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1) The typical state spends the most on
a.education.
b.Medicare and Social Security.
c.highways.
d.defense.
2) If men, on average, earn 20 percent more than women in a particular occupation,
a.this is clear evidence of discrimination.
b.some of this differential could be due to differences in educational levels.
c.some of this differential could be due to differences in human capital.
d.Both b and c are correct.
3) When the government taxes labor earnings we can expect people to
a.work more so they can keep the same standard of living.
b.work less and enjoy more leisure.
c.quit their present job and find one that pays better.
d.stop working altogether and go on welfare.
4) Which of the following steps does an economist take when studying the economy?
a.devise theories
b.collect data
c.analyze data
d.All of the above are correct.
5) Which combination would produce an increase in equilibrium quantity and an
indeterminate change in equilibrium price?
a.A
b.B
c.C
d.D
6) Table 10-6
The following table shows the total costs for each of four firms (A, B, C, and D) to
eliminate units of pollution from their production processes. For example, for Firm A to
eliminate one unit of pollution, it would cost $46, and for Firm A to eliminate two units
of pollution, it would cost a total of $103.
If the government charged a fee of $93 per unit of pollution, how many units of
pollution would the firms eliminate altogether?
a.10
b.12
c.14
d.16
7) When quantity supplied decreases at every possible price, we know that the supply
curve has
a.shifted to the left.
b.shifted to the right.
c.not shifted; rather, we have moved along the supply curve to a new point on the same
curve.
d.not shifted; rather, the supply curve has become flatter.
8) Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of
cheesecake. Regina would be willing to purchase only one slice and would pay up to $8
for it. Roger would be willing to pay $11 for his first slice,$9 for his second slice, and
$5 for his third slice. The current market price is $5 per slice. How much total consumer
surplus do Regina and Roger collectively receive from consuming cheesecake?
a.$3
b.$6
c.$9
d.$13
9) If an increase in income results in a decrease in the quantity demanded of a good,
then for that good, the
a. is negative.
b. is elastic.
c.income elasticity of demand is negative.
d.income elasticity of demand is positive.
10) Other things equal, one would predict that market wages would be relatively high
when
a.the supply of labor is high.
b.the demand for labor is low.
c.the supply of labor is low.
d.Both (a.) and (b.) are correct
11) When externalities cause markets to be inefficient,
a.government action is always needed to solve the problem.
b.private solutions can be developed to solve the problem.
c.given enough time, externalities can be solved through normal market adjustments.
d.there is no way to eliminate the problem of externalities in a market.
