A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers
fatalities per accident from 0.11 to 0.08 while raising the number of accidents per
period from 100,000 to any more than
a. 108,000.
b. 111,111.
c. 137,500.
d. 110,000.
Vernon spends the following percentages of his budget on the goods A, B, C, and D: 23
percent on good A, 11 percent on good B, 1 percent on good C, and 3 percent on good
D. For which good is price elasticity of demand the highest, ceteris paribus?
a. good A
b. good B
c. good C
d. good D
Which of the following is an example of a service?
a. medical care
b. dental care
c. a psychology lecture
d. a television set
e. a, b and c
If the government places a $2 tax on each unit of good X that is produced by Firm A, it
follows that the tax will not affect __________ cost, but will affect __________ cost.
a. variable; fixed
b. fixed; variable
c. average fixed; average variable
d. marginal; fixed
e. b and c
Firm X competes for the monopoly right to produce and sell widgets by expending
resources to lobby politicians. The government decides to award the monopoly right to
the firm. Which of the following is false?
a. The resources used to affect the transfer are expended in a socially wasteful manner.
b. The resources used to affect the transfer are better used from society’s point of view
in the production of goods and services.
c. The resources used to affect the transfer are not used in a wasteful manner from the
firm’s point of view.
d. The rent the firm consequently earns is real economic rent.
e. None of the above; all of the above are true.
In his article Straight Talk About Economic Literacy, economist
_______________________ said, “Citizens can vote even if they have no idea what
they are doing.If enough voters fit that description, democratic governments are bound
to make foolish decisions.”
a. Milton Friedman
b. James Buchanan
c. Bryan Caplan
d. John Maynard Keynes
Exhibit 34-9
For country Y, the opportunity cost of producing one unit of good A is __________
unit(s) of good B.
a. 1.5
b. 2
c. 1/2
d. 2/3
e. 10
A tariff is a tax on
a. savings.
b. capital goods.
c. imports.
d. land.
For a good where network externalities are present, having an early lead in the race for
customers may be the only lead necessary to ultimately win the race for dominance in
the good€s market.
a. True
b. False
If the law of increasing opportunity costs is operable, and currently the opportunity cost
of producing the 101st unit of good X is 5Y, then the opportunity cost of producing the
201st unit of good is X is most likely to be
a. less than 5Y.
b. more than 1/5Y but less than 5Y.
c. more than 5Y
d. less than 1/5Y but more than zero.
Exhibit 20-6
Suppose the three equilibrium quantities are 700, 800, and 900, and the two other
equilibrium prices are $2.20 and $2.75. What is the change in total revenue when a
per-unit tax shifts S1 to S2, given that D2 is the relevant demand curve?
a. $260
b. -$260
c. $900
d. $700
e. -$200
Which of the following will cause a firm’s factor demand curve to shift to the left?
a. a decrease in factor costs
b. an increase in factor costs
c. a decrease in marginal physical product
d. an increase in marginal physical product
House A has an ocean view and House B does not.In all other respects, the two houses
are the same.The market price of house A is $2,800,000; the market price of house B is
$2,600,000.The ocean view is therefore valued at
a. $200,000.
b. $1,950,000.
c. -$700,000.
d. $2,700,000.
Based on the data provided in this table,what type of relationship exists between
variables X and Y?
a. inverse
b. direct
c. independent
d. There is no relationship between variables X and Y.
Legal barriers to entry include patents, government licenses and economies of scale.
a. True
b. False
Explain how the purchase of futures contracts can help to insure a farmer against
adverse swings in the prices of the crops that he grows.
What does price elasticity of supply measure?Explain the relationship that exists
between price elasticity of supply and the length of time sellers have to adjust to the
price change.
Explain how scarcity can exist in a relatively rich country such as the United
States.Give examples to help support your answer.
Describe the diamond-water paradox and its solution.
Define the term scarcity and discuss two of its consequences.