Question 1

Which price index published by the U.S. federal government represents wholesale price changes?

Accepted Answer

A)  Consumer Price Index 
B)  Producer Price Index 
C)  GDP deflator 
D)  Dow-Jones Industrial Average 
A)  Consumer Price Index 
B)  Producer Price Index 
C)  GDP deflator 
D)  Dow-Jones Industrial Average

Question 2

When 1983 is the CPI base year, the CPI value is 82.4 for 1980 and 172.2 for 2017. Suppose we want to convert this CPI series to have a base year of 2017 (that is, CPI2017 = 100). What is the value of the revised CPI for 1980?

Accepted Answer

A)  172.2 
B)  100 
C)  47.9 
D)  209.0 
A)  172.2 
B)  100 
C)  47.9 
D)  209.0

Question 3

To evaluate the potential impact of introducing the hybrid Prius auto into the U.S. market, Toyota Motor Corporation would use:

Accepted Answer

A)  positive economic analysis. 
B)  normative economic analysis. 
C)  negative economic analysis. 
D)  forensic analysis. 
A)  positive economic analysis. 
B)  normative economic analysis. 
C)  negative economic analysis. 
D)  forensic analysis.

Question 4

During a presidential campaign, the candidates from each party typically describe their plans to maintain or change federal taxes on personal and business income. Are these policy statements generally positive or normative in nature?

Accepted Answer

A)  Positive 
B)  Normative 
C)  Both positive and normative 
D)  Neither positive or normative 
A)  Positive 
B)  Normative 
C)  Both positive and normative 
D)  Neither positive or normative

Question 5

The nominal price of milk was $2.25 in 1998 while the CPI was 163.0 that year. Also, the CPI in 1970 was 38.8. What was the real value of 1998 milk in terms of 1970 dollars?

Accepted Answer

38.8($2.25

Question 6

The reward for the capture of Jesse James was $500.00 in 1881. Suppose the CPI in 1881 was 0.25. What is the real value of the reward in 2010 dollars if the CPI was 218.1 in 2010?

Accepted Answer

218.1($500

Question 7

Use the following statements to answer this question: I. The inflation rate (the rate of change in the general price level) calculated from a price index like CPI is the same regardless of the base year we use to form the price index.
II) Although the CPI may indicate the general price level increased by 5% last year, there are some consumer products that may have experienced more or less inflation in the past year.

Accepted Answer

A)  I and II are true. 
B)  I is true and II is false. 
C)  I is false and II is true. 
D)  I and II are false. 
A)  I and II are true. 
B)  I is true and II is false. 
C)  I is false and II is true. 
D)  I and II are false.

Question 8

Which of the following is a positive statement?

Accepted Answer

A)  The President of the United States ought to be elected by a direct vote of the American people rather than the Electoral College. 
B)  When a country imports more than it exports, its balance of trade is negative. 
C)  Because many adults cannot afford to go to college, tax credits for tuition should be introduced. 
D)  The price of drugs in the United States is too high. 
E)  It only makes sense to offer financial aid for students who cannot pay some of their tuition. 
A)  The President of the United States ought to be elected by a direct vote of the American people rather than the Electoral College. 
B)  When a country imports more than it exports, its balance of trade is negative. 
C)  Because many adults cannot afford to go to college, tax credits for tuition should be introduced. 
D)  The price of drugs in the United States is too high. 
E)  It only makes sense to offer financial aid for students who cannot pay some of their tuition.

Question 9

Arbitraging price differences between two markets is generally not possible if:

Accepted Answer

A)  there are positive costs of transporting the products from one market to the other. 
B)  the transportation costs are larger than the difference in prices. 
C)  the government has prohibited exchange between the two markets. 
D)  A and C above 
E)  B and C above 
A)  there are positive costs of transporting the products from one market to the other. 
B)  the transportation costs are larger than the difference in prices. 
C)  the government has prohibited exchange between the two markets. 
D)  A and C above 
E)  B and C above

Question 10

The CPI in 1970 was 38.8 and in 1998 the CPI was 163.0. If the real value of a 1970 gallon of milk in terms of 1998 dollars is $0.70, what was the nominal price of milk in 1970?

Accepted Answer

38.8($0.70

Question 11

Which of the following is NOT an example of ways in which microeconomic analysis can help Toyota Motor Corporation in its corporate decision making?

Accepted Answer

A)  Forecasting demand for new automobiles 
B)  Determining how many automobiles to produce in order to maximize profits 
C)  Predicting how competitors will react to the firm's pricing strategy 
D)  Forecasting the effect of Toyota's hiring patterns on the U.S. unemployment rate 
E)  Forecasting the effect of an oil price increase on demand for hybrid autos 
A)  Forecasting demand for new automobiles 
B)  Determining how many automobiles to produce in order to maximize profits 
C)  Predicting how competitors will react to the firm's pricing strategy 
D)  Forecasting the effect of Toyota's hiring patterns on the U.S. unemployment rate 
E)  Forecasting the effect of an oil price increase on demand for hybrid autos

Question 12

Which of the following is a positive statement?

Accepted Answer

A)  When the price of a good goes up, consumers buy less of it. 
B)  When the price of a good goes up, firms produce more of it. 
C)  When the Federal government sells bonds, interest rates rise and private business investment is reduced. 
D)  all of the above 
E)  none of the above 
A)  When the price of a good goes up, consumers buy less of it. 
B)  When the price of a good goes up, firms produce more of it. 
C)  When the Federal government sells bonds, interest rates rise and private business investment is reduced. 
D)  all of the above 
E)  none of the above

Question 13

Although the U. S. airline industry has only a relatively small number of sellers, the market is nevertheless highly competitive. The reason is that:

Accepted Answer

A)  the number of buyers is very large. 
B)  due to fierce competition, no firm has significant control over prices. 
C)  due to fierce competition, no firm has significant control over the quantity supplied. 
D)  most airline routes are served by relatively many sellers. 
A)  the number of buyers is very large. 
B)  due to fierce competition, no firm has significant control over prices. 
C)  due to fierce competition, no firm has significant control over the quantity supplied. 
D)  most airline routes are served by relatively many sellers.

Question 14

Which of the following statements is false? An economic analysis of carbon taxes can:

Accepted Answer

A)  calculate the increase in costs faced by coal-using industries. 
B)  predict the effect on unemployment in West Virginia coal mining communities. 
C)  compare the likely reductions in medical expenditures on diseases caused by smog. 
D)  present a trade-off of the costs and benefits of different levels of carbon taxes. 
E)  conclude that such taxes should be imposed to benefit future generations. 
A)  calculate the increase in costs faced by coal-using industries. 
B)  predict the effect on unemployment in West Virginia coal mining communities. 
C)  compare the likely reductions in medical expenditures on diseases caused by smog. 
D)  present a trade-off of the costs and benefits of different levels of carbon taxes. 
E)  conclude that such taxes should be imposed to benefit future generations.

Question 15

Washington, D.C.'s metro train system is being extended further into the neighboring states of Maryland and Virginia, thereby reducing the cost of commuting into the United States' capitol. Other things being held constant, this can be expected to:

Accepted Answer

A)  decrease the extent of the market for housing around Washington, D.C. 
B)  increase the extent of the market for housing around Washington, D.C. 
C)  have no effect on the extent of the market for housing around Washington, D.C. as the actual geography remains unchanged. 
D)  have no effect on the extent of the market for housing around Washington, D.C. as the range of houses available has not changed. 
E)  have no effect on the extent of the market for housing around Washington, D.C. as property taxes have not changed. 
A)  decrease the extent of the market for housing around Washington, D.C. 
B)  increase the extent of the market for housing around Washington, D.C. 
C)  have no effect on the extent of the market for housing around Washington, D.C. as the actual geography remains unchanged. 
D)  have no effect on the extent of the market for housing around Washington, D.C. as the range of houses available has not changed. 
E)  have no effect on the extent of the market for housing around Washington, D.C. as property taxes have not changed.

Question 16

Suppose the Social Security Administration would like to guarantee the purchasing power of social security payments to the elderly does not diminish. That is, the real value of the payments does not decrease. The CPI in 1990 was 130.7 and the CPI in 1998 was 163.0. How much does the Social Security Administration need to increase payments from 1990 to 1998 to accomplish this objective?

Accepted Answer

The change in the ge

Question 17

Suppose you are in charge of product pricing and marketing strategy for a pharmaceutical company. You will have greater ability to independently set prices for your product if:

Accepted Answer

A)  there are no close substitutes for your product. 
B)  there are lots of other firms selling closely related products in your market. 
C)  your market is perfectly competitive. 
D)  none of the above 
A)  there are no close substitutes for your product. 
B)  there are lots of other firms selling closely related products in your market. 
C)  your market is perfectly competitive. 
D)  none of the above

Question 18

Use the following two statements to answer this question: I. Economic theories are developed to explain observed phenomena by deducing from a set of basic rules and assumptions.
II) Economic theories use value judgments to determine which people ought to pay more taxes.

Accepted Answer

A)  Both I and II are true. 
B)  I is true, and II is false. 
C)  I is false, and II is true. 
D)  Both I and II are false. 
A)  Both I and II are true. 
B)  I is true, and II is false. 
C)  I is false, and II is true. 
D)  Both I and II are false.

Question 19

Which price index published by the U.S. federal government represents retail price changes?

Accepted Answer

A)  Consumer Price Index 
B)  Producer Price Index 
C)  GDP deflator 
D)  Dow-Jones Industrial Average 
A)  Consumer Price Index 
B)  Producer Price Index 
C)  GDP deflator 
D)  Dow-Jones Industrial Average

Question 20

Which of the following statement is FALSE?

Accepted Answer

A)  Perfectly competitive markets are composed of many buyers and sellers. 
B)  Some markets may have only a few sellers but exhibit the properties of perfect competition. 
C)  A market may be composed of only one buyer and one seller. 
D)  All of the above statements are correct. 
A)  Perfectly competitive markets are composed of many buyers and sellers. 
B)  Some markets may have only a few sellers but exhibit the properties of perfect competition. 
C)  A market may be composed of only one buyer and one seller. 
D)  All of the above statements are correct.

Which price index published by the U.S. federal government represents wholesale price changes?

When 1983 is the CPI base year, the CPI value is 82.4 for 1980 and 172.2 for 2017. Suppose we want to convert this CPI series to have a base year of 2017 (that is, CPI₂₀₁₇ = 100). What is the value of the revised CPI for 1980?

To evaluate the potential impact of introducing the hybrid Prius auto into the U.S. market, Toyota Motor Corporation would use:

During a presidential campaign, the candidates from each party typically describe their plans to maintain or change federal taxes on personal and business income. Are these policy statements generally positive or normative in nature?

The nominal price of milk was $2.25 in 1998 while the CPI was 163.0 that year. Also, the CPI in 1970 was 38.8. What was the real value of 1998 milk in terms of 1970 dollars?

The reward for the capture of Jesse James was $500.00 in 1881. Suppose the CPI in 1881 was 0.25. What is the real value of the reward in 2010 dollars if the CPI was 218.1 in 2010?

Which of the following is a positive statement?

Arbitraging price differences between two markets is generally not possible if:

The CPI in 1970 was 38.8 and in 1998 the CPI was 163.0. If the real value of a 1970 gallon of milk in terms of 1998 dollars is $0.70, what was the nominal price of milk in 1970?

Which of the following is NOT an example of ways in which microeconomic analysis can help Toyota Motor Corporation in its corporate decision making?

Which of the following is a positive statement?

Although the U. S. airline industry has only a relatively small number of sellers, the market is nevertheless highly competitive. The reason is that:

Which of the following statements is false? An economic analysis of carbon taxes can:

Washington, D.C.'s metro train system is being extended further into the neighboring states of Maryland and Virginia, thereby reducing the cost of commuting into the United States' capitol. Other things being held constant, this can be expected to:

Suppose you are in charge of product pricing and marketing strategy for a pharmaceutical company. You will have greater ability to independently set prices for your product if:

Use the following two statements to answer this question: I. Economic theories are developed to explain observed phenomena by deducing from a set of basic rules and assumptions. II) Economic theories use value judgments to determine which people ought to pay more taxes.

Which price index published by the U.S. federal government represents retail price changes?

Which of the following statement is FALSE?

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 1: Preliminaries

Which price index published by the U.S. federal government represents wholesale price changes?

When 1983 is the CPI base year, the CPI value is 82.4 for 1980 and 172.2 for 2017. Suppose we want to convert this CPI series to have a base year of 2017 (that is, CPI2017 = 100). What is the value of the revised CPI for 1980?

To evaluate the potential impact of introducing the hybrid Prius auto into the U.S. market, Toyota Motor Corporation would use:

During a presidential campaign, the candidates from each party typically describe their plans to maintain or change federal taxes on personal and business income. Are these policy statements generally positive or normative in nature?

The nominal price of milk was $2.25 in 1998 while the CPI was 163.0 that year. Also, the CPI in 1970 was 38.8. What was the real value of 1998 milk in terms of 1970 dollars?

The reward for the capture of Jesse James was $500.00 in 1881. Suppose the CPI in 1881 was 0.25. What is the real value of the reward in 2010 dollars if the CPI was 218.1 in 2010?

Which of the following is a positive statement?

Arbitraging price differences between two markets is generally not possible if:

The CPI in 1970 was 38.8 and in 1998 the CPI was 163.0. If the real value of a 1970 gallon of milk in terms of 1998 dollars is $0.70, what was the nominal price of milk in 1970?

Which of the following is NOT an example of ways in which microeconomic analysis can help Toyota Motor Corporation in its corporate decision making?

Which of the following is a positive statement?

Although the U. S. airline industry has only a relatively small number of sellers, the market is nevertheless highly competitive. The reason is that:

Which of the following statements is false? An economic analysis of carbon taxes can:

Washington, D.C.'s metro train system is being extended further into the neighboring states of Maryland and Virginia, thereby reducing the cost of commuting into the United States' capitol. Other things being held constant, this can be expected to:

Suppose you are in charge of product pricing and marketing strategy for a pharmaceutical company. You will have greater ability to independently set prices for your product if:

Use the following two statements to answer this question: I. Economic theories are developed to explain observed phenomena by deducing from a set of basic rules and assumptions. II) Economic theories use value judgments to determine which people ought to pay more taxes.

Which price index published by the U.S. federal government represents retail price changes?

Which of the following statement is FALSE?

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Game Theory and Competitive Strategy

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

When 1983 is the CPI base year, the CPI value is 82.4 for 1980 and 172.2 for 2017. Suppose we want to convert this CPI series to have a base year of 2017 (that is, CPI₂₀₁₇ = 100). What is the value of the revised CPI for 1980?