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1) In a game, a dominant strategy is
a.the best strategy for a player to follow only if other players are cooperative.
b.the best strategy for a player to follow, regardless of the strategies followed by other
players.
c.a strategy that must appear in every game.
d.a strategy that leads to one player's interests dominating the interests of the other
players.
2) Government vouchers to purchase food, also known as food stamps, are an example
of
a.an in-kind transfer.
b.life-cycle income.
c.a negative income tax.
d.permanent income.
3) Which of the following statements about a well-maintained yard best conveys the
general nature of the externality?
a.A well-maintained yard conveys a positive externality because it increases the home's
market value.
b.A well-maintained yard conveys a negative externality because it increases the
property tax liability of the owner.
c.A well-maintained yard conveys a positive externality because it increases the value
of adjacent properties in the neighborhood.
d.A well-maintained yard cannot provide any type of externality.
4) Maxine's Production Possibilities FrontierDaisy's Production Possibilities
Frontier
(i)too much of the economy's capital stock is tied up in residential housing.
(ii)too little of the economy's capital stock is invested in corporate capital.
(iii)the misallocation of resources results in lower productivity and reduced real wages.
a.(i) only
b.(ii) only
c.(i) and (ii) only
d.(i), (ii), and (iii)
10) Since the 1980s, Wal-Mart stores have appeared in almost every community in
America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices.
Wal-Mart also locates its stores where land prices are low, usually outside of the
community business district. Many customers shop at Wal-Mart because of low prices.
Local retailers, like the neighborhood drug store, often go out of business because they
lose customers. This story demonstrates that
a.consumers do not react to changing prices.
b.there are diseconomies of scale in retail sales.
c.there are economies of scale in retail sales.
d.there are diminishing returns to producing and selling retail goods.
11) Figure 16-4
At the profit-maximizing, or loss-minimizing, output level, how many units of output
will the firm in this figure produce?
a.20
b.30
c.40
d.This firm will choose not to produce.
12) Economists usually have to make do with whatever data the world happens to give
them.
a.True
b.False
13) Figure 18-2
The figure below shows the production function for a particular firm.
Refer to Figure 18-2. The marginal product of the third worker is
a.20 units.
b.30 units.
c.40 units.
d.70 units.
14) That some firms are engaged in more than one type of business is explained, in
some cases, by
a.moral injunctions such as the Golden Rule.
b.the existence of charitable organizations.
c.government regulations that discourage the internalization of externalities.
d.the fact that the internalization of externalities sometimes coincides with the
self-interest of the relevant parties.
15) Figure 10-16
This graph shows the market for pollution when permits are issued to firms and traded
in the marketplace. In the absence of a pollution permit system, the quantity of
pollution would be
a.25
b.50
c.75
d.100
16) Table 18-1
Refer to Table 18-1. Suppose that the firm pays its workers $50 per day. Each unit of
output sells for $20. How many days of labor should the firm hire?
a.3
b.4
c.5
d.6
