1) A t-shirt maker would be willing to supply 75 t-shirts per day at a price of $18.00
each. At a price of $20.00, the t- shirt maker would be willing to supply 100 t-shirts.
Using the midpoint method, the price elasticity of supply for t- shirts is about
a.0.37, and supply is elastic.
b.0.37, and supply is inelastic.
c.2.71, and supply is elastic.
d.2.71, and supply is inelastic.
2) A good that is excludable is one that someone can be prevented from using if she did
not pay for it.
a.True
b.False
3) Your company has recently requested that you travel to Dhaka, Bangladesh, to work
on negotiations for a new factory to be located in one of the port cities. Your travel
agent provides a list of several hundred local hotels and a Sheraton. In this case, the
Sheraton brand-name is likely to be used as a signal of
a.perceived differences that are not likely to exist among your various options.
b.quality when quality cannot be easily judged.
c.inefficiency in markets characterized by recognizable brand names.
d.the quality of general lodging accommodations in Dhaka.
4) A television broadcast is an example of a good that is
a.private.
b.not rival in consumption.
c.social.
d.normal.
5) Which of the following helps to explain the differences in earnings in the United
States?
a.ability, effort, and chance
b.compensating differentials
c.physical attractiveness
d.All of the above are correct.
6) For a typical natural monopoly, average total cost is
a.falling, and marginal cost is above average total cost.
b.falling, and marginal cost is below average total cost.
c.rising, and marginal cost is below average total cost.
d.rising, and marginal cost is above average total cost.
7) Scenario 20-4
Suppose the government implemented a negative income tax and used the following
formula to compute a family’s tax liability:
Taxes owed = (1/5 of income) – $15,000
Refer to Scenario 20-4. A family earning $100,000 before taxes would have how much
after-tax income?
a.$50,000
b.$65,000
c.$80,000
d.$95,000
8) Suppose a tax is imposed on each new hearing aid that is sold. The supply curve is a
typical upward-sloping straight line, and the demand curve is a typical
downward-sloping straight line. As a result of the tax, the equilibrium quantity of
hearing aids decreases from 10,000 to 9,000, and the deadweight loss of the tax is
$60,000. We can conclude that the tax on each hearing aid is
a.$60.
b.$120.
c.$160.
d.$200.
9) Figure 15-4
Profit can always be increased by increasing the level of output by one unit if the
monopolist is currently operating at
(i)Q1.
(ii)Q2.
(iii)Q3.
(iv)Q4.
a.(ii) only
b.(i) or (ii) only
c.(i) only
d.(i), (ii), or (iii) only
10) Figure 14-12
. If the figure in panel (a) reflects the long-run equilibrium of a profit-maximizing firm
in a competitive market, the figure in panel (b) most likely reflects
a.perfectly inelastic long-run market supply.
b.perfectly elastic long-run market supply.
c.the entry of firms into the industry when some resources used in production are
available only in limited quantities.
d.the fact that zero profits cannot be sustained in the long run.
11) Which of the following best describes the economy’s stock of equipment and
structures?
a.capital
b.aggregate demand
c.long-term inventory
d.aggregate stock
12) For international trade to benefit a country, it must benefit all citizens of that
country.
a.True
b.False