea that my consumption of a public good does not compete with your consumption of the same good indicates the public good has a defining characteristic of being __________.
a. Rival
b. Nonrival
c. Invisible
d. Progressive
e. Equitable
b. Nonrival
A sales promotion gave all consumers of a good a 15% price reduction. The firm estimated that as a consequence, revenue rose by 5%. This implies that the demand for the good is ___ at its current price.
a. Perfectly elastic
b. In elastic
c. Elastic
d. Perfectly inelastic
e. Unit elastic
c. Elastic
A private college is considering a new program to provide financial aid to students who come from lower-income families. They would like an economist to use _____ economics to predict how it will affect enrollment, and ____ economics to determine if they should carry out the new program.
a. Positive; normative
b. Normative; macro
c. Normative; positive
d. Normative; micro
e. Positive; efficiency
a. Positive; normative
Suppose that a nation chooses to mine a mountain that was previously preserved as a free park for all to enjoy. Specifically, the mine will generate $5,000,000 per year in additional output, while the consumers valued the park at $10,000,000. Which of the following is the measured change in GDP?
a. $10,000,000
b. $15,000,000
c. $0
d. $5,000,000
e. -$5,000,000
d. $5,000,000
The problems of organization and coordination are called ____ actions
a. coordinated
b. corrective
c. uncoordinated
d. collective
e. subliminal
d. collective
The Fed is concerned that the economy may be heading into a recession. Which of the following policies would they wish to implement?
a. Sell government bonds
b. Sell government bonds and raise the discount rate
c. Increase reserve requirements
d. Lower the discount rate
e. Raise the discount rate
d. Lower the discount rate
When transaction costs are low, private parties can formulate solutions to complex problems and disagreements between one another. This is referred to as ___.
a. the Coase Theorem
b. The Adams Theorem
c. Corporate sabotage
d. The smith theorem
e. The profit motive
a. the Coase Theorem
In June of 2023, the New York Times reported that forest fires burning out of control in which region had delivered deadly smoke that threatened New Yorkers' ability to breathe?
a. Western Connecticut
b. Western Canada
c. Eastern Pennsylvania
d. The Hudson Valley
e. Northern New Jersey
b. Western Canada
Suppose that the government would like to increase the production of solar panels. Which of the options below would result in an increase in the equilibrium quantity of solar panels sold?
a. A tax on solar panels
b. A price ceiling on solar panels
c. A tariff on raw materials imported from abroad
d. A subsidy to producers of solar panels to lower production costs
e. A decrease in the price of power from the coal power plant
d. A subsidy to producers of solar panels to lower production costs
Economists think that, in reality, supply and demand is a good model for ____.
a. Markets that have reasonably similar products, and more than a few sellers and byers
b. markets with only one seller and many buyers
c. all markets
d. only markets that have identical products, many sellers, and many buyers
e. markets that have identical products, but only a few sellers and buyers
a. Markets that have reasonably similar products, and more than a few sellers and byers