1) Predatory pricing refers to
a.a firm selling certain products together rather than separately.
b.a monopoly firm reducing its price in an attempt to maintain its monopoly.
c.firms colluding to set prices.
d.All of the above are examples of predatory pricing.
2) Table 13-4
Charles’s Math Tutoring
Suppose that Charles’s math tutoring company has a fixed cost of $50 per month for his
cell phone. Each worker costs Charles $60 per day. As output increases from 0 to 45
students, Charles’s total cost curve
a.increases but gets flatter.
b.increases and gets steeper.
c.decreases and gets flatter.
d.decreases but gets steeper.
3) Suppose that the market for labor is initially in equilibrium. A decrease in the price of
output will cause the equilibrium wage
a.and the equilibrium quantity of labor to rise.
b.and the equilibrium quantity of labor to fall.
c.to rise and the equilibrium quantity of labor to fall.
d.to fall and the equilibrium quantity of labor to rise.
4) In the circular-flow diagram, which of the following items does not flow from
households to firms?
a.revenue
b.land, labor, and capital
c.factors of production
d.profit
5) Monopolistically competitive firms have excess capacity. To maximize profits, firms
will
a.increase their output to lower their average total cost of production and eliminate the
excess capacity.
b.produce where price equals marginal cost to eliminate the excess capacity.
c.produce where average revenue equals marginal cost to eliminate the excess capacity.
d.maintain the excess capacity.
6) Figure 14-7
When the price of the good is $175, the firm‘s maximum profit is
a. $16,500.
b. $20,375.
c. $25,750.
d. $90,125.
7) Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that
level of output, its marginal revenue is $30, its average revenue is $60, and its average
total cost is $34.
At Q = 500, the firm’s total revenue is
a. $13,000.
b. $15,000.
c. $17,000.
d. $30,000.
8) Which of the following assertions is not correct about the multilateral approach to
free trade?
a.The multilateral approach has the potential to result in freer trade than does the
unilateral approach.
b.The multilateral approach may have a political advantage over the unilateral
approach.
c.The multilateral approach is simpler than the unilateral approach.
d.NAFTA and GATT both represent multilateral approaches to free trade.
9) If a worker respond to an increase in the opportunity cost of leisure by taking less
leisure, then his labor supply curve is
a.horizontal.
b.vertical.
c.backward sloping.
d.upward sloping.
10) Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that
level of output, its marginal revenue is $30, its average revenue is $60, and its average
total cost is $34.
The firm’s profit-maximizing price is
a. $30.
b.between $30 and $34.
c.between $34 and $60.
d.$60.
11) Taxes on labor encourage which of the following?
a.labor demand to be more inelastic
b.mothers to stay at home rather than work in the labor force
c.workers to work overtime
d.fathers to take on second jobs
12) If the United States imports televisions and the U.S. government imposes a tariff on
televisions, then
a.total surplus in the American television market decreases.
b.producer surplus in the American television market increases.
c.U.S. imports of foreign televisions decrease.
d.All of the above are correct.
13) In the United States in 2011, the bottom fifth of the income distribution had
incomes below $27,21
a.True
b.False
14) Studies indicate that the for cigarettes is about 0.4. A government policy aimed at
reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to
the midpoint method, the government policy should have reduced smoking by
a.30%.
b.40%.
c.80%.
d. 250%.
15) Patents, copyrights, and trademarks
a.are examples of government-created monopolies.
b.allow their owners to reduce the costs of what they produce.
c.generate more revenue for the government than they cost consumers in the form of
higher prices.
d.All of the above are correct.
16) Table 16-1
The following table shows the percentage of output supplied by the top eight firms in
four different industries.
What is the concentration ratio in Industry A?
a. 38%
b.71%
c.92%
d.98%
17) If all taxpayers pay the same percentage of income in taxes, the tax system is
proportional.
a.True
b.False
18) When a production possibilities frontier is bowed outward, the opportunity cost of
one good in terms of the other depends on how much of each good is being produced.
a.True
b.False
19) Economists assume that the goal of the firm is to maximize total
a.revenue.
b.profits.
c.costs.
d.satisfaction.
20) Suppose that a worker in Radioland can produce either 4 radios or 1 television per
year and a worker in Teeveeland can produce either 2 radios or 5 televisions per year.
Each nation has 100 workers, and each country specializes according to the principle of
comparative advantage. If Radioland trades 100 televisions to Teeveeland in exchange
for 100 radios each year, then each country’s maximum consumption of new radios and
televisions per year will be
a.higher than it would be in the absence of trade because of the gains from trade.
b.the same as it would be in the absence of trade.
c.less than it would be in the absence of trade because neither country is specializing in
the product in which it has a comparative advantage.
d.less than it would be in the absence of trade because Teeveeland has an absolute
advantage in both goods and so it cannot benefit by trading with Radioland.