1) 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. The marginal product of labor begins to diminish with the
addition of which worker?
a.the 1st worker
b.the 2nd worker
c.the 3rd worker
d.the 4th worker
2) According to the benefits principle, it is fair for people to pay taxes based on the
benefits they receive from the government.
a.True
b.False
3) Which of the following is an example of a normative, as opposed to positive,
statement?
a.If the price of a product decreases, people’s willingness to buy that product will
increase.
b.Reducing tax rates on the wealthy would benefit the nation.
c.If the national saving rate were to increase, so would the rate of economic growth.
d.The elimination of trade restrictions would increase an economy’s standard of living.
4) When demand is unit elastic, equals
a.1, and total revenue and price move in the same direction.
b.1, and total revenue and price move in opposite directions.
c.1, and total revenue does not change when price changes.
d.0, and total revenue does not change when price changes.
5) Frequently it is the case that: (1) A worker knows more than his employer about how
much effort he puts into his job, and (2) the seller of a used car knows more than the
buyer about the car’s condition.
a.Neither (1) nor (2) serves as an example of asymmetric information.
b.Both (1) and (2) serve as examples of asymmetric information.
c.Neither (1) nor (2) serves as an example of a hidden action.
d.Both (1) and (2) serve as examples of hidden action.
6) Suppose the government used the following formula to compute a family’s tax
liability: Taxes owed = 28% of income – $8,000. How much would a family that earned
$150,000 owe?
a.$34,000
b.$42,000
c.$50,000
d.$68,000
7) Using the midpoint method, if the price falls from $150 to $100, the absolute value
of the is
a.0.4.
b.0.9.
c.1.1.
d.2
8) In recent years, which countries have taken a unilateral approach to the removal of
trade restrictions?
a.China and North Korea
b.Chile and South Korea
c.Russia and Japan
d.the United States and Mexico
9) The production function is the
a.increase in the amount of output from an additional unit of labor.
b.marginal product of an input times the price of output.
c.relationship between the quantity of inputs and output.
d.shift in labor demand caused by a change in the price of output.
10) You and your college roommate eat three packages of Ramen noodles each week.
After graduation last month, both of you were hired at several times your college
income. You still enjoy Ramen noodles very much and buy even more, but your
roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When
looking at income elasticity of demand for Ramen noodles, yours would
a.be negative, and your roommate’s would be positive.
b.be positive, and your roommate’s would be negative.
c.be zero, and your roommate’s would approach infinity.
d.approach infinity, and your roommate’s would be zero.
11) Figure 9-7. The figure applies to the nation of Wales and the good is cheese.
Which of the following is a valid equation for the gains from trade?
a.Gains from trade = (1/2)(P1 – P0)(Q2 – Q1).
b.Gains from trade = (1/2)(P1 – P0)(Q2 – Q0)
c.Gains from trade = (1/2)(P1 – P0)(Q1 + Q2).
d.Gains from trade = (1/2)(Q1)(P3– P1).
12) Assume that England and Spain can switch between producing cheese and
producing bread at a constant rate.
The opportunity cost of 1 unit of bread for England is
a.1/4 unit of cheese.
b.1/4 hour of labor.
c.4 units of cheese.
d.4 hours of labor.
13) The competitive firm‘s long-run supply curve is that portion of the marginal cost
curve that lies above average
a.fixed cost.
b.variable cost.
c.total cost.
d.revenue.
14) Table 20-11
Poverty Thresholds in 2011, by Size of Family and Number of Related Children
Under 18 Years [Dollars]
Source: U. S. Bureau of the Census, Current Population Survey.
Refer to Table 20-11. What is the poverty line for a family of three with one child?
a.$17,595
b.$18,106
c.$18,123
d.$22,891
15) The production possibilities frontier illustrates
a.the trade-off between efficiency and equality.
b.the combination of output that an economy should produce.
c.the combination of output that each member of society should consume.
d.None of the above is correct.
16) The competition experiment conducted by economists Muriel Niederle and Lise
Vesterlund was consistent with the results of Terry Odean which were that
a.men were better at math than women.
b.men chose competition more because they were better at sports than women.
c.men trade stocks excessively while women adopt a buy-and-hold strategy.
d.streetcar companies were not in favor of segregation because it hurt their profits.
17) The tax that generates the most revenue for state and local government is the
a.corporate income tax.
b.individual income tax.
c.property tax.
d.sales tax.
18) A common criticism of government programs that are designed to assist the poor is
that
a.those who receive assistance rarely meet the criterion for eligibility.
b.the majority of those below the poverty line refuse to accept government assistance.
c.they create incentives for people to become “needy.”
d.they typically account for a majority of annual government expenditures.
19) Chile’s Production Possibilities FrontierColombia’s Production Possibilities
Frontier
If
Chile and Colombia each divides its time equally between making coffee and making
soybeans, then total production is
a.12 pounds of coffee and 12 pounds of soybeans.
b.14 pounds of coffee and 9 pounds of soybeans.
c.16 pounds of coffee and 6 pounds of soybeans.
d.28 pounds of coffee and 18 pounds of soybeans.
20) If the value of the marginal product of labor exceeds the wage, then hiring another
worker increases the firm’s
a.profit.
b.total cost.
c.total revenue.
d.All of the above are correct.
21) Table 12-25
Which plan illustrates a regressive tax?
22) Scenario 17-6
Assume that a local telecommunications company sells high speed internet access and
cable television. The company’s only two customers are Taylor and Tim. Taylor is
willing to pay $50 per month for high speed internet access and $50 per month for cable
television. Tim is willing to pay only $20 per month for high speed internet access, but
is willing to pay $70 per month for cable television. Assume that the
telecommunications company can provide each of these products at zero marginal cost.
Refer to Scenario 17-6. How much additional profit can the telecommunications
company earn by switching to the use of a tying strategy to price high speed internet
access and cable television rather than pricing these goods separately?
23) Who would be more likely to study the effects of foreign competition on the
accounting industry, a macroeconomist or a microeconomist?
24) Assume you are a critic of welfare reforms that impose a time limit on the number
of years a person is eligible for welfare benefits. What is the foundation of your
critique?
25) When economists are trying to explain the world, they are scientists. When they are
trying to improve it, they are
26) For Brent, the income effect of a wage increase is stronger than the substitution
effect. In response to a wage increase, will Brent work more hours or will he work
fewer hours?
27) In the 1980s, the dangerous Ebola virus entered the United States through
contaminated monkeys that were imported for use in medical experiments. Suppose this
virus had not been contained but had spread to the general population. Assume that the
virus is lethal in half of the people who are exposed to it. Describe the resulting effect
on labor productivity.
28) Economists Cox and Alm compared the gap between rich and poor and found that
the richest 20% was about 15 times better off than the poorest 20% when they
compared what data?
29) Some people consider the NCAA (National Collegiate Athletic Association) to be a
_____ in the market for college athletics.
30) Table 12-25
Which plan represents the best tax?