1) Scenario 13-10
Jessica makes photo frames. She spends $5 on the materials for each photo frame. She
can create one photo frame in an hour. She earns $10 per hour at a part-time job at the
local coffee shop. She can sell a photo frame for $30 each.
An accountant would calculate the total cost for one photo frame to be
a. $5.
b.$10.
c.$15.
d.$25.
2) Why is a construction worker never likely to earn as much as a famous athlete?
a.Compensating differentials create a higher wage for professional athletes.
b.Technological progress has advanced less in the construction industry then in sports
training.
c.Productivity levels are low in the construction industry due to the high number of
people willing to be construction workers.
d.A construction worker can provide his services to only a limited number of customers.
3) Figure 9-12
Consumer surplus before trade is
a. $14,400.
b. $16,800.
c. $21,600.
d. $24,800.
4)
Figure 8-4
The vertical distance between points A and B represents a tax in the market.
The price that sellers
effectively receive after the tax is imposed is
a. $12.
b.between $8 and $12.
c.between $5 and $8.
d. $5.
5) Congressman Smith cites the “jobs argument” when he argues in favor of restrictions
on trade¾ he argues that everything can be produced at lower cost in other countries.
The likely flaw in Congressman Smith’s reasoning is that he ignores the fact that
a.there is no evidence that any worker ever lost his or her job because of free trade.
b.unemployment of labor is not a serious problem relative to other economic problems.
c.the gains from trade are based on comparative advantage.
d.the gains from trade are based on absolute advantage.
6) Which of the following is not a common resource?
a.elephants in the wild
b.a narrow trail in a park
c.a neighborhood garden
d.Neither a nor b is a common resource.
7) Bintu’s Production Possibilities FrontierJuba’s Production Possibilities Frontier
The opportunity cost of 1 bowl for Bintu is
a.1/4 cup.
b.1/2 cup.
c.2 cups.
d.4 cups.
8) In the long run, when price is greater than average total cost, some firms in a
competitive market will choose to enter the market.
a.True
b.False
9) Kate is a florist. Kate can arrange 20 bouquets per day. She is considering hiring her
husband William to work for her. William can arrange 18 bouquets per day. What would
be the total daily output of Kate’s firm if she hired her husband?
a.18 bouquets
b.19 bouquets
c.20 bouquets
d.38 bouquets
10) The term excess capacity refers to the fact that a firm operates on the
upward-sloping portion of its average-total- cost curve.
a.True
b.False
11) Two suspected drug dealers are stopped by the highway patrol for speeding. The
officer searches the car and finds a small bag of marijuana and arrests the two. During
the interrogation, each is separately offered the following: “If you confess to dealing
drugs and testify against your partner, you will be given immunity and released while
your partner will get 10 years in prison. If you both confess, you will each get 5 years.”
If neither confesses, there is no evidence of drug dealing, and the most they could get is
one year each for possession of marijuana. If each suspected drug dealer follows a
dominant strategy, what should he/she do?
a.Confess regardless of the partner’s decision
b.Confess only if the partner confesses
c.Don’t confess regardless of the partner’s decision
d.Don’t confess only if the partner doesn’t confess