1) An increase in the value of the marginal product of labor has the effect of increasing
the
a.demand for labor.
b.wage.
c.quantity of labor employed.
d.All of the above are correct.
2) Scenario 20-5
Suppose the government implemented a negative income tax and used the following
formula to compute a family’s tax liability:
Taxes owed = (1/4 of income) – $10,000
Refer to Scenario 20-5. Below what level of income would families start to receive a
subsidy from this negative income tax?
a.$10,000
b.$25,000
c.$40,000
d.$50,000
3) An early frost in the vineyards of Napa Valley would cause a(n)
a.increase in the demand for wine, increasing price.
b.increase in the supply of wine, decreasing price.
c.decrease in the demand for wine, decreasing price.
d.decrease in the supply of wine, increasing price.
4) Indiadesh is a country that produces two goods, textiles and computers. Last year,
Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000
textiles and 1100 computers. Given no further information, which of the following
events could explain this change?
a.Indiadesh decreased unemployment.
b.Indiadesh experienced an improvement in textile-making technology.
c.Indiadesh experienced an improvement in computer-making technology.
d.Indiadesh experienced a reduction in resources.
5) Robin owns a horse stables and riding academy and gives riding lessons for children
at €pony camp.€ Her business operates in a competitive industry. Robin gives riding
lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal
cost of pony camp is $100 per child. In order to maximize profits, Robin should
a.give riding lessons to more than 20 children per month.
b.give riding lessons to fewer than 20 children per month.
c.continue to give riding lessons to 20 children per month.
d.We do not have enough information to answer the question.
6) A rightward shift of a demand curve is called a(n)
a.increase in demand.
b.decrease in demand.
c.decrease in quantity demanded.
d.increase in quantity demanded.
7) The only two countries in the world, Alpha and Omega, face the following
production possibilities frontiers.
Alpha’s Production Possibilities FrontierOmega’s Production Possibilities Frontier
a.Assume that each country decides to use half of its resources in the production of each
good. Show these points on the graphs for each country as point A.
b.If these countries choose not to trade, what would be the total world production of
popcorn and peanuts?
c.Now suppose that each country decides to specialize in the good in which each has a
comparative advantage. By specializing, what is the total world production of each
product now?
d.If each country decides to trade 100 units of popcorn for 100 units of peanuts, show
on the graphs the gain each country would receive from trade. Label these points B.
8) If the price elasticity of supply for a good is equal to infinity, then the
a.supply curve is vertical.
b.supply curve is horizontal.
c.supply curve also has a slope equal to infinity.
d.quantity supplied is constant regardless of the price.
9) Which of the following goods is rival in consumption and excludable?
a.a fireworks display
b.national defense
c.a box of sparklers
d.a parade
10) The slope of a consumer’s budget constraint is unaffected by a change in income.
a.True
b.False