1) Two goods are substitutes when a decrease in the price of one good
a.decreases the demand for the other good.
b.decreases the quantity demanded of the other good.
c.increases the demand for the other good.
d.increases the quantity demanded of the other good.
2) Economists make assumptions to
a.mimic the methodologies employed by other scientists.
b.minimize the number of experiments that yield no useful data.
c.minimize the likelihood that some aspect of the problem at hand is being overlooked.
d.focus their thinking on the essence of the problem at hand.
3) If the cross-price elasticity of two goods is negative, then the two goods are
a.necessities.
b.complements.
c.normal goods.
d.inferior goods.
4) In the short run, a firm that produces and sells house paint can adjust
a.where to produce along its long-run average-total-cost curve.
b.the size of its factories.
c.how many workers to hire.
d.All of the above are correct.
5) Figure 9-13
Consumer surplus after trade is
a. $3,600.
b. $5,400.
c. $7,200.
d. $8,100.
6) If a 30 percent change in price causes a 15 percent change in quantity supplied, then
the price elasticity of supply is about
a.0.5, and supply is elastic.
b.0.5, and supply is inelastic.
c.2, and supply is inelastic.
d.2, and supply is elastic.
7) It is possible for the U.S. to gain from trade with Germany even if it takes U.S.
workers fewer hours to produce every good than it takes German workers.
a.True
b.False
8) Product differentiation causes the seller of a good to face what type of demand
curve?
a.downward sloping
b.vertical
c.horizontal
d.Any of the above could be correct since product differentiation does not affect the
shape of the demand curve.
9) Jose‘s restaurant operates in a perfectly competitive market. At the point where
marginal cost equals marginal revenue, ATC = $20, AVC = $15, and the price per unit is
$10. In this situation,
a.Jose‘s restaurant is earning a positive economic profit.
b.Jose‘s restaurant should shut down immediately.
c.Jose‘s restaurant is losing money in the short run but should continue to operate.
d.the market price will rise in the short run to increase profits.
10) Table 22-19
The 600 voters of Appleton are deciding by majority rule how much to spend on a new
library.
Refer to Table 22-19. The median voter prefers to spend
a.$2 million.
b.$3 million.
c.$3.5 million.
d.$4 million.
11) When a monopolistically competitive firm raises its price,
a.quantity demanded falls to zero.
b.quantity demanded declines but not to zero.
c.the market supply curve shifts outward.
d.quantity demanded remains constant.