1) Economists refer to the inputs that firms use to produce goods and services as
a.derived factors.
b.derived resources.
c.factors of production.
d.instruments of revenue.
2) Table 22-15
Diane, Henry, and Linda are voting for who to promote. They can only promote one
candidate. Their preferences are given in the table below.
Refer to Table 22-15. If elections were held where voters choose either Fred or Beth,
and then choose either the winner or Mary, what would the results be?
a.Fred would win the first and second election.
b.Fred would win the first election and Mary would win the second.
c.Beth would wind the first and second election.
d.Beth would win the first election and Mary would win the second.
3) In a market economy,
a.supply determines demand and demand, in turn, determines prices.
b.demand determines supply and supply, in turn, determines prices.
c.the allocation of scarce resources determines prices and prices, in turn, determine
supply and demand.
d.supply and demand determine prices and prices, in turn, allocate the economy’s scarce
resources.
4) Refer to Figure 9-24. Suppose the government imposes a tariff of $10 per unit. The
deadweight loss caused by the tariff is
a.$25.
b.$50.
c.$75.
d.d. $100.
5) In a long-run equilibrium, both perfectly competitive markets and monopolistically
competitive markets have price equal to average total cost.
a.True
b.False
6) Bill consumes two goods: iced tea and spaghetti. The price of iced tea is $2 per
bottle, and the price of spaghetti is $8 per serving. His income is $1,000 per month. He
spends all of his income each month. He purchases 200 bottles of iced tea. How many
servings of spaghetti does he purchase?
a.125
b.75
c.50
d.10
7) Assume that the government proposes a negative income tax that calculates the taxes
owed as follows: taxes owed equal 30% of income less 12,000. A family that earns an
income of $60,000 will
a.pay $6,000 in taxes.
b.receive an income subsidy of $6,000.
c.receive an income subsidy of $12,000.
d.have an after-tax income of $48,000.
8) Table 7-7
You have two essentially identical extra tickets to the Midwest Regional Sweet 16 game
in the men’s NCAA basketball tournament. The table shows the willingness to pay of
the four potential buyers in the market for a ticket to the game. You hold an auction to
sell the two tickets. Who makes the winning bids, and what do they offer to pay for the
tickets?
a.Michael and Earvin; more than $350 but less than or equal to $400
b.Michael and Earvin; more than $400 but less than or equal to $500
c.Earvin and Larry; more than $300 but less than or equal to $350
d.Larry and Charles; less than $300
9) The analysis of competitive firms sheds light on the decisions that lie behind the
a.demand curve.
b.supply curve.
c.way firms make pricing decisions in the not-for-profit sector of the economy.
d.way financial markets set interest rates.
10) Figure 16-5
Panel a shows a profit-maximizing monopolistically competitive firm that is
a.earning zero economic profit.
b.likely to exit the market in the long run.
c.producing its efficient scale of output.
d.not maximizing its profit.
11) Scenario 13-6
Ziva is an organic lettuce farmer, but she also spends part of her day as a professional
organizing consultant. As a consultant, Ziva helps people organize their houses. Due to
the popularity of her home-organization services, Farmer Ziva has more clients
requesting her services than she has time to help if she maintains her farming business.
Farmer Ziva charges $25 an hour for her home-organization services. One spring day,
Ziva spends 10 hours in her fields planting $130 worth of seeds on her farm. She
expects that the seeds she planted will yield $300 worth of lettuce.
Ziva’s accounting profit from farming equals
a. $-80.
b. $130.
c. $170.
d. $260.