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Figure 622
Refer to Figure 622. Sellers pay how much of the tax per unit?
a. $0.50.
b. $1.50.
c. $3.00.
d. $5.00.
Which of the following will cause a decrease in producer surplus?
a. the imposition of a nonbinding price ceiling in the market
b. buyers expect the price of a good to be higher next month
c. the price of a substitute increases
d. income increases and buyers consider the good to be inferior
What term refers to the idea that society has limited resources and therefore cannot
produce all the goods and services people wish to have?
a. inefficiency
b. inequality
c. scarcity
d. market failure
Which of the following statements is (are) correct?
a. Relative to some other scientists, economists find it more difficult to conduct
experiments.
b. Theory and observation are important in economics as well as in other sciences.
c. To obtain data, economists often rely upon the natural experiments offered by history.
d. All of the above are correct.
Evidence indicates that seat belt laws have led to
a. fewer pedestrian deaths.
b. fewer automobile accidents.
c. fewer deaths per automobile accident.
d. All of the above are correct.
Table 65
PriceQuantity
DemandedQuantity
Supplied
$01500
$312045
$69090
$960135
$1230180
$150225
Refer to Table 65. Suppose the government imposes a price floor of $3 on this market.
What will be the size of the surplus (or shortage) in this market?
a. 0 units
b. 30 units
c. 45 units
d. 75 units
Which of the following statements is not correct concerning government attempts to
reduce the flow of illegal drugs into the country? Drug interdiction
a. raises prices and total revenue in the drug market.
b. can increase drugrelated crime.
c. shifts the demand curve for drugs to the left.
d. shifts the supply curve of drugs to the left.
Figure 322
Alice and Betty’s Production Possibilities in one 8hour day.
Alice’s Production Possibilities FrontierBetty’s Production Possibilities Frontier
Refer to Figure 322. What are Alice and Betty’s opportunity costs of 1 pizza?
a. Alice’s opportunity cost of 1 pizza is 1/2 of a pitcher of lemonade and Betty’s
opportunity cost of 1 pizza is 2/3 of a pitcher of lemonade.
b. Alice’s opportunity cost of 1 pizza is 1 pitcher of lemonade and Betty’s opportunity
cost of 1 pizza is 3 pitchers of lemonade.
c. Alice’s opportunity cost of 1 pizza is 2 pitchers of lemonade and Betty’s opportunity
cost of 1 pizza is 1.5 pitchers of lemonade.
d. Alice’s opportunity cost of 1 pizza is 400 pitchers of lemonade and Betty’s
opportunity cost of 1 pizza is 450 pitchers of lemonade.
The nation's antitrust laws are enforced by economists at the Department of
a. Labor.
b. Health and Human Services.
c. Justice.
d. Treasury.
Table 715
The following table represents the costs of five possible sellers.
SellerCost ($)
Quentin10
Ruby30
Sandra60
Thomas100
Ursula150
Refer to Table 715. If each producer has one unit available for sale, and if the market
equilibrium price is $80 per unit, how much is the total producer surplus in this market?
a. $90
b. $110
c. $130
d. $140
Suppose scientists provide evidence that people who drink energy drinks are more
likely to have a heart attack than people who do not drink energy drinks. We would
expect to see
a. no change in the demand for energy drinks.
b. a decrease in the demand for energy drinks.
c. an increase in the demand for energy drinks.
d. a decrease in the supply of energy drinks.
Economists speaking like policy advisers make
a. claims about how the world is.
b. descriptive statements.
c. normative statements.
d. More than one of the above is correct.
Which of the following statements about the effects of rent control is correct?
a. The shortrun effect of rent control is a surplus of apartments, and the longrun effect
of rent control is a shortage of apartments.
b. The shortrun effect of rent control is a relatively small shortage of apartments, and
the longrun effect of rent control is a larger shortage of apartments.
c. In the long run, rent control leads to a shortage of apartments and an improvement in
the quality of available apartments.
d. The effects of rent control are very noticeable to the public in the short run because
the primary effects of rent control occur very quickly.
In the early 1920s,
a. Germany experienced a very high rate of inflation.
b. the quantity of German money was declining rapidly.
c. the value of German money remained almost constant.
d. All of the above are correct.
Economic models
a. are people who act out the behavior of firms and households so that economists can
study this behavior.
b. are usually detailed replications of reality.
c. incorporate simplifying assumptions that often contradict reality, but also help
economists better understand reality.
d. are useful to researchers but not to teachers because economic models omit many
details of the realworld economy.
Figure 817
Refer to Figure 817. Suppose the government imposes a $1 tax in each of the four
markets represented by demand curves D1, D2, D3, and D4. The deadweight will be the
smallest in the market represented by
a. D1.
b. D2.
c. D3.
d. D4.
Which of the following observations would be consistent with the imposition of a
binding price floor on a market? After the price floor becomes effective,
a. a smaller quantity of the good is bought and sold.
b. a larger quantity of the good is demanded.
c. a smaller quantity of the good is supplied.
d. the price falls below the equilibrium price.
The minimum wage
a. is an example of a price ceiling.
b. has its greatest impact on middleaged and immigrant workers.
c. does not apply to unpaid internships.
d. does not affect the quantity of labor demanded; it only affects the quantity of labor
supplied.
Suppose the government imposes a 30cent tax on the sellers of soft drinks. Which of the
following is not correct? The tax would
a. shift the supply curve upward by 30 cents.
b. raise the equilibrium price by 30 cents.
c. reduce the equilibrium quantity.
d. discourage market activity.
Which of the following statements about the circularflow diagram is correct?
a. One must imagine that the economy operates without money in order to make sense
of the diagram.
b. The diagram leaves out details that are not essential for understanding the economic
transactions that occur between households and firms.
c. The government cannot be excluded as a decision maker in a circularflow diagram.
d. All of the above are correct.
Several arguments for restricting trade have been advanced. Those arguments do not
include
a. the jobs argument.
b. the protectionasabargainingchip argument.
c. the nodeadweightloss argument.
d. the infantindustry argument.
Which of the following statements is not valid when the market supply curve is
vertical?
a. Market quantity supplied does not change when the price changes.
b. Supply is perfectly inelastic.
c. An increase in market demand will increase the equilibrium quantity.
d. An increase in market demand will increase the equilibrium price.
Assume the market for pork is perfectly competitive. When one pork buyer exits the
market,
a. the price of pork increases.
b. the price of pork decreases.
c. the price of pork does not change.
d. there is no longer a market for pork.
Figure 923
The following diagram shows the domestic demand and domestic supply for a market.
Assume that the world price in this market is $120 per unit.
Refer to Figure 923. With free trade allowed, this country
a. exports 5 units of the good.
b. imports 5 units of the good.
c. exports 13 units of the good.
d. imports 13 units of the good.
DeShawn has spent $600 purchasing and repairing an old fishing boat, which he
expects to sell for $900 once the repairs are complete. DeShawn discovers that, in
addition to the $600 he has already spent, he needs to make an additional repair, which
will cost another $400, in order to make the boat worth $900 to potential buyers. He can
sell the boat as it is now for $400. What should he do?
a. He should sell the boat as it is now for $400.
b. He should keep the boat since it would not be rational to spend $1,000 on repairs and
then sell the boat for $900.
c. He should complete the repairs and sell the boat for $900.
d. It does not matter which action he takes; the outcome is the same either way.
Figure 713
Refer to Figure 713. If the equilibrium price rises from $60 to $120, what is the
additional producer surplus to initial producers in the market?
a. $1,200
b. $2,400
c. $3,600
d. $4,800
Figure 29
Panel (a) Panel (b)
Refer to Figure 29, Panel (a). The opportunity cost of moving from point K to point L
is
a. 0 cups of coffee.
b. 1 donut.
c. 2 donuts.
d. 4 cups of coffee.
Figure 87
The vertical distance between points A and B represents a tax in the market.
Refer to Figure 87. Before the tax is imposed, the equilibrium price is
a. $32, and the equilibrium quantity is 15.
b. $24, and the equilibrium quantity is 15.
c. $24, and the equilibrium quantity is 25.
d. $16, and the equilibrium quantity is 15.
Figure 925
The following diagram shows the domestic demand and supply in a market. Assume
that the world price in this market is $10 per unit.
Refer to Figure 925. Suppose the government imposes a tariff of $5 per unit. The
amount of revenue collected by the government from the tariff is
a. $50.
b. $100.
c. $150.
d. $200.
If a tax is imposed on a market with inelastic demand and elastic supply, then
a. buyers will bear most of the burden of the tax.
b. sellers will bear most of the burden of the tax.
c. the burden of the tax will be shared equally between buyers and sellers.
d. it is impossible to determine how the burden of the tax will be shared.
Table 716
PriceQuantity
DemandedQuantity
Supplied
$12.00036
$10.00330
$ 8.00624
$ 6.00918
$ 4.001212
$ 2.00156
$ 0.00180
Refer to Table 716. Both the demand curve and the supply curve are straight lines. If
the price is $4 but only 6 units are bought and sold, total surplus will be
a. $42.
b. $48.
c. $54.
d. $60.
In the United States, before OPEC increased the price of crude oil in 1973, there was
a. no price ceiling on gasoline.
b. a nonbinding price ceiling on gasoline.
c. a binding price ceiling on gasoline.
d. a nonbinding price floor on gasoline.
Market failure can be caused by
a. low consumer demand.
b. equilibrium prices.
c. externalities and market power.
d. high prices and foreign competition.
A higher price for batteries would result in a(n)
a. increase in the demand for flashlights.
b. decrease in the demand for flashlights.
c. increase in the demand for batteries.
d. decrease in the demand for batteries.
