1) As the number of concrete workers in the United States falls, the wage paid to the
remaining concrete workers will necessarily fall as well.
a.True
b.False
2) 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 substitution 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.
3) Empirical evidence suggests that advertising usually leads to an increase in the price
for advertised products.
a.True
b.False
4) Riley travels a great deal, and over the past several years he has read dozens of
reviews of hotel chains, all of which rave about the clean rooms and great service at
Comeon Inns. Last month, Riley checked into a room at a Comeon Inn for the first
time, only to find the room filthy and the service lousy. He decided the Comeon Inn
chain is inferior to other hotel chains.
a.Riley was irrational to have believed the reviews that he had read.
b.Riley was rational to have changed his mind about Comeon Inns based on his one
experience.
c.Riley is an example of someone who gives too much weight to a small number of
vivid observations.
d.Riley is an example of someone who is reluctant to change his mind.
5) In 2011, the poverty rate in the United States was
a.5.9 percent.
b.11.1 percent.
c.15.0 percent.
d.22.4 percent.
6)
For prices below $5, demand is price
a.elastic, and raising price will increase total revenue.
b.inelastic, and raising price will increase total revenue.
c.elastic, and lowering price will increase total revenue.
d.inelastic, and lowering price will increase total revenue.
7) When comparing short-run average total cost with long-run average total cost at a
given level of output,
a.short-run average total cost is typically above long-run average total cost.
b.short-run average total cost is typically the same as long-run average total cost.
c.short-run average total cost is typically below long-run average total cost.
d.the relationship between short-run and long-run average total cost follows no clear
pattern.
8) The labor supply curve is fundamentally a representation of the trade-off people face
between which of the following?
a.work and wages
b.work and leisure
c.wages and productivity
d.technology and wages
9)
At a price of $50 per unit, sellers’ total revenue equals
a. $500.
b. $750.
c. $1000.
d. $1250.
10) Which of the following is not an example of an adverse selection problem?
a.A homeowner purchases a refrigerator that the seller knows has a history of leaking.
b.A highly productive worker quits her job after a salary cut knowing that she can make
more at a different job.
c.A major league baseball player performs poorly in his second season after signing a
multi-million dollar contract.
d.A contractor uses low quality materials for construction but charges for higher quality
materials.
11) Table 18-12
The table displays data for a small, competitive, profit-maximizing firm that produces
and sells envelopes. The time frame is one week.
Refer to Table 18-12. Suppose the firm sells each box of envelopes that it produces for
$7. Suppose also that the firm’s fixed costs amount to $400. How many workers should
the firm hire in order to maximize profit, and what is the maximum profit?
a.The firm should hire 2 workers; its maximum profit is $80.
b.The firm should hire 2 workers; its maximum profit is $96.
c.The firm should hire 3 workers; its maximum profit is $96.
d.The firm should hire 3 workers; its maximum profit is $124.
12) Table 10-1
The following table shows the private value, private cost, and external cost for various
quantities of output in a market.
How large would a corrective tax need to be to move this market from the equilibrium
outcome to the socially-optimal outcome?
a.$2
b.$3
c.$9 d. $10
13) During the early 1920s in Germany, prices
a.doubled annually.
b.doubled monthly.
c.tripled monthly.
d.tripled annually.
14) Antitrust laws give the Justice Department the authority to challenge potential
mergers between companies in an effort to safeguard society from monopoly power.
a.True
b.False
15) Holding all other factors constant and using the midpoint method, if a tractor
manufacturer increases production from 80 to 100 units when price increases by 15
percent, then supply is
a.inelastic, since the price elasticity of supply is equal to 0.68.
b.inelastic, since the price elasticity of supply is equal to 1.48.
c.elastic, since the price elasticity of supply is equal to 0.68.
d.elastic, since the price elasticity of supply is equal to 1.48.
16) Education yields positive externalities. For example,
a.colleges and universities have benefited, in recent years, from increases in tuition paid
by students.
b.as a result of earning a college degree, a person becomes a more productive worker
and benefits by earning higher wages.
c.a more educated population tends to result in lower crime rates.
d.All of the above are correct.