1) When a certain nation abandoned a policy of prohibiting international trade in
automobiles in favor of a free-tree policy, the result was that the country began to
import automobiles. The change in policy improved the well-being of that nation in the
sense that
a.both producers of automobiles and consumers of automobiles in that nation became
better off as a result.
b.the gains to automobile producers in that nation exceeded the losses of the automobile
consumers in that nation.
c.the gains to automobile consumers in that nation exceeded the losses of the
automobile producers in that nation.
d.even though total surplus in that nation decreased, it was still true that consumer
surplus and producer surplus increased.
2) The higher a country’s tax rates, the more likely that country will be
a.at the top of the Laffer curve.
b.on the positively sloped part of the Laffer curve.
c.on the negatively sloped part of the Laffer curve.
d.experiencing small deadweight losses.
3) Almost all economists agree that tariffs and import quotas
a.reduces general economic welfare.
b.increases general economic welfare.
c.have no effect on general economic welfare.
d.stimulate a less than fully employed economy.
4)
The demand curve representing the demand for a luxury good with several close
substitutes is
a.A.
b.B.
c.C.
d.D.
5) Table 22-11
Five voters must choose from among four options: A, B, C, or D. Each voter’s
preferences are summarized in the table below. Options higher in the table are more
preferred by the voter.
Refer to Table 22-11. Which pairwise voting scheme would result in outcome A?
a.First, choose between A and B. Second, voters choose between the winner of the first
vote and C. Third, voters choose between the winner of the second vote and D.
b.First, choose between A and C. Second, voters choose between the winner of the first
vote and B. Third, voters choose between the winner of the second vote and D.
c.First, choose between B and D. Second, voters choose between the winner of the first
vote and C. Third, voters choose between the winner of the second vote and A.
d.First, choose between C and D. Second, voters choose between the winner of the first
vote and A. Third, voters choose between the winner of the second vote and B.
6) Figure 16-12
What is the efficient scale of production?
a.This firm cannot produce efficiently.
b.12 units
c.22 units
d.28 units
7) Table 18-1
Refer to Table 18-1. What is the marginal product of the second worker?
a.8
b.9
c.10
d.18
8) When the invisible hand guides economic activity, prices of products reflect
a.only the values that society places on those products.
b.only the costs to society of producing those products.
c.both the values that society places on those products and the costs to society of
producing those products.
d.none of the above; when the invisible hand guides economic activity, prices of
products are set by the government in a manner that is thought to be fair.
9) Hot dogs and hot dog buns are complements. An increase in the price of flour used to
make hot dogs buns will
a.increase consumer surplus in the market for hot dog buns and decrease producer
surplus in the market for hot dogs.
b.increase consumer surplus in the market for hot dogs and increase producer surplus in
the market for hot dog buns.
c.decrease consumer surplus in the market for hot dog buns and increase producer
surplus in the market for hot dogs.
d.decrease consumer surplus in the market for hot dog buns and decrease producer
surplus in the market for hot dogs.
10) Which of the following is not a way that a corporate tax on the income of U.S. car
companies will affect markets?
a.The price of cars will rise.
b.The wages of auto workers will fall.
c.Owners of car companies (stockholders) will receive less profit.
d.Less deadweight loss will occur since corporations are entities and not people who
respond to incentives.
11) Which of the following represents an example of labor-market discrimination?
a.An employer is more likely to grant an interview to a person graduating from Yale
than from the local community college.
b.An employer is more likely to grant an interview to a person graduating from the
local community college than from Yale.
c.An employer is more likely to grant an interview to a woman with a traditionally
“white” name such as Emily than to a woman with a traditionally “black” name such as
Lakisha.
d.An employer is as likely to grant an interview to person with a traditionally
“masculine” name such as “Alex” as a person with a traditionally “feminine” name such
as “Emily.”
12) A profit-maximizing, competitive firm for which the marginal product of labor is
diminishing also experiences
a.a perfectly inelastic supply of labor.
b.a perfectly elastic supply of labor.
c.a downward-sloping demand for labor.
d.an upward-sloping demand for labor.
13) The sign on a church in your neighborhood reads “All are welcome at Sunday
Service.” Because the church has limited seating and is usually full, the Sunday Service
is
a.a private good.
b.a public good.
c.a club good.
d.a common resource.
14) In a competitive market, the actions of any single buyer or seller will
a.discourage entry by competitors.
b.influence the profits of other firms in the market.
c.have a negligible impact on the market price.
d.None of the above is correct.
15) Which of the following statements is (are) true of the prisoners’ dilemma?
(i)Rational self-interest leads neither party to confess.
(ii)Cooperation between the prisoners is difficult to maintain.
(iii)Cooperation between the prisoners is individually rational.
a.(ii) only
b.(ii) and (iii)
c.(i) and (iii)
d.(i), (ii), and (iii)
16) Figure 21-30
The graph shows two budget constraints for a consumer.
Refer to Figure 21-30. Suppose the consumer’s income is $90 and Budget Constraint A
applies. What is the price of a light bulb?
17) Suppose that in Germany total annual output is worth $600 million and people work
40 million hours. In France total annual output is worth $700 million and people work
50 million hours. In which country do people enjoy a higher standard of living?
18) If the two countries specialize and trade with each other, which country will import
radios?
19) Give two reasons why the long-run industry supply curve may slope upward. Use
an example to demonstrate your reasons.
20) List several examples of the administrative burden of the U.S. income tax system.
21) Suppose the for good A is 1.25. If the price of good A increases by 20%, what will
be the resulting percentage change in quantity demanded for good A?
22) Explain how the presence of asymmetric information in car insurance markets may
lead people who are good drivers or even average drivers to choose not to buy car
insurance unless the law requires it.
23) If no one can be prevented from using good x, then good x is one of two types of
goods. What are those two types?
24) Suppose that good X is a luxury and that good Y is a necessity. Which good would
you expect to have more price inelastic demand?