Macroeconomics Answers

QUESTION 9

When the externality of pollution exists:

1. The supply curve no longer represents all social costs.
2. The supply curve continues to represent all social costs.
3. Everybody benefits.
4. Nobody benefits.
5. Society benefits.

QUESTION 10

Economists commonly refer to externalities as an example of:

1. Too many chefs, not enough cooks.
2. In for a penny, in for a pound.
3. A pound of flesh.
4. The aphorism of the apocalypse.
5. Market failure.

QUESTION 11

Command-and-control regulation requires that firms increase their costs:

1. At the expense of society.
2. By installing anti-pollution equipment.
3. By polluting more.
4. By increasing their level of production.
5. All of the above.

QUESTION 12

Command-and-control regulation is inflexible; it usually

1. Requires different standards for all polluters.
2. Requires the same standard for all polluters.
3. Will not bend to consumer preferences.
4. Will reach the worst possible outcome.
5. Cannot even touch its toes.

QUESTION 5

In a market with no anti-pollution restrictions, firms:

1. Cannot exist.
2. Can dispose of certain wastes only by paying an appropriate tax.
3. Can dispose of certain wastes only by paying an inappropriate tax.
4. Can dispose of certain wastes absolutely free.
5. Cannot dispose of wastes.

QUESTION 6

Taking the additional external costs of pollution into account results in:

1. A lower quantity of production.
2. A lower quantity of pollution.
3. A higher price.
4. All of the above.
5. None of the above.

QUESTION 7

The supply curve is based on choices about production that firms make while:

1. Looking at their marginal costs.
2. Looking at their fixed costs.
3. Looking at their total costs.
4. Looking at their implicit costs.
5. None of the above. 

QUESTION 8

The demand curve is based on the benefits that individuals perceive while:

1. Watching the ballgame.
2. Maximizing their utility.
3. Minimizing their utility.
4. Maximizing their profit.
5. Minimizing their profit.

QUESTION 1

The subject of this chapter is:

1. How to have our cake and eat it too.
2. How to balance economic progress with unintended effects on our planet.
3. How to bake a cake.
4. How to fry eggs.
5. How to sleep properly. 

QUESTION 2

Every country needs to strike some balance between:

1. Production and environmental quality.
2. Production and additional jobs.
3. Production and additional wealth.
4. Production and profusion.
5. All of the above.  

QUESTION 3

This is a fundamental building block of the economic way of thinking:

1. Trade allows wealthy countries to take advantage of poorer countries.
2. Trade allows poorer countries to take advantage of richer countries.
3. Voluntary exchange benefits both buyers and sellers.
4. Voluntary exchange benefits only buyers.
5. Voluntary exchange benefits only sellers.

QUESTION 4

The social costs include the private costs of production that a company incurs:

1. But none of the external costs.
2. And the external costs.
3. Without addressing the problem.
4. While addressing the problem.
5. All of the above.

If the demand function faced by a firm is:

Q = 90 – 2P

TC = 2 + 57Q – 8Q² + Q³

Determine the level of output at which the firm maximizes the profit.

Determine the best level of output for the above question by the MR and MC approach.

Suppose that the production function of the firm is:

Q = 100L^1/2.K^1/2

 K= 100, P = $1, w = $50 and r = $40. Determine the quantity of labor that the firm should hire in order to maximize the profits. What is the maximum profit of this firm?

Question 16: Given 120 + 50Q – 10Q² + Q³

Find

a.      The equations of the TVC, AVC, and MC functions.

b.     The level of output at which AVC and MC are minimum, and prove that the AVC and MC curves are U-shaped.

c.      Find the AVC and MC for the level of output at which the AVC curve is minimum.

The fundamental equations in an economy are given as:

Consumption function C =200+0.8yd

Investment function. I=300

Tax. T=120

Government expenditure. G=200

Exports. X=100

Imports M=0.05y

Find the following.

1.The equilibrium level of income.

2.The net exports.

C=100+0.75Y

T=50+0.5Y

X=200

M=50+0.25Y

G=150. Illustrate aggregate spending and equilibrium level of income on a diagram

According to a Fisher effect, how how does an increase in theinflation rate affect 

the real interest rate and nominal interest rate?

 What is the GDP per capita in Stickmanland this year? How does GDP per capita

reflect the quality of life in Stickmanland?