1) Which of the following movements
would illustrate the effect in the market for chocolate chip cookies of an improved
high-speed mixer that allows bakers to produce cookies in less time?
a.Point A to Point B
b.Point C to Point B
c.Point C to Point D
d.Point A to Point D
2) Figure 8-7
The vertical distance between points A and B represents a tax in the market.
Which of the following statements is correct?
a.The loss of producer surplus that is associated with some sellers dropping out of the
market as a result of the tax is $60.
b.The loss of consumer surplus for those buyers of the good who continue to buy it after
the tax is imposed is $120.
c.The loss of consumer surplus caused by this tax exceeds the loss of producer surplus
caused by this tax.
d.This tax produces $320 in tax revenue for the government.
3) Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue
information.
What is the average revenue when Sally sells 7 pairs of shoes?
a. $40
b. $90
c. $100
d. $700
4) The supply of aged cheddar cheese is inelastic, and the supply of bread is elastic.
Both goods are considered to be normal goods by a majority of consumers. Suppose
that a large income tax increase decreases the demand for both goods by 10%.
The equilibrium price will
a.increase in both the aged cheddar cheese and bread markets.
b.increase in the aged cheddar cheese market and decrease in the bread market.
c.decrease in the aged cheddar cheese market and increase in the bread market.
d.decrease in both the aged cheddar cheese and bread markets.
5) An increase in the marginal cost of an activity necessarily means that people will no
longer engage in any of that activity.
a.True
b.False
6) Abe owns a dog¾ the dog€s barking annoys Abe€s neighbor, Jenny. Suppose that the
benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400
from the barking. Assuming Abe has the legal right to keep the dog, a possible private
solution to this problem is that
a.Jenny pays Abe $150 to give the dog to his parents who live on an isolated farm.
b.Abe pays Jenny $350 for her inconvenience.
c.Jenny pays Abe $300 to give the dog to his parents who live on an isolated farm.
d.There is no private transaction that would improve this situation.
7) The graph below represents the various combinations of ham and cheese (in pounds)
that the nation of Bonovia could produce in a given month.
If the production possibilities frontier shown is for 240 hours of production, then which
of the following combinations of ham and cheese could Bonovia produce in 240 hours?
a.225 pounds of ham and 140 pounds of cheese
b.280 pounds of ham and 100 pounds of cheese
c.355 pounds of ham and 80 pounds of cheese
d.330 pounds of ham and 60 pounds of cheese
8) Scenario 15-1
Consider a transportation corporation named Reading’s that has just completed the
development of a new light rail system in Minneapolis. Currently, there are plenty of
seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city.
After just a few years of operation, the shareholders of Reading’s experienced
incredibly high rates of return on their investment due to the profitability of the
corporation.
Which of the following statements is most likely to be true?
(i)New entrants to the market know they will have a smaller market share than
Reading’s
currently has.
(ii)Reading’s is a natural monopoly.
(iii)Reading’s is most likely experiencing increasing average total cost.
a.(i) and (ii) only
b.(ii) and (iii) only
c.(i) and (iii) only
d.(i), (ii), and (iii)
9) Figure 16-2. The figure is drawn for a monopolistically competitive firm.
In order to maximize profit, the firm will charge a price of
a. $16.
b.$24.
c.$32.
d.$36.
10) Figure 21-21
Refer to Figure 21-21. Suppose that a consumer is originally at point R. Then the price
of good X decreases. Which of the following represents the income effect of the price
decrease?
a.the movement from point R to point S
b.the movement from point R to point T
c.the movement from point T to point S
d.None of the above is correct.
11) Studies of discrimination in baseball suggest that black players
a.suffered from discriminatory wage differentials several decades ago and those wage
differentials persist today.
b.suffered from discriminatory wage differentials several decades ago but those wage
differentials have been eliminated.
c.did not suffer from discriminatory wage differentials several decades ago but in recent
years wage differentials have become evident.
d.did not suffer from discriminatory wage differentials in the past and they do not suffer
from wage differentials today.
12) Suppose Raymond and Victoria attend a charity benefit and participate in a silent
auction. Each has in mind a maximum amount that he or she will bid for an oil painting
by a locally famous artist. This maximum is called
a.deadweight loss.
b.willingness to pay.
c.consumer surplus.
d.producer surplus.