1) When the value of a human life is calculated according to the economic contribution
a person makes to society (as reflected in her income-earning potential), the troubling
implication is that
a.it is possible for a retired or disabled person to have no value to society.
b.economists are more valuable than entrepreneurs.
c.retired people who volunteer in their communities are more valuable than physicians.
d.all workers have equal value.
2) Table 14-12
Bill’s Birdhouses
What is the total revenue from selling 4 units?
a. $80
b. $137
c. $320
d. $480
3) Figure 14-4
Suppose a firm operating in a competitive market has the following cost curves:
When price rises from P3 to P4, the firm finds that
a.fixed costs decrease as output increases from Q3 to Q4.
b.it can earn a positive profit by increasing production to Q4.
c.profit is still maximized at a production level of Q3.
d.average revenue exceeds marginal revenue at a production level of Q4.
4) Table 18-2
Refer to Table 18-2. The table shows the number of bracelets that can be assembled
per week by various numbers of workers. If the price per bracelet in a perfectly
competitive product market is $2.50, how many workers would the firm employ if the
weekly wage rate is $375?
a.2
b.3
c.4
d.5
5) Microeconomics and macroeconomics are closely intertwined.
a.True
b.False
6) The art in scientific thinking — whether in chemistry, economics, or biology — is
a.the design and implementation of laboratory experiments.
b.knowing when to stop collecting data and when to start analyzing the data.
c.deciding which assumptions to make.
d.being able to mathematically model natural phenomena.
7) Prior to the collapse of communism, communist countries worked on the premise
that economic well-being could be best attained by
a.a market economy.
b.a strong reliance on prices and individuals’ selfinterests.
c.a system of large privately-owned firms.
d.the actions of government central planners.
8) An internet radio broadcast is
a.excludable and rival in consumption.
b.excludable and not rival in consumption.
c.not excludable and rival in consumption.
d.not excludable and not rival in consumption.
9) Figure 9-10. The figure applies to Mexico and the good is rifles.
The price and quantity of rifles in Mexico before trade is
a.P0 and Q0.
b.P1 and Q1.
c.P2 and Q2.
d.P1 and Q0.
10) In the early 1920s,
a.Germany experienced a very high rate of inflation.
b.the quantity of German money was declining rapidly.
c.the value of German money remained almost constant.
d.All of the above are correct.
11) Chrissy and Marvin are competitors in a local market and each is trying to decide if
it is worthwhile to advertise. If both of them advertise, each will earn a profit of
$10,000. If neither of them advertise, each will earn a profit of $20,000. If one
advertises and the other doesn’t, then the one who advertises will earn a profit of
$30,000 and the other will earn $14,000. To earn the highest profit, Chrissy
a.should advertise, and she will earn $10,000.
b.should advertise, and she will earn $30,000.
c.should not advertise, and she will earn 20,000.
d.has no dominant strategy.
12) Figure 8-1
Suppose the government imposes a tax of P’ – P”’. The producer surplus before the tax is
measured by the area
a.I+J+K.
b.I+Y.
c.L+M+Y.
d.M.
13) A radio story reported a study on the makes and models of cars that were observed
going through intersections in the Washington, D.C. area without stopping at the stop
signs. According to the story, Volvos were heavily overrepresented; the fraction of cars
running stop signs that were Volvos was much greater than the fraction of Volvos in the
total population of cars in the D.C. area. This is initially surprising because Volvo has
built a reputation as an especially safe car that appeals to sensible, safety-conscious
drivers. How is this observation best explained?
a.Volvo drivers are not willing to take risks that they would take in another, less safe
car. Driving a Volvo leads to a propensity to run stop signs.
b.Volvo drivers are not willing to take risks that they would take in another, less safe
car. Driving a Volvo reduces the propensity to run stop signs.
c.Volvo drivers are willing to take risks that they would not take in another, less safe
car. Driving a Volvo reduces the propensity to run stop signs.
d.Volvo drivers are willing to take risks that they would not take in another, less safe
car. Driving a Volvo leads to a propensity to run stop signs.
14) Economists at the Department of Justice
a.track the behavior of the nation’s money supply.
b.advise Congress on economic matters.
c.help enforce the nation’s antitrust laws.
d.prepare the federal budget.
15) Evidence from a study of the market for baseball players using 1960s data
a.indicated that sports with strong player associations are unlikely to experience wage
discrimination.
b.suggested that government regulation had eliminated most evidence of wage
discrimination.
c.found some evidence of consumer-driven wage discrimination.
d.found that measurement of marginal productivity was very difficult for baseball
players.
16) In a December 2007 New York Times column, Paul Krugman noted that
a.it is difficult to find instances of trade between high-wage countries in the modern era.
b.it is difficult to find instances of trade between high-wage countries and low-wage
countries in the modern era.
c.the United States now imports more oil and other raw materials from other advanced
countries than from the third world.
d.the United States now imports more manufactured goods from the third world than
from other advanced countries.
17) A firm in a competitive market has the following cost structure:
If the market price is $8, how many units of output should the firm produce to
maximize profit?
a.5 units
b.6 units
c.7 units
d.8 units
18) For the purpose of analyzing the gains and losses from a tax on a good, we use tax
revenue as a direct measure of the
a.government’s benefit from the tax.
b.government’s loss from the tax.
c.deadweight loss of the tax.
d.overall net gain to society of the tax.