1) Figure 18-7
Refer to Figure 18-7. Which of the following would shift the labor supply curve from
S1 to S2?
a.technological progress
b.a decrease in the price of the firm’s output
c.a change in workers’ attitudes toward the work-leisure tradeoff
d.an increase in the price of the firm’s output
2) Stephen is restoring a car and has already spent $4,000 on the restoration. He expects
to be able to sell the car for $5,800. Stephen discovers that he needs to do an additional
$2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the
car now, without completing the additional work, for $3,800. What should he do?
a.He should sell the car now for $3,800.
b.He should keep the car since it wouldn’t be rational to spend $6,400 restoring a car
and then sell it for only $5,800.
c.He should complete the additional work and sell the car for $5,800.
d.It does not matter which action he takes since the outcome will be the same either
way.
3) Scenario 15-6
The concert promoters of a heavy-metal band, WeR2Loud, know that there are two
types of concert-goers: die- hard fans and casual fans. For a particular WeR2Loud
concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual
fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue.
Suppose the cost of putting on the concert is $50,000, which includes the cost of the
band, lighting, security, etc.
How much additional profit can the concert promoters earn by charging each customer
their willingness to pay relative to charging a flat price of $50 per ticket?
a. $25,000
b. $50,000
c. $75,000
d. $100,000
4) Figure 10-3
The social cost curve is above the supply curve because
a.it takes into account the external costs imposed on society by the concert.
b.it takes into account the effect of local noise restrictions on concerts in parks
surrounded by residential neighborhoods.
c.concert tickets are likely to cost more than the concert actually costs the organizers.
d.residents in the surrounding neighborhoods get to listen to the concert for free.
5) Use the graph to answer the following questions about CDs.
a.What is the equilibrium price of CDs before trade?
b.What is the equilibrium quantity of CDs before trade?
c.What is the price of CDs after trade is allowed?
d.What is the quantity of CDs exported after trade is allowed?
e.What is the amount of consumer surplus before trade?
f.What is the amount of consumer surplus after trade?
g.What is the amount of producer surplus before trade?
h.What is the amount of producer surplus after trade?
i.What is the amount of total surplus before trade?
j.What is the amount of total surplus after trade?
k.What is the change in total surplus because of trade?
6) Which of the following statements is true?
a.The proper scope of antitrust laws is well defined and definite.
b.Antitrust laws focus on granting certain firms the option to form a cartel.
c.Policymakers have the difficult task of determining whether some firms’ decisions
have legitimate purposes even though they appear anti-competitive.
d.There is always a need for policymakers to try to limit a firm’s pricing power,
regardless of whether the firm’s market is competitive, a monopoly, or an oligopoly.
7) Table 16-3
The following table shows the output produced by each of the top eight firms in four
industries as well as the total industry output for those industries.
What is the concentration ratio for Industry D?
a.approximately 48%
b.approximately 54%
c.approximately 60%
d.approximately 66%
8) Your younger sister needs $50 to buy a new bike. She has opened a lemonade stand
to make the money she needs.
Your mother is paying for all of the ingredients. She currently is charging 25 cents per
cup, but she wants to adjust her price to earn the $50 faster. If you know that the
demand for lemonade is elastic, what is your advice to her?
a.Leave the price at 25 cents and be patient.
b.Raise the price to increase total revenue.
c.Lower the price to increase total revenue.
d.There isn’t enough information given to answer this question.
9) Figure 19-7
Refer to Figure 19-7. The figure shows labor demand and labor supply in a
non-unionized labor market. If the current labor demand is D1 and the current labor
supply is S1, when a minimum wage of $18 per hour is imposed in this market, how
many unemployed workers result?
10) Increases in international trade and technological change have been offered as
explanations for the
a.increase in demand for both skilled and unskilled workers in the United States.
b.increase in demand for skilled workers and decrease in demand for unskilled workers
in the United States.
c.decrease in demand for skilled workers and increase in demand for skilled workers in
the United States.
d.decrease in demand for both skilled and unskilled workers.
11) One characteristic of an oligopoly market structure is:
a.firms in the industry are typically characterized by very diverse product lines.
b.firms in the industry have some degree of market power.
c.products typically sell at a price equal to their marginal cost of production.
d.the actions of one seller have no impact on the profitability of other sellers.
12) Figure 8-7
The vertical distance between points A and B represents a tax in the market.
Which of the following statements is correct?
a.Total surplus before the tax is imposed is $180.
b.After the tax is imposed, consumer surplus is 25 percent of its pre-tax value.
c.After the tax is imposed, producer surplus is 36 percent of its pre-tax value.
d.All of the above are correct.