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Test Bank for Economics, 4th Edition, R.Glenn Hubbard

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Test Bank for Economics, 4th Edition: R. Glenn Hubbard . Note : this is not a text book. Description: ISBN-10: 013281725X. ISBN-13: 9780132817257

 

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Economics 4th Edition, R.Glenn Hubbard

Chapter 1

Economics: Foundations and Models

1) Recent changes occurring within the U.S. health care system, including lower insurance reimbursement rates, have resulted in

A) a growing number of doctorʹs choosing to open privat

B) more medical practices being owned by hospitals than by individua

C) a majority of hospitals closing routine medical practices in order to focus only on emergency car

D) a majority of doctors working directly for insurance

2) In economics, choices must be made because we live in a world of

A) scarcity

B) unlimited resources.

3) Which of the following statements is true about scarcity?

A) Scarcity refers to the situation in which unlimited wants exceed limited

B) Scarcity is not a problem for the

C) Scarcity is only a problem when a country has too large a

D) Scarcity arises when there is a wide disparity in income

4) The basic economic problem of                  has always existed and will continue to exist.

A) scarcity B) efficiency                       C) inflation                         D) recession

5) By definition, economics is the study of

A) how to make money in the stock

B) how to make money in a market

C) the choices people make to attain their goals, given their scarce

D) supply and

6) An economic                  is a simplified version of some aspect of economic life used to analyze an economic issue.

A) market B) trade-off                       C) variable                         D) model

7) Where do economic agents such as individuals, firms and nations, interact with each other?

A) in public locations monitored by the government

B) in any arena that brings together buyers and sellers

C) in any physical location people where people can physically get together for selling goods, such as shopping malls

D) in any location where transactions can be monitored by consumer groups and taxed by the government

8) The term                  in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

A) collective B) cooperative                   C) market                           D) trade-off

9) Economists assume that individuals

A) behave in unpredictable

B) will never take actions to help

C) prefer to live in a society that values fairness above all

D) are rational and respond to

10) Economists assume that rational behavior is useful in explaining choices people make

A) because irrational people do not make economic

B) even though people may not behave rationally all the

C) because individuals act rationally all the time in all

D) even though people rarely, if ever, behave in a rational

Chapter 2

Tradeoffs, Comparative Advantage, and the Market System

1) Scarcity

A) stems from the incompatibility between limited resources and unlimited

B) can be overcome by discovering new resources.

C) can be eliminated by rationing

D) is a bigger problem in market economies than in socialist

2) BMW recently decided to build a manufacturing plant in Shenyang, China. At this plant, BMW is able to take advantage of paying lower wages to its Chinese workers than it pays its German workers, but it also sacrifices the high levels of technical training possessed by its German workers. In deciding to open the Shenyang plant, BMW

A) faced no trade-offs because employing lower-wage workers increased

B) faced a trade-off between higher cost and lower precision.

C) adopted a negative technological change because it replaced high -skilled workers with low-skilled

D) eroded some of its competitiveness in the luxury car market because of its decreased cost of production.

3) The principle of opportunity cost is that

A) in a market economy, taking advantage of profitable opportunities involves some money cost.

B) the economic cost of using a factor of production is the alternative use of that factor that is given up.

C) taking advantage of investment opportunities involves

D) the cost of production varies depending on the opportunity for technological

4) The production possibilities frontier shows the                  combinations of two products that may be produced in a particular time period with available resources.

A) minimum attainable B) maximum attainable

C) only D) equitable

5) The production possibilities frontier model shows that

A) if consumers decide to buy more of a product its price will

B) a market economy is more efficient in producing goods and services than is a centrally planned economy.

C) economic growth can only be achieved by free market

D) if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another

6) The production possibilities frontier model assumes which of the following?

A) Labor, capital, land and natural resources are unlimited in B) The economy produces only two products.

C) Any level of the two products that the economy produces is currently D) The level of technology is variable.

7) The attainable production points on a production possibility curve are

A) the horizontal and vertical

B) the points along the production possibilities

C) the points outside the area enclosed by the production possibilities

D) the points along and inside the production possibility frontier.

8) The points outside the production possibilities frontier are

A) B) attainable.                     C) inefficient.                     D) unattainable.

9) Refer to Figure 21.  Point A is

A) technically

B) unattainable with current

C) inefficient in that not all resources are being

D) the equilibrium output

10) Refer to Figure 21.   Point B is

A) technically

B) unattainable with current

C) inefficient in that not all resources are being

D) the equilibrium output

Chapter 3

Where Prices Come From: The Interaction of Demand and Supply

1) The market for tablet computers has grown rapidly over the past few years, due in part to the overwhelming success of the Apple iPad. Following the successful launch of the iPad in 2010, companies such as Toshiba, Samsung, Dell, and Amazon have all introduced products to compete with the iPad. The tablet computers introduced to compete with the iPad would be considered

A) complements to the B) substitutes for the iPad.

C) inferior goods compared to the D) normal goods compared to the iPad.

2) If the Apple iPad and the Samsung Galaxy Tab are considered substitutes, then, other things equal, an increase in the price of the iPad will

A) decrease the demand for the

B) increase the demand for the Galaxy

C) increase the quantity demanded for the Galaxy

D) increase the quantity demanded for the iPad.

3) What is the difference between an ʺincrease in demandʺ and an ʺincrease in quantity demandedʺ?

A) There is no difference between the two terms; they both refer to a shift of the demand curve.

B) An ʺincrease in demandʺ is represented by a rightward shift of the demand curve while an ʺincrease in quantity demandedʺ is represented by a movement along a given demand curve.

C) There is no difference between the two terms; they both refer to a movement downward along a given demand

D) An ʺincrease in demandʺ is represented by a movement along a given demand curve, while an ʺincrease in quantity demandedʺ is represented by a rightward shift of the demand

4) The demand by all the consumers of a given good or service is the                  for the good or service.

A) market demand B) quantity demanded

C) law of demand D) scheduled demand

5) If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as

A) a decrease in

B) a decrease in quantity C) a change in consumer income.

D) a decrease in consumersʹ taste for

6) By drawing a demand curve with                  on the vertical axis and                  on the horizontal axis, economists assume that the most important determinant of the demand for a good is the

                 of the good.

A) quantity; price; quantity B) price; quantity; quantity

C) price; quantity; price D) quantity; price; price

7) The law of demand implies, holding everything else constant, that

A) as the price of bagels increases, the quantity of bagels demanded will

B) as the price of bagels increases, the demand for bagels will

C) as the price of bagels increases, the quantity of bagels demanded will

D) as the price of bagels increases, the demand for bagels will

8) If a demand curve shifts to the right, then

A) demand has B) quantity demanded has increased.

C) demand has D) quantity demanded has decreased.

9) Holding everything else constant, an increase in the price of MP3 players will result in

A) a decrease in the quantity of MP3 players

B) a decrease in the demand for MP3

C) an increase in the supply of MP3 players.

D) a decrease in the quantity of MP3 players

10) A change in all of the following variables will change the market demand for a product  except

A) the price of the B) population and demographics.

C) D) tastes.

Chapter 4

Economic Efficiency, Government Price Setting, and Taxes

1) The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

A) producer B) the substitution effect. C) the income effect.                                                      D) consumer surplus.

2) In New York City, about 1 million apartments are subject to rent control by the local government. Rent control

A) puts a legal limit on the rent that landlords can charge for an

B) is a price floor which sets a minimum rent for apartments.

C) only applies to those apartments which are owned and rented out by the local government.

D) is a government policy which limits apartment rental to those people whose incomes are less than $50,000 per year.

3) In a city with rent-controlled apartments, all of the following are true except

A) apartments usually rent for rates lower than the market

B) apartments are often in shorter supply than they would be without rent

C) it usually takes more time to find an apartment than it would without rent

D) landlords have an incentive to rent more apartments than they would without rent

4) Paul goes to Sportsmart to buy a new tennis racquet.  He is willing to pay $200 for a new racquet, but buys one on sale for $125.  Paulʹs consumer surplus from the purchase is

A) $325 B) $200                                C) $125                                D) $75

5) Lucinda buys a new GPS system for $250.  She receives consumer surplus of $75 from the purchase.  How much does Lucinda value her GPS system?

A) $75 B) $175                                C) $250                                D) $325

6) Willingness to pay measures

A) the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it.

B) the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good.

C) the maximum price that a buyer is willing to pay for a

D) the maximum price a buyer is willing to pay minus the minimum price a seller is willing to

7) Consumers are willing to purchase a product up to the point where

A) the marginal benefit of consuming the product is equal to the marginal cost of consumingit.

B) the consumer surplus is equal to the producer

C) the marginal benefit of consuming the product equals the area below the supply curve and above the market

D) the marginal benefit of consuming a product is equal to its

8) Marginal benefit is equal to the                  benefit to a consumer receives from consuming one more unit of a good or service

A) total B) unintended                   C) additional                     D) surplus

9) Which of the following statements best describes the concept of consumer surplus?

A) ʺSafeway was having a sale on Dreyerʹs ice cream so I bought 3 ʺ

B) ʺI was all ready to pay $300 for a new leather jacket that I had seen in Macyʹs but I ended up paying only $180 for the same ʺ

C) ʺI paid $130 for a printer last This week the same store is selling the same printer for$110.ʺ 4.

D) ʺI sold my Blu-ray copy of BenHur for $18 at a garage sale even though I was willing to sell it for $10.ʺ

10) Each point on a                  curve shows the willingness of consumers to purchase a product at different prices.

A) demand B) supply

C) production possibilities D) marginal cost

Chapter 5

Externalities, Environmental Policy, and Public Goods

1) In 2011, New Jersey Governor Chris Christie announced that he would pull the state out of the Regional Greenhouse Gas Initiative (RGGI), which is a coalition of 10 states that agreed to reduce their emissions of carbon dioxide by 10 percent by 2018. RGGI is an example of

A) command and B) cap-and-trade.

C) the greenhouse gas reduction D) the zero pollution goal.

2) Some critics of the U.S. Environmental Protection Agencyʹs proposed NSPS air pollution regulations which are designed to reduce carbon dioxide emissions argue that the policy will

A) significantly increase electric utility

B) ultimately result in an increase in carbon dioxide

C) increase greenhouse gases in exchange for the reduction of carbon D) result in an increase in the consumption of fossil fuels.

3) Conceptually, the efficient level of carbon emissions is the level for which

A) the marginal benefit of reducing carbon emissions is B) the marginal cost of reducing carbon emissions is minimized.

C) the marginal benefit of reducing carbon emissions is equal to the cost of reducing carbon emissions.

D) the marginal benefit of reducing carbon emissions is minimized and the marginal cost of reducing carbon emissions is

4) An externality is

A) a benefit realized by the purchaser of a good or

B) a cost paid for by the producer of a good or

C) a benefit or cost experienced by someone who is not a producer or consumer of a good or service.

D) anything that is external or not relevant to the production of a good or

5) Which of the following is a source of market failure?

A) unforeseen circumstances which leads to the bankruptcy of many firms

B) a lack of government intervention in a market

C) incomplete property rights or inability to enforce property rights

D) an inequitable income distribution

6) What is a market failure?

A) It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social

B) It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private

C) It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen

D) It refers to a breakdown in a market economy because of widespread corruption in government.

7) What are property rights?

A) the title to ownership of any physical asset

B) a legal document verifying ownership of intangible assets

C) the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it

D) the right of the government to appropriate private assets for the good of society

8) Which of the following activities create a negative externality?

A) cleaning up the sidewalk on your block

B) graduating from college

C) repainting the house you live in to improve its appearance

D) keeping a junked car parked on your front lawn

9) A negative externality exists if

A) there are price controls in a

B) there are quantity controls in a

C) the marginal social cost of producing a good or service exceeds the private

D) the marginal private cost of producing a good or service exceeds the social

10) Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

A) the private cost of production B) the social cost of production

C) the external cost of production D) the explicit cost of production

Chapter 6

Elasticity: The Responsiveness of Demand and Supply

1) Price elasticity of demand measures

A) how responsive suppliers are to price

B) how responsive sales are to changes in the price of a related

C) how responsive quantity demanded is to a change in price.

D) how responsive sales are to a change in buyersʹ

2) Suppose the value of the price elasticity of demand is -3. What does this mean?

A) A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent.

B) A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent.

C) A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent.

D) A $1 increase in price causes quantity demanded to fall by 3

3) If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

A) will increase by 45 B) will increase by 5 percent.

C) will decrease by 45 D) will decrease by 5 percent.

4) The price elasticity of demand for Stork ice cream is -4.  Suppose youʹre told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded?

A) 40 percent B) 25 percent                     C) 5 percent                    D) 0.4 percent

5) If demand is inelastic, the absolute value of the price elasticity of demand is

A) one

B) less than

C) greater than

D) greater than the absolute value of the slope of the demand

6) A demand curve which is                  represents perfectly inelastic demand, and a demand curve which is                  represents inelastic demand.

A) downward sloping; vertical B) horizontal; downward sloping

C) vertical; downward sloping D) upward sloping; horizontal

7) If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

A)

B) less than

C) more than

D) equal to the absolute value of the slope of the demand

8) Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6 for a pair of wool hand warmers and not a dime more. On the basis of this information, what can you conclude about her price elasticity of demand for wool hand warmers?

A) It is B) It is perfectly elastic.

C) It is perfectly D) The price elasticity coefficient is 0.

9) Seth is a competitive body builder.  He says he has to have his 12 -oz package of protein powder to ʺfeed his musclesʺ every day. On the basis of this information, what can you conclude about his price elasticity of demand for protein powder?

A) It is B) It is perfectly elastic.

C) It is perfectly D) The price elasticity coefficient is 0.

Chapter 7

The Economics of Health Care

1) Over the past 160 years in the United States, life expectancy

A) has remained fairly

B) has slightly

C) has more than

D) increased up to the 1950s and then declined for the next 60

2) On average, people in high-income countries                  than people in low -income countries.

A) have a shorter life expectancy

B) are subject to a higher infant mortality rate

C) are taller

D) are exposed to more severe diseases

3) The average height of adult males in the United States

A) has steadily increased since the early

B) has remained very constant since the Civil C) rose significantly beginning in 1830.

D) declined in the mid-1800s before beginning to rise again around

4) Between 1981 and 2009, the overall mortality rate in the United States

A) decreased by more than 25

B) slowly but steadily C) remained fairly constant.

D) was similar to the average rate in most low -income

5) In the United States from 1981 to 2009, deaths from all of the following declined substantially except

A) cancer B) kidney disease. C) heart attacks.                                                              D) strokes.

6) In the United States from 1981 to 2009, deaths from diabetes increased largely due to the effects of

  1. A) foreign-produced B) stress in the workplace. C) a larger immigrant population. D) increasing obesity.

7) The overall decline in death rates in the United States since 1981 was due to all of the following except

A) a decline in

B) the decline in the

C) the availability of new prescription

D) new surgical techniques.

8) Better health allows people to work harder, which raises a countryʹs total income. This indicates that in effect, better health

A) is a primary cause of price

B) reduces the incentive to work.

C) shifts out a countryʹs production possibilities

D) increases consumer

Chapter 8

Firms, the Stock Market, and Corporate Governance

1) Which of the following must a firm in a market economy do today to succeed?

A) Produce the goods and services that consumers want at a lower cost than consumers themselves can produce.

B) Organize the factors of production into a functioning, efficient

C) Have access to sufficient

D) Market firms today must do all of these

2) Organizing a successful firm in a market economy has become                  over the last century.

A) legally impossible B) politically impossible

C) less difficult D) more difficult

3) Unlike firms that sell stock in financial markets, which are known as                  firms, companies like Facebook which do not sell stock in financial markets are known as                  firms.

A) public; private B) open; closed

C) corporate; proprietary  D) stock market; bond market

4) A sole proprietorship is

A) the easiest type of business to set

B) the most difficult type of business to set

C) the most expensive type of business to set

D) the least profitable type of business to set up.

5) Which type of business is the most difficult to set up?

A) sole proprietorship

B) partnership

C) corporation

D) There is no difference in the difficulty of

6) A corporation is the type of business has                  government rules and regulations affecting it.

A) no B) the fewest                     C) the most                        D) only federal

7) Which type of business has the least government rules and regulations affecting it?

A) sole proprietorship

B) partnership

C) corporation

D) They all have the same set of rules and regulations affecting

8) As a form of business, a partnership

A) has limited

B) has only one

C) cannot issue

D) has the most government rules and regulations affecting

9) How do a sole proprietorship and a corporation differ?

A) Proprietorships have unlimited liability while corporations have limited

B) Corporations can issue stocks and bonds, while proprietorships

C) Corporations face more taxes than do proprietorships.

D) All of these are differences between the two types of

10) Assume you set up a sole proprietorship and your lawyer tells you that as the owner, you could stand to lose your personal wealth if the business goes bankrupt. This means a sole proprietorship

A) faces limited B) faces unlimited liability.

C) has little chance of D) is not a good type of business to set up.

Chapter 9

Comparative Advantage and the Gains from International Trade

1) U.S. firms that sell products in foreign markets protested the ʺBuy Americanʺ provision in the 2009 stimulus bill, arguing that if the United States restricted imports from foreign firms,

A) foreign countries would likely retaliate by limiting S. exports.

B) foreign firms would stop selling all products in the United States.

C) S. firms would never be able to meet the increased demand for U.S. -produced goods.

D) eventually the government would demand price cuts from U.S. manufacturers.

2) Workers in industries protected by tariffs and quotas are likely to support these trade restrictions because

A) they do not want to offend their employers who want

B) politicians lobby to convince workers the restrictions will make them better

C) they believe the restrictions will protect their jobs.

D) they donʹt understand that the restrictions will threaten their

3) The intention of the ʺBuy Americanʺ provision in the 2009 stimulus bill was to

A) increase jobs in the United

B) prevent foreign firms from dumping product in the United

C) insure that products used to build roads and bridges meet S. quality and safety standards.

D) save the government money by restricting the sale of more expensive foreign -made products.

4) In the 1930s, the United States charged an average tariff rate                  . Today, the rate is                 .

A) of 100 percent; 20 percent  B) above 50 percent; less than 2 percent

C) of less than 10 percent; over 40 percent D) of 17 percent; 33 percent

5) A tariff is a tax imposed by a government on

  1. A) exports B) services.                         C) imports.                         D) luxury items.

6) Goods and services bought domestically but produced in other countries are referred to as

A) exports B) imports.

C) transfer D) foreign consumption.

7) Exports are domestically produced goods and services

A) sold to other

B) sold to the

C) sold at home.

D) which are used to produce other goods and

8) When Roxanne, a U.S. citizen, purchases a designer dress from Barneys of New York that was made in Milan, the purchase is

A) both a S. and an Italian import.

B) a S. import and an Italian export.

C) a S. export and an Italian import.

D) neither an export nor an import for either

9) Which of the following statements about the importance of trade to the U.S. economy is true?

A) Since 1950, both exports and imports have steadily decreased as a fraction of S. gross domestic product.

B) Overall, about 80 percent of S. manufacturing jobs depend directly or indirectly on exports.

C) The United States is the largest exporter in the

D) The S. economy is highly dependent on international trade for growth in its gross domestic product.

10) In 2010,                  of Caterpillarʹs sales were outside the United States.

A) only 12 percent B) more than two-thirds

C) less than half D) 95 percent

Chapter 10

Consumer Choice and Behavioral Economics

1) Economists assume that the goal of consumers is to

A) do as little work as possible to B) make themselves as well off as possible.

C) expend all their D) consume as much as possible.

2) Utility is

A) easily measured in units called

B) subjective and difficult to

C) the consumption of a quasi-public good like electricity or natural

D) the production of a quasi -public good like electricity or natural gas.

3) Marginal utility is the

A) total satisfaction received from consuming a given number of units of a

B) average satisfaction received from consuming a

C) extra satisfaction received from consuming one more unit of a

D) satisfaction achieved when a consumer has had enough of a

4) As a consumer consumes more and more of a product in a particular time period, eventually marginal utility

A) rises B) is constant.                    C) declines.                        D) fluctuates.

5) If a consumer receives 22 units of marginal utility for consuming the first can of soda, 20 units from consuming the second, and 15 from the third, the total utility of consuming the three units is

A) 57 utility

B) 35 utility

C) 15 utility units.

D) unknown as more information is needed to determine the

6) If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the third candy bar is

A) 25 utility

B) 20 utility units.

C) 5 utility units.

D) unknown as more information is needed to determine the

7) If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the second candy bar is

A) 25 utility

B) 20 utility units.

C) 5 utility units.

D) unknown as more information is needed to determine the

8) Total utility

A) cannot decrease as a person consumes more and more of a

B) has a constant rate of increase as a person consumes more and more of a

C) is equal to the sum of the marginal utilities of all units consumed.

D) is negative when marginal utility is

9) If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of

A) the law of B) the law of supply.

C) the law of increasing marginal opportunity D) the law of diminishing marginal utility.

10) The law of diminishing marginal utility states that

A) eventually total utility falls as more of a good is consumed, other things

B) the extra satisfaction from consuming a good decreases as more of a good is consumed,

other things constant.

C) the extra satisfaction from consuming a good increases slowly as more of a good is

consumed, other things constant

D) when the extra satisfaction from consuming a good becomes negative, total utility starts

falling, other things constant.

AND MUCH MORE