1) If a worker respond to an increase in the opportunity cost of leisure by taking more
leisure, then her labor supply curve is
a.upward sloping.
b.backward sloping.
c.horizontal.
d.vertical.
2) Scenario 18-7
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to
graduate school in economics to become a university economics professor.
Event 2: An increasing number of students in U.S. primary and secondary schools
increases the number of students entering college, increasing the output price of
university economics professors’ services.
Refer to Scenario 18-7. As a result of these two events, holding all else constant, the
equilibrium quantity of university economics professors will
a.increase.
b.decrease.
c.not change.
d.It is not possible to determine what will happen to the equilibrium quantity.
3) Figure 7-27
Refer to Figure 7-27. If the government mandated a price increase from P1 to a higher
price, then
a.total surplus would decrease.
b.consumer surplus would increase.
c.total surplus would increase, since producer surplus would increase.
d.total surplus would remain unchanged.
4) Gary and Diane must prepare a presentation for their marketing class. As part of their
presentation, they must do a series of calculations and prepare 50 PowerPoint slides. It
would take Gary 10 hours to do the required calculation and 10 hours to prepare the
slides. It would take Diane 12 hours to do the calculations and 20 hours to prepare the
slides.
a.How much time would it take the two to complete the project if they divide the
calculations equally and the slides equally?
b.How much time would it take the two to complete the project if they use comparative
advantage and specialize in calculating or preparing slides?
c.If Diane and Gary have the same opportunity cost of $5 per hour, is there a better
solution than for each to specialize in calculating or preparing slides?
5) In a monopoly market, the socially efficient quantity of output is typically higher
than the profit-maximizing quantity of output for the monopolist.
a.True
b.False
6) A decrease in supply will cause the largest increase in price when
a.both supply and demand are inelastic.
b.both supply and demand are elastic.
c.demand is elastic and supply is inelastic.
d.demand is inelastic and supply is elastic.
7) Diminishing marginal product affects the shape of the production function in what
way?
a.The slope of the production function decreases as the quantity of input increases.
b.The production function becomes steeper as the quantity of input increases.
c.The production function slopes downward.
d.The production function is horizontal beyond a certain quantity of input.
8) When strategic interactions are important to pricing and production decisions, a
typical firm will
a.set the price of its product equal to marginal cost.
b.consider how competing firms might respond to its actions.
c.generally operate as if it is a monopolist.
d.consider exiting the market.
9) Which of the following characteristics of competitive markets is necessary for firms
to be price takers?
(i)There are many sellers.
(ii)Firms can freely enter or exit the market.
(iii)Goods offered for sale are largely the same.
a.(i) and (ii) only
b.(i) and (iii) only
c.(ii) only
d.(i), (ii), and (iii)
10) Which of these statements does not apply to market economies?
a.Prices prevent decentralized decision making from degenerating into chaos.
b.Prices coordinate the actions of millions of people with varying abilities and desires.
c.Prices ensure that anyone who wants a product can get it.
d.Prices ensure that what needs to get done does in fact get done.
11) Table 12-10
If Jace has $33,000 in taxable income, his tax liability will be
a. $4,531.
b. $4,678.
c. $4,950.
d. $8,269.
12) Which of the following is a correct statement about production possibilities
frontiers?
a.An economy can produce only on the production possibilities frontier.
b.An economy can produce at any point inside or outside a production possibilities
frontier.
c.An economy can produce at any point on or inside the production possibilities
frontier, but not outside the frontier.
d.An economy can produce at any point inside the production possibilities frontier, but
not on or outside the frontier.
13) When a monopoly increases its output and sales,
a.both the output effect and the price effect work to increase total revenue.
b.the output effect works to increase total revenue, and the price effect works to
decrease total revenue.
c.the output effect works to decrease total revenue, and the price effect works to
increase total revenue.
d.both the output effect and the price effect work to decrease total revenue.
14) In a long-run equilibrium, a firm in a monopolistically competitive market operates
a.where marginal revenue is zero.
b.where marginal revenue is negative.
c.on the rising portion of its average total cost curve.
d.on the declining portion of its average total cost curve.