List prices on new cars do not change very often, so
A) the real price of cars is very inflexible.
B) the prices of new cars can only be flexible if there are changes in the cost of materials.
C) price flexibility is not an important feature in the auto market.
D) price flexibility shows up primarily through the negotiations between buyers and sellers.
Ques. 2What is a government's budget constraint in the long run as opposed to a given time period?
What will be an ideal response?
Ques. 3Which category of unemployed individuals makes up the greatest share of those who are unemployed?
A) new entrants
B) reentrants
C) job losers
D) job leavers
Ques. 4The classical model assumes that
A) imperfect competition predominates in most markets.
B) people have money illusion.
C) wages and prices are flexible.
D) wages are flexible but prices are not.
Ques. 5If a demand curve shifts, we know that
A) the price of the good itself is not a factor.
B) the price of the good itself is a factor.
C) the price of the good and supply are the major factors.
D) the price of the good and demand are major factors.
Ques. 6If the government offers to reduce your property taxes by 10 percent if you install solar heating for your home, this would be an example of
A) police power.
B) incentives.
C) disincentives.
D) ceteris paribus.
Ques. 7During the Winter Olympics in Vancouver, some residents rented rooms to visitors. This behavior
A) helped reduce the shortage of hotel rooms caused by the high demand during the Olympics.
B) reduced the demand for tickets to the Olympics since many local residents left town while they rented out space in their homes.
C) hurt the hotel market in Vancouver in the long run because new hotels that should have been built were not built for the Olympics.
D) raised the demand for hotel rooms in Vancouver and should have been prevented by the city of Vancouver.
Ques. 8In the above figure, the opportunity cost of moving from producing 75 guitars and 25 ukuleles to producing 50 guitars and 50 ukuleles is
A) 25 ukuleles.
B) 50 guitars.
C) 100 guitars.
D) 25 guitars.
Ques. 9What are the three sources of funding for the public sector? Can the government rely on all of these sources in the long run? Explain.
What will be an ideal response?
Ques. 10Increases in the duration of unemployment may
A) reflect a general downturn in economic activity that depresses job openings.
B) increase the number of discouraged workers.
C) increase the unemployment rate.
D) all of the above.
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