1) An economist who is studying the relationship between the money supply, interest rates, and the rate of inflation is engaged in
A. microeconomic research
B. macroeconomic research
C. theoretical research, because there is no data on these variables
D. empirical research, because there is no economic theory related to these variables
2) A basic difference between microeconomics and macroeconomics is that microeconomics
A. focuses on the choices of individual consumers, while macroeconomics considers the behavior of large businesses
B. focuses on financial reporting by individuals, while macroeconomics focuses on financial reporting by large firms
C. examines the choices made by individual participants in an economy, while macroeconomics considers the economy's overall performance
D. focuses on national markets, while macroeconomics concentrates on international markets
3) The distinction between supply and the quantity supplied is best made by saying that
A. the quantity supplied is represented graphically by a curve and supply as a point on that curve associated with a particular price
B. supply is represented graphically by a curve and the quantity supplied as a point on that curve associated with a particular price
C. the quantity supplied is in direct relation with prices, whereas supply is in inverse relation
D. the quantity supplied is in inverse relation with prices, whereas supply is in direct relation
4) After several years of slow economic growth, world demand for petroleum began to rise rapidly in the 1990s. Much of the increase in demand was met by additional supplies from sources outside the Organization of Petroleum Exporting Countries (OPEC). OPEC, during this time, was unable to restrain output among members in its effort to lift oil prices. What best describes these events?
A. The rise in demand shifted the demand for oil to the right. OPEC actions shifted the demand for oil back to the left.
B. The rise in demand shifted the demand for oil to the right. As price rose, the supply of oil also rose.
C. The rise in demand shifted the demand for oil to the right. As price rose, the quantity of oil supplied rose.
D. The rise in demand reflects a movement down along the demand curve as supply shifted to the right when suppliers produced more oil.
5) Price elasticity of demand is the:
A. change in the quantity of a good demanded divided by the change in the price of that good
B. change in the price of a good divided by the change in the quantity of that good demanded
C. percentage change in price of that good divided by the percentage change in the quantity of that good demanded
D. percentage change in quantity demanded of a good divided by the percentage change in the price of that good
6) If average movie ticket prices rise by about 5 percent and attendance falls by about 2 percent, other things being equal, the elasticity of demand for movie tickets is about:
A. 0.0
B. 0.4
C. 0.6
D. 2.5
7) When labor is the variable input, the average product equals the
A. marginal product divided by the number of workers
B. marginal product multiplied by the number of workers
C. number of workers divided by the quantity of output
D. quantity of output divided by the number of workers
8) The increase in output obtained by hiring an additional worker is known as
A. the average product
B. the marginal product
C. the total product
D. value added
9) Which of the following is the best example of a long-run decision?
A. An automobile manufacturing company is considering whether or not to invest in robotic equipment to develop a more cost-effective production technique.
B. An automobile manufacturing company is considering whether or not to expand its existing workforce, while keeping the same factory and equipment.
C. A business consulting firm is considering whether or not to hire interns to assist with research and data processing.
D. A business consulting firm is considering whether or not to add new computers while maintaining the same number of employees.
10) Other things being equal, when average productivity falls,
A. average fixed cost must rise
B. marginal cost must rise
C. average total cost must rise
D. average variable cost must rise
11) According to economist Colin Camerer of the California Institute of Technology, many New York taxi drivers decide when to finish work by setting an income goal for themselves. If this is true, then on busy days when the effective hourly wage is higher, taxi drivers will
A. work the same number of hours as they will on slower days
B. work fewer hours than they will on slower days
C. work more hours than they will on slower days
D. not work any hours
12) A firm's demand for labor is derived from the
A. opportunity costs associated with labor and leisure
B. desires and needs of the entrepreneur
C. cost of labor inputs
D. demand for its output
13) Owen runs a delivery business and currently employs three drivers. He owns three vans that employees use to make deliveries, but he is considering hiring a fourth driver. If he hires a fourth driver, he can schedule breaks and lunch hours so all three vans are in constant use, allowing him to increase deliveries per day from 60 to 75. This will cost an additional $75 per day to hire the fourth driver. The marginal cost per delivery of increasing output beyond 60 deliveries per day
A. is $0 because Owen does not have to purchase another van
B. is $5
C. is $75
D. cannot be calculated without knowing Owen's total fixed costs
14) Expected economic profit per unit is equal to
A. expected price
B. expected average total cost
C. the difference between expected average price and expected average total cost
D. the difference between expected total revenue and expected total cost
15) If a firm in a perfectly competitive market experiences a technological breakthrough,
A. other firms would find out about it eventually
B. other firms would find out about it immediately
C. other firms would not find out about it
D. some firms would find out about it, but others would not