1) What will happen to the equilibrium price and quantity of traditional camera film if
traditional cameras become more expensive, digital cameras become cheaper, the cost
of the resources needed to manufacture traditional film falls, and more firms decide to
manufacture traditional film?
a.Price will fall, and the effect on quantity is ambiguous.
b.Price will rise, and the effect on quantity is ambiguous.
c.Quantity will fall, and the effect on price is ambiguous.
d.Quantity will rise, and the effect on price is ambiguous.
2) If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3,
then the marginal revenue of selling the eighth unit is equal to
a.$3.
b.$4.
c.$24.
d.-$4.
3) Which of the following statements are positive and which are normative?
a.The minimum wage creates unemployment among young and unskilled workers.
b.The minimum wage ought to be abolished.
c.If the price of a product in a market decreases, then, other things equal, quantity
demanded will increase.
d.A little bit of inflation is worse for society than a little bit of unemployment.
e.There is a tradeoff between inflation and unemployment in the short run.
f.If consumer income increases, then, other things equal, the demand for automobiles
will increase.
g.The U.S. income distribution is not fair.
h.U.S. workers deserve more liberal unemployment benefits.
i.If interest rates increase, then investment will decrease.
j.If welfare benefits were reduced, then the country would be better off.
4) The marginal product of labor is the
a.marginal revenue product minus the wage paid to the worker.
b.total amount of output divided by the total units of labor.
c.increase in the amount of output from an additional unit of labor.
d.None of the above is correct.
5) At a price of
a.$2, there is a surplus of 6 units.
b.$5, there is a surplus of 25 units.
c.$5, there is a shortage of $25.
d.$7, there is a surplus of 4 units.
6) The simplest way for a monopoly to arise is for a single firm to
a.decrease its price below its competitors’ prices.
b.decrease production to increase demand for its product.
c.make pricing decisions jointly with other firms.
d.own a key resource.
7) In the early 19th century, the Russian government sent doctors to southern Russian
villages to provide assistance during a cholera epidemic. The villagers noticed that
wherever doctors appeared, people died. Therefore, many doctors were chased away
from villages, and some were even killed. This reaction to the correlation between
doctors and deaths is most likely a problem of
a.omitted variables.
b.reverse causality.
c.government propaganda.
d.medical incompetence.
8) Refer to Scenario 12-4. The taxpayer faces
a.an average tax rate of 22.5 percent when her income is $30,000.
b.an average tax rate of 22.0 percent when her income is $50,000.
c.a marginal tax rate of 10 percent when her income rises from $40,000 to $40,001.
d.a marginal tax rate of 50 percent when her income rises from $60,000 to $60,001.
9) Which types of models are built with assumptions?
a.economic models, but not models in other disciplines such as physics and biology
b.economic models as well as models in other disciplines such as physics and biology
c.models that are built for teaching purposes but not for research purposes
d.bad models
10) When, in our analysis of the gains and losses from international trade, we assume
that a particular country is small, we are
a.assuming the domestic price before trade will continue to prevail once that country is
opened up to trade with other countries.
b.assuming there is no demand for that country’s domesticallyproduced goods by other
countries.
c.assuming international trade can benefit producers, but not consumers, in that country.
d.making an assumption that is not necessary to analyze the gains and losses from
international trade.