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5 Steps To A 5 AP Microeconomics And Macroeconomics 1st Edition Eric Dodge - Solutions
3. If Real GDP = $200 billion and the price index =200, Nominal GDP is A. $4 billion.B. $400 billion.C. $200 billion.D. $2 billion.E. impossible to determine since the base year is not given.
2. GDP is $10 million, consumer spending is $6 million, government spending is $3 million, exports are $2 million, and imports are $3 million. How much is spent for investments?A. $0 million B. $1 million C. $2 million D. $3 million E. $4 million
1. Which of the following transactions would be counted in GDP?A. The wage you receive from babysitting your neighbor’s kids B. The sale of illegal drugs C. The sale of cucumbers to a pickle manufacturer D. The sale of a pound of tomatoes at a supermarket E. The resale of a sweater you received
6. You learn that one nation has a Gini ratio of .25 and another nation has a Gini ratio of .85. Based on this you might conclude:A. the nation with the higher Gini ratio has a more equal distribution of wealth and income.B. the nation with the higher Gini ratio has a more unequal distribution of
5. Jason earns $1000 a week and pays a total of$200 in taxes. Jennifer earns $2000 a week and pays a total of $300 in taxes. We can conclude from this information that their income is taxed with a(n)A. progressive tax.B. proportional tax.C. regressive tax.D. tax bracket.E. egalitarian tax.
4. Production of energy (i.e, electricity, natural gas, heating oil) creates a negative externality in the form of air pollution blown to communities downwind from the source of the pollution. Of the choices below, which is the most appropriate policy to remedy this negative externality?A. a per
3. Which of the following is the best example of a public good?A. A lighthouse on a rocky coastline.B. Tickets to the Super Bowl.C. A granola bar.D. A cup of coffee.E. A magazine subscription.
2. Which of the following scenarios best describes a negative externality?A. A roommate subscribes to a monthly CD club and you share the same taste in music.B. Your neighbor has a swimming pool and you have an open invitation to come on over for a pool party.C. Your neighbor has a swimming pool
1. In the figure below, X represents A. spillover benefits.B. a potential producer subsidy to eliminate an externality.C. a potential consumer subsidy to eliminate an externality.D. both A and C.E. A, B, and C. Pmk Qmk Qsoc S x Dsocial Dprivate
5. If a firm hires labor in a monopsony labor market, the wage and employment are A. $3 and zero.B. $4 and 10.C. $5 and 20.D. $6 and 30.E. $7 and 40.
4. If a firm is hiring labor in the perfectly competitive labor market, the wage and employment are A. $3 and zero.B. $4 and 10.C. $5 and 20.D. $6 and 30.E. $7 and 40.
3. A competitive labor market is currently in equilibrium.Which of the following most likely increases the market wage?A. More students graduate with the necessary skills for this labor market.B. Demand for the good produced by this labor is stronger.C. The price of a complementary resource
2. The price of labor is $2 and the price of capital is$1. The marginal product of labor is 200 and the marginal product of capital is 50. What should the firm do?A. Increase capital and decrease labor so that the marginal product of capital falls and the marginal product of labor rises.B. Increase
1. Your aunt runs a small firm from her home making apple pies. She hires some friends to help her.Which of the following situations would most likely increase her demand for labor?A. The price of apple peelers/corers rises.B. Your aunt’s friends gossip all day, slowing their dough making
6. Dead weight loss occurs in A. monopolistic competition as P > MC.B. monopoly markets because P > MC.C. oligopoly markets because P > MC.D. all of the above.E. none of the above.
5. If these firms do not collude, the outcome will be:A. Both firms maintain the status quo.B. Both firms advertise.C. Firm X advertises and Firm Y maintains the status quo.D. Firm Y advertises and Firm X maintains the status quo.
4. Which of these situations is not an example of price discrimination?A. Brent works nights so he chooses to buy bread at 7 a.m. rather at 7 p.m.B. Bob and Nancy each receive a “$1 off”coupon in the mail, but Bob redeems it while Nancy does not.C. Katie buys 12 Cokes for $3 and Josh buys one
3. If the perfectly competitive price is currently above minimum ATC, we can expect which of the following events in the long run?A. Price rises as firms enter the industry.B. Market equilibrium quantity rises as firms exit the industry.C. Nothing, the industry is currently in long-run
2. Which characteristic is likely a part of a monopoly market but not of monopolistic competition?A. Differentiated products B. Patents & Copyrights C. Possibility of profit in the short run D. Dead weight loss exists E. None of the above
1. For a competitive firm, what is the most important thing to consider in deciding whether to shut down in the short run?A. Compare AVC to MR.B. Compare TR to TC.C. Do not produce if the TFC is not covered by revenue.D. Produce the highest quantity demanded regardless of price.E. Compare P to ATC.
6. At the q3 level of output, A. AFC = $d2 − $d1.B. MC = $d2.C. TVC = $d2.D. ATC = $d3.E. AFC = $d3 − $d2.
5. The curves labeled W, X, Y, Z refer to which respective cost functions?A. MC, AVC, ATC, and AFC.B. MC, TC, TVC, and AFC.C. MC, ATC, AVC, and AFC.D. MC, ATC, AVC, and TFC.E. ATC, AVC, AFC, and MC.
4. If the per unit price of labor, a variable resource, increases, it causes which of the following?A. An upward shift in AFC.B. An upward shift in MPL.C. A downward shift in ATC.D. An upward shift in MC.E. A downward shift in AFC.
3. Which of the following cost and production relationships is inaccurately stated?A. AFC = AVC − ATC B. MC = ΔTVC/ΔQ C. TVC = TC − TFC D. APL = TPL/L E. MC = w/MPL
2. The Law of Diminishing Returns is responsible for A. AVC that first rises, but eventually falls, as output increases.B. AFC that first rises, but eventually falls, as output increases.C. MP that first falls, but eventually rises, as output increases.D. MC that first falls, but eventually rises,
1. Which of the following is most likely an example of production inputs that can be adjusted in the long run, but not in the short run?A. Amount of wood used to make a desk.B. Number of pickles put on a sandwich.C. The size of a McDonald’s kitchen.D. Number of teacher’s assistants in local
6. The competitive market equilibrium is at point C. If a per unit excise tax is imposed on the production of this good, the revenue collected by the government is A. the area BDE.B. the area BADH.C. the area GDH.D. the area DAC.E. the area GDAB.
5. The competitive market equilibrium is at point C.If a per unit excise tax is imposed on the production of this good, the dead weight loss is A. the area BDE.B. the area BADH.C. the area GDH.D. the area DAC.E. the area GDAB.
4. A consequence of a price floor is A. a persistent shortage of the good.B. an increase in total welfare.C. a persistent surplus of the good.D. elimination of dead weight loss.E. an increase in quantity demanded and a decrease in quantity supplied.
3. Mrs. Johnson spends her entire daily budget on potato chips, at a price of $1 each, and onion dip at a price of $2 each. At her current consumption bundle, the marginal utility of chips is 12 and the marginal utility of dip is 30. Mrs. Johnson should A. do nothing; she is consuming her utility
2. A small business estimates price elasticity for the product to be 3. To raise total revenue, owners should A. decrease price as demand is elastic.B. decrease price as demand is inelastic.C. increase price as demand is elastic.D. increase price as demand is inelastic.E. do nothing; they are
1. If the price of corn rises 5 percent and the quantity demanded for corn falls 1 percent, then A. Ed = 5 and demand is price elastic.B. Ed = 1/5 and demand is price elastic.C. Ed = 5 and demand is price inelastic.D. Ed = 1/5 and demand is price inelastic.E. Ed = 5 and corn is a luxury good.
6. The competitive market provides the best outcome for society because A. consumer surplus is minimized while producer surplus is maximized.B. the total welfare is maximized.C. producer surplus is minimized while consumer surplus is maximized.D. the difference between consumer and producer surplus
5. The apple market is in equilibrium. Suppose we observe that apple growers are using more pesticides to increase apple production. At the same time, we hear that the price of pears, a substitute for apples, is rising. Which of the following is a reasonable prediction for the new price and
4. The market for denim jeans is in equilibrium, and the price of polyester pants, a substitute good, rises. In the jean market A. supply falls, increasing the price and decreasing the quantity.B. supply falls, increasing the price and increasing the quantity.C. demand falls, increasing the price
3. Suppose that aluminum is a key production input in the production of bicycles. If the price of aluminum falls, and all other variables are held constant, we expect A. the demand for aluminum to rise.B. the supply of bicycles to rise.C. the supply of bicycles to fall.D. the demand for bicycles to
2. If average household income rises and we observe that the demand for pork chops increases, pork chops must be A. an inferior good.B. a normal good.C. a surplus good.D. a necessity.E. a shortage good.
5. Ray and Dorothy can both cook and can both pull weeds in the garden on a Saturday afternoon. For every hour of cooking, Ray can pull 50 weeds and Dorothy can pull 100 wccds. Based on this information, A. Ray pulls weeds since he has absolute advan- tage in cooking. B. Dorothy pulls weeds since
4. The shape of this PPF tells us that A. economic resources are perfectly substitutable from production of tea to production of crumpets.B. citizens prefer that an equal amount of tea and crumpets be produced. C. the opportunity cost of producing crumpets rises as more crumpets are produced. D.
3. Economic growth is best represented by a move- ment from A. A to B B. B to C C. C to D D. D to E E. E to A
2. A student decides that, having already spent three hours studying for an exam, she should spend one more hour studying for the same exam. Which of the following is most likely true?A. The marginal benefit of the fourth hour is certainly less than the marginal cost of the fourth hour.B. The
1. Economics is best described as A. the study of how scarce material wants are allocated between unlimited resources.B. the study of how scarce labor can be replaced by unlimited capital.C. the study of how decision makers choose the best way to satisfy their unlimited material wants with a scarce
30. Which of the following is a likely effect of a higher tariff imposed by the U.S. on imported automobiles?A. Net exports will fall and the dollar will appreciate in value.B. Net exports will fall and the dollar will depreciate in value.C. The price of automobiles in the U.S. will fall.D. Net
29. Suppose the Japanese economy is suffering a prolonged recession. Lower Japanese household incomes will affect U.S. exports to Japan, demand for the dollar, and the value of the dollar relative to the yen in which of the following ways?Exports Demand Value To Japan For $ of $A. Decrease Decrease
28. If the world price of copper exceeds the domestic(U.S.) price of copper, we would expect A. The U.S. to be a net exporter of copper.B. The U.S. to impose a tariff on imported copper to protect domestic producers.C. The demand for U.S. copper to fall.D. A growing trade deficit in the U.S. in
27. Suppose the reserve ratio is 10 percent and the Fed buys $1 million in Treasury securities from commercial banks. If money demand is perfectly elastic, which of the following is likely to occur?A. Money supply increases by $10 million, lowering the interest rate and increasing AD.B. Money
26. If a bank has $1000 in checking deposits and the bank is required to reserve $250, what is the reserve ratio? How much does the bank have in excess reserves? What is the size of the money multiplier?A. 25%, $750, M = 1⁄4 B. 75%, $250, M = 4 C. 25%, $750, M = 4 D. 75%, $750, M = 1⁄4 E. 25%,
25. Excess reserves in the banking system will increase if A. the reserve ratio is increased.B. the checking deposits increase.C. the discount rate is increased.D. the Fed sells Treasury securities to commercial banks.E. income tax rates increase.
24. Which of the following is an accurate statement of the money supply in the U.S.?A. The money supply is backed by gold reserves.B. The least liquid measure of money is M2.C. M1 is larger than M3.D. Paper money can be exchanged at commercial banks for an equal amount of gold.E. The most liquid
23. Which of the following monetary policies would lessen the effectiveness of expansionary fiscal policy?A. Decreasing the value of the domestic currency.B. Lowering the income tax rate.C. Selling Treasury securities to commercial banks.D. Lowering the discount rate.E. Lowering the reserve ratio.
22. Which of the following is a tool used by the Fed to increase the money supply?A. A lower discount rate B. Selling Treasury securities to commercial banks C. A higher reserve ratio D. A lower personal income tax rate E. A lower investment income tax rate
21. A contractionary monetary policy will cause the real interest rate, aggregate demand, output, and the price level to change in which of the following ways?Real Interest Aggregate Price Rate Demand Output Level A. Decrease Increase Increase Increase B. Decrease Decrease Decrease Increase C.
20. In a recession, expansionary monetary policy is designed to A. decrease AD so that real prices will decrease, which is good for the economy.B. increase AD, which will increase real GDP and increase employment.C. increase unemployment, but low prices negate this effect.D. keep interest rates
19. The “crowding out” effect is the result of A. decreasing interest rates from contractionary fiscal policy.B. increasing interest rates from expansionary fiscal policy.C. increasing interest rates from expansionary monetary policy.D. increasing unemployment rates from expansionary monetary
18. Automatic stabilizers in the economy serve an important role in A. increasing length of the business cycle.B. balancing the budget.C. increasing a budget surplus in a recession.D. decreasing net tax revenue during economic growth.E. lessening the impact of a recession.
17. Of the following choices, the one most likely to be preferred by supply-side economists would be A. increased government spending.B. higher tariffs on imported goods.C. lower taxes on household income.D. higher welfare payments.E. a tax credit on capital investment.
16. If the economy is experiencing a recession, how will a plan to decrease taxes for consumers and increase spending on government purchases affect real GDP and the price level?A. GDP rises and the price level falls.B. GDP falls and the price level rises.C. GDP rises and the price level rises.D.
15. The Phillips Curve represents the relationship between A. inflation and the money supply.B. unemployment and the money supply.C. the money supply and the real interest rate.D. inflation and unemployment.E. investment and the real interest rate.
14. The best example of a negative supply shock to the economy would be A. a decrease in government spending.B. a decrease in the real interest rate.C. an increase in the money supply.D. unexpectedly higher resource prices.E. technological improvements.
13. The spending multiplier is often smaller than predicted because of A. lower taxes.B. increasing net exports.C. falling unemployment.D. lower interest rates.E. rising price levels.
12. Suppose the economy is operating beyond full employment. Which of the following is true at this point?A. The short-run AS curve is horizontal.B. Further increases in AD will result in a lower price level.C. A decrease in AD will result in a lower price level if prices are sticky.D. Further
11. If the economy is operating below full employment, which of the following will have the greatest positive impact on real GDP?A. The government decreases spending with no change in taxes.B. The government increases spending with no change in taxes.C. The government decreases spending and matches
10. An increase in investor optimism will have which of the following effects in the market for loanable funds?A. An increase in supply, lowering the interest rate.B. A decrease in demand, increasing the interest rate.C. An increase in both supply and demand, and an ambiguous change in interest
9. A stronger stock market is likely to cause which of the following changes in the consumption function, the MPC, and aggregate demand? Consumption Function MPC Aggregate Demand A. Increase Increase Increase B. No change No change No change C. Increase Decrease No change D. Increase No change
8. To deflate nominal GDP, you must A. divide nominal GDP by the GDP deflator. B. multiply real GDP by the GDP deflator. C. divide real GDP by the GDP deflator. D. multiply nominal GDP by the GDP deflator. E. divide nominal GDP by real GDP.
7. If the CPI increases by 2 percent and your nominal income increases by 8 percent, your real income has A. increased by 4 percent. B. decreased by 4 percent. C. increased by 6 percent. D. decreased by 6 percent. E. increased by 10 percent.
6. For years you work as a grocery checker at a supermarket and one day you are replaced by self-serve checkout stations. What type of unemployment is this? A. Cyclical B. Structural C. Seasonal D. Frictional E. Discouraged
5. If an American firm moves a plant from the U.S. to Brazil, A. U.S. GDP falls and Brazil's GDP falls. B. U.S. GDP rises and Brazil's GDP falls. C. U.S. GDP falls and U.S. GNP riscs. D. U.S. GDP falls and Brazil's GDP rises. E. U.S. GDP rises and Brazil's GDP rises.
4. If DVD players are a normal good, an increase in household income will A. increase the equilibrium quantity and increase the price. B. decrease the equilibrium quantity and increase the price. C. increase the equilibrium price, but the change in quantity is ambiguous. D. decrease the equilibrium
3. Using the graph above (Figure D.4), which of the following movements would be described as economic growth? A. W to X B. X to Y C. W to Y D. Z to W E. X to Z
2. Which of the following statements is true of these production possibilities? A. Nation X has comparative advantage in paper production and should trade paper to Nation Y in exchange for crepes. B. Nation X has comparative advantage in crepe production and should trade crepes to Nation Y in
1. Which of the following resources are examples of capital? I. An electric typewriter II. A barrel of crude oil III. A registered nurse IV. A share of corporate stock A. I only B. II only C. III only D. II and IV only E. I and IV only
30. Which of the following tax systems is designed to redistribute income from the wealthy to the poor?A. A progressive tax system.B. A regressive tax system.C. A proportional tax system.D. An excise tax system.E. A tariff system.
29. A negative externality from the production of a good exists when A. the market overallocates resources to the production of this good.B. spillover benefits are received by society.C. the marginal social benefit equals the marginal social cost.D. total welfare is maximized.E. the marginal
28. Which of the following is the best example of a public good?A. A visit to the orthodontist.B. A session at the tanning salon.C. A large pizza.D. A cup of coffee.E. The Hubble telescope.
27. If the above firm were a monopsonist, the wage would be ________ and employment would be _________ the competitive outcome.A. greater than; less than B. less than; greater than C. greater than; greater than D. less than; less than E. less than; the same as
26. If a firm is hiring labor in the perfectly competitive labor market, the wage and employment will be A. $4 and zero.B. $5 and 10.C. $6 and 20.D. $7 and 30.E. $8 and 40.
25. Which of the following statements is true about the demand for labor?A. It rises if the price of a substitute resource falls and the output effect is greater than the substitution effect.B. It falls if the price of the output produced rises.C. It falls if the price of a complementary resource
24. Which of the following is most likely to decrease the demand for kindergarten teachers?A. An increase in K–12 funding.B. Increased immigration of foreign citizens and their families.C. A decrease in the average number of children per household.D. Subsidies given to college students who major
23. If the government wishes to regulate a natural monopoly so that it produces an efficient level of output it would be A. where price is equal to average total cost.B. where marginal revenue equals marginal cost.C. where normal profits are made.D. where price is equal to average variable cost.E.
22. The market structures of perfect competition and monopolistic competition share which of the following characteristics?A. Ease of entry and exit in the long run.B. Homogenous products.C. Perfectly elastic demand for the firm’s product.D. Long-run positive profits.E. Rigid or “sticky”
21. Which of the following is necessarily a characteristic of oligopoly?A. Free entry into and exit from the market.B. A few large producers.C. One producer of a good with no close substitutes.D. A homogenous product.E. No opportunities for collusion between firms.
20. Which of the following statements describes a profit-maximizing monopolist?I. Output is set where marginal revenue equals marginal cost, creating an efficient allocation of economic resources.II. Dead weight loss is eliminated in the long run.III. Price is set above marginal cost, creating
19. If the perfectly competitive price is currently below minimum average total cost, we can expect which of the following events in the long run?A. The price will rise and each firm’s output will fall as firms exit the industry.B. Market equilibrium quantity will increase as firms exit the
18. If the market price of the output increases from P1 to P3, the profit-maximizing firm will A. increase output from q1 to q4 and earn positive economic profits.B. increase output from q1 to q4 and earn a normal profit.C. increase output from q1 to q3 and earn positive economic profits.D.
17. The shutdown point is seen at:A. P0, q0 B. P1, q1 C. P2, q2 D. P3, q3 E. P3, q4
16. Monopolistic competition is often characterized by A. strong barriers to entry.B. long-run price that exceeds average total cost.C. price that exceeds average variable cost, causing excess capacity.D. a homogenous product.E. many resources devoted to advertising.
15. At a quantity of 4, what is the total cost of production?A. $7.50 B. $2.50 C. $15 D. $30 E. $14.50
14. The range of diminishing marginal productivity begins at what level of output?A. 1 B. 2 C. 3 D. 4 E. 5
13. The total fixed cost of producing a quantity of 4 is A. $5 B. $7.50 C. $7 D. $2.50 E. $10
12. In the short run, a firm employs labor and capital to produce gadgets. If the annual price of capital increases, what will happen to the shortrun cost curves?A. The marginal cost and average variable cost curves will shift upward.B. The average fixed cost and average total cost curves will
11. If a consumer is not required to pay a monetary price for each cookie she consumes, the consumer will stop eating cookies when A. the total utility from eating cookies is equal to zero.B. the substitution effect outweighs the income effect from eating cookies.C. the ratio of marginal utility
10. Which of the following describes the theory behind the demand curve?A. Decreasing marginal utility as consumption rises.B. Increasing marginal cost as consumption rises.C. Decreasing marginal cost as consumption rises.D. Increasing total utility at an increasing rate as consumption rises.E. The
9. If the price of firm A’s long distance service rises by 5 percent and the quantity demanded for firm B’s long distance service increases by 10 percent, we can say that A. demand for firm B is price elastic.B. supply for firm B is price elastic.C. firms A and B are substitutes because the
8. Suppose the price of beef rises by 10 percent and the quantity demanded of beef falls by 20 percent. We can conclude that A. demand for beef is price elastic and consumer spending on beef is falling.B. demand for beef is price elastic and consumer spending on beef is rising.C. demand for beef is
7. In Figure D.2 above, identify the area of consumer surplus.A. 0ACB B. 0FCB C. AFC D. ACE E. FCE
6. If the demand for grapes increases simultane- ously with an increase in the supply of grapes, we can say that A. equilibrium quantity rises, but the price change is ambiguous. B. equilibrium quantity falls, but the price change is ambiguous. C. equilibrium quantity rises, and the price rises. D.
5. The competitive market for gasoline is currently in a state of equilibrium. Which of the following would most likely increase the price of gasoline? A. Household income falls. B. Technology used to produce gasoline improves. C. The price of subway tickets and other public transportation falls.
4. Which of the following is true of equilibrium in a purely (or perfectly) competitive market for good X? A. A shortage of good X exists. B. The quantity demanded equals the quantity supplied of good X. C. A surplus of good X exists. D. The government regulates the quantity of good X produced at
3. The graph above (Figure D.1) shows a nation's pro- duction possibility frontier (PPF) for the production of bread and butter. Which of the following is true? A. The opportunity cost of producing more butter is a decreasing amount of bread.B. Point X represents unemployed economic resources. C.
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