Refer to the graph shown. If the monopoly firm maximizes profit, consumers will pay:
A. $2.00 per unit and consumer surplus will be 45.
B. $2.50 per unit and consumer surplus will be 18.75.
C. $3.50 per unit and consumer surplus will be 11.25.
D. $3.50 per unit and consumer surplus will be 22.5.
Answer:
What economists call the law of one price depends on:
A. government action.
B. people seeking to exploit profit opportunities.
C. random chance.
D. the inertia effect.
Answer:
Refer to the graph above. A monopolist that efficiently produces the profit-maximizing
level of output would have per-unit cost equal to:
A. A.
B. B.
C. C.
D. D.
Answer:
Behavioral economics:
A. tests the underlying economic assumptions of economic models.
B. measures people’s preferences by developing mathematical models.
C. studies how economists behave.
D. is based on sociology.
Answer:
The most likely reason politicians don’t appear to economists to look at policy issues in
a cost/benefit framework is that:
A. politicians are not economists.
B. politicians don’t make rational decisions.
C. the marginal costs and marginal benefits facing the politician are not necessarily the
ones facing society.
D. politicians are focusing on the long-run effects of policies rather than the short-run
effects.
Answer:
Refer to the graph shown. The richest 10 percent of the families earn:
A. 37 percent of the income.
B. 48 percent of the income.
C. 52 percent of the income.
D. 63 percent of the income.
Answer:
To allow heuristic models to provide us with a better understanding of economic
problems, it is important to:
A. increase the amount of vocabulary in your model.
B. always stick with the deductive method.
C. empirically test your data.
D. never bring mathematics into the model.
Answer:
Refer to the graph shown. If this monopolist were forced to set price equal to average
total cost, it would charge a price of:
A. $0.15.
B. $0.30.
C. $0.75.
D. $0.90.
Answer:
An increase in quantity and an indeterminate change in price are consistent with a:
A. leftward shift in demand and supply.
B. rightward shift in supply and demand.
C. rightward shift in supply, keeping demand constant.
D. rightward shift in demand, keeping supply constant.
Answer:
Marginal product eventually:
A. declines because some inputs are fixed.
B. increases because some inputs are fixed.
C. declines because some inputs are variable.
D. increases because some inputs are variable.
Answer:
Constant returns to scale means that long-run:
A. ATC increases as output increases.
B. ATC decreases as output decreases.
C. ATC rises and also falls as output increases.
D. ATC does not change as output increases.
Answer:
When Amazon sets the default mail option as two-day mailing instead of the
free-shipping option, it is employing:
A. a RECAP.
B. a tax.
C. a push.
D. a nudge.
Answer:
If a teacher was curious to see if collaboration among students leads to higher grades,
which of the following models would be the best to use?
A. Traditional models
B. Heuristic models
C. Regression models
D. Butterfly effect model
Answer:
Suppose there are 50 firms in a perfectly competitive market and each maximizes profit
at 50 units of output when market price is $15.00 per unit. One of the points on the
market supply curve must be at:
A. price = $15 and quantity supplied = 2,500.
B. price = $15 and quantity supplied = 25,000.
C. price = $3.33 and quantity supplied = 2,500.
D. price = $3.33 and quantity supplied = 25,000.
Answer:
North Carolina’s school choice program gives parents a bigger say over where their
children go to school. To help with the choice, parents are mailed a sheet of paper
listing the average of the math and reading scores for each school they could apply to.
Providing this information is an example of:
A. a push.
B. a nudge.
C. a shadow price.
D. an incentive compatibility problem.
Answer:
Which of the following is an argument an economist would use to argue against market
regulation designed to protect consumers?
A. Information is costless and readily available, and so it is up to consumers to beware.
B. When a brand name product is found unsafe, the value of the brand is reduced,
which gives companies with brand names an incentive to produce high-quality
products.
C. Manufacturers have no incentive to stop the sale of counterfeit products.
D. Government is more likely to have consumers’ interest in mind than does the market.
Answer:
The discovery of a significant new source of oil that can be exported will:
A. shift the supply of a currency to the right and lead to a currency depreciation.
B. shift the supply a currency to the right and lead to a currency appreciation.
C. shift the demand for a currency to the left and lead to a currency depreciation.
D. shift the demand for a currency to the right and lead to a currency appreciation.
Answer:
Which of the following provides the best explanation for constant returns to scale?
A. replication of production techniques
B. diminishing marginal product
C. increasing marginal product
D. constant marginal product
Answer:
To maximize profits, a perfectly competitive firm should produce until:
A. price is greater than average total cost.
B. marginal cost is equal to price.
C. average total cost is minimized.
D. per unit profits are maximized.
Answer:
Refer to the graph below.
Given the production possibility curve, which point is unattainable?
A. A
B. B
C. C
D. D
Answer:
Refer to the graph shown. The line segment that represents average total costs of
producing Q * is:
A. AQ *.
B. BQ *.
C. CQ *.
D. AB.
Answer:
The model of supply and demand leads to the prediction that low interest rates cause:
A. an increase in housing prices, especially in cities with plenty of room for expansion.
B. an increase in housing prices, especially in cities with limited land.
C. a decrease in housing prices, especially in cities with plenty of room for expansion.
D. a decrease in housing prices, especially in cities with limited land.
Answer:
Refer to the graph shown. For which curve does the price elasticity of supply decrease
as price increases?
A. A
B. B
C. C
D. D
Answer:
The long-run market solution to a wage that is so low that workers cannot survive is:
A. the reallocation of property rights, reducing the wage of some but increasing the
wage for those earning a below-subsistence wage.
B. the reallocation of scarce resources to those who need it the most.
C. the starvation of some low-wage workers until the supply of labor shifts to the left
and the wage for survivors increases to above subsistence.
D. government intervention into the market to establish a minimum wage so that all
workers earn at least a subsistence wage.
Answer:
High gasoline prices hit commuters who live far from their jobs in areas with little
public transportation hard. With few alternatives, they just have to bear the higher cost.
Based on this information, how would you characterize demand for gasoline by these
commuters?
A. Gasoline is a luxury good.
B. Gasoline is an inferior good.
C. Demand for gasoline is elastic.
D. Demand for gasoline is inelastic.
Answer:
An economic policy is:
A. a generalization about the workings of an abstract economy.
B. a physical or mental structure that significantly influences economic decisions.
C. an action taken to influence the course of economic events.
D. a standard people use when they determine whether a particular activity or behavior
is acceptable.
Answer:
Refer to the graph below.
Point A represents a price of:
A. 3 and a quantity of 3.
B. 3 and a quantity of 5.
C. 5 and a quantity of 3.
D. 5 and a quantity of 5.
Answer:
According to official statistics in the United States, a family is considered to live in
poverty if its money income:
A. is below three times an average family’s minimum food budget.
B. is below the income earned by 90 percent of all Americans.
C. is below the income earned by 80 percent of all Americans.
D. plus all government transfers is below three times an average family’s minimum
food budget.
Answer:
Long-run market supply is a horizontal line in a(n):
A. decreasing-cost industry.
B. constant-cost industry.
C. increasing-cost industry.
D. perfectly competitive industry.
Answer:
A problem in using the judgment by market structure criterion is that:
A. each action of a firm must be analyzed separately and within a particular context.
B. it is difficult to determine the relevant industry and geographic market.
C. it is an expensive and time-consuming standard.
D. it is the most subjective standard.
Answer:
Consider the following payoff matrix facing two firms selling the same product in the
same market. They must choose whether to price the good at a high or low price.
Given this information:
A. A has a dominant strategy but B does not.
B. B has a dominant strategy but A does not.
C. Both A and B have dominant strategies.
D. Neither A nor B has a dominant strategy.
Answer:
Refer to the graph shown. If the firm is producing 250 units of output, profit is equal to:
A. $38.
B. -$38.
C. $0.
D. $30.
Answer:
Which of the following statements is true?
A. Liberal and conservative economists differ less often than laypeople think they do.
B. Conservative economists focus on incentives, and liberal economists do not.
C. Liberal economists focus on individual choice, and conservative economists do not.
D. Most economists discredit individuals’ abilities to choose reasonably.
Answer: