1) Consider a profit-maximizing monopoly pricing under the following conditions. The
profit-maximizing price charged for goods produced is $12.The intersection of the
marginal revenue and marginal cost curves occurs where output is 10 units and
marginal cost is $6. The socially efficient level of production is 12 units. The demand
curve and marginal cost curves are linear. What is the value of the deadweight loss
created by the monopolist?
a.$4
b.$6
c.$12
d.d. $16
2) If the U.S. government determines that the cost of feeding an urban family of four is
$7,500 per year, then the official poverty line for a family of that type is
a.$7,500.
b.$15,000.
c.$22,500.
d.$30,000.
3) The supply curve for portable charcoal grills shifts
a.only when production technology changes.
b.when a determinant of the supply of portable charcoal grills other than the price of
portable charcoal grills changes.
c.when any determinant of the supply of portable charcoal grills changes.
d.only when the number of sellers of portable charcoal grills changes.
4) Economists would argue that the gender wage gap is narrowing because of efficiency
wages.
a.True
b.False
5) Oligopoly and monopolistic competition are examples of a market structure called
imperfect competition.
a.True
b.False
6) Goods that are rival in consumption include both
a.club goods and public goods.
b.public goods and common resources.
c.common resources and private goods.
d.private goods and club goods.
7) If the marginal cost of producing the tenth unit of output is $3, and if the average
total cost of producing the tenth unit of output is $2, then at ten units of output, average
total cost is rising.
a.True
b.False
8) In the short run, a firm operating in a monopolistically competitive market
a.produces an efficient output level.
b.chooses the maximum price to maximize profits.
c.produces where marginal cost is minimized.
d.chooses a price that exceeds marginal revenue.
9) Because there are many sellers in a competitive market, individual firms are unable
to maximize profits.
a.True
b.False
10) When a monopolist increases the quantity that it sells, all else equal, total revenue
increases, which is called the output effect.
a.True
b.False
11) Which of the following does not affect the wages a worker earns?
a.natural ability
b.effort
c.chance
d.All of the above affect the wages a worker earns.
12) Taxes cause deadweight losses because they prevent buyers and sellers from
realizing some of the gains from trade.
a.True
b.False
13) If the between two goods is positive, what is the relationship between the two
goods?
14) Which strategy was the most successful in the prisoners’ dilemma tournament?
15) Consider the following goods:
€¢fire-protection services provided by a fire department
€¢a beautiful mural on the outside wall of a fire station
€¢a firefighter’s helmet
Which of these goods is the best example of a private good? Briefly explain.
16) Which political philosophy argues that the government should choose policies to
maximize the total utility of everyone in society?
17) In order to represent a consumer’s choices on a graph, we draw her budget
constraint as well as her curves.
18) Which country has an absolute advantage in producing radios?