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4. ______________________ unemployment is due to the time required to match workers with jobs. 5. ______________________ unemployment is where workers do not have the skills required in the available jobs. 6. ______________________ unemployment is due to downturns in the business cycle. Multiple Choice: ___ 1. Which of the following is not one of the macroeconomic goals? a. full employment b. money supply growth c. economic growth d. price level stability ___ 2. If the quantity of money spent decreases relative to the quantity of products purchased: a. the price level will increase b. the price level will decrease c. the price level will stay the same d. All of the above are possible ___ 3. The largest category in the market basket of goods and services purchased by typical households is: a. medical care b. transportation c. housing d. food and beverages ___ 4. If the CPI was 113.6 in 1987 and was 118.3 in 1988, what was the rate of inflation for 1988? a. 4.1% b. 4.7% c. 16.1% d. 18.3% ___ 5. The CPI in 1954 was: a. 19.5 b. 26.7 c. 26.9 d. 30.6 ___ 6. If a gallon of gasoline cost $.18 in 1940, when the CPI was 14.0, and cost $2.80 in 2010, when the CPI was 218.1, what was the 2010 price of a gallon of gasoline, adjusted to the 1940 price level? a. $.18 b. $.36 c. $1.62 d. $2.80 ___ 7. The average engineer’s salary was $74,920 in 2001. The average engineer’s salary was $10,248 in 1962. What was the real average engineer’s salary in 2001, adjusted to the 1962 price level? a. $12,487 b. $12,776 c. $24,807 d. $27,804 FOR REVIEW ONLY - NOT FOR DISTRIBUTION Inflation and Unemployment 4 - 12

Answer questions 8. and 9. based on the following information: The average teacher salary was $9,705 in 1972 and was $46,726 in 2004. ___ 8. What was the real average teacher salary in 1972, adjusted to the 2004 price level? a. $23,217 b. $27,804 c. $43,858 d. $48,525 ___ 9. Between 1972 and 2004, real average teacher salaries: a. decreased by 6.5% b. increased by 6.5% c. increased by 68% d. increased by 101% ___ 10. A period of unemployment typically lasts: a. less than 6 months b. from 6 months to one year c. from one year to two years d. more than two years ___ 11. Anyone 16 and older who does not have a paying job and is actively seeking employment is: a. employed b. unemployed c. not in the labor force d. All of the above are possible ___ 12. Out of 247 million persons 16 and older, 145 million had paying jobs, 12 million did not have paying jobs but were actively seeking employment, 4 million wanted to work but had given up seeking employment and 86 million were retired or were otherwise not interested in employment. What is the size of the labor force? a. 149 million b. 157 million c. 161 million d. 227 million ___ 13. Based on the information in question 12., what is the unemployment rate? a. 7.1% b. 7.6% c. 8.3% d. 10.1% ___ 14. When the economy is at “full employment”: a. the unemployment rate will be zero b. there will still be some unemployment c. the unemployment rate will be at the natural unemployment rate d. Both b. and c. above ___ 15. Cheryl graduates with an accounting degree in May. After searching for two months, she lands a job as an accountant in July. While Cheryl was looking for work, she was: a. frictionally unemployed b. structurally unemployed c. cyclically unemployed d. Not in the labor force FOR REVIEW ONLY - NOT FOR DISTRIBUTION 4 - 13 Inflation and Unemployment

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    PRINCIPLES OF ECONOMICS JEFF HOLT S

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    Principles of Economics, 6th Editio

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    16. Study Guide for Chapter 7 17. C

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    11. Appendix: Book Review - “The

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    20. Appendix: The NCAA Cartel 21. S

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    Introduction: A Brief History of U.

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    In the twentieth century, per capit

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    Appendix: The 35 Largest National E

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    Multiple Choice: ___ 1. The Jamesto

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    2. Describe the economic cost of th

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    Chapter 1 Scarcity and Choices The

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    Example 5B: At the end of 1982, the

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    Example 11: When Cindy quits her jo

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    consequences may result in failure

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    An upward sloping curve (as in Exam

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    In making decisions, humans tend to

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  • Page 35 and 36: ___ 13. If the value of one variabl
  • Page 37 and 38: Y Point X Y A 0 1 B 3 3 C 6 5 D 9 7
  • Page 39 and 40: Chapter 2 Trade and Economic System
  • Page 41 and 42: Example 4B: The following quantitie
  • Page 43 and 44: 1. An increase in the quantity of r
  • Page 45 and 46: 3. For whom to produce? This is det
  • Page 47 and 48: The graph below illustrates the shi
  • Page 49 and 50: The two primary economic systems ar
  • Page 51 and 52: ___ 12. The capitalist vision sees
  • Page 53 and 54: ___ 25. According to the book “Ca
  • Page 55 and 56: Chapter 3 Demand, Supply, and Equil
  • Page 57 and 58: . For inferior goods, income and de
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  • Page 61 and 62: Not only does a free market elimina
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  • Page 65 and 66: Example 17: The graph below illustr
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  • Page 73 and 74: Chapter 4 Inflation and Unemploymen
  • Page 75 and 76: Computing the Rate of Inflation The
  • Page 77 and 78: Full Employment Though unemployment
  • Page 79 and 80: 3. Cyclical unemployment - due to d
  • Page 81 and 82: During the Great Depression, the ec
  • Page 83: Appendix: Think Like an Economist -
  • Page 87 and 88: ___ 25. The extension of unemployme
  • Page 89 and 90: Chapter 5 Measuring Total Output: G
  • Page 91 and 92: 5. Leisure. Leisure time is by defi
  • Page 93 and 94: The U.S. is a high per capita GDP c
  • Page 95 and 96: Example 17: In “An International
  • Page 97 and 98: The simple circular flow diagram be
  • Page 99 and 100: ___ 3. Which of the following would
  • Page 101 and 102: 2. Explain what nonproduction trans
  • Page 103 and 104: Chapter 6 The Aggregate Market The
  • Page 105 and 106: Example 2C: Assume the same facts a
  • Page 107 and 108: Example 5B: The price of crude oil
  • Page 109 and 110: Price Level Real GDP SRAS AD 2 AD 1
  • Page 111 and 112: Appendix: Why the Aggregate Demand
  • Page 113 and 114: ___ 3. DEF Company can invest in ne
  • Page 115 and 116: 2. List and explain the two factors
  • Page 117 and 118: Chapter 7 Classical Economic Theory
  • Page 119 and 120: Notice that the investment demand c
  • Page 121 and 122: Long-Run Equilibrium If Real GDP is
  • Page 123 and 124: Example 6B: When the economy is in
  • Page 125 and 126: Laissez-faire If the economy is sel
  • Page 127 and 128: ___ 5. According to Say’s Law: a.
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  • Page 131 and 132: Chapter 8 Keynesian Economic Theory
  • Page 133 and 134: Example 2B: The graph below illustr
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    Example 5: Assume that the table be

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    Notice on the graph on the previous

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    According to Keynesian theory, a ch

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    “The General Theory” also inclu

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    ___ 8. If the consumption function

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    3. If the MPC is .667, and investme

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    Chapter 9 Fiscal Policy The basic e

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    Keynesian Fiscal Policy Theory and

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    Example 5A: The federal government

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    The Laffer Curve What will happen t

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    Appendix: The Importance of Incenti

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    ___ 4. A decrease in government exp

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    2. Explain what automatic stabilize

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    Chapter 10 Money, Money Creation, a

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    Example 4B: The castaways on Gillig

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    Looking at the balance sheet below,

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    Demand-side One-shot Inflation Exam

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    4. Inflation increases uncertainty

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    life; it came into existence not by

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    calculated by using the potential d

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    ___ 12. If the required-reserve rat

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    4. Referring to the balance sheet f

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    Chapter 11 The Federal Reserve Syst

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    5. After Bank X sells the $300,000

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    Low Mortgage Interest Rates Mortgag

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    Relaxed Standards for Mortgage Loan

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    The Bursting of the Housing Bubble

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    On February 17, 2009, the federal g

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    Fed policies caused short-term inte

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    ___ 10. The Fed’s most important

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    ___ 25. In response to the recessio

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    Chapter 12 Monetary Policy The basi

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    2. A change in aggregate demand (AD

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    Monetarist Transmission Mechanism C

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    3. Borrowers do not have to seek ou

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    Appendix: Book Review - “The Age

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    Questions for Chapter 12 Fill-in-th

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    ___ 16. The primary source of incom

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    7. According to Alan Greenspan, wha

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    Chapter 13 Taxes, Deficits, and the

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    Example 5: In 2015, Taxpayer A had

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    of $5 and a quantity of 10 units. T

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    The complexity of the tax law also

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    the current government spending and

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    cut of 1964. The top rate was lower

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    ___ 6. Federal excise taxes: a. are

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    3. How would eliminating the loopho

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    Chapter 14 Economic Growth The basi

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    2. Labor. Labor can contribute to e

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    estricting international trade (e.g

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    An improvement in technology (e.g.

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    The table below shows the economic

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    will increase both Real GDP and per

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    ___ 8. Which of the following is co

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    ___ 26. The opinion that economic g

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    Chapter 15 Less Developed Countries

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    Example 8: Countries A, B, C, and D

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    Obstacles to Economic Development f

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    c. Restrictions on international tr

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    Appendix: Book Review - “The Powe

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    Example 25: In Brazil, about half t

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    Study Guide for Chapter 15 Chapter

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    ___ 13. Among the counterproductive

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    4. List four ways that governments

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    Chapter 16 International Trade The

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    Other Benefits of Free Internationa

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    Example 6: The graph below illustra

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    competitive disadvantage. But dumpi

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    is only 25% as productive as before

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    Smith was skeptical of government a

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    ___ 4. For Country X, what is the o

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    ___ 18. Frédéric Bastiat’s “P

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    4. On the graph below: (1) What is

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    Chapter 17 Elasticity We are often

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    Example 4A: What is price elasticit

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    Example 5A: Gertie’s Gas and Go i

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    Example 10A: When the price of Good

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    Example 13B: On the graph below, su

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    $7 - 6 - 5 - Price 4 - 3 - 2 - 1 -

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    In the long run, would the deadweig

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    ___ 7. The factors that determine w

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    3. a. Which price (or prices) from

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    Chapter 18 Utility The basic econom

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    Nonetheless, society generally assu

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    Example 9: Capital City operates a

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    Marginal rate of substitution - the

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    The diamond-water paradox is the ob

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    Complete the table below to answer

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    4. The graph below shows indifferen

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    Chapter 19 The Firm The basic econo

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    than contributing to team productio

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    1. Difficulty in raising large amou

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    Corporations also use self-financin

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    Example 24: A blacksmith who produc

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    For financing needs, proprietorship

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    ___ 13. Corporations: a. are comple

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    5. List two things that the absence

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    Chapter 20 Production and Costs The

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    In Example 5B, Birdwell finds that

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    variable cost initially decreases,

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    Quantity TC MC AFC AVC ATC 0 240 X

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    If the scale of operation is increa

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    average total cost. Average fixed c

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    ___ 11. Concerning the cost curves:

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    5. Complete the following cost tabl

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    Chapter 21 Perfect Competition The

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    Even though a perfect competitor ca

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    Example 6C: This example builds on

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    At what price will there be neither

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    Appendix: Perfect Competition in th

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    Multiple Choice: ___ 1. A perfect c

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    ___ 17. Perfect competition: a. req

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    Answers for Chapter 21 Fill-in-the-

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    Chapter 22 Monopoly Of the four mar

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    3. Exclusive ownership of an essent

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    maximizing quantity (4 units) creat

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    $22 - 20 - 18 - 16 - 14 - Deadweigh

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    2. Negotiating, beginning at a high

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    Legal barriers are created by gover

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    ___ 8. The slope of the demand curv

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    Price Quantity 3. List some of the

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    Chapter 23 Monopolistic Competition

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    For Percomp (the perfect competitor

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    Example 7A: The graph below represe

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    Example 9: The Organization of the

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    Example 12 illustrates the dilemma

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    its current price and quantity. The

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    ___ 14. Game theory: a. is a method

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    Answers for Chapter 23 Fill-in-the-

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    Chapter 24 Factor Markets The basic

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    $ $240 - 200 - 160 - 120 - 80 - 40

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    Since producers will attempt to equ

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    2. Differences in nonmoney aspects

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    were his strikeouts, walks, and hom

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    ___ 3. To maximize profits, a produ

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    ___ 19. According to the book, “M

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    Multiple Choice: 1. a. 8. c. 15. d.

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    Chapter 25 Labor Unions The primary

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    The elasticity of demand for union

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    Example 4A: Assume that the graph b

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    Notice from the graph in Example 6

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    Wage Factory A Quantity of Labor S

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    As a cartel, a labor union faces a

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    ___ 10. For a monopsony: a. there i

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    3. The graph below represents a lab

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    Chapter 26 Interest, Present Value,

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    An increase in expected rates of re

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    An asset is valuable because we exp

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    Example 13B: General Ordnance prove

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    Appendix: Present Value Table One f

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    ___ 4. An increase in expected rate

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    Problems: 1. List and explain the t

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    Chapter 27 Market Failure The basic

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    External Benefit If a market genera

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    Example 2: To encourage the consump

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    $100 - 90 - 80 - MSC 70 - $ 60 - 50

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    A common good is nonexcludable. Non

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    Study Guide for Chapter 27 Chapter

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    ___ 5. What government policy would

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    4. Based on the information on the

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    Chapter 28 Public Choice and Govern

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    Candidates and the Median Voter Mod

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    Example 8: According to State and F

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    Example 10: When Elvis Presley was

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    4. Pessimistic bias. This is the te

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    ___ 5. An elected official will: a.

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    2. If a certain policy will yield s

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    Chapter 29 Government Regulation of

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    underproduction is the amount that

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    micromanagement results in business

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    market. They may agree with their c

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    Questions for Chapter 29 Fill-in-th

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    ___ 10. The public interest theory

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    4. List the four types of costs imp

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    Chapter 30 Agriculture and Health C

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    weather may cause bumper crops. Bad

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    Security and Rural Investment Act o

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    Example 12: From 1960 to 2013, the

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    1. NHI would provide universal heal

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    d. Insurance providers are not allo

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    Study Guide for Chapter 30 Chapter

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    Answer questions 7. through 10. by

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    ___ 21. If there were no individual

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    Chapter 31 Income Distribution and

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    Income is more equally distributed

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    over a typical career is the accumu

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    Ideal Income Redistribution The ide

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    Poverty - a family whose income fal

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    Appendix: Income Inequality around

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    How is this story an analogy for th

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    ___ 2. In 2013, the Lowest Income 6

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    Problems: 1. Explain the two primar

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    Absolute advantage - when one natio

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    Fiat money - money by government de

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    Nonrivalrous good - a good for whic

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    Absolute advantage, 16-9 Absolute e

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    “Company town”, 25-6 Comparativ

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    Eli Lilly and Company, 22-1 Emergen

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    Houston, Texas, 15-10 Human capital

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    Market, 3-1, 3-8-9 Market basket, 4

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    Political bias, 9-4, 12-7 Political

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    Short run production, 20-2-3 Short-

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    Upturns, 9-4 USDA, 27-9, 30-1-2, 30

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