1) Figure 9-11
Producer surplus in this market after trade is
a.C.
b.C + B.
c.A + B + D.
d.B + C + D.
2) Which of the following statements is not correct?
a.The government may use antitrust laws to break up an existing company to improve
competition.
b.The government may break up a natural monopoly to lower the price charged to
customers.
c.Private ownership is typically preferred to public ownership.
d.Sometimes the best strategy is for the government to do nothing about monopoly
inefficiency because the “fix” may be worse than the problem.
3) Both The Wealth of Nations and the Declaration of Independence share the point of
view that
a.every person is entitled to life, liberty, and the pursuit of happiness.
b.individuals are best left to their own devices without the government guiding their
actions.
c.the government plays a central role in organizing a market economy.
d.because of human nature a strong legal system is necessary for a market system to
survive.
4) Table 7-19
The following table shows the cost of producing a good for the only four producers in a
market.
Refer to Table 7-19. If the market equilibrium price is $28, what is total producer
surplus in the market?
5) Suppose that the country of Libraria made a concerted effort to increase the
educational level of its people. If this effort had no effect on the wages of its workers,
one might consider this as evidence in support of
a.the human-capital view of education.
b.the signaling view of education.
c.both the human-capital and the signaling view of education.
d.neither the human-capital nor the signaling view of education.
6) The problem with the protection-as-a-bargaining-chip argument for trade restrictions
is
a.if it works consumer surplus will decline.
b.if it works producer surplus falls.
c.if it fails the country faces a choice between two bad options.
d.if it fails total surplus will increase.
7) Figure 14-7
The firm will shut down in the short run if the price of the good is
a. $75.
b.$85.
c.$95.
d.All of the above are correct.
8) Which of the following is an example of a firm’s derived demand?
a.The wage that a worker earns is a function of her human capital.
b.A firm’s demand for college textbook study guide authors is inseparably linked to the
supply of college
textbooks.
c.Factors that increase the demand for labor will increase the equilibrium wage.
d.All of the above are correct.
9) Which of the following is likely to have the most price inelastic demand?
a.chocolate
b.Godiva chocolate
c.Hershey’s chocolate
d.All three would have the same elasticity of demand because they are all related.
10) Import quotas and tariffs make domestic sellers better off and domestic buyers
worse off.
a.True
b.False
11) A demand curve displaying the relationship between the price of cars and the
quantity demanded of cars should have a slope that is
a.less than 0.
b.between zero and 1.
c.between one and infinity.
d.undefined.