1) For a country that is considering the adoption of either a tariff or an import quota on
a particular good, an important difference is that
a.an import quota has no effect on consumer surplus, while a tariff decreases consumer
surplus.
b.an import quota has no effect on producer surplus, while a tariff decreases producer
surplus.
c.a tariff raises total surplus, while an import quota does not.
d.a tariff raises revenue for that country’s government, while an import quota does not.
2) Jordan is planning ahead for retirement and must decide how much to spend and how
much to save while he’s working in order to have money to spend when he retires.
When the income effect dominates the substitution effect, an increase in the interest rate
on savings will cause him to
a.decrease his savings rate.
b.increase his savings rate.
c.continue saving at the current rate.
d.Any of the above could be correct.
3) The marginal product of land depends on the quantity of land that is available.
a.True
b.False
4) Entry into a market by new firms will increase the
a.supply of the good.
b.profits of existing firms.
c.price of the good.
d.marginal cost of producing the good.
5) Which of the following statements about trade is false?
a.Trade increases competition.
b.With trade, one country wins and one country loses.
c.Bulgaria can benefit, potentially, from trade with any other country.
d.Trade allows people to buy a greater variety of goods and services at lower cost.
6) Table 22-15
Diane, Henry, and Linda are voting for who to promote. They can only promote one
candidate. Their preferences are given in the table below.
Refer to Table 22-15. If elections were held where voters choose either Fred or Mary,
and then choose either the winner or Beth, what would the results be?
a.Fred would win the first and second elections.
b.Fred would win the first election and Beth would win the second election.
c.Mary would win the first and second elections.
d.Mary would win the first election and Beth would win the second election.
7) Figure 15-5
A profit-maximizing monopoly will produce an output level of
a.Q1.
b.Q2.
c.Q3.
d.Q4.
8) After a recent spike in violent crime, the local police department wants to spend
$550,000 on a new crime fighting initiative. If a human life is worth $9 million, the
crime fighting initiative is worth the cost if it reduces the risk of someone dying from
crime by at least
a.3.5 percentage points.
b.5.5 percentage points.
c.6.1 percentage points.
d.9.0 percentage points.
9) When a tax is imposed on a good, the resulting decrease in consumer surplus is
always larger than the resulting decrease in producer surplus.
a.True
b.False
10) Sue earns income of $80,000 per year. Her average tax rate is 50 percent. Sue paid
$5,000 in taxes on the first $30,000 she earned. What was the marginal tax rate on the
first $30,000 she earned, and what was the marginal tax rate on the remaining $50,000?
a.6.25 percent and 50.00 percent, respectively
b.10.00 percent and 70.00 percent, respectively
c.16.67 percent and 60.00 percent, respectively
d.16.67 percent and 70.00 percent, respectively
11) In both perfect competition and monopolistic competition, each firm
a.has some monopoly power.
b.sells a product that is at least slightly different from those of other firms.
c.faces a downward-sloping demand curve.
d.has many competitors.
12) If new government regulations designed to protect wetlands remove very
productive farmland from production, then the production possibilities frontier will shift
inward.
a.True
b.False
13) In a perfectly competitive market, at the market price, buyers
a.cannot buy all they want, and sellers cannot sell all they want.
b.cannot buy all they want, but sellers can sell all they want.
c.can buy all they want, but sellers cannot sell all they want.
d.can buy all they want, and sellers can sell all they want.