Economists are concerned about nontariff (regulatory) barriers when they are used to prevent imports when a good a) is produced via questionable means (e.g. banning milk produced from cows injected with bovine growth hormone). b) is produced via more efficient use of labor. c) may spread disease (e.g. banning beef from countries that have experienced mad cow disease). d) violates local standards of decency.
> What would happen to the NPV of the above project if the inflation rate was expected to be 4 percent in each of the next 4 years? You may use either Excel® or CB to determine your answer.
> A four-year financial project is forecast to have net cash inflows of $20,000; $25,000; $30,000; and $50,000 in the next 4 years. It will cost $75,000 to implement the project, payable at the beginning of the project. If the required rate of return is 0.
> The IT unit of a company has been asked to prepare a budget for a special software package project. The group has considerable experience with similar tasks and submits the costs in the following table. The group also thinks that the distribution of the
> A light manufacturing firm has set up a project for developing a new machine for one of its production lines. The most likely estimated cost of the project itself is $1,000,000, but the most optimistic estimate is $900,000 while the pessimists predict a
> 1. Calculate the schedule variance and cost variance for the Bullwhip project. 2. Does Jimmy’s point about the material costs have merit? If so, does this have any implications for the way the earned valued is calculated at Peak? 3. Who is right about th
> 1. What is the cost of completing this project if no overtime is used? How long will it take to complete the project? 2. What is the shortest amount of time in which the project can be completed? What is the cost of completing the project in the shortes
> If the equilibrium rent is _____ the controlled level, then rent control laws are ______. a) above; necessary b) above; irrelevant c) below; necessary d) below; irrelevant
> The distinct feature of the marginal cost curve in the analysis of venues is that it is a) a vertical line. b) a horizontal line. c) a check-shaped curve. d) a backward L.
> The argument that the minimum wage is worse than the Earned Income Tax Credit is based on the idea that a) the people who earn the minimum wage are really poor. b) the minimum wage applies to all workers, not just the working poor. c) the Earned Incom
> A price support mechanism a) can only regulate supply. b) can only regulate demand. c) must involve government purchases. d) can involve government manipulation of the supply or demand of the good.
> Wealth inequality is _____ related to the ratio of mean to median wealth. a) positively b) negatively c) not
> The method of detecting sex discrimination most likely to maximize it would be to use a) simple differences in income between men and women. b) simple differences in full-time wages for men and women. c) regression techniques. d) auditing technique
> Using the monopoly power in one area to compel costumers to buy goods in another area a) is a violation of the Sherman Anti-Trust Act. b) is legal, but bad business practice. c) is illegal but would be bad business practice anyway. d) is legal and a
> The method of detecting sex discrimination most likely to minimize it would be to use a) simple differences in income between men and women. b) simple differences in full-time wages for men and women. c) regression techniques. d) auditing techniques
> Monopoly creates prices that are _____ which would exist under perfect competition. a) lower than that b) equal to that c) greater than that d) more volatile than that
> Economists call the reduction in consumer confidence that resulted from the September 11th attacks an _____ shock which leads to the ________. a) aggregate demand, aggregate demand curve shifting left b) aggregate demand, aggregate demand curve shiftin
> Which advantage does a typical developing country have in attempting to draw foreign investment? a) Very low wages b) Poor education c) Easy profit repatriation d) Independent central banks
> Which one of the following communities would likely see the greatest economic impact from a new casino? a) Plainfield, IN (just outside Indianapolis) b) Gary, IN (outside Chicago and already has one) c) Terre Haute, IN (Indianapolis is 70 miles away;
> We can measure how much someone values the personal touch of a small grocery store by using the amount extra they pay at that store even when there is a Walmart in town. Economists call that a) revealed demand. b) revealed preference. c) parsing the p
> Under perfect competition marginal resource cost ________ supply, under monopsony marginal resource cost _______ supply. a) equals; equals b) equals; is greater than c) equals; is less than d) is greater than; is less than
> If you invested in 20 different companies and chose those companies at random, you would be counting on the _______ market hypothesis and its implication that you would do as well as you would with any other investment strategy. a) random b) complete c
> The typical problem for generating parity in sports leagues is that a) there is no mechanism for bringing in new talent in a way that helps the bad teams. b) there is no means by which players on one team can move to another. c) with no salary cap and
> When a group of competitors joins together to form a monopoly, they are forming a a) cartel. b) coalition. c) union. d) trust.
> The alternative minimum tax has the effect of limiting a) income. b) taxable income. c) deductions. d) exemptions.
> The average index of monthly earnings is indexed a) for wage inflation. b) for consumer price inflation. c) for producer price inflation. d) via a combination of wage and price inflation.
> Though the high-quality preschool experience is a private benefit for the children and their parents, the economic justification for Head Start is based on a) external costs. b) its low total cost. c) the increase in reading ability of participants go
> In a simple 300 million-person world of all four-person families, if the poverty line is $12,500 and half of the 10 million families (with 40 million poor people) earn $10,000 and the other half earn $7,500, then the poverty rate is a) 3.33% (10 million
> The reason the ECB did not want the Greeks to exit the euro was that a) Greece was viewed as a valuable member in temporary distress. b) Greece was viewed as so unimportant that it did not want the perception that countries were leaving for any reason
> The argument that spending more money on teachers has little impact on educational outcomes in K–12 is a) inconsistent with any economic model. b) consistent with the upward-sloping nature of a production function. c) consistent with the downward-slo
> The argument that spending more money on teachers has little impact on educational outcomes in K–12 is a) inconsistent with any economic model. b) consistent with the upward-sloping nature of a production function. c) consistent with the downward-slo
> Rent control is an example of a _________ a) price ceiling. b) price floor. c) price irrelevancy. d) price equalization.
> The optimal venue for an event is one where a) the number of seats exceeds the number where marginal cost equals marginal revenue. b) the number of seats is less than number where marginal cost equals marginal revenue. c) the number of seats is exactl
> The last time the minimum wage alone was sufficient to keep a family of three above the poverty line was a) 1979. b) 1985. c) 1990. d) 1998.
> Farm price supports are typically for a) basic commodities like raw milk and grain. b) fruits and vegetables. c) refined products like flour. d) manufactured products like breakfast cereals.
> Income inequality as conventionally measured is ____ when you ignore the decreases in the capital gains tax rate. a) overstated b) understated c) property stated
> One of the concerns about monopolies is that they a) reduce the motivation to innovate. b) reduce the motivation to make a profit. c) hire people at an excessive level. d) waste resources in pursuit of the next invention.
> The destruction of the World Trade Center and damage to the Pentagon and the accompanying work to rebuild and repair led to _____ to the insurance companies and _____ in GDP. gains; gains losses; losses losses; gains gains; losses
> Economists generally believe that a new casino in a city that already has them would likely have _________ economic impact. a) an enormously negative b) a modestly negative c) an enormously positive d) a modestly positive
> An increase in the expected inflation rate in one country will a) strengthen its currency. b) weaken its currency. c) have no impact on the exchange rate between its currency and other currencies.
> The impact of a new Walmart on a community’s workers is a) only positive in that new jobs are created. b) only negative because better-paying jobs at competitors are lost. c) positive and negative because new jobs are created, but they often displac
> When there are many employers in a city and one union, the model that economists use is one for a) monopoly. b) monopsony. c) perfect competition. d) monopolistic competition.
> A stock index is a) essentially the weighted sum of stock prices. b) the simple sum of stock prices. c) the geometric average of stock prices. d) the consensus view of professional economists.
> Most baseball franchises have _____ over the years while the sale price of the typical team has ______. a) made a profit; fallen b) lost money; fallen c) made a profit; risen d) lost money; risen
> The heaviest concentration of proven oil reserves is found in a) Alaska. b) the North Sea. c) the Persian Gulf. d) Texas.
> Because there are _______, adjusted gross income is always ______ taxable income. a) deductions and exemptions; less than b) deductions and exemptions; greater than c) credits; greater than d) credits; less than
> One of the reasons a government-run annuity system such as Social Security may be better for society than simply relying on private savings is that a) no one would save for themselves. b) people, being overly risk averse, will save too much. c) people
> If Head Start were a good long-run investment from a strictly economic perspective, for current children enrolled in the program it would a) make them happier. b) help their parents with subsidized day care/preschool. c) increase the likelihood of fut
> In a simple 300 million-person world of all four-person families, if the poverty line is $12,500 and half of the 10 million families (with 40 million poor people) earn $10,000 and the other half earn $7,500, then the poverty gap is a) $125 billion (= 10
> The fact that education benefits not just the person being educated but society as a while suggests that there is a a) positive externality. b) negative externality. c) congestion. d) monopoly.
> The fact that education benefits not just the person being educated but society as a while suggests that there is a a) positive externality. b) negative externality. c) congestion. d) monopoly.
> In the long run, rent control has ________ impact because, over time, supply and demand become ______ elastic. a) an increasing; more b) a decreasing; more c) an increasing; less d) a decreasing; less
> Economists ______ the activities of ticket brokers and scalpers. a) draw no distinction between b) separately model c) draw a stark contrast between d) ignore
> In order for the minimum wage to reach its 1968 high in real terms (1999 dollars), it would have to rise to approximately ___ per hour. a) $8 b) $9 c) $10 d) $11
> Price supports in the United States have a) always relied on the government paying farmers to set aside land. b) always relied on the government buying excess crops. c) always relied on forbidding production above certain levels. d) utilized a wide v
> Income inequality as conventionally measured is ____ when you ignore the fact that a higher percentage of the population is filing tax forms. a) overstated b) understated c) property stated
> The earnings of African Americans relative to whites has a) increased from 40 percent in the 1920s to 90 percent today. b) increased from 50 percent in the 1950s to around 60 percent in the 1970s, remaining in that area since. c) remained constant sin
> Antitrust law is designed to limit the impact of a) monopoly. b) oligopoly. c) monopolistic competition. d) perfect competition.
> The economic rationale for farm price supports is generally a) weak, but relies on price variability. b) weak, but relies on the unavailability of crop insurance. c) strong, and relies on the fact that prices are too high. d) strong, and relies on t
> 1. The fundamental value of a share of stock is based on the present value of expected future a) dividends. b) revenues. c) profits. d) costs.
> Deficits cannot occur in a) defined benefit plans. b) defined contribution plans. c) entitlement budgets. d) state and local budgets.
> The tax brackets have higher tax rates for more taxable income. This makes the federal income tax a) proportional. b) regressive. c) progressive. d) integrative.
> 1. Between 1998 and 2007 the real minimum wage a) rose rapidly. b) rose slowly. c) fell steadily. d) fell rapidly.
> This chapter suggests that many economists generally a) accept the notion that a human life is worth the value of the chemicals that can be extracted from it. b) argue that a human life is worth the sum of the person’s future income. c) argue that the
> The argument that casinos have little economic impact on a community is based on the notion of a) supply. b) demand. c) opportunity cost. d) local substitution.
> 1. The impact of a new Walmart on a community’s consumers is a) significantly positive for those that get lower prices b) somewhat negative for those that prefer a personal touch (if stores offering it close). c) substantially negative in all aspects
> When there is only one employer in a city, the model that economists use is one for a) monopoly. b) monopsony. c) perfect competition. d) monopolistic competition.
> The value of a sports franchise to a city’s economy depends greatly on a) the sale of memorabilia to citizens. b) the degree to which non-ticket-based sales increase. c) the degree to which restaurant revenues rise. d) the degree to which noncitizens
> In order to compare the price of gasoline in the 1970s with the price in any other year, you have to adjust for a) the availability of oil. b) the price of oil. c) overall inflation. d) unemployment.
> Social Security’s revenue emanates from taxes on a) all income. b) payrolls. c) capital. d) estates.
> From an economic perspective the tool one would use to analyze the costs and benefits of Head Start would be a) present value. b) supply and demand. c) production possibilities. d) marginal net benefit.
> To counter the slowing rate of economic growth, conservative economists would recommend a) taxation and spending policies that decrease aggregate demand. b) taxation and spending policies that increase aggregate demand. c) corporate and personal incom
> Poverty is a _______ concept in that a person with that income in the United States may be considered in poverty, while a person with that same income in Somalia may be in the upper quarter of income earners. a) relative b) absolute c) irrelevant d)
> The evidence on the impact of spending on K–12 education outcomes suggests that, ceteris paribus, a) the more a school district spends, the better it does. b) the more a school district spends, the worse it does. c) the more a school district spends o
> The evidence on the impact of spending on K–12 education outcomes suggests that, ceteris paribus, a) the more a school district spends, the better it does. b) the more a school district spends, the worse it does. c) the more a school district spends o
> The principal argument against rent control is that a) landlords and all tenants are made worse off. b) landlords and a few tenants are made worse off by less than the majority of tenants are made better off. c) landlords and a few tenants are made w
> As the baby boom generation (born between 1946 and 1964) ages, which of the following is a likely outcome? a) A movement to the right in the demand for nursing home beds b) A movement to the left in the supply for nursing home beds c) A movement to th
> Part of the Patient Protection and Affordable Care Act involved a tax on indoor tanning that tanning salons are required to collect from tanners and send to the federal government. Which of the following would be the predicted result? a) A movement to t
> If Midwestern grain farmers can plant either soybeans or corn on their land with equal profitability and there is an increase in the price of soybeans, which of the following will result? a) A movement to the right in the demand for corn b) A movement
> The underlying reason for the upward-sloping nature of the supply curve is that a) the production of most goods comes with increasing marginal benefits. b) the production of most goods comes with increasing marginal costs. c) the consumption of most
> Ticket scalping is a symptom of a) stupid promoters. b) market prices being greater than the face value of the ticket. c) market prices being less than the face value of the ticket. d) stupid consumers.
> If MR > MC, then when an additional unit is sold, the firm’s a) profit will be positive. b) profit will increase. c) profit will be negative. d) profit will decrease.
> Policy makers have considered putting computer chips in cars that would allow tax collectors to charge people based on how often they drive during rush hours. These policy makers are dealing with the fact that public roads are a) purely private good.
> Without an increase in price, an increase in demand will lead to a) a shortage. b) a surplus. c) socialism. d) equilibrium.
> Joseph Schumpeter coined the phrase “creative destruction.” The idea of creative destruction is that a) people need to be forced from their comfort zone in order to make crucial decisions that enhance their economic prospects. b) unemployment affects soc
> If a program’s cost rises only with inflation and increases in those that qualify for the program, this represents a) an increase in spending using baseline budgeting. b) a decrease in spending using current-services budgeting. c) no increase or decr
> Of these, economists consider this the worst: a) inflation of 5 percent. b) recession. c) deflation of 5 percent. d) depression.
> In a diagram of perfect competition, the marginal revenue line moves up and down when there is exit and entry, respectively, because a) the market demand for the good rises and falls when there is exit and entry, respectively. b) the market demand for
> If you were to conclude, after carefully examining data and using proper evaluation techniques, that a tax credit for attending college benefits the poor more than a tax deduction (of equal total cost to the government) would, you would have engaged in _
> Local telephone service was once an area in which consumers had no choices. Many young people no longer use “landlines,” preferring instead to use their cellular phones. This means that the market has moved toward a) monopoly. b) oligopoly. c) perfect
> When choosing to limit trade, a country can impose a tax on imported goods. This is called a) an estate tax. b) a tariff. c) a quota. d) a capital gains tax.
> Income inequality, when measured as the percentage of total income going to the top 1 percent, increased most rapidly during the a) 1950s. b) 1960s. c) 1980s and 1990s. d) 2000s.
> A 60-month car loan (where no down payment was made) with a 6 percent interest rate and a monthly payment of $500 would allow the borrower to buy a a) $35,500 car. b) $30,000 car. c) $25,863 car. d) $28,200 car.
> On a graph of real gross domestic product over time, recessions appear as a) relatively short and shallow drops on an otherwise increasing path. b) long, sharp declines on an otherwise increasing path. c) the dips on a path that increases and decrease
> One unsettling consequence of setting a tax on tobacco sufficiently high to reduce consumption would be a) it would likely reduce Medicare costs. b) it would likely increase tobacco revenues to farmers. c) it would likely increase tobacco company prof
> The consensus among economists is that NAFTA’s impact on the U.S. economy is a) enormously positive. b) enormously negative. c) marginal in net though it has increased both imports and exports. d) marginal in net because it has affected neither impor
> To counter the slowing rate of economic growth, liberal economists would recommend a) taxation and spending policies that decrease aggregate demand. b) taxation and spending policies that increase aggregate demand. c) corporate and personal income tax
> In determining whether the distribution of federal spending among various agencies was correct, an economist would want to make sure a) that each agency manager got what (s) he thought was needed in that area. b) that the last dollar spent in each area
> Which of the following tools would have likely have the impact of raising short-term interest rates the most? a) Cutting the Fed Funds target by one-quarter point b) Buying $1 million dollars in bonds c) Raising the reserve requirement from 8 percent
> Discretionary fiscal policy as a tool for making things better is a) universally applauded as being helpful. b) universally derided for never being effective. c) considered by many to be effective but subject to several concerns over timing and motive
> When a satellite television company gains a subscriber there is no impact on existing subscribers. That is, there is no rivalry in the consumption for their service. This is an example of a a) purely private good. b) purely public good. c) congestible
