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1) Table 12-10
If Willie has $170,000 in taxable income, his tax liability will be
a. $16,781.
b. $41,309.
c. $41,827.
d. $47,600.
2) Studies that compare the wages of more risky and less risky occupations estimate the
value of a human life to be about
a.$1 million.
b.$5 million.
c.$10 million.
d.$20 million.
3) Economic growth causes a production possibilities frontier to shift outward.
a.True
b.False
4) Total surplus is
a.the total cost to sellers of providing the good minus the total value of the good to
buyers.
b.the total value of the good to buyers minus the cost to sellers of providing the good.
c.the difference between consumer surplus and sellers' cost.
d.always smaller than producer surplus.
5) A patent is used to
a.disseminate information.
b.offset the negative effects of taxes.
c.protect inventors for as long as they live.
d.assign property rights.
6) Scenario 21-3
Scott knows that he will ultimately face retirement. Assume that Scott will experience
two periods in his life, one in which he works and earns income, and one in which he is
retired and earns no income. Scott can earn $250,000 during his working period and
nothing in his retirement period. He must both save and consume in his work period
with an interest rate of 10 percent on savings.
Refer to Scenario 21-3. If the interest rate on savings increases, it is possible that
a.Scott will decrease his savings in the work period.
b.Scott will increase his savings in the work period.
c.Scott will not change his consumption in the work period.
d.All of the above are possible.
7) Figure 8-6
The vertical distance between points A and B represents a tax in the market.
Without a tax, consumer surplus in this market is
a. $1,500.
b. $2,400.
c. $3,000.
d. $3,600.
8) When a good is taxed,
a.both buyers and sellers of the good are made worse off.
b.only buyers are made worse off, because they ultimately bear the burden of the tax.
c.only sellers are made worse off, because they ultimately bear the burden of the tax.
d.neither buyers nor sellers are made worse off, since tax revenue is used to provide
goods and services that would otherwise not be provided in a market economy.
9) When a consumer experiences a price decrease for an inferior good, if the income
effect is
a.less than the substitution effect, the demand curve will be downward sloping.
b.greater than the substitution effect, the demand curve will be upward sloping.
c.less than the substitution effect, the demand curve will be upward sloping.
d.both a) and b) are correct.
10) "An extra dollar of income gives more additional satisfaction to a poor person than
to a rich person." This is an important assumption of which political philosophy?
a.utilitarianism
b.liberalism
c.libertarianism
d.republicanism
11) If the Korean steel industry subsidizes the steel that it sells to the United States, the
a.United States should protect its domestic steel industry from this unfair competition.
b.harm done to U.S. steel producers from this unfair competition exceeds the gain to
U.S. consumers of cheap Korean steel.
c.harm done to U.S. steel producers is less than the benefit that accrues to U.S.
consumers of steel.
d.United States should subsidize the products it sells to Korea.
12) Economics deals primarily with the concept of
a.scarcity.
b.money.
c.poverty.
d.banking.
13) For which of the following goods is the most inelastic?
a.pizza
b.large pizza
c.large pepperoni pizza
d.Domino's large pepperoni pizza
14) When we move along a given demand curve,
a.only price is held constant.
b.income and price are held constant.
c.all nonprice determinants of demand are held constant.
d.all determinants of quantity demanded are held constant.
15) Diminishing marginal product exists when the total cost curve becomes horizontal
as outputs increases.
a.True
b.False
16) Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a
market. Assume that the world price in this market is $1 per unit.
Suppose the country imposes a $1 per unit tariff. If the country allows trade with a
tariff, how much is tariff revenue?
17) Temporary Assistance for Needy Families (TANF) and Supplemental Security
Income (SSI) are examples of .
18) Table 7-20
Refer to Table 7-20. How much is total surplus at the equilibrium price in this market?
19) If the supply of tennis balls, a complement to tennis racquets, decreases, what will
happen to the equilibrium price of tennis balls and to the equilibrium price of tennis
racquets?
20) Scenario 16-8
Burger Bonanza, a major national burger chain, recently decided to spend $4 million on
an advertising campaign featuring a world famous actor to promote its new Bomber
Burger.
What can consumers conclude from Burger Bonanza's willingness to spend $4 million
on an advertising campaign?
21) Figure 9-29
The following diagram shows the domestic demand and domestic supply curves in a
market. Assume that the world price in this market is $1 per unit.
If the country allows free trade, will the country import or export this good, and how
many units will be imported/exported?
