1) Figure 9-9
Total surplus in this market after trade is
a.A + B.
b.A + B + C.
c.A + B + C + D.
d.B + C + D.
2) Which of the following statements is true for markets in which the demand curve
slopes downward and the supply curve slopes upward?
a.As the size of the tax increases, tax revenue continually rises and deadweight loss
continually falls.
b.As the size of the tax increases, tax revenue and deadweight loss rise initially, but
both eventually begin to fall.
c.As the size of the tax increases, tax revenue rises initially, but it eventually begins to
fall; deadweight loss continually rises.
d.As the size of the tax increases, tax revenue rises initially, but it eventually begins to
fall; deadweight loss falls initially, but eventually it begins to rise.
3) The following diagram shows a budget constraint for a particular consumer.
If the price of X is $20, then what is the price of Y?
a. $15
b. $25
c. $35
d. $70
4) Who among the following is a free rider?
a.Ernie listens to National Public Radio, but does not contribute to any fundraising
efforts.
b.Bert takes the commuter rail to work, but he purchases the discounted monthly passes
rather than buying tickets each day.
c.Grover sends his 5 children to a private school rather than to the public school in his
neighborhood.
d.Oscar goes to Elmo’s house to watch a football game on the local television channel.
5) Owners of land are compensated according to the
a.absolute level of production from the land.
b.number of laborers the land can support.
c.purchase price of the land stock.
d.value of the marginal product of land.
6) Figure 7-21
Which area represents total surplus in the market when the price is P1?
a.A+B
b.B+C
c.C+D
d.A+B+C+D
7) What will happen in the gasoline market now if buyers expect higher gasoline prices
in the near future?
a.The demand for gasoline will increase.
b.The demand for gasoline will decrease.
c.The demand for gasoline will be unaffected.
d.The supply of gasoline will increase.
8) Figure 16-11
What, if any, long run adjustment will occur in this industry?
9) Using the midpoint method, the income elasticity of demand for good Y is
a.2.33, and good Y is a normal good.
b.-2.33, and good Y is an inferior good.
c.-0.43, and good Y is a normal good.
d.-0.43, and good Y is an inferior good.
10) Over the past century, the average income in the United States has risen about
a.twofold.
b.fivefold.
c.eightfold.
d.tenfold.
11) Production possibilities frontiers are usually bowed outward. This is because
a.the more resources a society uses to produce one good, the fewer resources it has
available to produce another good.
b.the opportunity cost of producing a good decreases as more and more of that good is
produced.
c.of the effects of technological change.
d.resources are specialized; that is, some are better at producing particular goods rather
than other goods.
12) Figure 16-7
Which of the graphs depicts the situation for a profit-maximizing firm in a
monopolistically competitive market?
a.panel a
b.panel b
c.panel c
d.panel d
13) Bundle J contains 10 units of good X and 5 units of good Y. Bundle K contains 5
units of good X and 10 units of good Y. Bundle L contains 10 units of good X and 10
units of good Y. Assume that the consumer’s preferences satisfy the four properties of
indifference curves. The price of X is $1, the price of Y is $2, and the consumer has an
income of $20. Which bundle will the consumer choose?
a.bundle J
b.bundle K
c.bundle L
d.either bundle J or bundle K
14) Which of the following will cause no change 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
15) Refer to Figure 9-18. If Isoland allows international trade and if the world price of
peaches is $3, then
a.Isoland has a comparative advantage, relative to other countries, in producing
peaches.
b.Isoland will export peaches.
c.producer surplus with trade exceeds producer surplus without trade.
d.consumer surplus with trade exceeds consumer surplus without trade.