1) The less freedom young mothers have to work outside the home, the
a.more elastic the supply of labor will be.
b.less elastic the supply of labor will be.
c.more horizontal the labor supply curve will be.
d.larger is the decrease in employment that will result from a tax on labor.
2) Most economists view the United States’ experience with trade as
a.one from which no firm conclusions about the virtues of free trade can be reached,
due to the relatively short history of international trade in the U.S.
b.one from which no firm conclusions about the virtues of free trade can be reached,
due to the lack of trade within the U.S. throughout most of the early history of the U.S.
c.an ongoing experiment that confirms the virtues of free trade.
d.an ongoing experiment that calls into serious question the notion that free trade
enhances the economic well- being of a nation.
3) Consider the following pairs of goods. For which of the two goods would you expect
the demand to be more price elastic? Why?
a.water or diamonds
b.insulin or nasal decongestant spray
c.food in general or breakfast cereal
d.gasoline over the course of a week or gasoline over the course of a year
e.personal computers or IBM personal computers
4) The supply curve for whiskey is the typical upward-sloping straight line, and the
demand curve for whiskey is the typical downward-sloping straight line. When whiskey
is taxed, the area on the relevant supply-and-demand graph that represents
a.government’s tax revenue is a rectangle.
b.the deadweight loss of the tax is a triangle.
c.the loss of consumer surplus caused by the tax is neither a rectangle nor a triangle.
d.All of the above are correct.
5) Table 15-20
A monopolist faces the following demand curve:
If a monopolist faces a constant marginal cost of $2, how much output should the firm
produce in order to maximize profit?
a.2 units
b.3 units
c.4 units
d.5 units
6) Markets are often inefficient when negative externalities are present because
a.private costs exceed social costs at the private market solution.
b.externalities cannot be corrected without government regulation.
c.social costs exceed private costs at the private market solution.
d.production externalities lead to consumption externalities.
7) When the marginal tax rate exceeds the average tax rate, the tax is
a.proportional.
b.regressive.
c.non-egalitarian.
d.progressive.
8) Which of the following is likely to have the most price elastic demand?
a.scissors
b.fruit
c.music downloads
d.toothpaste
9) Which of the following will not occur when government policies are enacted to make
the distribution of income more equitable?
a.People will alter their behaviors.
b.Incentives will be distorted.
c.Total utility will likely remain constant.
d.The allocation of resources will be less efficient .
10) Alice and Betty’s Production Possibilities in one 8hour day.
Alice’s Production Possibilities FrontierBetty’s Production Possibilities Frontier