Table 9-12 Production and
Consumption Production
Without Trade With Trade
Estonia and Morocco can produce both swords and belts. Table 9-12 shows the
production and consumption quantities without trade, and the production numbers with
trade.
If the actual terms of trade are 1 belt for 1.5 swords and 70 belts are traded, how many
belts will Morocco consume?
A) 40
B) 50
C) 70
D) 120
Figure 11-2
The average product of labor declines after L2 because
A) the marginal product of labor is below the average product of labor.
B) the marginal product of labor is falling.
C) the marginal product of labor is negative.
D) the marginal product of labor is positive.
For a perfectly competitive firm, at profit maximization,
A) market price exceeds marginal cost.
B) total revenue is maximized.
C) marginal revenue equals marginal cost.
D) production must occur where average cost is minimized.
A firm’s demand curve for labor slopes downwards because
A) of the law of diminishing marginal returns.
B) firms supply less labor as the wage rate rises.
C) workers supply less labor services as the wage rate falls.
D) of rising marginal product.
Firms in a small economy planned that inventories would grow over the past year by
$500,000. Over that year, inventories did grow by exactly $500,000. This implies that
A) aggregate expenditure that year was equal to GDP that year.
B) there was an unplanned increase in inventories that year.
C) there was an unplanned decrease in inventories that year.
D) aggregate expenditure that year was greater than GDP that year.
Economists have shown that the burden of a tax is the same whether the tax is collected
from the buyer or the seller. Why, then, are gasoline and cigarette taxes imposed on
sellers?
A) Sellers are more honest than buyers.
B) The demand for both gasoline and cigarettes is very elastic.
C) The Equal Protection Clause of the U.S. Constitution prohibits the government from
imposing taxes like these on buyers.
D) It is more difficult for buyers to keep track of their purchases, and for the
government to verify that the right of amount of tax revenue is collected.
An economist observes two consumers in a supermarket. One of the consumers buys a
case of Coca-Cola and the other buys a case of Pepsi-Cola. Both colas sell for the same
price and the ages and incomes of the consumers are also the same. Based on this
information, how would the economist explain the consumers’ choices?
A) One of the consumers made the wrong choice, but it is impossible to say which one.
B) Both consumers should have considered buying other colas that had lower prices.
C) Both consumers should have purchased less than a case because they would be able
to buy more later.
D) Apparently, the consumers had different tastes.
Table 12-4
Table 12-4 shows the short-run cost data of a perfectly competitive firm. Assume that
output can only be increased in batches of 20 units. If the market price is $45, the firm
A) earn a profit of $3,600.
B) will suffer a loss of $200.
C) will break even.
D) will earn profit of $1,040.
In game theory, the three key characteristics of a game are
A) rules, strategies, and payoffs.
B) rules, regulations, and payoffs.
C) winners, losers, and rules.
D) risks, rewards, and penalties.
Figure 5-7
The marginal cost of reducing pollution curve is the same curve as
A) the supply of pollution reduction curve.
B) the demand for pollution reduction curve.
C) the negative externality curve.
D) the value of pollution reduction curve.
Figure 4-2
What area represents producer surplus at a price of P2?
A) A + B
B) B + D
C) A + B + C
D) A + B + C + D + E
In general, the labor supply curve
A) slopes downward because firms will hire fewer workers at higher wages.
B) slopes upward because as the wage rises, the opportunity cost of leisure increases.
C) is vertical at the equilibrium wage rate.
D) is perfectly elastic at the equilibrium wage rate.
Harvey Rabbitt pays for monthly cable TV service. Last week the cable company
informed Harvey that his monthly cable price would go down because the city council
has granted approval for three new cable companies to service his area. How is the
market for cable TV services affected by this?
A) There is an increase in the supply of cable TV service.
B) There is a decrease in the demand for cable TV service.
C) There is a decrease in the quantity of cable TV service supplied.
D) There is a decrease in the supply of cable TV service.
Figure 4-1 Figure 4-1 shows Kendra’s
demand curve for ice-cream cones.
What is the total amount that Kendra is willing to pay for 2 ice cream cones?
A) $1.50
B) $3.00
C) $5.50
D) $6.50
Table 4-7
Table 4-7 shows the demand and supply schedules for labor market in the city of Pixley.
If a minimum wage of $11.50 an hour is mandated, what is the quantity of labor
supplied?
A) 40,000
B) 570,000
C) 610,000
D) 1,180,000
A number of economists have estimated the impact of unionization on workers’ wages.
Which of the following is one conclusion reached by these studies?
A) Union workers earn less than they would if they were not unionized. This is because
of the impact of workers’ strikes, during which union members do not receive wages.
B) Holding constant the impact of other factors that affect wages, being in a union has
no impact on a worker’s wages.
C) Being in a union increases a worker’s wages by about 10 percent, holding constant
other factors that influence wages.
D) The share of national income received by workers has increased significantly over
time; unions have been responsible for about one-half of the increase in workers’ share
of national income from the end of World War II to 2000.