ECON E 42629

If you heard overheard a farmer discussing his planting plans for the upcoming season and he said “The price of corn has gone way up. I know I”ll have to put some money into fertilizer on that field on the hill that’s been idle all these years, but it will be worth it this year.” This would be consistent with which justification for an upward sloping supply curve
A) increasing marginal cost.
B) the need for higher prices in one good to motivate a shift in production from another.
C) the real-balance effect.
D) diminishing marginal utility.

Figure 1.3 A, B and C
In Figure 1.3 A, B and C, which depicts the existence of constant opportunity cost?
A) Figure A
B) Figure B
C) Figure C
D) All three figures show the existence of constant opportunity cost.

In 2007, the most affordable places to live tended to be located disproportionately in the
A) upper Mid-West.
B) mid-Atlantic states and along the West Coast.
C) Great Plains states.
D) southeastern states.

If the price is less than the average variable cost the firm should produce
A) Zero
B) Where MC=MR
C) Where ATC is minimized
D) Where AVC is minimized

If the price of a good rises by 10% and the percentage decrease in the total amount consumers spend on the good is 10% then the good is
A) elastic.
B) inelastic.
C) unit elastic.
D) perfectly inelastic.

Figure 22.1
In Figure 22.1 for a good with no externality, which area represents the total value to the consumer?
A) 0ACQ*
B) BP*C
C) 0BCQ*
D) 0P*CQ*

Which form of intellectual property protects a drug manufacturer against a rival stealing its brand name?
A) Patent
B) Trademark
C) Copyright
D) Copymark

The statement that ‘since a farmer will make more money if he has a bumper crop means that all farmers would make more money if they all had bumper crops” would be an example of which of the following?
A) the fallacy that correlation is the same as causation
B) the fallacy of composition
C) truth in an obvious form
D) A) and B)

Social Security was intended to
A) cover all of the income necessary for retirement.
B) provide retirement income for only those who did not save for themselves.
C) provide retirement income for only those without private pensions.
D) provide a safety net of retirement income to which recipients would add their savings and pensions.

For the minimum wage to be relevant it must be
A) above the equilibrium wage.
B) below the equilibrium wage.
C) at the equilibrium wage.
D) slightly below the equilibrium wage.

Economists would label Social Security
A) a defined benefit pension program.
B) a defined contribution program.
C) a Ponzi scheme.
D) an unneeded intrusion into private savings.

Suppose you are a mayor of a city with a police force of 100 and an annual budget of $8 million. Now suppose your police chief asks for an additional officer with an additional annual expenditure of $50,000 for salary, benefits and equipment. If you are thinking like an economist, you will agree to the request if the chief can demonstrate that
A) crime will be reduced.
B) the total amount spent on police protection is worth $8,050,000.
C) the average amount of safety produced per officer is more than $50,000.
D) the additional officer will produce at least $50,000 worth of extra safety annually.

Given the production function and total cost function shown in Chapter 4, as production increases, total fixed costs
A) decrease constantly.
B) remain constant.
C) increase constantly.
D) increase for a while and then decrease.

If gas prices today were $1.50 per gallon, in terms of history this would be
A) an all-time low in inflation adjusted terms.
B) an all-time low in nominal terms.
C) not an all-time low but rather low in inflation adjusted terms.
D) about the long term historical average in inflation adjusted terms.

Figure 1.6
Using Figure 1.6 above we know the production of 90 units of soda and 2 units of pizza is
A) possible, but there would be unemployed resources.
B) possible, but only if all resources were fully employed.
C) impossible because we have the resources but do not have the technology.
D) impossible because we have the technology but do not have the resources.

Which of the following would not be an external cost associated with gambling?
A) The increase in homelessness associated with casinos.
B) The increase in crime near casinos.
C) The effects on the gamblers’ family.
D) The cost of security at casinos.

	Lumber	Cars
United States	1	2
Brazil	2	1

Table 17.3
In Table 17.3,
A) the United States has an absolute advantage in both goods but a comparative advantage in cars only.
B) Brazil has an absolute advantage in both goods but a comparative advantage in lumber only.
C) the United States has an absolute and comparative advantage in Cars while Brazil has an absolute and comparative advantage in lumber.
D) the United States has an absolute and comparative advantage in both goods.

Which of the following elements of the Federal Income tax code are not indexed for inflation
A) the brackets.
B) the standard deduction.
C) the personal exemption.
D) the level at which the Alternative Minimum Tax begins.

The unemployment rate for African-Americans is, across age categories,
A) about the same as that for whites.
B) one percentage points lower than that of whites.
C) several percentage points higher than that of whites.
D) less than half that of whites.

For a previously illegal good, decriminalization will cause
A) demand to increase.
B) demand to become less elastic.
C) supply to become less elastic.
D) price to fall, unambiguously.

In 2009, the trading partner with which the U.S. had the largest trade deficit was
A) Africa.
B) Europe.
C) OPEC.
D) China.

Table 4.1
Refer to Table 4.1, Box H should be filled with
A) $0.
B) $110.
C) $125.
D) $150.

After the passage of the Patient Protection and Affordable Care Act insurance companies can
A) charge higher premiums for mental health care than for other forms of care.
B) charge older individuals more than younger ones.
C) deny coverage to certain religious groups.
D) charge higher premiums to individuals based on their drug arrests.

Economists estimate that the rate of return to prescription drug companies is
A) much above the average.
B) at or slightly above the average.
C) slightly below average.
D) much below average.

Which of the following trade agreements includes the United States?
A) NAFTA
B) CAFTA
C) GATT
D) All of these include the United States

Which of the following reasons offered for why crime fell in the 1990s does economist Steven Levitt suggest had a significant impact?
A) The increased number of police
B) The increased use of the community policing
C) The increased use of gun buyback programs
D) The increased use of the death penalty

Social promotion suggests that students are
A) only allowed to proceed to the next grade if they meet minimum behavioral standards.
B) granted diplomas for survival, rather than for achievement.
C) only allowed to graduate after taking a state exam.
D) given an opportunity to go back and take courses to improve their grades.

Figure 1.2
In Figure 1.2, which labeled points are unattainable?
A) only A
B) only B and C
C) only D
D) A, B and C

The marginal product of labor is
A) The change in output that results from an increase of labor by one unit.
B) Total output divided by total labor.
C) The percentage change in output divided by the percentage change in labor.
D) The output produced by a worker of average quality.

One of the reasons economists approve of limiting trade would be
A) the protection of the environment.
B) the preservation of a high employment company.
C) the preservation of a high wage company.
D) the preservation of a large production company.

Among the most important demand side factors explaining homes prices would be the
A) rates charged by licensed plumbers.
B) cost of land.
C) cost of lumber.
D) local population growth rate.

Figure 22.1
In Figure 22.1 for a good with no externality, which area represents the total variable cost to the producer?
A) OACQ*
B) BP*C
C) 0BCQ*
D) 0P*CQ*