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1) Goods that do not have close substitutes have downward-sloping demand curves.
a.True
b.False
2) When a certain monopoly sets its price at $8 it sells 64 units. When the monopoly
sets its price at $10 it sells 62 units. The marginal revenue for the firm over this range is
a.$22.
b.$27.
c.$54.
d.$108.
3) Scenario 18-4
In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees
across the Adriatic Sea to Italy where they sought relief from the fighting.
Refer to Scenario 18-4. The Albanian civil war probably affected Italian labor markets
by causing
a.total employment in Italy to decrease.
b.wages in Italy to increase.
c.the marginal product of labor in Italy to decrease.
d.All of the above are correct.
4) When quantity demanded has increased at every price, it might be because
a.the number of buyers in the market has decreased.
b.income has increased, and the good is an inferior good.
c.the costs incurred by sellers producing the good have decreased.
d.the price of a complementary good has decreased.
5) Jake can complete an oil change in 45 minutes and he can write a poem in 90
minutes. Ming-la can complete an oil change in 30 minutes and she can write a poem in
90 minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's
opportunity cost of writing a poem.
a.True
b.False
6) Figure 8-21
Suppose the government places a $3 per-unit tax on this good. The smallest deadweight
loss from the tax would occur in a market where demand is represented by
a.Demand 1, and supply is represented by Supply 1.
b.Demand 1, and supply is represented by Supply 2.
c.Demand 2, and supply is represented by Supply 1.
d.Demand 2, and supply is represented by Supply 2.
7) The marginal rate of substitution between goods A and B measures the price of A
relative to the price of B.
a.True
b.False
8) Suppose the government increases the size of a tax by 20 percent. The deadweight
loss from that tax
a.increases by 20 percent.
b.increases by more than 20 percent.
c.increases but by less than 20 percent.
d.decreases by 20 percent.
9) Scenario 13-8
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar,
lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02
for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her
labor. She can sell 300 glasses for $0.50 each.
What are Wanda's implicit costs per glass?
a. $0.18
b. $0.10
c. $0.08
d. $0.02
10) The process of buying a good in one market at a low price and selling the good in
another market for a higher price in order to profit from the price difference is known as
a.sabotage.
b.conspiracy.
c.arbitrage.
d.collusion.
11) An increase in the price of blue pens will increase both the equilibrium price and
quantity in the market for black pens.
a.True
b.False
12) Table 18-10
Refer to Table 18-10. This table describes the number of baseballs a manufacturer can
produce per day with different quantities of labor. Each baseball sells for $5 in a
competitive market. What is the marginal revenue product of the third worker?
a.120 baseballs.
b.$300
c.$400
d.$600
13) Import quotas and tariffs both cause the quantity of imports to fall.
a.True
b.False
14) Economic models are built with
a.recommendations concerning public policies.
b.facts about the legal system.
c.assumptions.
d.statistical forecasts.
15) One key difference between an oligopoly market and a competitive market is that
oligopolistic firms
a.are price takers while competitive firms are not.
b.can affect the profit of other firms in the market by the choices they make while firms
in competitive markets do not affect each other by the choices they make.
c.sell completely unrelated products while competitive firms do not.
d.sell their product at a price equal to marginal cost while competitive firms do not.
16) When a highway is congested, giving rise to negative externalities, it is appropriate
to view the highway as a common resource.
a.True
b.False
17) The difference between slope and elasticity is that slope
a.is a ratio of two changes, and elasticity is a ratio of two percentage changes.
b.is a ratio of two percentage changes, and elasticity is a ratio of two changes.
c.measures changes in quantity demanded more accurately than elasticity.
d.None of the above is correct; there is no difference between slope and elasticity.
18) In 2011, federal government receipts were approximately
a.$4,000 per person and federal government spending was approximately $8,000 per
person, resulting in a budget deficit.
b.$8,000 per person and federal government spending was approximately $12,000 per
person, resulting in a budget deficit.
c.$12,000 per person and federal government spending was approximately $8,000 per
person, resulting in a budget surplus.
d.$8,000 per person and federal government spending was approximately $4,000 per
person, resulting in a budget surplus.
