1) Table 15-12
The following table provides information on the price, quantity, and average total cost
for a monopoly.
In order to maximize profits, the firm should produce
a.4 units of output.
b.8 units of output.
c.12 units of output.
d.16 units of output.
2) In 2011, the largest source of receipts for state and local governments was corporate
income taxes.
a.True
b.False
3) Table 17-3
Imagine a small town in a remote area where only two residents, Maria and Miguel,
own dairies that produce milk that is safe to drink. Each week Maria and Miguel work
together to decide how many gallons of milk to produce. They bring milk to town and
sell it at whatever price the market will bear. To keep things simple, suppose that Maria
and Miguel can produce as much milk as they want without cost so that the marginal
cost is zero. The weekly town demand schedule and total revenue schedule for milk is
shown in the table below:
Refer to Table 17-3. Suppose the town enacts new antitrust laws that prohibit Maria
and Miguel from operating as a monopoly. What will be the price of milk once Maria
and Miguel reach a Nash equilibrium?
a.$14
b.$12
c.$10
d. $8
4) Evidence of discrimination is most apparent when one compares wages among broad
groups.
a.True
b.False
5) In building economic models, economists often omit
a.assumptions.
b.theories.
c.details.
d.equations.
6) Because taxes distort incentives, they cause markets to allocate resources
inefficiently.
a.True
b.False
7) In a particular country in 2000, the average worker needed to work 40 hours to
produce 55 units of output. In that same country in 2008, the average worker needed to
work 30 hours to produce 45 units of output. In that country, the productivity of the
average worker
a.decreased by about 6 percent between 2000 and 2008.
b.remained unchanged between 2000 and 2008.
c.increased by about 9 percent between 2000 and 2008.
d.increased by about 18 percent between 2000 and 2008.
8) Table 22-1
Three friends — Linda, Stephanie, and Jamie — are deciding where to go together for
vacation. They all agree that they should go to one of three places: France, Greece, or
Italy. They also agree that they will have two pairwise votes to determine where to go
on vacation, with the majority determining the outcome on each vote. The first, second,
and third choices for each person are as indicated in the table below.
Refer to Table 22-1. If the friends change their minds and decide to choose a vacation
destination using a Borda count, then
a.the friends will go to France.
b.the friends will go to Greece.
c.the friends will go to Italy.
d.A Borda count will not result in a single winner in this case.
9) Since about 1970 in the U.S.,
a.decreases in the wages of unskilled workers, relative to skilled workers, have led to
increased inequality in family incomes.
b.increases in the wages of unskilled workers, relative to skilled workers, have led to
increased equality in family incomes.
c.inequality in family incomes has increased, despite increases in the wages of unskilled
workers relative to skilled workers.
d.inequality in family incomes has decreased, despite increases in the wages of skilled
workers relative to unskilled workers.
10) Refer to Figure 9-20. From the figure it is apparent that
a.Vietnam has a comparative advantage in producing rice, relative to the rest of the
world.
b.foreign countries have a comparative advantage in producing rice, relative to
Vietnam.
c.Vietnam has an absolute advantage in producing rice, relative to the rest of the world.
d.foreign countries have an absolute advantage in producing rice, relative to Vietnam.
11) Figure 16-14
Which of the following best describes the profit-maximizing outcome for the firm
depicted here?
a.This firm is earning a short run profit, but will earn zero profit in the long run.
b.This firm is incurring a short run loss, but will earn zero profit in the long run.
c.This firm is earning zero profit in the short run, but will earn a positive profit in the
long run.
d.This firm is in long run equilibrium and will continue to earn zero profit.
12) Albert Einstein once made the following observation about science:
a.The whole of science is nothing more than the refinement of everyday thinking.
b.The whole of science is nothing more than an interesting intellectual exercise.
c.In order to understand science, one must rely solely on abstraction.
d.In order to understand science, one must transcend everyday thinking.
13) When economic profits are zero in equilibrium, the firm‘s revenue must be
sufficient to cover all opportunity costs.
a.True
b.False
14) Table 17-26
Two prescription drug manufacturers (Firm A and Firm B) are faced with lawsuits from
states to recover the healthcare related expenses associated with side-effects from its
drugs. Each drug manufacturer has evidence that indicates that taking its prescription
drug causes liver failure. State prosecutors do not have access to the same data used by
drug manufacturers and thus will have difficulty recovering full costs without the help
of at least one of the drug manufacturer’s studies. Each firm has been presented with an
opportunity to lower its liability in the suit if it cooperates with attorneys representing
the states.
Refer to Table 17-26. Pursuing its own best interests, Firm B will concede that taking
its drug causes liver failure
a.only if Firm A concedes that taking its drug causes liver failure.
b.only if Firm A does not concede that taking its drug causes liver failure.
c.regardless of whether Firm A concedes that taking its drug causes liver failure.
d.None of the above; in pursuing its own best interests, Firm B will in no case concede
that taking its drug causes liver failure.
15) A good is an inferior good if the consumer buys more of it when
a.his income rises.
b.the price of the good falls.
c.the price of a substitute good rises.
d.his income falls.
16) Minimum wage laws
a.creates a surplus of labor in markets where the equilibrium wage is above the
minimum wage.
b.cannot be valid unless labor unions are sufficiently powerful to force enactment of
those laws in the first place.
c.are likely to have a greater effect on unskilled-labor markets than on skilled-labor
markets.
d.All of the above are correct.
17) A supply schedule is a table that shows the relationship between
a.price and quantity supplied.
b.input costs and quantity supplied.
c.quantity demanded and quantity supplied.
d.profit and quantity supplied.