1) One theory of advertising suggests that
a.advertising is more effective for industrial products than consumer products.
b.the content of advertising may be irrelevant to product success in the market.
c.regulations limiting advertising benefit consumers, but not producers.
d.television advertising is more effective in reducing competition than ads on websites.
2) Using a toll to reduce traffic when congestion is greatest is an example of a
a.regulation solution.
b.command-and-control policy.
c.corrective tax.
d.Coase theorem solution.
3) The substitution effect from an increase in wages is evident in a
a.decrease in labor demand.
b.desire to consume less leisure.
c.desire to consume more leisure.
d.backward-bending labor supply curve.
4) Rent, interest, and profit are all forms of income paid to the owners of
a.aggregate stock.
b.aggregate demand.
c.firms and not-for-profit organizations.
d.land and capital.
5) Figure 20-5
Refer to Figure 20-5. If the government imposes a minimum wage above Wo, it is
likely to
a.increase employment to a level above Qo.
b.reduce employment to a level below Qo.
c.provide more income to the working poor than they collectively received before the
minimum wage was set.
d.have no effect on employment.
6) An increase in the price of blueberries would lead to a(n)
a.increased supply of blueberries.
b.a movement up and to the right along the supply curve for blueberries.
c.a movement down and to the left along the supply curve for blueberries.
d.Both a and b are correct.
7) A benevolent social planner would prefer that the output of good x be increased from
its current level if, at the current level of output of good x,
a.social value = private value = private cost < social cost.
b.social cost > private value = social value > private cost.
c.social cost = private cost = private value < social value.
d.social value = private cost = social cost > private value.
8) If revenue from a cigarette tax is used to pay for healthcare for people with lung
cancer, the cigarette tax may be justified on the basis of
a.the benefits principle.
b.the ability-to-pay principle.
c.vertical equity.
d.horizontal equity.
9) A consumer’s willingness to pay directly measures
a.the extent to which advertising and other external forces have influenced the
consumer’s preferences.
b.the cost of a good to the buyer.
c.how much a buyer values a good.
d.consumer surplus.
10) Scenario 13-11
Walter builds birdhouses. He spends $5 on the materials for each birdhouse. He can
build one in 30 minutes. He is semi-retired but earns $8 per hour at the local hardware
store. He can sell a birdhouse for $20 each.
An economist would calculate the total cost for one birdhouse to be a. $5.
b.$8.
c.$9.
d.$13.
11) A firm in a competitive market has the following cost structure:
If the market price is $4, this firm will
a.produce 2 units in the short run and exit in the long run.
b.produce 3 units in the short run and exit in the long run.
c.produce 4 units in the short run and exit in the long run.
d.shut down in the short run and exit in the long run.
12) The accountants hired by the Brookside Racquet Club have determined total fixed
cost to be $75,000, total variable cost to be $130,000, and total revenue to be $145,000.
Because of this information, in the short run, the Brookside Racquet Club should
a.shut down.
b.exit the industry.
c.stay open because shutting down would be more expensive.
d.stay open because the firm is making an economic profit.
13) Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
Harry is a single person whose taxable income is $35,000 a year. What is his marginal
tax rate in 2013?
a.10%
b.15%
c.27%
d.30%
14) Figure 16-10
The figure is drawn for a monopolistically-competitive firm.
When the firm is maximizing its profit,
a. TR = $9,000 and TC =$16,000.
b. TR = $14,000 and TC =$16,000.
c. TR = $16,000 and TC =$16,000.
d. MC exceeds MR by $66.66 on the last unit of output produced.
15) Suppose that the labor market for high school chemistry teachers is initially in
equilibrium. Chemistry teachers use laboratory chemicals as an important part of their
jobs. New environmental regulations ban the use of many chemicals, which means that
fewer laboratory chemicals are available for high school chemistry teachers to use in
their jobs. What happens to the equilibrium wage and quantity of high school chemistry
teachers?
a.Both the equilibrium wage and quantity increase.
b.Both the equilibrium wage and quantity decrease.
c.The equilibrium wage increases, and the equilibrium quantity decreases.
d.The equilibrium wage decreases, and the equilibrium quantity increases.