1) Figure 9-6
The figure illustrates the market for roses in a country.
The
imposition of a tariff on roses
a.increases the number of roses imported by 100.
b.increases the number of roses imported by 200.
c.decreases the number of roses imported by 200.
d.decreases the number of roses imported by 400.
2) Which of the following is an example of an externality?
a.A paper mill dumps waste into the river.
b.A neighbor’s loud music disrupts sleep.
c.A drunk driver causes an accident that injures another person.
d.All of the above are correct.
3) Economists work both inside and outside the administrative branch of the U.S.
government.
a.True
b.False
4) The income level below which families are said to be poor is known as the
a.income maintenance threshold.
b.poverty line.
c.bottom quintile of the income distribution.
d.minimum wage.
5) A monopoly’s marginal cost will
a.be less than its average fixed cost.
b.be less than the price per unit of its product.
c.exceed its marginal revenue.
d.equal its average total cost.
6) As a group, oligopolists would always be better off if they would act collectively
a.as if they were each seeking to maximize their own individual profits.
b.in a manner that would prohibit collusive agreements.
c.as a single monopolist.
d.as a single perfectly competitive firm.
7) The profit that a monopolist earns represents a loss to society that is measured
through deadweight loss.
a.True
b.False
8) Over the past 100 years, as the U.S. economy’s income has grown,
a.tax rates have decreased, while tax revenues have increased.
b.tax rates have increased, while tax revenues have decreased.
c.both tax rates and tax revenues have increased.
d.both tax rates and tax revenues have decreased.
9) On hot summer days, electricity-generating capacity is sometimes stretched to the
limit. At these times, electric companies may ask people to voluntarily cut back on their
use of electricity. On these days, electricity is
a.excludable, but nonrival in consumption.
b.not excludable, but rival in consumption.
c.excludable and rival in consumption.
d.not excludable and nonrival in consumption.
10) Local cable television companies frequently are monopolists.
a.True
b.False
11) The notion of a tit-for-tat strategy applies to a prisoners’ dilemma game that is
played repeatedly, but it does not apply if the game is played only once.
a.True
b.False
12)
Using the midpoint method, the between point Y and point Z is
a. 0.5
b. 0.75
c.1.0
d.1.3
13) The failure of markets to adequately protect the environment can viewed either as a
problem of
a.externalities or as a problem of common resources.
b.externalities or as a problem of private goods.
c.the overprovision of public goods or as a problem of the underprovision of private
goods.
d.club goods or as a problem that arises when the quantity of excludable goods exceeds
the socially-efficient quantity.
14) If a good is normal, then an increase in income will result in a(n)
a.increase in the demand for the good.
b.decrease in the demand for the good.
c.movement down and to the right along the demand curve for the good.
d.movement up and to the left along the demand curve for the good.
15) A firm operating in a competitive market will stay in business in the short run so
long as the market price exceeds the firm‘s average total cost¾ otherwise, the firm will
shut down.
a.True
b.False
16) In a competitive market, no single producer can influence the market price because
a.many other sellers are offering a product that is essentially identical.
b.consumers have more influence over the market price than producers do.
c.government intervention prevents firms from influencing price.
d.producers agree not to change the price.
17) The law of demand states that, other things equal, when the price of a good rises,
the quantity demanded of the good rises, and when the price falls, the quantity
demanded falls.
a.True
b.False
18) Which of the following statements is not correct?
a.Patents help internalize the externalities associated with technological advances.
b.Economists typically prefer regulations to corrective taxes because regulations
provide more incentives for firms to seek continued reductions in pollution.
c.Allowing firms to trade pollution permits will lower the total cost of reducing
pollution.
d.A big impediment to implementing the Coase theorem in many cases is high
transactions costs.
19) Figure 13-10
The three average total cost curves on the diagram labeled ATC1, ATC2, and ATC3 most
likely correspond to three different
a.time horizons.
b.products.
c.firms.
d.factory sizes.
20) Assume a market is perfectly competitive. When a new producer enters the market,
the
a.price in the market increases.
b.price in the market decreases.
c.price in the market does not change.
d.market is no longer a competitive market.