1) Which of the following is not correct?
a.The slope of a line will be a small positive number for a fairly flat upward-sloping
line.
b.The slope of a line will be a large positive number for a steep upward-sloping line.
c.The slope of a line will be a negative number for a downward-sloping line.
d.The slope of a line will be infinite for a horizontal line.
2) Which group (or groups) would be the most upset by wide variation in the income
distribution?
a.utilitarians
b.utilitarians and liberals
c.libertarians
d.liberals and libertarians
3) The equilibrium rental income paid to landowners at any point in time equals the
a.purchase price of land.
b.value of the marginal product of land.
c.marginal product of land.
d.wage paid to laborers.
4) Assume for Brazil that the opportunity cost of each cashew is 100 peanuts. Which of
these pairs of points could be on Brazil’s production possibilities frontier?
a.(200 cashews, 30,000 peanuts) and (150 cashews, 35,000 peanuts)
b.(200 cashews, 40,000 peanuts) and (150 cashews, 30,000 peanuts)
c.(300 cashews, 60,000 peanut) and (200 cashews, 50,000 peanuts)
d.(300 cashews, 60,000 peanuts) and (200 cashews, 80,000 peanuts)
5) “The government should choose policies to maximize the total utility of society.”
This statement is most closely associated with which political philosophy?
a.liberalism
b.utilitarianism
c.libertarianism
d.welfarism
6) Scenario 22-1
Esteban and Michaela own an apartment building. They hire Nico to manage the
building and deal with tenants’ complaints. They also hire Ted to make any necessary
repairs to the apartments or the common area and they hire Rex to be the door guard at
night.
Refer to Scenario 22-1. Which of the following statements is correct?
a.If Rex falls asleep while he is supposed to be guarding the door, he has created an
adverse selection problem.
b.Esteban and Michaela are the principals and Nico, Ted, and Rex are the agents.
c.Nico is the principal and Ted and Rex are the agents.
d.All of the above are correct.
7) Figure 14-8
Suppose a firm operating in a competitive market has the following cost curves:
Which line segment best reflects the short-run supply curve for this firm?
a.ABCF
b.CD
c.DF
d.BCD
8) Suppose that the market for labor is initially in equilibrium. Suppose that workers’
tastes change so that they choose to retire at age 70 rather than age 67. Then the
equilibrium wage
a.and the equilibrium quantity of labor will rise.
b.and the equilibrium quantity of labor will fall.
c.will rise, and the equilibrium quantity of labor will fall.
d.will fall, and the equilibrium quantity of labor will rise.
9) Total revenue minus only explicit costs is called
a.accounting profit.
b.economic profit.
c.average total cost.
d.implicit profit.
10) In general, which of the following would libertarians argue is more important than
equal outcomes?
a.equal opportunities
b.equal incomes
c.providing a social safety net
d.offering the opportunity to purchase social insurance