1) Which of the following is a characteristic of a monopoly?
a.low fixed costs as a portion of total costs
b.free entry and exit
c.barriers to entry
d.declining marginal cost
2) Table 17-14
This table shows a game played between two players, A and B. The payoffs in the table
are shown as (Payoff to A, Payoff to B).
Refer to Table 17-14. Which outcome is the Nash equilibrium in this game?
a.Up-Right
b.Up-Left
c.Down-Right
d.Down-Left
3) Suppose that someone makes the argument that because empty alcohol containers are
found at many accidents, the containers cause accidents. This would be an example of
a.sound logic.
b.reverse causality.
c.omitted variables.
d.bias.
4) Table 14-9
Suppose that a firm in a competitive market faces the following revenues and costs:
If the firm‘s marginal cost is $11, it should
a.increase production to maximize profit.
b.increase the price of the product to maximize profit.
c.advertise to attract additional buyers to maximize profit.
d.reduce production to increase profit.
5) When new firms enter a perfectly competitive market,
a.economic profits of existing firms will continue to be zero.
b.entering firms will earn zero economic profit upon entry into the market.
c.existing firms may see their costs rise if more firms compete for limited resources.
d.prices will rise as existing firms raise prices to keep new firms out of the market.
6) If the is equal to 0, then demand is unit elastic.
a.True
b.False
7) Figure 9-4. The domestic country is Nicaragua.
Consumer surplus in Nicaragua without trade is
a. $375.
b. $2,000.
c. $2,250.
d. $8,700.
8) If orange juice and apple juice are substitutes, an increase in the price of orange juice
will shift the demand curve for apple juice to the left.
a.True
b.False
9) A vacation home in Malibu is
a.not rival in consumption and excludable.
b.rival in consumption and excludable.
c.not rival in consumption and not excludable.
d.rival in consumption and not excludable.
10) Poor families are eligible for financial assistance, without having to demonstrate
any additional “need,”
a.under the current welfare system and under a negative income tax.
b.under the current welfare system but not under a negative income tax.
c.under a negative income tax but not under the current welfare system.
d.under neither the current welfare system nor under a negative income tax.