1) In a market, the price of any good adjusts until quantity demanded equals quantity
supplied.
a.True
b.False
2) When leisure is a normal good, the income effect from a decrease in wages is evident
in
a.a desire to consume more leisure.
b.a desire to consume less leisure.
c.an upward-sloping labor-supply curve.
d.a shift in labor demand.
3) Specialization and trade are closely linked to
a.absolute advantage.
b.comparative advantage.
c.gains to some traders that exactly offset losses to other traders.
d.shrinkage of the economic pie.
4) Table 7-1
If the market price is $105,
a.Calvin’s consumer surplus is $45 and total consumer surplus is $85.
b.Sam’s consumer surplus is $30 and total consumer surplus is $90.
c.Andrew’s consumer surplus is $15 and total consumer surplus is $67.50.
d.Lori’s consumer surplus is $2 and total consumer surplus is $100.
5) The economic inefficiency of a monopolist can be measured by the
a.number of consumers who are unable to purchase the product because of its high
price.
b.excess profit generated by monopoly firms.
c.poor quality of service offered by monopoly firms.
d.deadweight loss.
6) Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of
cheesecake. Regina would be willing to purchase only one slice and would pay up to $8
for it. Roger would be willing to pay $11 for his first slice,$9 for his second slice, and
$5 for his third slice. The current market price is $5 per slice. Assume that the
government places a $4 tax on each slice of cheesecake and that the new equilibrium
price is $9. Which of the following statements is correct?
a.Roger will bear the full burden of the deadweight loss.
b.Regina will bear the full burden of the deadweight loss.
c.Both Regina and Roger will share the burden of the deadweight loss.
d.There will be no deadweight loss.
7) If consumers often purchase muffins to eat while they drink their latt©s at local
coffee shops, what would happen to the equilibrium price and quantity of latt©s if the
price of muffins rises?
a.Both the equilibrium price and quantity would increase.
b.Both the equilibrium price and quantity would decrease.
c.The equilibrium price would increase, and the equilibrium quantity would decrease.
d.The equilibrium price would decrease, and the equilibrium quantity would increase.
8) Assume that the farmer and the rancher can switch between producing pork and
producing tomatoes at a constant rate.
The opportunity cost of 1 pound of tomatoes for the rancher is
a.1 pound of pork.
b.1 hour of labor.
c.1.5 pounds of pork.
d.1.5 hours of labor.
9) In order to construct a more complete picture of the economic burden of government
across income classes, economists usually
a.include tax payments as well as transfer payments received.
b.focus only on the tax payments of wealthy tax payers.
c.limit their analysis to taxes based on the ability-to-pay principle.
d.focus their analysis on issues of tax efficiency.
10) Oligopolies produce more when they collude then when they do not.
a.True
b.False
11) A tax imposed at every stage of production is a
a.value-added tax.
b.lump sum tax.
c.corrective tax.
d.regressive tax.
12) Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as
a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives
a tour bus around the ski resort, earning $11 per hour.
Refer to Scenario 18-3. If Sam takes fewer hours of leisure in the summer than in the
winter, we can assume that his labor supply curve for the range of earnings in this
example
a.is horizontal.
b.is vertical.
c.is upward sloping.
d.has a backward-bending portion.
13) Which of the following is not a determinant of the for a good?
a.the time horizon
b.the steepness or flatness of the supply curve for the good
c.the definition of the market for the good
d.the availability of substitutes for the good
14) When markets fail, which of the following is true?
a.Government intervention can always improve outcomes.
b.Government intervention can potentially improve outcomes.
c.Government intervention can never improve outcomes.
d.Markets do not fail.
15) Would the maximin criterion achieve perfect income equality?
a.Yes. There would be no way to reallocate resources to raise the utility of the poor.
b.Yes. The maximin criterion would eliminate poverty.
c.No. It is impossible for complete equality to benefit the worst-off people in society.
d.No. Complete equality would reduce incentives to work, which would reduce total
income, which would reduce the incomes of the worst-off people in society.