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1) When two goods are perfect complements, the indifference curves are right angles.
a.True
b.False
2) Critics of the minimum wage argue that
a.labor demand is inelastic so firms can adjust production.
b.too many older employees benefit at the expense of teenage workers.
c.many minimum-wage earners are teenagers from middle-class families.
d.All of the above are correct.
3) Figure 8-12
Suppose a $3 per-unit tax is placed on this good. The per-unit burden of the tax on
buyers is
a.$1.
b.$2.
c.$3.
d.$4.
4) A small island off the coast of Cape Cod contains two restaurants and two retail
stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown
in the economy, tourists are less willing to pay for the boat ride to visit the island. The
owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A
and B - think that if tourists could ride the ferry for free, they would be happy to visit
the island, eat and shop. The business owners are considering contributing to a pool of
money that will be used to pay for roundtrip ferry service each day. The table represents
their willingness to pay, that is, the maximum amount that each business owner is
willing to contribute, per day, to pay for each ferry trip.
Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business
owners have agreed to split the costs of the ferry trips equally. Which of the following
statements is correct?
a.The owner of Restaurant 1 would prefer to have 3 ferry trips.
b.The owner of Restaurant 2 would prefer to have 2 ferry trips.
c.The owner of Store A would prefer to have 1 ferry trip.
d.All of the above are correct.
5) Scenario 12-5
Senator Filch argues that a tax must be paid by people who benefit from government
services. Senator Fudge argues that a tax must be paid in accordance with a person's
ability to bear the tax burden. Senator Malfoy argues that people with a greater ability
to pay a tax should pay a larger amount. Senator Moody argues that taxpayers with
similar abilities to pay should contribute the same amount.
Which Senator is advocating taxes based on a person's ability to pay?
a.Senator Filch only
b.Senator Moody only
c.Senators Fudge and Malfoy only
d.Senators Malfoy and Moody only
6)
Emma's use of good x does not affect anyone else's use of good x. Neither Emma nor
anyone else can be prevented from using the good. Good x is an example of the type of
good that belongs in
a.Box A, which represents private goods.
b.Box B, which represents common resources.
c.Box C, which represents common resources.
d.Box D, which represents public goods.
7) When quantity supplied increases at every possible price, we know that the supply
curve has
a.shifted to the left.
b.shifted to the right.
c.not shifted; rather, we have moved along the supply curve to a new point on the same
curve.
d.not shifted; rather, the supply curve has become flatter.
8) The Ogallala aquifer is a large underground pool of fresh water under several
western states in the United States. Any farmer with land above the aquifer can at
present pump water out of it. Which of the following statements about the aquifer is
correct?
a.The aquifer is a public good which must be publicly owned to be used efficiently.
b.The aquifer is a private good which must be privately owned to be used efficiently.
c.The aquifer is a common resource which will be overused if no one owns it.
d.The aquifer is a club good which should be left as it is.
9) Table 22-2
Three longtime friends-Allen, Brian, and Cody-are deciding how they will spend their
Sunday afternoon. They all agree that they should do one of three things: go to a movie,
play golf, or go to a baseball game. They also agree that they will have two pairwise
votes to determine how to spend their afternoon, with the majority determining the
outcome on each vote. The first, second, and third choices for each person are as
indicated in the table below.
Refer to Table 22-2. Which of the following statements is correct?
a.In a pairwise election, "golf" beats "movie."
b.In a pairwise election, "baseball game" beats "golf."
c.In a pairwise election, "movie" beats "baseball game."
d.All of the above are correct.
10) Economists use some familiar terms in specialized ways
a.to make the subject sound more complex than it is.
b.because every respectable field of study has its own language.
c.to provide a new and useful way of thinking about the world.
d.because it was too difficult to come up with new terms.
11) On the Fourth of July, there is no fireworks display in the small town of
Yankeeville, even though it would be efficient for such a display to be produced. Which
of the following statements is correct?
a.The lack of a fireworks display in Yankeeville arises because of an externality.
b.The lack of a fireworks display in Yankeeville arises because the free-rider problem
does not apply to goods such as fireworks displays.
c.In deciding not to produce a fireworks display in Yankeeville, private individuals and
private firms made decisions that were privately irrational.
d.All of the above are correct.
12) Slow growth in US incomes during the 1970s and 1980s was primarily due to
a.slow productivity growth in the US.
b.increased competition from Japan.
c.increased competition from European countries.
d.a rapid decrease in the quantity of money in the economy.
13) Which of the following firms is the closest to being a perfectly competitive firm?
a.the New York Yankees
b.Apple, Inc.
c.DeBeers diamond wholesalers
d.a wheat farmer in Kansas
14) A rise in the interest rate will generally result in people consuming less when they
are old if the substitution effect outweighs the income effect.
a.True
b.False
15) A mobile phone is a
a.private good.
b.club good.
c.common resource.
d.public good.
16) Economists devise theories, collect data, and then analyze these data in an attempt
to verify or refute their theories.
a.True
b.False
17) Which of the following is a problem that keeps people from privately solving
externality problems?
a.Each party involved holds out for a better deal.
b.The externality is large.
c.Only problems with a sufficiently large number of parties can be solved.
d.There is a lack of government intervention.
18) The average-total-cost curve reflects the shape of both the average-fixed-cost and
average-variable-cost curves.
a.True
b.False
19) Assume that Andrea and Paul can switch between producing wheat and producing
beef at a constant rate.
Which of the following combinations of wheat and beef could Paul not produce in one
8-hour day?
a.13 bushels of wheat and 60 pounds of beef
b.20 bushels of wheat and 30 pounds of beef
c.20 bushels of wheat and 20 pounds of beef
d.25 bushels of wheat and 15 pounds of beef
20) For which pairs of goods is the cross-price elasticity most likely to be positive?
a.peanut butter and jelly
b.bicycle frames and bicycle tires
c.pens and pencils
d.college textbooks and iPods
