1) Table 22-10
The town of Franklin is facing a severe budget shortage. The town administrator has
proposed four options to balance the budget: increase property taxes (taxes), cut the
school arts budget (arts), turn off half of the streetlights in the town (streetlights),
reduce police patrols (police). Exactly one of the four choices will prevail, and the
choice will be made by way of pairwise voting, with the majority determining the
outcome on each vote. The preferences of the voters are summarized in the table below.
Voter Type
Refer to Table 22-10. If the town administrator asks voters to choose first between
reducing police patrols and increasing taxes, and then between the winner of the first
vote and cutting the school arts budget, and then between the winner of the second vote
and turning off half of the streetlights, which choice will win the final vote?
a.arts
b.police
c.streetlights
d.taxes
2) Liberalism is the political philosophy espoused by
a.Robert Nozick.
b.John Stuart Mill.
c.John Rawls.
d.Jeremy Bentham.
3) Which of the following statements is correct?
a.The U.S. federal government collected a higher percentage of income in taxes in the
early 1900s than in the early 2000s.
b.The U.S. federal government collects a higher percentage of income in taxes than
many European countries, including France and Germany.
c.The U.S. federal government collects a lower percentage of income in taxes than
many developing countries, including Mexico and India.
d.The U.S. federal government collects a similar percentage of income in taxes as
Brazil and Japan.
4) Figure 8-10
Suppose the government imposes a tax that reduces the quantity sold in the market after
the tax to Q2. With the tax, the consumer surplus is
a.(P0-P2) x Q2.
b. 1/2 x (P0-P2) x Q2.
c. (P0-P5) x Q5.
d. 1/2 x (P0-P5) x Q5.
5) Figure 13-3
The graph illustrates a typical
a.total-cost curve.
b.production function.
c.production possibilities frontier.
d.fixed-cost curve.
6) A market’s equilibrium is the point at which the supply and demand curves intersect.
a.True
b.False
7) A market structure with only a few sellers, each offering similar or identical products,
is known as
a.oligopoly.
b.monopoly.
c.monopolistic competition.
d.perfect competition.
8)
Which supply curve represents perfectly inelastic supply?
a.S1
b.S2
c.S3
d.None of the supply curves is perfectly inelastic.
9) The poverty line is set by the government so that 10 percent of all families fall below
that line and are thereby classified as “poor.”
a.True
b.False
10) The value of the marginal product of labor is calculated by multiplying the
a.price of output by the quantity of labor.
b.price of output by the marginal product of labor.
c.wage by the quantity of labor.
d.wage by the marginal product of labor.
11) Suppose the government taxes 10 percent of the first $40,000 of income and 20
percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her
marginal and average tax rates?
a.20 percent and 15 percent, respectively
b.20 percent and 14 percent, respectively
c.10 percent and 15 percent respectively
d.10 percent and 14 percent respectively
12) A good will have a more elastic demand, the
a.greater the availability of close substitutes.
b.more broad the definition of the market.
c.shorter the period of time.
d.more it is regarded as a necessity.
13) A monopolistically competitive market
a.is imperfectly competitive, and all imperfectly competitive markets are
monopolistically competitive.
b.is imperfectly competitive, but not all imperfectly competitive markets are
monopolistically competitive.
c.is imperfectly competitive, whereas an oligopolistic market is not imperfectly
competitive.
d.is not imperfectly competitive.
14) The term refers to a small incremental adjustment to an existing plan of action.
15) Figure 21-32
The figure shows three indifference curves and a budget constraint for a consumer
named Hannah. When young, Hannah works and earns income. When old, she is retired
and earns no income.
Refer to Figure 21-32. What is the value of the interest rate that Hannah earns on her
saving?
16) Greg’s Production Possibilities
Catherine’s Production Possibilities
Which if any good(s) does Catherine have an absolute advantage producing?
17) Consider a small hair styling salon. List some examples of implicit costs of this
business.
18) Scenario 15-11
Vincent operates a scenic tour business in Boston. He has one bus which can fit 50
people per tour and each tour lasts 2 hours. His total cost of operating one tour is fixed
at $450. Vincent’s cost is not reduced if he runs a tour with a partially full bus. While
his cost is the same for all tours, Vincent charges each passenger his/her willingness to
pay: adults $18 per trip, children $10 per trip, and senior citizens $12 per trip. At those
rates, on a typical day Vincent’s demand is:
Assume that Vincent’s customers are always available for the tour¾ therefore, he can
fill his bus for each tour as long as there is sufficient total demand for the day.
What is Vincent’s cost of serving all passengers demanding a tour on a typical day?
19) Suppose demand is given by the equation:
At what price will total revenue be maximized?
20) Figure 16-14
Use the letters to identify
the deadweight loss from this firm producing at its profit- maximizing level of output.