Prostitution is made legal in New Zealand, what is the impact on GDP?

	A.	GDP increases.
	B.	GDP decreases.
	C.	GDP is unchanged.
	D.	None of the above.

Which of the following is not a characteristic of perfect competition?

	A.	Large number of firms in the industry.
	B.	Outputs of the firms are perfect substitutes for one another.
	C.	Firms face downward-sloping demand functions.
	D.	No barriers to entry or exit.

Over time Asians have chosen to cook less at home and dine out more. This change in behavior:

	A.		reduces GDP.
	B.		increases GDP.
	C.		does not affect GDP.
	D.		none of the above

A perfectly competitive firm will minimize its losses by shutting down when:

	A.	P < ATC at the profit-maximizing level of output.
	B.	P < AVC at the profit-maximizing level of output.
	C.	P < MC at the profit-maximizing level of output.
	D.	P < TFC at the profit-maximizing level of output.

Macroeconomics studies the following topics:

	A.	national output, the inflation rateand the unemployment rate
	B.	the price of Cisco stock
	C.	differences in market structure.
	D.	all of the above.

Which of the following statements regarding a monopolist isfalse?

	A.	The marginal revenue curve lies below the demand curve for the monopolist's output.
	B.	Unlike a perfectly competitive firm, a monopolist faces little or no competition.
	C.	The monopolist sets price equal to marginal cost to maximize profits.
	D.	The monopolist may or may not earn positive economic profits.

Which of the following statements correctly describes the relationship between price and marginal cost at the profit-maximizing point in perfectly competitive and monopoly markets?

	A.		Price is greater than marginal cost in perfectly competitive markets and equal to marginal cost in monopoly markets.
	B.		Price is equal to marginal cost in perfectly competitive markets and greater than marginal cost in monopoly markets.
	C.		Price is equal to marginal cost in both markets.
	D.		Price is greater than marginal cost in both markets.

Which of the following is the best example of a monopolistically competitive market?

	A.	The wheat market.
	B.	The electricity market.
	C.	The restaurant market.
	D.	All of the Above.

f a firm decides to cut all production at its factory so that output is zero,which of the following is true?

	A.	Variable cost will be zero
	B.	Total cost will be zero
	C.	Average cost will be zero
	D.	All of the above

GDP can increase from one year to the next by:

	A.	increases in prices while quantities of goods and services are constant.
	B.	increases in the quantities of goods and services produced while prices remain constant.
	C.	both prices and quantities of goods and services increase.
	D.	all of the above.

Assume a perfectly competitive firm is producing a level of output at which MR < MC. What should the firm do to maximize its profits?

	A.	The firm should do nothing it wants to maximize the difference between MR and MC in order to maximize its profits.
	B.	The firm should decrease output.
	C.	The firm should increase price.
	D.	The firm should increase output.

In a circular-flow diagram, total income and total expenditures in an economy are:

	A.	equal because firms are ultimately owned by households.
	B.	equal only if there is no saving.
	C.	equal because every transaction has a buyer and a seller.
	D.	always equal because some people's income is not for production.

Suppose a monopolist is producing a level of output such that MR > MC. Which of the following best describes what will happen as the firm moves to its profit-maximizing equilibrium?

	A.	Marginal revenue will rise and marginal cost will fall.
	B.	Marginal cost and marginal revenue will both rise.
	C.	Marginal revenue will fall and marginal cost will rise.
	D.	Marginal cost and marginal revenue will both fall.

In year one, the GDP deflator is 100 and in year two 110. If nominal GDP in year two is $300 billion, what is real GDP for year two?

	A.	$200 billion.
	B.	$100 billion.
	C.	$272.73 billion.
	D.	$220 billion.

Because firms produce a differentiated product, each of the firms in a monopolistically competitive market faces a demand curve that is

	A.	perfectly elastic.
	B.	perfectly inelastic.
	C.	downward sloping.
	D.	perfectly elastic or perfectly inelastic depending on whether the firm's output is a luxury or a necessity.

The value of currently produced final goods and services measured in current year prices is called:

	A.	real GDP.
	B.	nominal GDP.
	C.	inflation.
	D.	deflation.

The negatively-sloped(i.e.declining)partof the long-run average total cost curve is due to which of the following?

	A.	Diseconomies of scale.
	B.	The difficulties encountered in coordinating the many activities of a large firm.
	C.	Diminishing returns.
	D.	The increase in productivity that results from specialization.