1) Which of the following statements is correct?
a.The efficient provision of private goods is intrinsically more difficult than the efficient
provision of public goods.
b.The efficient provision of public goods is intrinsically more difficult than the efficient
provision of private goods.
c.Private markets provide quantities of public goods that exceed the socially-efficient
quantities of those goods.
d.Private decision makers utilize quantities of common resources that fall short of the
socially-efficient quantities of those resources.
2) Causes of market failure include
a.externalities and market power.
b.market power and incorrect forecasts of consumer demand.
c.externalities and foreign competition.
d.incorrect forecasts of consumer demand and foreign competition.
3) Italy should specialize in the production of
a.boats and import cars.
b.cars and import boats.
c.both goods and import neither good.
d.neither good and import both goods.
4) Gretchen is a writer who works from her home. Gretchen lives next door to Randall,
the trumpet player for a local band. Randall needs lots of practice to earn his share of
the band€s profit, which will amount to $3 Gretchen gets distracted by Randall€s
trumpet playing but she needs to get her writing done to earn $570 for her current
article. If Gretchen needs to hire a lawyer to help her reach an agreement with Randall,
then what price is Gretchen willing to pay the lawyer?
a.less than $350
b.less than $450
c.less than $570
d.less than $920
5) Figure 15-5
A profit-maximizing monopoly’s total cost is equal to
a.P2 x Q3.
b.P4 x Q3.
c.P5 x Q3.
d.(P2-P5) x Q3.
6) Table 14-8
Suppose that a firm in a competitive market faces the following revenues and costs:
The firm should not produce an output level beyond
a.4 units.
b.5 units.
c.6 units.
d.7 units.
7) Elasticity measures how responsive quantity is to changes in price.
a.True
b.False
8) Table 7-1
If the price of the product is $90, then who would be willing to purchase the product?
a.Calvin
b.Calvin and Sam
c.Calvin, Sam, and Andrew
d.Calvin, Sam, Andrew, and Lori
9) All cartels are inherently reliant on
a.a horizontal demand curve.
b.an inelastic demand for their product.
c.the cooperation of their members.
d.enforcement of antitrust laws.
10) The signaling theory of education maintains that workers who complete specific
levels of education enhance their productivity through education.
a.True
b.False
11) Which of the following changes would not shift the demand curve for a good or
service?
a.a change in income
b.a change in the price of the good or service
c.a change in expectations about the future price of the good or service
d.a change in the price of a related good or service
12) Figure 8-28
Suppose that Market A is characterized by Demand 1 and Supply 1, and Market B is
characterized by Demand 1 and Supply 2. If an identical tax is imposed on each market,
the tax will create a larger deadweight loss in which market? Explain.
13) Reaching and enforcing an agreement between members of a cartel becomes more
difficult as the size of the group __________.
14) The following table shows the number of cases of water each seller is willing to sell
at the prices listed.
Assuming these are the only four suppliers in this market, the function for market
supply can be written as QS=
15) Illustrate on three demand-and-supply graphs how the size of a tax (small, medium
and large) can alter total revenue and deadweight loss.
16) Economists at which administrative department help formulate spending plans and
regulatory policies?
17) Scenario 13-21
Suppose that a small family farm sold its output for $100,000 in a given year. The
family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on
equipment, including maintenance. The family members could have earned $20,000
working at other occupations.
What is the accounting profit for the family farm?