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Question 15 15. In October 2015, Hurricane Joaquin caused massive destruction to North and South Carolina, New York, and Florida. Catastrophic flooding occurred with hundreds of people requiring rescue, 25 killed, and estimated damage of $12 billion. Even those who […]

Section 1: Basic Economic Concepts Question 1 1. In each of the following situations, identify which of the twelve principles is at work. a. You choose to purchase your textbooks online through Chegg rather than paying a higher price for […]

Question 11 11. After several years of decline, the market for handmade acoustic guitars is making a comeback. These guitars are usually made in small workshops employing relatively few highly skilled luthiers. Assess the impact on the equilibrium price and […]

Section 2: Demand, Supply, and Equilibrium Question 1 1. A study conducted by Yahoo! revealed that chocolate is the most popular flavor of ice cream in America. For each of the following, indicate the possible effects on demand, supply, or […]

Section 3: Market Efficiency and Price Controls Question 1 1. Determine the amount of consumer surplus generated in each of the following situations. a. Leon goes to the clothing store to buy a new T-shirt, for which he is willing […]

Question 12 12. The accompanying table shows hypothetical demand and supply schedules for milk per year. The U.S. government decides that the incomes of dairy farmers should be maintained at a level that allows the traditional family dairy farm to […]

the tax increase, the number of gonorrhea cases was 7,450. Use the midpoint method to determine the percent decrease in gonorrhea cases, and then calculate the cross-price elasticity of demand between alcohol and the incidence of gonorrhea. According to your […]

Section 4: Elasticity and Law of Demand Question 1 1. Do you think the price elasticity of demand for Ford sport-utility vehicles (SUVs) will increase, decrease, or remain the same when each of the following events occurs? Explain your answer. […]

2. The Heckscher–Ohlin model predicts that a country will have a comparative advantage in the good whose production is intensive in the factor the country has abundantly available: the United States has the comparative advantage in satellite production, and China […]

Question 15 15. Bruno can spend his income on two different goods: smoothies and energy bars. For each of the following three situations, decide if the given consumption bundle is within Bruno’s consumption possibilities. Then decide if it lies on […]

Section 6: Economics and Decision Making Question 1 1. Jackie owns and operates a website design business. To keep up with new technology, she spends $5,000 per year upgrading her computer equipment. She runs the business out of a room […]

Section 7: Production and Costs Question 1 1. Changes in the prices of key commodities have a significant impact on a company’s bottom line. For virtually all companies, the price of energy is a substantial portion of their costs. In […]

2. a. Yes, aspirin is produced in a perfectly competitive industry. Many manufacturers produce aspirin, the product is standardized, and new manufacturers can easily enter and existing manufacturers can easily exit the industry. b. No, Alicia Keys concerts are not […]

Section 9: Monopoly Question 1 1. Each of the following firms possesses market power. Explain its source. a. Merck, the producer of the patented cholesterol-lowering drug Zetia b. WaterWorks, a provider of piped water c. Chiquita, a supplier of bananas […]

Section 1 Appendix: Graphs in Economics Question 1 1. Study the four accompanying diagrams. Consider the following statements and indicate which diagram matches each statement. Which variable would appear on the horizontal and which on the vertical axis? In each […]

Brewers Market share Before merger After merger AB InBev 21% 29% SABMiller 10 — Heineken 9 11 Carlsberg 6 6 China Resource Brewery Ltd. 6 6 Tsingtao Brewery Group 4 4 Molson-Coors 3 4 Yanjing 3 3 Kirin 2 2 […]

Section 10: Oligopoly and Monopolistic Competition Question 1 1. The accompanying table shows the demand schedule for vitamin D. Suppose that the marginal cost of producing vitamin D is zero. Quantity of vitamin D demanded (tons) $8 0 7 10 […]

Section 11: Market Failure and the Role of Government Question 1 1. What type of externality (positive or negative) is present in each of the following examples? Is the marginal social benefit of the activity greater than or equal to […]

Section 12: Factor Markets and the Distribution of Income Question 1 1. In 2015, national income in the United States was $15,665.3 billion. In the same year, 148.8 million workers were employed, at an average wage, including benefits, of $62,187 […]

• Help students to understand that not all market choices are free from effects on other people and the fact that people often ignore these effects leads to market failures. Ask them to consider what market failures they have been […]

Module 10 krugman 1 Module 10 Price Controls (Ceilings and Floors) What’s New in the Fourth Edition? • Updated case studies Module Objectives • What is a market intervention and why are price controls the main forms it takes? • […]

Module 11 krugman 1 Module 11 Defining and Measuring Elasticity What’s New in the Fourth Edition? • New Economics in Action. • Handouts for use in class. Module Objectives • Why is elasticity used to measure the response to changes […]

Module 12 krugman 1 Module 12 Interpreting the Price Elasticity of Demand What’s New in the Fourth Edition? • New Economics in Action. • Handouts for use in class. Module Objectives • What factors influence the size of these various […]

jelly means less peanut butter, the goods must be consumed together; that is, they are complements. The value of cross-price elasticity is negative (–/+) for complements. If she had purchased more butter)/(percentage change in the price of jelly) equals (–10/25)/(1/1.5) […]

Module 14 krugman 1 Module 14 The Benefits and Costs of Taxation What’s New in the Fourth Edition? • Updated Economics in Action example. Module Objectives • How do taxes affect supply and demand? • What factors determine who bears […]

can identify some of the goods the United States exports. Ask them also who they think our biggest trade partners are. You can find current data online. A place to start is https://www.trade.gov/. = so 75 million/37,500 = 1 million/500 […]

o What does the increased supply of imported auto parts do to the domestic price of auto parts? (It causes it to fall.) produce? (They have less incentive to produce.) consumers? (The quantity demanded increases.) o Does the amount of […]

Module 17 krugman 1 Module 17 Making Decisions What’s New in the Fourth Edition? • Updated Teaching Tips • Updated Business Cases • Handouts for use in class Module Objectives • Why does good decision making depend on accurately defining […]

Module 19 krugman 1 Module 18 Behavioral Economics What’s New in the Fourth Edition? • Updated Teaching Tips • Updated Business Cases • Handouts for use in class Module Objectives • What do economists consider to be rational and irrational […]

Module 19 krugman 1 Module 19 Maximizing Utility What’s New in the Fourth Edition? • Updated business cases • Updated Teaching Tips • Handouts for in-class use Module Objectives • What factors determine how consumers spend their income? • Why […]

world is too complex to consider everything at once. You want to use a more complicated model only if the benefits of added understanding exceed the costs of added difficulty and complexity.) like a real airplane (size, weight, other details, […]

Module 20 krugman 1 Module 20 The Production Function What’s New in the Fourth Edition? • Updated cases • Handouts to use in the classroom Module Objectives • What is the firm’s production function? • Why is production often subject […]

Module 21 krugman 1 Module 21 Firm Costs What’s New in the Fourth Edition? • Updated cases • Handouts to use in the classroom Module Objectives • What types of costs does a firm face? • How does the firm […]

of store? What are the benefits of becoming larger? (Buying bulk, spreading fixed costs over larger quantities.) What are the drawbacks of becoming too large? (Losing customer service, becoming difficult to manage.) nuclear power plant (which might take 25 years […]

Give specific examples of industries that fit each classification. Monopoly (pharmaceutical companies with drugs under patent) Module 23 krugman 1 Module 23 Introduction to Market Structure What’s New in the Fourth Edition? • Handouts for use in the classroom Module […]

Module 24 krugman 1 Module 24 Perfect Competition What’s New in the Fourth Edition? • Updated cases • Handouts to use in the classroom Module Objectives • What is perfect competition and why do economists consider it an important benchmark? […]

Module 25 krugman 1 Module 25 Graphing Perfect Competition What’s New in the Fourth Edition? • Updated cases Module Objectives • How do we use graphs to determine a perfectly competitive firm’s production decision? • What determines a perfect competitor’s […]

Module 26 krugman 1 Module 26 Long–Run Outcomes in Perfect Competition What’s New in the Fourth Edition? • Updated cases • Handouts to use in the classroom Module Objectives • Why does it make sense for a firm to behave […]

Module 27 krugman 1 Module 27 Monopoly in Practice What’s New in the Fourth Edition? Module Objectives • What is the significance of monopoly, a type of industry in which only one producer, a monopolist, operates? • How does being […]

Module 28 krugman 1 Module 28 Monopoly, Government Policy, and Social Welfare What’s New in the Fourth Edition? Module Objectives • Why does the presence of monopoly typically reduce social welfare? • What tools do policy makers use to address […]

Module 29 krugman 1 Module 29 Price Discrimination What’s New in the Fourth Edition? • Handouts for use in class Module Objectives • What is price discrimination and why is it so prevalent in certain industries? Teaching Tips Price Discrimination […]

Module 3 krugman 1 Module 3 Comparative Advantage and Trade What’s New in the Fourth Edition? • Worksheets for use in the classroom. • New Economics in Action case study. Module Objectives • How does trade lead to gains for […]

Department of Justice had to decide if the merger should be allowed. You can find several examples at http://www.wsj.com if you enter either “collusion” or “price fixing” into the search box. Some notable examples are Microsoft, the merger of Whole […]

Module 32 krugman 1 Module 31 Game Theory What’s New in the Fourth Edition? • Handouts to use in class • Updated cases Module Objectives • How do the insights gained from game theory help us understand the strategic behavior […]

enter this industry (where firms are earning positive profit). Illustrate the long-run equilibrium and make sure students understand why economic profit will be equal to zero. which one you are talking about (by not simply saying “monopolistic”). Ask what makes […]

shoes (Nike, UnderArmour, Adidas, etc.) versus specially branded name-brand athletic shoes (Michael Jordan, Steph Curry, DB, etc.). Use cost-benefit analysis to explain when a firm will engage in product differentiation and when it will not. Module 33 krugman 1 Module […]

Module 34 krugman 1 Module 34 Externalities What’s New in the Fourth Edition? • Updated business cases • Handouts to use in class Module Objectives • What are externalities and why do they lead to inefficiency? • Why do externalities […]

Module 35 krugman 1 Module 35 Externalities and Public Policy What’s New in the Fifth Edition? • Updated business cases Module Objectives • Why are some government policies to deal with externalities efficient and others are not? • Why are […]

Module 36 krugman 1 Module 36 Public Goods and Common Resources What’s New in the Fourth Edition? • Updated business cases Module Objectives • What is a public good and how is it different from a private good? • What […]

Module 37 krugman 1 Module 37 Factor Markets What’s New in the Fourth Edition? • Updated business cases • Handouts to use in class Module Objectives • How are resources like land, labor, physical capital, and human capital traded in […]

Module 38 krugman 1 Module 38 Marginal Productivity Theory What’s New in the Fourth Edition? • Updated business cases Module Objectives • What is the marginal productivity theory of income distribution? • What are the sources of wage disparities, and […]

Module 39 krugman 1 Module 39 The Market for Labor What’s New in the Fourth Edition? • Updated business cases Module Objectives • How do decisions about time allocation determine labor supply? • How do you find equilibrium in the […]

students the following series of questions. (It will help some students to see the step-by-step construction of the diagram in addition to the completed diagram in the text.) goods and services? (Stores, markets, etc.) Draw the market for goods and […]

Module 40 krugman 1 Module 40 The Economics of the Welfare State What’s New in the Fourth Edition? • Updated business cases • Handouts for use in class Module Objectives • What is the welfare state and how does it […]

Module 5 krugman 1 Module 5 Demand What’s New in the Fourth Edition? • Enhanced in-class activities and handouts Module Objectives • What is a competitive market? • What is a demand curve? • What are the differences between the […]

Students will understand this idea even though they have not been introduced to cost concepts yet. From here you can ask what would cause the firm to want to supply more or less at any given price, or to charge […]

Module 7 krugman 1 Module 7 Changes in Equilibrium What’s New in the Fourth Edition? • Enhanced in-class activities and handouts Module Objectives • How are equilibrium price and quantity affected when there is a change in either supply or […]

determines how much they pay? (Their willingness to pay and the amount of consumer surplus they can bargain for.) would they feel about it? Coupons are often left around stores (or dispensed from a machine provided by the store). Perhaps […]

Module 4 krugman 1 Module 9 Efficiency and Markets What’s New in the Fourth Edition? • Updated Economics in Action examples Module Objectives • What is total surplus and why is it used to illustrate the gains from trade in […]

Page 1 1. The point at which the axes of a graph intersect is called the: A) slope. B) origin. C) graph. D) intercept. 2. The _____ of a curve shows the point at which the curve intersects an axis. […]

Page 1 1. Which topic is studied in macroeconomics? A) the change in automobile sales due to a change in the price of automobiles B) the effect of a tax reduction on the profits of an individual business C) recessions […]

Page 1 1. A price control is: A) control of the price of a good by the firm that produces it. B) a legal restriction on how high or low a price in a market may go. C) an upper […]

Page 1 1. The price elasticity of demand measures the responsiveness of the change in the: A) quantity demanded to a change in the price. B) price to a change in the quantity demanded. C) slope of the demand curve […]

Page 1 1. Each month Jacquelyn spends exactly $50 on ice cream, regardless of the price of each container. Jacquelyn’s price elasticity of demand for ice cream is: A) 0. B) 1. C) greater than 1. D) less than 1 […]

Page 1 1. The cross-price elasticity of electricity with respect to the price of natural gas has been estimated as being equal to 0.2. This implies that: A) natural gas and electricity are both normal goods. B) electricity and natural […]

Page 1 1. Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. If the demand curve is downward-sloping and the supply curve is upward-sloping: A) the price of […]

Page 1 1. Goods and services purchased from abroad are _____, while goods and services sold abroad are _____. A) always been positive. B) always been negative. C) shown an increase in exports as a ratio of world production since […]

Page 1 1. An economy moves from autarky to free international trade. In the import sector, consumer surplus _____, producer surplus _____, and the economy as a whole _____. A) rises; rises; gains B) rises; falls; gains C) falls; rises; […]

Page 1 1. Jacquelyn is a student at a major state university. Which factor is not an explicit cost of her attending college? A) Opportunity cost may be larger than monetary cost. B) Opportunity cost includes both explicit and implicit […]

Page 1 1. Economists’ and psychologists’ attempts to understand and explain why people make decisions that appear to be irrational is the field of study called _____ economics A) international B) irrational C) rational D) behavioral 2. The purpose of […]

Page 1 1. The relation between an individual’s consumption bundle and her satisfaction is called a _____ function. A) demand B) production C) consumption D) utility 2. To say that you can’t have too much of a good thing means […]

Page 1 1. A simplified representation that is used to study a real situation is called a(n): A) model. B) production possibility frontier. C) assumption. D) trade-off. 2. The models that economists construct: A) usually make simplifying assumptions. B) often […]

Page 1 1. A _____ is an organization that produces goods or services for sale. A) production function B) firm C) variable input D) fixed input 2. In the short run: A) all inputs are fixed. B) all inputs are […]

Page 1 1. In the short run, the costs associated with variable inputs are _____, and the costs associated with _____ inputs are _____. A) variable; fixed; fixed B) fixed; fixed; variable C) variable; fixed; variable D) fixed; fixed; fixed […]

Page 1 1. The long-run average total cost curve is tangent to an infinite number of short-run _____ cost curves. A) total B) marginal C) average variable D) average total 2. Where the long-run average total cost curve is at […]

Page 1 1. If a California avocado stand operates in a perfectly competitive market, that stand’s owner will be a price: A) maker. B) taker. C) discriminator. D) maximizer. 2. If all firms in an industry are price takers: A) […]

Page 1 1. In perfect competition: A) a firm’s total revenue is found by multiplying the market price by the firm’s quantity of output. B) the firm’s total revenue curve is a downward-sloping line. C) at any price, the more […]

Page 1 1. Consider a perfectly competitive firm in the short run. Assume that it is sustaining economic losses but continues to produce at the profit-maximizing (loss-minimizing) output. Which statement is false? A) Marginal cost is less than average total […]

Page 1 1. The short-run industry supply curve: A) shows the total quantity supplied by all firms in an industry for each possible price when the number of producers is fixed. B) is drawn on the assumption that the number […]

Page 1 1. Most electric, gas, and water companies are examples of _____ monopolies. A) unregulated B) natural C) restricted-input D) sunk-cost 2. Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles, and […]

Page 1 1. Suppose the GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive. We would expect the _____ surplus to increase and _____ surplus to decrease after the breakup. A) producer; consumer and total B) […]

Page 1 1. The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is: A) privatization. B) monopolization. C) output competition. D) price discrimination. […]

Page 1 1. As long as people have different _____, everyone has a comparative advantage in something. A) direct costs B) benefits C) utility D) opportunity costs 2. Because of trade, a country may: A) consume outside its production possibility […]

Page 1 1. An industry with only two firms is generally called: A) a monopoly. B) monopolistic competition. C) a duopoly. D) perfect competition. 2. A duopoly is an industry that consists of: A) a single firm. B) two firms. […]

Page 1 1. Game theory is commonly used to explain behavior in oligopolies because oligopolies are characterized by: A) large profits in the long run. B) either homogeneous or heterogeneous products. C) interdependence. D) imperfect competition. 2. An analytical approach […]

Page 1 1. Since a monopolistically competitive firm faces a downward-sloping demand curve, its price will be _____ revenue. A) equal to marginal B) less than marginal C) greater than marginal D) equal to total 2. The demand curve for […]

Page 1 1. If the toothpaste market is monopolistically competitive, product differentiation would not take the form of: A) production of many varieties of toothpaste, including those with whitening agents. B) differentiation in the locations where certain toothpastes are available. […]

Page 1 1. A market economy will produce _____ without any government regulation. A) too little pollution B) too much pollution C) the socially optimal amount of pollution D) the amount of pollution that maximizes total surplus 2. A negative […]

Page 1 1. According to many economists, the government should: A) reduce the level of carbon emissions as far as possible. B) use policies to achieve the optimal level of carbon-emissions reduction in the least costly way. C) set policy […]

Page 1 1. Which example is considered a nonexcludable good? A) health care B) national defense C) education D) ice cream 2. Which example best fits the characteristics of a private good? A) a professor giving a lecture in a […]

Page 1 1. G. Reecy’s Hamburger Joint is a fast-food restaurant. Which factor is associated with production? A) the raw meat used for the hamburgers B) the hamburger buns C) the cook D) the concentrate that is diluted to make […]

Page 1 1. According to the _____, in a perfectly competitive economy each factor of production is paid its equilibrium value of the marginal product. A) theory of labor supply B) efficiency-wage model C) theory of compensating differentials D) marginal […]

Page 1 1. Scott’s wage is $25 per hour and he works 50 hours a week, which is his optimal labor supply at that wage. His marginal utility of one hour of leisure is equal to the: A) marginal utility […]

Page 1 1. Trade takes the form of _____ when people directly exchange goods they have for goods they want. A) exploitation B) benevolence C) barter D) a zero-sum game 2. The simplest circular-flow model shows the interaction between households […]

Page 1 1. Government payments to individuals for which no good or service is exchanged are: A) spending. B) purchases. C) spending on goods and services. D) transfer payments. 2. Which transaction is a transfer payment? A) The government pays […]

Page 1 1. The market for corn in Kansas is considered to be competitive. This means there are _____ buyers and _____ sellers of corn in Kansas. A) many; few B) few; many C) many; many D) few; few 2. […]

Page 1 1. Which factor will not cause an increase in the supply of cornflakes? A) an increase in the price of cornflakes B) a cost-saving improvement in the technology of corn production C) a reduction in the price of […]

Page 1 Use the following to answer questions 1-6: 1. (Ref 7-1 Figure: Demand and Supply of Gasoline) Use Figure: Demand and Supply of Gasoline. A factor that may have changed supply from S1 to S2 is: A) better technology […]

Page 1 1. A consumer’s willingness to pay reflects the: A) maximum price at which he or she would buy a given good or service. B) minimum price at which he or she would buy a given good or service. […]

Page 1 Use the following to answer question 1: 1. (Ref 9-1 Figure: Wireless Mouse Market) Use the graph to calculate consumer surplus when the market is at equilibrium. A) $4,000 B) $5,000 C) $2,000 D) $3,000 Use the following […]