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Figure 13.4
Refer to Figure 13.4. This firm's marginal revenue will be negative at
A) $6.
B) $14.
C) all prices.
D) prices between $8 and $12.
Quantity demanded will equal quantity supplied if a ________ is set ________ the
equilibrium price.
A) price ceiling; above
B) price ceiling; below
C) price floor; above
D) price ceiling, at or below
If the marginal tax rate exceeds the average tax rate, the tax would be
A) proportional.
B) regressive.
C) progressive.
D) uniform.
Figure 4.3
Refer to Figure 4.3. If the government will not allow the retailers to charge more than
$0.40 for a pencil, which of the following will happen?
A) Demand must eventually decrease so that the market will come into equilibrium at a
price of $0.40.
B) Supply must eventually increase so that the market will come into equilibrium at a
price of $0.40.
C) A nonprice rationing system such as queuing must be used to ration the available
supply of pencils.
D) The market will be in equilibrium at a price of $0.40.
Figure 3.15
Refer to Figure 3.15. A decrease in supply is represented by the movement from
A) S2 to S3.
B) S2 to S1.
C) Point B to Point A along supply curve S2.
D) Point B to Point C along supply curve S2.
Figure 6.8
Refer to Figure 6.8. The marginal utility of the second movie rental is
A)0
B)10
C)25
D)40
A(n) ________ is most easily shifted.
A) income tax
B) tax on gasoline
C) property tax
D) tax on pineapples
Cashews are measured in bushels and tea is measured in pounds (lbs.)
Table 20.2
Refer to Table 20.2. The most that Vietnam will be willing to pay for a bushel of
cashews is
A) 5 lbs. of tea.
B) 25 lbs. of tea.
C) 5 lbs. of tea.
D) 10 lbs. of tea.
Figure 5.3
Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger is
increased from $8 to $10, the price elasticity of demand equals ________ and demand
is ________.
A) 5; elastic
B) -0.5; inelastic
C) -4.5; elastic
D) -9.0; inelastic
"Goodwill" is an example of
A) physical capital.
B) intangible capital.
C) financial capital.
D) a public service industry.
For perfectly price inelastic supply,
A) price is solely determined by supply.
B) price is solely determined by demand.
C) only a government can set the price.
D) either supply or demand may set the price.
In 2005, the number of Internet users was ________ per 1,000 people in low-income
countries.
A) 44
B) 50
C) 25
D) 0
Monopolistically competitive firms use a(n) ________ strategy to achieve market
power.
A) product differentiation
B) dominant
C) maximin
D) opportunistic behavior
Figure 4.4
Refer to Figure 4.4. Assume that initially there is free trade. If the United States then
imposes a $25 tax per barrel of imported oil, the tax revenue generated will equal
A) $25 million per day.
B) $50 million per day.
C) $100 million per day.
D) $125 million per day.
If business leaders expect the new Congress to lower the corporate profits tax, most
likely this will cause business firms, ceteris paribus, to
A) plan to decrease investment in the future to compensate for the lower tax rate.
B) decrease investment because they would expect lower benefits from investment.
C) not change their investment plans because lower corporate profit taxes will not
change the demand for their product.
D) increase investment because the lower corporate profits tax will increase the return
on any investment.
During 2012, Tony's assets equal $300,000 and his net worth is $50,000. Tony's
liabilities are
A) $50,000.
B) $150,000.
C) $200,000.
D) $250,000.
The cross-price elasticity of demand between good X and good Y is -2.4. Given this
information, which of the following statements is true?
A) The demand for goods X and Y is elastic.
B) Goods X and Y are substitutes.
C) Goods X and Y are complements.
D) The demand for goods X and Y is income elastic.
Which of the following is a major source of inefficiency?
A) market power
B) perfect competition
C) price taking
D) all of the above
You accidentally run into your next door neighbor's fence and destroy it. Your neighbor
sues you and you are required to pay $1,000 to repair the fence. This is an example of
A) the Coase theorem.
B) a liability rule.
C) an injunction.
D) the free-rider problem.
Jane has $500 a week to spend on clothing and food. The price of clothing is $25 and
the price of food is $10. Jane spends her entire income when she purchases ________
units of clothing and ________ units of food.
A) 10; 10
B) 25; 5
C) 12; 20
D) 16; 8
A "brain drain" is
A) the tendency of workers in developing countries to reject new technologies.
B) the tendency of talented people in developing countries to get education in
developed countries and to stay there after graduation.
C) the impact of poverty on the productivity of workers in developing countries.
D) the impact of malnutrition on education and productivity in developing countries.
The firm should continue investing
A) even if the MRPK is equal to the price of capital.
B) only as long as the MRPK is less than the price of capital.
C) up to the point where the MRPK equals the price of capital.
D) only as long as the price of capital is greater than the interest rate.
A household will only buy a good as long as the utility from the good's consumption is
________ its market price.
A) less than
B) less than or equal to
C) greater than
D) greater than or equal to
The law of diminishing marginal returns
A) results in average variable cost (AVC), average total cost (ATC) ,and marginal
cost(MC) curves eventually increasing at an increasing rate.
B) results in MC but not ATC curves eventually increasing at an increasing rate.
C) causes average fixed costs to decline continuously as output increases.
D) causes the difference between average total cost and average variable cost to shrink
as output increases.
The table shows the relationship between income and utility for Celeste.
Table 17.1
Refer to Table 17.1. Suppose Celeste has a 1/3 chance of becoming disabled in any
given year. If she does become disabled, she will earn $0. If Celeste does not become
disabled, she will earn her usual salary of $120,000. Celeste has the opportunity to
purchase disability insurance which will pay her her full salary in the event she
becomes disabled. Such an insurance policy would be worth ________ to Celeste.
A) $0
B) $40,000 or less
C) more than $40,000 but less than $80,000
D) $80,000 or more
Table 19.1
Relating to the Economics in Practice on page 392: Refer to Table 19.1. At an income
level of $20,000, the average tax rate is
A) 2%.
B) 3%.
C) 12%.
D) 24%.
Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise
from air traffic negatively affects individuals living in Playa Del Rey, however, this cost
is not considered by airlines or air travelers. The airlines feel they have a right to use the
airspace while the individuals living in Playa Del Rey feel they have the right to quiet.
The following diagram depicts the marginal costs and marginal benefits associated with
air travel.
Figure 16.5
Refer to Figure 16.5. Suppose the government assigns property rights to the residents of
Playa Del Rey, then the airlines and the residents engage in negotiations. The resulting
efficient level of air travel is ________.
A) 0 units
B) 100 units
C) 120 units
D) indeterminate from the given information.
Table 10.2
Refer to Table 10.2. Marginal revenue product of the ________ worker is $120.
A) second
B) third
C) fourth
D) fifth
The slope of a vertical line is
A) zero.
B) infinite.
C) continually changing.
D) negative.
Figure 3.7
Refer to Figure 3.7. If pizza and hamburgers are substitutes, an increase in the price of
hamburgers will cause a movement from Point B on demand curve D2 to
A) demand curve D1.
B) demand curve D3.
C) Point A on demand curve D2.
D) Point C on demand curve D2.
The term ________ is used to describe countries that are stagnant and have fallen far
behind the economic advances of the rest of the world.
A) "First World"
B) "Second World"
C) "Third World"
D) "Fourth World"
