Pindyck & Rubinfeld Quiz 1


On-Line Quiz

Note: There are 10 multiple choice questions below. Answer each question by clicking the appropriate button. When you have answered all of the questions, click the "Check Answers" button at the bottom of the page. Your score will be calculated, and you will see a list of the questions that you answered correctly, and those that you answered incorrectly. You may retake the quiz as often as you wish. Click the "Reset" button to clear all your answers before you retake the quiz.

  1. A valid and useful theory of gold prices:

      helps to predict the movements of gold prices over time.
      may be founded on simplifying assumptions.
      need not exactly predict every change in gold prices.
      all of the above

  2. 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.

      Both I and II are true.
      I is true, and II is false.
      I is false, and II is true.
      Both I and II are false.

  3. Use the following two statements to answer this question:
    I. A market is a collection of buyers and sellers that, through actual or potential interactions, determine the price for a product or set of products.
    II. An industry is a collection of markets for similar or closely related products.

      Both I and II are true.
      I is true, and II is false.
      I is false, and II is true.
      Both I and II are false.

  4. 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' capital. Other things being held constant, this can be expected to:

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

  5. Why is market definition important for economic decision making?

      A firm is interested in knowing its actual and potential competitors.
      A firm will define its market in order to maximize revenue.
      Government regulators are interested in knowing the effect of mergers and acquisitions on competition and prices in a particular market.
      both A and C
      both A and B

  6. Which of the following assertions, if proven true in a court of law, would help Archer-Daniels-Midland, a maker of corn syrup, in its attempt to acquire another corn syrup producer, the Clinton Corn Processing Company?

      Archer-Daniels-Midland is a dominant producer of corn syrup.
      There are no good substitutes for corn syrup for any of its major uses.
      Archer-Daniels-Midland and the Clinton Corn Processing Company together hold only a small share of the market for sweeteners including corn syrup and sugar.
      Archer-Daniels-Midland produces many other different agricultural products, in addition to corn syrup.

  7. The price of a taco was $0.29 in 1970 and $0.99 in 1993. The CPI was 38.8 in 1970 and 144.0 in 1993. The 1993 price of a taco in 1970 dollars is:

      $0.08.
      $0.27.
      $0.34.
      $3.67.

  8. Suppose the nominal price of gasoline was $0.90 per gallon in 1987. To convert this value to the real price of 1987 gasoline in 2011 dollars, we should:

      multiply by the 1987 CPI and divide by the 2011 CPI.
      multiply by the 2011 CPI and divide by the 1987 CPI.
      not do anything because this is the real price in 2011 dollars.
      do none of the above.

  9. When 1983 is the CPI base year, the CPI value is 82.4 for 1980 and 172.2 for 2000. Suppose we want to convert this CPI series to have a base year of 2000 (that is, CPI2000 = 100). What is the value of the revised CPI for 1980?

      172.2
      100
      47.9
      209.0

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

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

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