1) Table 22-20
The table below shows the preferred city budget (in millions) for in the city of
Springfield.
Refer to Table 22-20. In an election, each voter will select the budget closest to his or
her most preferred budget. Using this information, what is the most preferred budget of
the median voter?
a.$10
b.$20
c.$30
d.$40
2) Which of the following goods are likely to be sold in a monopolistically competitive
market?
a.jeans
b.breakfast cereal
c.electricity distribution in Chicago
d.postage stamps
3) Refer to Figure 9-17. With free trade, total surplus is
a. $600.
b. $1,200.
c. $1,800.
d. $2,400.
4) An increase in the price of cheese crackers from $2.25 to $2.45 per box causes
suppliers of cheese crackers to increase their quantity supplied from 125 boxes per
minute to 145 boxes per minute. Using the midpoint method, supply is
a.elastic, and the price elasticity of supply is 1.74.
b.elastic, and the price elasticity of supply is 0.57.
c.inelastic, and the price elasticity of supply is 1.74.
d.inelastic, and the price elasticity of supply is 0.57.
5) The defining characteristic of a natural monopoly is
a.constant marginal cost over the relevant range of output.
b.economies of scale over the relevant range of output.
c.constant returns to scale over the relevant range of output.
d.diseconomies of scale over the relevant range of output.
6) The income effect of a price change is unaffected by whether the good is a normal or
inferior good.
a.True
b.False
7) “The firm hires the factor up to the point where the value of the factor’s marginal
product is equal to the factor’s price.” This statement applies to which factor of
production?
a.labor only
b.land only
c.capital only
d.land, labor, and capital
8) Table 18-11
Consider the following daily production data for MadeFromScratch, Inc.
MadeFromScratch sells cupcakes for $2 each and pays the workers a wage of $325 per
day.
Refer to Table 18-11. Assuming MadeFromScratch is a competitive, profit-maximizing
firm, how many workers will the firm hire?
a.2 workers
b.3 workers
c.4 workers
d.5 workers
9) Max and Maddy charge people to park on their lawn while attending a nearby craft
fair. At the current price of $10, seven people park on their lawn. If they raise the price
to $15, they know that only five people will want to park on their lawn. Whether they
have seven or five cars parked on their lawn does not affect their costs. From this
information it follows that
a.they should leave the price at $10.
b.it does not matter if they charge $10 or $15.
c.they would do better charging $15 than $10.
d.they should raise the price even more.
10) A free rider is a person who
a.will only purchase a product on sale.
b.receives the benefit of a good but avoids paying for it.
c.can produce a good at no cost.
d.rides public transit regularly.
11) Assume that Huang and Min can switch between producing parasols and producing
porcelain plates at a constant rate.
The opportunity cost of 1 plate for Min is
a.1/3 parasol.
b.1/2 parasol.
c.2 parasols.
d.3 parasols.