1) Table 17-4
The table shows the town of Mauston’s demand schedule for gasoline. For simplicity,
assume the town’s gasoline seller(s) incur no costs in selling gasoline.
Refer to Table 17-4. Suppose there are exactly two sellers of gasoline in Mauston:
Shellon and Standstop. If Shellon sells 150 gallons and Standstop sells 200 gallons,
then
a.Shellon’s profit is $450 and Standstop’s profit is $600.
b.Shellon’s profit is $1,050 and Standstop’s profit is $1,200.
c.the two firms are colluding and earn monopoly profits.
d.consumers in Mauston are worse off than they would be if the two firms colluded.
2)
At a price of $10 per unit, sellers’ total revenue equals
a. $100.
b. $450
c. $500.
d. $1250.
3) An example of an explicit cost for the owner of a tattoo parlor would be the wages
that she could earn if she worked as a graphic artist for an advertising agency.
a.True
b.False
4) When we move along a given supply curve,
a.only price is held constant.
b.technology and price are held constant.
c.all nonprice determinants of supply are held constant.
d.all determinants of quantity supplied are held constant.
5) When government policies are enacted,
a.equality can usually be enhanced without an efficiency loss, but efficiency can never
be enhanced without a reduction in equality.
b.efficiency can usually be enhanced without a reduction in equality, but equality can
never be enhanced without an efficiency loss.
c.it is always the case that either efficiency and equality are both enhanced, or
efficiency and equality are both diminished.
d.None of the above are correct.
6) One characteristic of an efficient tax system is that it minimizes the costs associated
with revenue collection.
a.True
b.False
7) Suppose a competitive market has a horizontal long-run supply curve and is in
long-run equilibrium. If demand decreases, we can be certain that in the short-run,
a.at least some firms will shut down.
b.price will fall below marginal cost for some firms.
c.price will fall below average total cost for some firms.
d.at least some firms will enter the industry.
8) An outcome is said to be efficient if an economy is conserving the largest possible
quantity of its scarce resources while still meeting the basic needs of society.
a.True
b.False
9) If a pharmaceutical company discovers a new drug and successfully patents it, patent
law gives the firm
a.partial ownership of the right to sell the drug for a limited number of years.
b.partial ownership of the right to sell the drug for an unlimited number of years.
c.sole ownership of the right to sell the drug for a limited number of years.
d.sole ownership of the right to sell the drug for an unlimited number of years.
10) The actions of buyers and sellers naturally move markets toward equilibrium.
a.True
b.False