1) If all of the firms in an oligopoly successfully collude and form a cartel, then total
profit for the cartel is equal to what it would be if the market were a monopoly.
a.True
b.False
2) Devin works as an
attorney for a corporation and is paid a salary in exchange for the legal services he
performs. Juan owns office buildings and rents his buildings to companies in exchange
for rent payments. If Devin’s income is represented by a flow of dollars from Box D to
Box B of this circularflow diagram, then Juan’s income is represented by a flow of
dollars
a.from Box A to Box C.
b.from Box C to Box A.
c.from Box B to Box D.
d.from Box D to Box B.
3) Figure 9-1
The figure illustrates the market for coffee in Guatemala.
From the figure it is apparent that
a.Guatemala will experience a shortage of coffee if trade is not allowed.
b.Guatemala will experience a surplus of coffee if trade is not allowed.
c.Guatemala has a comparative advantage in producing coffee, relative to the rest of the
world.
d.foreign countries have a comparative advantage in producing coffee, relative to
Guatemala.
4) Assume that Jamaica and Norway can switch between producing coolers and
producing radios at a constant rate. The following table shows the number of coolers or
number of radios each country can produce in one day.
Suppose Jamaica decides to increase its production of radios by 12. What is the
opportunity cost of this decision?
a.3 coolers
b.6 coolers
c.12 coolers
d.24 coolers
5) Consider Noah’s decision to go to college. If he goes to college, he will spend
$80,000 on tuition, $15,000 on room and board, and $4,000 on books. If he does not go
to college, he will earn $22,000 working in a store and he will spend $13,000 on room
and board. Noah’s cost of going to college is
a.$99,000.
b.$103,000.
c.$108,000.
d.$121,000.
6) A duty of economists at the Department of Labor is to
a.analyze data on workers.
b.schedule federal holidays.
c.enforce the nation’s antitrust laws.
d.All of the above are correct.
7) Table 7-17
At a price of $2.00, total surplus is
a.larger than it would be at the equilibrium price.
b.smaller than it would be at the equilibrium price.
c.the same as it would be at the equilibrium price.
d.There is insufficient information to make this determination.
8) If we observe a great deal more advertising for Mucinex, an over-the-counter drug,
than for a Grainger drill press, we can infer that
a.more money is spent on Mucinex than on Grainger drill presses.
b.the market for Mucinex is more highly differentiated than the market for Grainger
drill presses.
c.Grainger has lower costs of production than Mucinex.
d.Mucinex operates in an oligopoly, while Grainger operates in a monopolistically
competitive market.
9) Students of microeconomic principles often say they are going to study “tonight,”
because the only way to pass the exam is to study some every night. When “tonight”
comes, some students choose to do something else. Come exam day, these students do
not do well on their exam. This observation is an example of how people
a.are inconsistent over time.
b.are consistent over time.
c.are mainly interested in fairness.
d.are rational.
10) Table 12-10
If Miss Kay has $80,000 in taxable income, her marginal tax rate is
a. 15%.
b.25%.
c.28%.
d.33%.
11) Workers whose skills become obsolete as a result of technological change are often
paid a lower wage as a result of
a.natural ability.
b.geographic location of employment.
c.chance.
d.work effort.
12) When the price of a good is $5, the quantity demanded is 100 units per month;
when the price is $7, the quantity demanded is 80 units per month. Using the midpoint
method, the is about
a. 0.22.
b. 0.67.
c. 1.33.
d. 1.50.
13) If we observe that Jamie’s budget constraint has moved outward, then we know for
certain that
a.her income must have increased.
b.she will be indifferent between goods X and Y.
c.the price of one or both of the goods must have decreased.
d.she can reach a higher indifference curve.