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1) Rational people make decisions at the margin by comparing
a.average costs and benefits.
b.total costs and benefits.
c.additional costs and benefits.
d.opportunity costs and benefits.
2) A profit-maximizing firm will shut down in the short run when
a.price is less than average variable cost.
b.price is less than average total cost.
c.average revenue is greater than marginal cost.
d.average revenue is greater than average fixed cost.
3) Which of the following events would unambiguously cause a decrease in the
equilibrium price of cotton shirts?
a.an increase in the price of wool shirts and a decrease in the price of raw cotton
b.a decrease in the price of wool shirts and a decrease in the price of raw cotton
c.an increase in the price of wool shirts and an increase in the price of raw cotton
d.a decrease in the price of wool shirts and an increase in the price of raw cotton
4) If a consumer purchases more of good X and good Y after her income increases, then
neither good X nor good Y is an inferior good for her.
a.True
b.False
5) The reason to regulate utilities instead of using antitrust laws to promote competition
is that a utility is usually a
a.profit-maximizing monopoly.
b.producer of externalities.
c.revenue-maximizing monopoly.
d.natural monopoly.
6) Which of the following is not correct?
a.Economics is a study of the choices that people make and the resulting interactions
they have with one another.
b.In areas it has already studied, economists have found perfect and unchanging
answers.
c.Economists are trying to expand their understanding of human behavior and society.
d.The economics of asymmetric information, political economy, and behavioral
economics are all topics at the frontier of microeconomics.
7) Table 12-20
The following table presents the total tax liability for an unmarried taxpayer under four
different tax schedules for the income levels shown.
Which tax schedule could be considered a lump-sum tax?
a.Tax Schedule B only
b.Tax Schedule B and Tax Schedule C
c.Tax Schedule D only
d.None of the tax schedules could be considered a lump-sum tax.
8) Kenneth Arrow proved that the voting system that satisfied all of the properties of his
"perfect" voting system was
a.one in which a single person (a "dictator") imposes his preferences on everyone else.
b.pairwise majority voting.
c.majority voting that is not pairwise.
d.None of the above is correct. Arrow proved that no voting system can satisfy all of the
properties of his "perfect" system.
9) Suppose a gardener produces both tomatoes and squash in his garden. If he must give
up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1
bushel of tomatoes is
a.0.63 bushels of squash.
b.1.6 bushels of squash.
c.3 bushels of squash.
d.5 bushels of squash.
10) Borda count is a voting method often used in polls that rank sports teams.
a.True
b.False
11) If something happens to alter the quantity supplied at any given price, then we
move along the fixed supply curve to a new quantity supplied.
a.True
b.False
12) Canada's Production Possibilities FrontierMexico's Production Possibilities
Frontier
Mexico would incur an opportunity cost of 8 units of Good X if it increased its
production of Good Y by
a.2 units.
b.4 units.
c.6 units.
d.8 units.
13) In the short run, a market consists of 100 identical firms. The market price is $6,
and the total cost to each firm of producing various levels of output is given in the table
below. What will total quantity supplied be in the market?
a.100 units
b.200 units
c.300 units
d.400 units
