1) Table 17-13
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are
interested in expanding their market share. Both are interested in expanding the size of
their store and parking lot to accommodate potential growth in their customer base. The
following game depicts the strategic outcomes that result from the game. Increases in
annual profits of the two home-improvement stores are shown in the table below.
Refer to Table 17-13. Suppose the owners of Lopes and HomeMax meet for a friendly
game of golf one afternoon and happen to discuss a strategy to optimize growth related
profit. They should both agree to
a.increase their store and parking lot sizes.
b.refrain from increasing their store and parking lot sizes.
c.be more competitive in capturing market share.
d.share the context of their conversation with the Federal Trade Commission.
2) Economists have found evidence that differences in wages can be explained by
a.experience
b.job characteristics
c.physical attractiveness
d.All of the above are correct.
3) Table 20-3
The Distribution of Income in Edgerton
Refer to Table 20-3. If the poverty rate is 26%, where is the poverty line in Edgerton?
a.under $28,000
b.between $28,000 and $43,999
c.between $44,000 and $75,999
d.between $76,000 and $87,999
4) When a country that imports a particular good imposes a tariff on that good,
a.producer surplus increases and total surplus increases in the market for that good.
b.producer surplus increases and total surplus decreases in the market for that good.
c.producer surplus decreases and total surplus increases in the market for that good.
d.producer surplus decreases and total surplus decreases in the market for that good.
5) Figure 13-9
The figure below depicts average total cost functions for a firm that produces
automobiles.
At levels of output less than M, the firm experiences
a.economies of scale.
b.diseconomies of scale.
c.constant returns to scale.
d.both diminishing marginal productivity and coordination problems.
6) Suppose a certain country imposes a tariff on a good. Which of the following results
of the tariff is possible?
a.Consumer surplus decreases by $100; producer surplus increases by $100; and
government revenue from the tariff amounts to $50.
b.Consumer surplus decreases by $200; producer surplus increases by $100; and
government revenue from the tariff amounts to $50.
c.Consumer surplus increases by $100; producer surplus decreases by $200; and
government revenue from the tariff amounts to $50.
d.Consumer surplus decreases by $50; producer surplus increases by $200; and
government revenue from the tariff amounts to $150.
7) When a country that imports shoes imposes a tariff on shoes, buyers of shoes in that
country become worse off.
a.True
b.False
8) Consumers are often a primary source of discrimination in labor markets.
a.True
b.False
9) Refer to Figure 9-15. The amount of government revenue created by the tariff is
a.B.
b.E.
c.D + F.
d.B + D + E + F.
10) Suppose Hillary values a large order of French fries at $4. Bill values a large order
of French fries at $7. The pre- tax price of a large order of French fries is $2. The
government imposes a “fat tax” of $3 on each large order of French fries, and the price
rises to $5. The deadweight loss from the tax is
a.$4, and the deadweight loss comes from both Hillary and Bill.
b.$4, and the deadweight loss comes only from Hillary because she does not buy a large
French fries after the tax.
c.$2, and the deadweight loss comes from both Hillary and Bill.
d.$2, and the deadweight loss comes only from Hillary because she does not buy a large
French fries after the tax.
11) The product-variety externality states that entry of a new firm conveys a negative
externality on consumers.
a.True
b.False
12) Table 13-20
Listed in the table are the long-run total costs for three different firms.
Refer to Table 13-20. Firm A is experiencing economies of scale.
a.True
b.False
13) Table 13-19
What is the marginal product of the second worker?
14) Suppose a recent increase in federal gasoline taxes is estimated to cause a $150
million reduction in the total surplus (consumer plus producer surplus) in the gasoline
market. If tax revenues increased by $100 million, what is the deadweight loss
associated with the tax? As a result of the tax, 10,000 people sold their cars and started
riding their bicycles to work. How much of the burden of the deadweight loss is
incurred by the bicycle riders?
15) Once during a U.S. presidential campaign, a lobbyist for a prominent national
women’s organization made the claim that women in the United States earn $0.60 for
every $1.00 earned by a man. A reporter, who was prepared for this statement, asked the
lobbyist why wages paid to the organization’s secretarial staff (all of whom were
women) were significantly below the national average if they were truly interested in
raising the rates of compensation for women. If you were the lobbyist, how would you
have answered this question? Do you think your answer is convincing? Explain.
16) Since individual buyers and individual sellers in a competitive market have no
influence on the market price, what do we call the buyers and sellers in a competitive
market?
17) What is Russia’s opportunity cost of one compass?
18) Figure 15-22
How much deadweight loss results if this single-price monopolist profit-maximizes?
19) If income rises in the market for an inferior good, will the demand curve for the
inferior good shift to the right or to the left?
20) Suppose demand is given by the equation:
Using the midpoint method, what is the between $1 and $2?