1) Scenario 20-6
Zooey is a single mother of two young children whose husband died in a tragic car
accident. She earns $20,000 per year working as a cashier at a grocery store. The
government uses a negative income tax system in which Taxes owed = (1/4 of income)
– $15,000.
Refer to Scenario 20-6. If Zooey decides to quit her job and earns $0 in income
annually, how much more or less money will she have compared to continuing to work
as a cashier?
a.If she quits her job, she will have $10,000 less per year.
b.If she quits her job, she will have $15,000 less per year.
c.If she quits her job, she will have $10,000 more per year.
d.If she quits her job, she will have $15,000 more per year.
2) Table 15-9
Consider the following demand and cost information for a monopoly.
At the profit-maximizing price, how much profit will the monopoly earn?
a. $8
b. $10
c. $12
d. $14
3) Demand is said to be inelastic if the
a.quantity demanded changes proportionately more than price.
b.price changes proportionately more than income.
c.quantity demanded changes proportionately less than price.
d.quantity demanded changes proportionately the same as price.
4) Producer surplus is the cost of production minus the amount a seller is paid.
a.True
b.False
5) If he devotes all of his available resources to cantaloupe production, a farmer can
produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he
produces, it follows that
a.if he devotes all of his available resources to watermelon production, then he can
produce 80 watermelons.
b.he cannot have a comparative advantage over other farmers in producing cantaloupes.
c.his opportunity cost of one watermelon is 2/3 of a cantaloupe.
d.his production possibilities frontier is bowed-out.
6) Which combination would produce an increase in equilibrium price and an
indeterminate change in equilibrium quantity?
a.A
b.B
c.C
d.D
7) Total profit for a firm is calculated as
a.marginal revenue minus average total cost.
b.average revenue minus average total cost.
c.marginal revenue minus marginal cost.
d.(price minus average cost) times quantity of output.
8) Figure 21-19
Refer to Figure 21-19. Assume that the consumer depicted in the figure has an income
of $20. The price of Skittles is $2 and the price of M&M’s is $4. The consumer’s
optimal choice is point
a.A.
b.B.
c.C.
d.D.
9) The following table contains a demand schedule for a good.
If the law of demand applies to this good, then Q1 could be
a.0
b.100
c.200
d.400
10) In response to the deep economic downturn in the US in 2008 and 2009, the US
a.reduced taxes.
b.increased government spending.
c.increased the supply of money.
d.All of the above are correct.
11) Table 18-11
Consider the following daily production data for MadeFromScratch, Inc.
MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per
day.
Refer to Table 18-11. What is the value of the marginal product of the second worker?
a.$180
b.$360
c.$450
d.$720
12) Table 15-4
A monopolist faces the following demand curve:
If the monopolist produces 5 units, what is its average revenue?
a. $100
b.$20
c.$5
d.$4
13) Figure 7-24
Refer to Figure 7-24. If the government imposes a price floor at $18, then consumer
surplus is
a.ABF.
b.AGH.
c.HGCD.
d.HGBF.
14) Competitive firms have
a.downward-sloping demand curves, and they can sell as much output as they desire at
the market price.
b.downward-sloping demand curves, and they can sell only a limited quantity of output
at each price.
c.horizontal demand curves, and they can sell as much output as they desire at the
market price.
d.horizontal demand curves, and they can sell only a limited quantity of output at each
price.
15) Figure 8-13
Suppose the government places a $5 per-unit tax on this good. The producer surplus
after this tax is
a.$60.
b.$45.
c.$30.
d.$15.