1) The federal healthcare spending program that specifically targets the poor is called
a.Medicaid.
b.Medicare.
c.National Institutes of Health.
d.Blue Cross/Blue Shield.
2) Which of the following is not an example of a barrier to entry?
a.Mighty Mitch’s Mining Company owns a unique plot of land in Tanzania, under
which lies the only large deposit of Tanzanite in the world.
b.A chemist receives a patent for a new skin cream.
c.An entrepreneur opens a cupcake bakery.
d.A taxi cab driver in New York City obtains a license to legally provide transportation
in New York City.
3) Figure 16-2. The figure is drawn for a monopolistically competitive firm.
If the ATC=40 at the profit-maximizing level of output, which of the following will
occur in the long run in this industry?
a.Firms will exit this industry.
b.Firms will enter this industry.
c.This firm will continue to earn positive economic profits.
d.This firm will incur losses.
4)
A bottle of soda is an example of the type of good represented by Box
a.A.
b.B.
c.C.
d.D.
5) The tax on gasoline
a.reduces efficiency by causing large deadweight losses.
b.reduces efficiency by decreasing consumer surplus and producer surplus.
c.enhances efficiency by serving as a corrective device in a market with positive
externalities.
d.enhances efficiency by serving as a corrective device in a market with negative
externalities.
6) A 1986 study of segregation on early 20th century U.S. streetcars found that the
primary source of racial segregation on streetcars was
a.a longstanding tradition of racial segregation.
b.policies implemented by the owners of streetcars.
c.laws passed by the government.
d.threats by white people to boycott the streetcars if they were forced to sit with black
people.
7) All goods and services are sold in perfectly competitive markets.
a.True
b.False
8) Refer to Figure 9-17. When the country moves from no trade to free trade,
consumer surplus
a.increases by $1,200 and producer surplus increases by $600.
b.increases by $1,200 and producer surplus decreases by $600.
c.decreases by $1,350 and producer surplus increases by $450.
d.decreases by $1,350 and producer surplus decreases by $450.
9) A profit-maximizing firm in a monopolistically competitive market is characterized
by which of the following?
a.average revenue exceeds marginal revenue
b.marginal revenue exceeds average revenue
c.average revenue is equal to marginal revenue
d.revenue is always maximized along with profit
10) Table 17-8
For a certain small town, the table shows the demand schedule for water. Assume the
marginal cost of supplying water is constant at $4 per bottle.
Refer to Table 17-8. If there are two suppliers of water, Victor and Sami, and if they
have successfully formed a cartel, then what would be the price and the market
quantity?
a.The price would be $7 per bottle and the market quantity would be 600 bottles.
b.The price would be $6 per bottle and the market quantity would be 800 bottles.
c.The price would be $5 per bottle and the market quantity would be 1000 bottles.
d.The price would be $4 per bottle and the market quantity would be 1200 bottles.
11) Microsoft faces very little competition from other firms for its Windows software.
Why isn’t the price of the software $1,000 per copy?
a.because the government would not allow such a high price
b.because stockholders would not allow such a high price
c.because the company would sell so few copies that they would earn higher profits by
selling at a lower price
d.All of the above are correct.
12) When a monopolistically competitive firm is in a long-run equilibrium, the values
of marginal cost, average total cost, and price are all the same.
a.True
b.False
13) Figure 21-29
The figure below illustrates the preferences of a representative consumer, Nathaniel.
Refer to Figure 21-29. A change in Nathaniel’s optimum from point A to point B results
from
a.a change in Nathaniel’s preferences.
b.an increase in the income Nathaniel receives when he is young.
c.an increase in the interest rate.
d.a decrease in the interest rate.
14) Scenario 13-2
Chelsea wants to start her own Christmas ornament business. She can purchase a
suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning
3 percent interest per year.
Suppose Chelsea purchases the factory using her own money. What is Chelsea’s annual
implicit opportunity cost of purchasing the factory?
a. $2,000
b. $3,000
c. $4,500
d. $5,000
15) Today’s demand curve for gasoline could shift in response to a change in
a.today’s price of gasoline.
b.the expected future price of gasoline.
c.the number of sellers of gasoline.
d.All of the above are correct.
16) What you give up to obtain an item is called your
a.opportunity cost.
b.explicit cost.
c.monetary cost.
d.direct cost.