Elite Student Edition 5 Steps To A 5 AP Microeconomics 2020 1st Edition Eric R. Dodge - Solutions

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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 weeds. Based on this information,(A) Ray pulls weeds, since he has absolute advantage in cooking.(B) Dorothy pulls weeds, since she
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) the
Economic growth is best represented by a movement from(A) A to B(B) B to C(C) C to D(D) D to E(E) E to A
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
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
Which of the following is a likely effect of a higher tariff imposed by the United States 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 United States
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 TO JAPAN DEMAND FOR $ VALUE OF $ (A) Decrease Decrease
If the world price of copper exceeds the domestic (U.S.) price of copper, we would expect(A) the United States to be a net exporter of copper.(B) the United States 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
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 supply
If a bank has $1,000 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 = ¼(B) 75%, $250, M = 4(C) 25%, $750, M = 4(D) 75%, $750, M = ¼(E) 25%, $250, M
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.
Which of the following is an accurate statement of the money supply in the United States?(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
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.
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.
A contractionary monetary policy will cause the nominal interest rate, aggregate demand, output, and the price level to change in which of the following ways?
In a recession, expansionary monetary policy is designed to(A) decrease aggregate demand so that real prices will decrease, which is good for the economy.(B) increase aggregate demand, which will increase real output and increase employment.(C) increase unemployment, but low prices negate this
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
Automatic stabilizers in the economy serve an important role in(A) increasing the 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.
Of the following choices, the one most likely to be preferred by supplyside 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.
If the economy is experiencing a recession, how will a plan to decrease taxes for consumers and increase spending on government purchases affect real gross domestic product (GDP) and the price level?(A) real GDP rises and the price level falls.(B) real GDP falls and the price level rises.(C) real
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.
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.
When government uses expansionary fiscal policy, 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.
Suppose the economy is operating beyond full employment. Which of the following is true at this point?(A) The short-run aggregate supply curve is horizontal.(B) Further increases in aggregate demand will result in a lower price level.(C) A decrease in aggregate demand will result in a lower price
If the economy is operating below full employment, which of the following will have the greatest positive impact on real gross domestic product?(A) The government decreases spending with no change in taxes.(B) The government increases spending with no change in taxes.(C) The government decreases
An increase in corporate 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
A stronger stock market is likely to cause which of the following changes in the consumption function and aggregate demand?
To deflate nominal gross domestic product (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.
If the consumer price index (CPI) increases by 2 percent and your nominal income increases by 8 percent, your real income has approximately(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.
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
An American firm moves a manufacturing plant from the United States to Brazil. How will this affect gross domestic product (GDP) in the United States and in 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 Brazil’s GDP remains
Suppose DVD players are a normal good and are exchanged in a competitive market. All else equal, 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
Using Figure D.1, 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 Crepes X Z W Y Figure D.1 Paper
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 exchange
Which of the following is an example of capital as an economic resource?(A) A cement mixer(B) A barrel of crude oil(C) A registered nurse(D) A share of corporate stock(E) A bachelor’s degree
Take a look at the following PPCs for two nations, Theodoria and Elijastan. Based on only these two graphs, determine how these two nations could specialize and gain from trade. You will need to determine which nation exports steel and which nation exports food.Finally, find an acceptable terms of
Suppose the U.S. economy is experiencing a recession.a. How will the Fed move to combat the recession, and how will this action affect interest rates in the U.S. economy?b. How will the Fed’s action affect the value of the U.S. dollar and net exports in the United States? Explain.
Suppose that the full employment in the economy occurs at 5%unemployment and 2.5% inflation. This is also called the NAIRU, or“non-accelerating inflation rate of unemployment.” In a correctly labeled graph, draw the long-run and short-run Phillips curves that reflect this information.
Assume the economy is operating at full employment. In each of the following, predict the impact on AD or SRAS and how the event will likely change the price level and real GDP.a. Firms are less optimistic about future profitability.b. Foreign consumers are experiencing higher household incomes.c.
Two rival firms operate in an oligopoly and, once a year, choose an advertising strategy. The firms can choose between an expensive television and radio advertising campaign (costly ads) or an inexpensive direct-mail advertising campaign (cheap ads). Television and radio cost more but reach more
Assume the following about the market for gizmos:• Gizmos are sold in a competitive market.• Gizmos have no close substitute.• The demand for gizmos is price inelastic but not perfectly inelastic.Suppose now that the government imposes a per-unit excise tax on producers of gizmos.(A) Using a
The graph below shows a firm that has monopolized the market for gadgets.(A) Using the values in the graph, identify the following:i. The profit-maximizing quantity ii. The price of a gadget when the monopolist has maximized profit iii. The allocatively efficient output (B) Using the values in the
Because of the free-rider effect, the private marketplace tends to(A) provide the allocatively efficient amount of a public good.(B) produce too much of a public good, requiring the government to intervene and tax the production of it.(C) produce a public good in the amount where the marginal
Which of the following scenarios is the best example of a positive externality?(A) Your neighbor has a swimming pool and throws loud late-night parties.(B) Your neighbor has a swimming pool and allows you free access.(C) Your neighbor has a swimming pool and the powerful chlorine odor blows into
The U.S. government collects tax revenue, buys military equipment from many private firms, and uses this equipment to provide national defense to all Americans. This is a good example of(A) a natural monopoly.(B) an excise tax on military equipment.(C) a regressive tax.(D) a public good.(E)
The local market for bankers is currently in equilibrium. Which of the following increases the local wage paid to bankers?(A) Internet banking at home is becoming more popular.(B) More college students are majoring in finance and economics, majors that make them attractive as bank employees.(C) The
Suppose the state requires hairdressers and manicurists to pass a series of exams to be certified cosmetologists. How does this policy change the supply of cosmetologists, the equilibrium wage, and the price of a manicure?
A cartel is often the result of(A) perfectly competitive firms that agree to produce a homogenous product.(B) oligopoly competitors that agree to restrict output to maximize joint profits.(C) a monopoly that has been regulated by the government.(D) a natural monopoly that has evolved into a
The price of labor is $5 and the price of capital is $10 per unit. Using the table below, what is the least-cost combination of labor and capital that should be hired to produce 18 units of output?(A) 1 Labor and 2 Capital (B) 4 Labor and 8 Capital (C) 2 Labor and 1 Capital (D) 5 Labor and 5
A monopsony employer hires labor up to the point where(A) wage = marginal factor cost.(B) marginal factor cost = marginal product of labor.(C) marginal factor cost = marginal revenue product of labor.(D) wage = marginal revenue product of labor.(E) wage = price of the good produced by the labor.
Which of the following increases the demand for interstate truck drivers?(A) An increase in the wage of truck drivers(B) An increase in the supply of truck drivers(C) An increase in the price of diesel fuel, which is used to power semitrucks(D) A decrease in the demand for interstate shipping(E) A
Which of the following would improve the efficiency of a monopoly market?(A) The government regulates the monopolist to produce the output where marginal revenue equals marginal cost.(B) The government provides additional legal barriers to entry.(C) The government subsidizes the monopolist so that
If the government wishes to regulate a natural monopoly so that it earns a normal profit, it sets(A) Price = Marginal cost.(B) Marginal revenue = Marginal cost.(C) Price = Average total cost.(D) Price = Marginal revenue.(E) Marginal revenue = Average total cost.
Deadweight loss in industries with market power is a result of(A) profit-maximizing output occurs where price equals marginal revenue.(B) profit-maximizing output occurs where price exceeds marginal cost.(C) profit-maximizing output occurs where price equals marginal cost.(D) profit-maximizing
The monopolistically competitive price is above marginal revenue because(A) firms have differentiated products.(B) firms are price takers.(C) firms produce a homogenous product.(D) the market is allocatively efficient.(E) profits are normal in the long run.
Which of the following choices is true of both perfectly competitive firms and monopolistically competitive firms?(A) Barriers to entry(B) Homogenous products(C) Normal profits in the long run(D) Excess capacity(E) Price-setting behavior
The production of chicken often results in offending odors that are picked up by the wind and blown over rural communities. This is an example of a ______ externality, the result of which are spillover ______ and an _______ of resources to chicken production.(A) negative, costs, underallocation(B)
Oligopoly has at times been the subject of government antitrust regulation. Which of the following is a reason for this government regulation?(A) Price is approximately equal to marginal cost.(B) Price is approximately equal to average total cost.(C) Deadweight loss lessens over time.(D) Consumer
Which of the following statements is true of a consumer’s utilitymaximizing behavior?(A) As consumption of good X increases, total utility increases at an increasing rate.(B) The consumer should stop consuming good X when marginal utility is maximized.(C) The consumer has maximized utility
The top six firms in an oligopolistic industry have market shares of 25%, 25%, 15%, 10%, 6%, and 3%. Many smaller firms split the rest of the market. What is the value of the four-firm concentration ratio?(A) 65%(B) 54%(C) 75%(D) 34%(E) 50%
Consumer surplus in the monopolist market is equal to the area(A) abce.(B) abcf.(C) P5cd.(D) 0Q1aP1.(E) P1P5ca.
If this firm were a profit-maximizing monopolist, the price, output, and profit would be
A monopolist may be able to maintain long-run positive profit due to(A) deadweight loss.(B) economies of scale in production.(C) a price that is set equal to average total cost.(D) perfectly elastic demand for the product.(E) entry of new firms that keep the price high.
Which of the following is a characteristic of a monopoly market?(A) Firms produce a homogeneous product.(B) Barriers to entry exist.(C) Firms are price-taking profit maximizers.(D) Deadweight loss is eliminated through entry of competing firms in the long run.(E) In the long run the firm earns
If a market for a good is producing a negative externality,(A) at the market output the marginal costs to society exceed the private marginal costs of production.(B) at the market output the marginal benefits to society exceed the private marginal costs of production.(C) at the market output the
Where is the shutdown point for this perfectly competitive firm?(A) Any price below curve 4(B) Any price below 0c(C) Any price below curve 3(D) Any price below curve 2(E) Any quantity less than Q
The curve labeled 4 represents which of the following?(A) Marginal cost(B) Marginal product of labor(C) Average total cost(D) Average fixed cost(E) Average variable cost
The demand for labor falls if(A) labor productivity falls.(B) the price of the good produced by labor rises.(C) the price of a complementary input falls.(D) demand for the good produced by labor rises.
At a quantity of 10, what is the value of $(Y - X)?(A) $100(B) $25(C) $10(D) $35(E) $350
If average variable cost at a quantity of 10 is $25, what is the value of$Y in the figure above?(A) $250(B) $25(C) $35(D) $1,000(E) $350
The market for good X is currently in equilibrium. Which of the following choices would not cause both a decrease in the equilibrium price of good X and a decrease in the equilibrium quantity of good X?(A) A decrease in consumer income and good X is a normal good.(B) An increase in consumer income
The figure above shows the long-run average cost curve of a competitive firm. Which of the following choices best describes Region B in the diagram?(A) Economies of scale(B) Diseconomies of scale(C) Constant returns to scale(D) Diminishing returns to scale(E) Increasing returns to scale
The table above shows how hiring increasing amounts of labor to a fixed amount of capital affects the hourly output of Eli’s lemonade stand. Based on this table of production data, which of the following can be said?(A) Diminishing marginal returns begins with the first worker hired.(B) Marginal
Which of the following is a characteristic of perfect competition?(A) Firms produce a homogeneous product.(B) Barriers to entry exist.(C) Firms are price-setting profit maximizers.(D) The government regulates the price so that deadweight loss is eliminated.(E) Long-run positive profits are
Diminishing marginal returns to short-run production begin when(A) the average product of labor begins to fall.(B) the total product of labor begins to fall.(C) marginal product of labor becomes negative.(D) average variable cost begins to rise.(E) marginal product of labor begins to fall.
A firm employs variable amounts of labor to a fixed amount of capital to produce output. If the daily wage paid to labor increases, how does this affect the firm’s costs?
If it is true that bacon and eggs are complementary goods, then(A) the income elasticity of bacon is positive and the income elasticity for eggs is negative.(B) the price elasticity for eggs is greater than the price elasticity for bacon.(C) the cross-price elasticity between bacon and eggs is
The figure above best represents which of the following functions?(A) Total product of labor(B) Total revenue(C) Total cost(D) Total utility(E) Total short-run economic profits
You are told that the Gini coefficient of income inequality has risen from .35 to .85. Which of the following is a likely cause of this change?(A) Market power in the factor and output markets has increased.(B) Labor market discrimination has been eliminated.(C) The distribution of wealth and
Dorothy has daily income of $20, each cup of coffee costs Pc= $1, and each scone costs Ps= $4. The table below provides us with Dorothy’s marginal utility (MU) received in the consumption of each good. As a utility-maximizing consumer, which combination of coffee and scones should Dorothy consume
The downward-sloping demand curve is partially explained by which of the following?(A) Substitution effects and income effects(B) The law of increasing marginal costs(C) The principle of comparative advantage(D) The law of diminishing marginal returns to production(E) The least-cost principle
If the market is in equilibrium, which of the following areas corresponds to producer surplus?(A) BGD(B) 0AHJ(C) 0DGK(D) 0BG(E) 0BGK
If the price were to fall from 0C to 0A, which of the following would be true?(A) Dollars spent on this good would increase if demand for the good were price inelastic.(B) Dollars spent on this good would decrease if demand for the good were price elastic.(C) Dollars spent on this good would
If the current price is 0B, we would expect(A) a surplus in the market to be eliminated by rising prices.(B) a shortage in the market to be eliminated by falling prices.(C) a surplus in the market to be eliminated by falling prices.(D) quantity demanded to be equal to quantity supplied as the
Which of the following is true of the perfectly competitive firm in the short run?(A) The firm earns a normal profit.(B) The firm shuts down if the price falls below average total cost.(C) The firm earns positive economic profit.(D) The firm maximizes profit by producing where the price equals
If the wage paid to all units of labor is $4.50, how many units of labor are hired?(A) 1(B) 2(C) 3(D) 4(E) 5
Which unit of labor has marginal revenue product equal to $1.50?(A) 1st(B) 2nd(C) 3rd(D) 4th(E) 5th
Suppose a price floor is installed in the market for coffee. One result of this policy would be(A) a decrease in the demand for coffee-brewing machines.(B) a persistent shortage of coffee in the market.(C) an increase in consumer surplus due to lower coffee prices.(D) an increase in the demand for
Which of the following is an implicit cost for the owner of a small store in your hometown?(A) The wage that is paid to the assistant manager(B) The cost of purchasing canned goods from a wholesale food distributor(C) The value placed on the owner’s skills in an alternative career(D) The cost of
Good X is exchanged in a competitive market. Which of the following is true if an excise tax is now imposed on the production of good X?(A) If the demand curve is perfectly elastic, the price rises by the amount of the tax.(B) The consumer’s burden of the tax rises as the demand curve is more
The elasticity of supply is typically greater when(A) producers have fewer alternative goods to produce.(B) producers have less time to respond to price changes.(C) producers are operating near the limits of their production.(D) producers have less access to raw materials necessary for
Which of the following is a fundamental aspect of the free market system?(A) A high degree of government involvement.(B) Public ownership of resources.(C) Private property.(D) Central planners set wages and prices.(E) Employers consult government agencies for guidance in hiring workers with
Which of the following goods is likely to have the most elastic demand curve?(A) Demand for white Ford minivans(B) Demand for automobiles(C) Demand for Ford automobiles(D) Demand for American-made automobiles(E) Demand for a Ford minivan
An effective price ceiling in the market for good X likely results in(A) a persistent surplus of good X.(B) a persistent shortage of good X.(C) an increase in the demand for good Y, a substitute for good X.(D) a decrease in the demand for good Z, a complement with good X.(E) a rightward shift in
Which of the following certainly lowers the equilibrium price of a good exchanged in a competitive market?(A) The demand curve shifts to the right.(B) The supply curve shifts to the left.(C) The demand curve shifts to the left, and the supply curve shifts to the right.(D) The demand curve shifts to
A competitive market for coffee, a normal good, is currently in equilibrium. Which of the following would most likely result in an increase in the demand for coffee?(A) Consumer income falls.(B) The price of tea rises.(C) The wage of coffee plantation workers falls.(D) Technology in the harvesting
A rational consumer who is eating Girl Scout cookies stops eating when(A) the total benefit equals the total cost of eating cookies.(B) the marginal benefit equals the marginal cost of the next cookie.(C) the marginal cost of eating cookies is maximized.(D) the marginal benefit of eating cookies is
Which of the following scenarios would increase a nation’s production possibility frontier (PPF)?(A) The nation’s system of higher education slowly declines in quality.(B) The nation invests in research and development of new technology.(C) The nation’s infant mortality rate increases.(D)
The figure above shows the production possibility frontiers (PPFs) for two nations that produce crabs and cakes. If these nations specialize and trade based on the principle of comparative advantage, which of the following trade agreements benefit both nations?(A) Nation A trades three crabs to
Which of the following is likely to have a demand curve that is the least elastic?(A) Demand for the perfectly competitive firm’s output(B) Demand for the oligopoly firm’s output with a homogenous product(C) Demand for the oligopoly firm’s output with a differentiated product(D) Demand for

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Elite Student Edition 5 Steps To A 5 AP Microeconomics 2020 1st Edition Eric R. Dodge - Solutions

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