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111 Cards in this Set

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The term diminishing returns refers to a:

decrease in the extra output due to the use of an additional unit of a variable input, when more and more of the variable input is used and all other things are held constant.

(Table: Labor and Output) The marginal product of the fifth worker is:

4.

(Table: Labor and Output) The average product when four workers are employed is:

9.

When marginal cost is rising:

both average variable cost and average total cost may be rising, or one of them may be falling.

If the marginal cost of the first sports jersey is $21, the marginal cost of the second sports jersey is $40, and the marginal cost of the third jersey is $17, what is the total variable cost of producing three jerseys?

$78

(Figure: Marginal Product of Labor) Using the marginal product of labor curve in the figure, the total product of labor for three workers is:

51 bushels.

(Figure: Marginal Product of Labor) Using the marginal product of labor curve in the accompanying figure, the total product of labor for eight workers is:

96 bushels.

(Figure: Marginal Product of Labor) Using the marginal product of labor curve in the figure, the total product of labor for five workers is:

75 bushels.

When marginal cost is below average variable cost, average variable cost must be:

at its maximum.

The total product curve:

will become flatter as output increases if there are diminishing returns to the variable input.

If an increase in output results in a decrease in average total cost, the corresponding marginal cost is:

less than average total cost.

When marginal cost is above average variable cost, average variable cost must be:

rising.

The total cost curve for a snowmobile dealership shows how ________ cost depends on the quantity of ________.

total; output

At 30 units of output, a firm's marginal cost and average variable cost both equal $10. Therefore, assuming normally shaped cost curves, at 29 units of output its marginal cost:

is less than $10 and its average variable cost is more than $10.

A fixed input is one:

whose quantity cannot be changed in a particular period.

The average total cost of producing cell phones in a factory is $20 at the current output level of 100 units per week. If fixed cost is $1,200 per week:

average variable cost is $8

The average total cost curve in the short run slopes upward because of:

diminishing returns.

Average variable cost equals all of the following except:

variable cost times output.

In the short run:

Some inputs are fixed and some are variables

If a firm produces 10 units of output and incurs $30 in average variable cost and $35 in average total cost, total fixed cost is:

$50.

Austin's total fixed cost is $3,600. Austin employs 20 workers and pays each worker $60. If labor is his only variable cost, what is Austin's total cost?

$4,800

If marginal cost is equal to average total cost:

average total cost is at its minimum.

Lauren has 11 people working in her tangerine grove. The marginal product of the eleventh worker equals 13 bushels of tangerines. If she hires a twelfth worker, the marginal product of that worker will equal:

The answer cannot be determined with the information available.

Kaile Cakes produces 10 cakes per day. The marginal cost of the tenth cake is $24, and average total cost of 10 cakes is $6. The average total cost of 9 cakes is:

$4.

If marginal cost is greater than average total cost:

average total cost is increasing.

Which of the following curves is not affected by diminishing returns?

the average fixed cost curve

The long run is a planning period:

over which a firm can consider all inputs as variable.

Oscar owns a meat processing plant whose unpleasant odors waft across the city. Because the production of processed meat provides a negative externality to the community, at the market equilibrium quantity, the marginal social:

cost of processed meat exceeds the market price. .

In the absence of government action, polluters will pollute up to the point at which the marginal social benefit of pollution is:

zero.

Positive externalities are:

difficult to measure, since marginal benefits are hard to observe.

Flu vaccines often provide both private benefits to individuals and positive external benefits to other members of society. As a result, without government intervention one would find:

too few doses of flu vaccine being produced, since external benefits would not be considered.

Suppose each person in a community had to pay for his or her own education from kindergarten through high school. One would expect that:

less education would be acquired, since society has not considered the positive external benefits of education.

An example of a good that is rival in consumption and nonexcludable is:

national defense.

On hot summer days, beach parking lots are usually full by early morning even though one must pay in order to park there. Parking at such lots is:

rival in consumption and excludable.

When goods are rival in consumption and excludable, markets:

will produce an efficient quantity of the good.

If an activity generates external costs, the decision makers generating the activity will:

not be faced with its full costs.

If a coal-powered electrical generator discharges smoke into the air and causes uncompensated costs and discomfort to residents of a town, then this electrical generation has a(n):

external cost.

All of the following are examples of an external cost except:

zoning restrictions on your property.

If external costs exist, the competitive free market:

allocates resources inefficiently.

A copper mining operation discharges waste products into a river and causes higher costs and discomfort to downstream users of the water for which they are not compensated. In this case:

too much of society's resources is being used to produce copper.

If the marginal benefit received from pollution is equal to its marginal cost, then:

society has achieved its socially optimal level of pollution.

If the marginal benefit received from pollution is less than its marginal cost, then:

society's well-being can be improved if the quantity of pollution decreases.

If a good that involves external costs is priced to take these costs into account, then its price will:

rise, and output will fall.

If at the current amount of pollution, the marginal social benefit of pollution is greater than its marginal social cost, then:

there is too little pollution.

Which of the following questions is appropriate to the study of macroeconomics?

How does the aggregate price level affect overall consumer spending?

Controlling interest rates is an example of:

monetary policy.

Monetary policy involves changes in :

the quantity of money.

The onset of the Great Depression:

came as a considerable shock to the conventional wisdom of economics at that time and opened the door for critiques of mainstream thought by economists like John Maynard Keynes.

A period of falling real gross domestic product is a(n):

recession.

The value, of the final goods and services produced during a particular period is:

gross domestic product

Intermediate goods are not counted in the calculation of GDP because:

to do so would be double counting.

The Boeing Company buys $3 million worth of steel, $2.5 million worth of computer hardware and software, and $1 million worth of mechanical tools to manufacture a certain model of aircraft. Boeing sells this particular model of aircraft at $10 million. The value added by Boeing is equal to:

$3.5 million.

GDP includes the value of all of the following goods except:

the value of Bridgestone tires purchased by Ford Motor Co.

The inflation-adjusted measure of aggregate output typically used by economists is called:

real gross domestic product.

If real GDP rises while nominal GDP falls, then prices on average have:

fallen.

Consider an economy that produces only two goods: DVDs and DVD players. If 10 DVDs are sold at $20 each and 5 DVD players are sold at $100 each, then nominal GDP is:

$700.

Consider an economy that produces only two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Nominal GDP this year is:

$500

Consider an economy that produces only two goods: DVDs and DVD players. Last year, 10 DVDs were sold at $20 each and 5 DVD players were sold at $100 each, while this year 15 DVDs were sold at $10 each and 10 DVD players were sold at $50 each. Real GDP this year using last year as the base year is:

$1,300.

Suppose that nominal GDP is $1,000 in 2009 and $1,500 in 2010. If the overall price level ____ between 2009 and 2010, we could say that real GDP _____.

increased by 50%; stayed constant

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is:

115.

If the cost of a market basket is $150 in year 1 and $200 in year 2, the price index for year 1 using year 2 as the base is:

75

If the CPI is 120 in year 1 and 150 in year 2, then the rate of inflation from year 1 to year 2 is:

25%

The labor force is:

the total of the employed and unemployed

The unemployment rate is:

the percent of the labor force that is unemployed

To be counted as unemployed, one must:

be out of work and actively looking for a job.

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its unemployment rate is:

10%

If a country has a working-age population of 200 million, 135 million people with jobs, and 15 million people unemployed and seeking employment, then its labor force is:

150 million

Discouraged workers:

have given up looking for a job.

According to official statistics, discouraged workers are:

not included in the labor force

Which of the following situations is likely to lead to anincrease in discouraged workers?

The availability of jobs falls

An increase in the number of discouraged workers in theeconomy tends to:

lower the official unemployment rate.

In general, for the U.S. economy, the relation between unemployment and economic growth is:

negative

Frictional unemployment exists because of all of thefollowing reasons except:

for the minimum wage

Frictional unemployment is considered to be:

good, since that means people may be seeking for jobs that match their job skills

Sam, who is 55 years old and has been a steelworker for 30years, is unemployed because the steel plant in his town closed and moved toMexico. Sam is:

structurally unemployed

Efficiency wages encourage:

a worker to stay in their job

Unemployment is at its natural level if there is no:

cyclical unemployment

Cyclical unemployment is the result of:

the business cycle

If money income remains the same while the average pricelevel doubles:

real income will fall

A key statistic to measure economic growth is:

real GDP per capita

The best available measure of the standard of living in acountry is:

real GDP per capita

If a country has a population of 1,000, an area of 100 square miles, and a GDP of $5 million, then its GDP per capita is:

$5,000

China has much higher rate of growth than the United States,but the average Chinese household is:

still far pooper than a typical U.S. house hold because China’s real GDP per capita is much lower than that of the United States

The Rule of 70 indicates that a 6% annual increase in thepotential level of real GDP would lead to the potential output doubling in_______ years.

12

The Rule of 70 states that a variable's approximate doublingtime equals:

70 divided by the growth rate.

If real GDP doubles in 35 years, its average annual growth rate is approximately:

2%

The term human capital describes:

the improvement in labor created by education and knowledge that is embodied.



The unemployment rate is the number of people classified as unemployed as a percentage of:

the labor force.

The total labor force equals:

the number of employed plus unemployed persons.

If the unemployment rate is 8 percent, this means:

8 percent of the labor force is unemployed.

In November 1995 the labor force in Aberdeen, South Dakota, was 14,800. There were 14,483 persons employed. The local unemployment rate:

was 2.1 percent.

Which of the following individuals would be consideredunemployed?

none of the above

If the population older than 16 years of age equals 150 million, the labor force equals 110 million, and the total number of persons employed equals 98 million, then the unemployment rate is:

10.9 percent

Which of the following is false?

The labor force includes those people over the age of 14 who are either employed or unemployed.

Suzie Homemaker works in her home as a full-time caretakerand homemaker. Officially, she is

. not in the labor force

When unemployment rises above the natural rate it reflectsthe existence of ____ unemployment.

cyclical

The term full employment implies an unemployment rate of:

approximately 5%

If the economy is operating at the natural rate ofunemployment, which of the following is essentially eliminated?

cyclical unemployment

In the typical CPI shopping basket, which of the categoriesbelow represents the largest percentage of consumer spending?

housing

The economy's inflation rate is the

percentage change in the price level from the previous period.

The CPI is a measure of the overall cost of the goods andservices bought by

a typical consumer.

In computing the consumer price index, a base year ischosen. Which of the followingstatements about the base year is correct?

The value of the consumer price index is always 100 in the base year.

The price index was 220 in one year and 260 in the nextyear. What was the inflation rate?


18.2 percent

. The market basket used to calculate the CPI in Aquiloniais 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pairs of pants. In 2005, bread cost $1.00 per loaf, milk cost$1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In 2006, bread cost $1.50 per loaf, milk cost$2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. Using 2005 as the base year, what wasAquilonia’s inflation rate in 2006?

24.4 percent

If the price index was 90 in year 1, 100 in year 2, and 95in year 3, then the economy experienced

11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.

Which of the following statistics is usually regarded as thebest single measure of a society’s economic well-being?

gross domestic product

For an economy as a whole,

income must equal expenditure.

A farmer sells $50,000 of apples to individuals who takethem home to eat and $75,000 of apples to a company that uses them all toproduce cider. How much of the farmer’ssales will be included as apples in GDP?

$50,000

A steel company sells some steel to a bicycle company for$150. The bicycle company uses the steelto produce a bicycle, which it sells for $250. Taken together, these two transactions contribute

$250 to GDP

Gross domestic product adds together many different kinds of goods and services into a single measure of the value of economic activity. To do this, GDP makes use of

market prices.

In the economy of Ukzten in 2010, consumption was $500, exports were $200, GDP was $1200, government purchases were $250, and investment was $300. What were Ukzten’s imports in 2010?

$50