An unwritten, unspoken agreement through which firms limit competition among
themselves is called:
A) satisfying.
B) tacit collusion.
C) overt collusion.
D) a cartel.
Which of the following U.S. welfare programs is a means-tested in-kind benefit?
A) Social Security
B) Temporary Assistance to Needy Families
C) food stamps
D) unemployment insurance
Figure: PPV
(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue
for a pay-per-view football game on cable TV. Assume that the marginal cost and
average cost are a constant $20. If the cable company is a monopoly, how much is
producer surplus when the monopolist maximizes profit?
A) $0
B) $20
C) $80
D) $160
The first law designed to curb monopoly power in the United States was the _____ Act.
A) Sherman Antitrust
B) Clayton
C) Federal Trade Commission
D) Robinson-Patman
Figure: The Market for Thumb Drives
(Figure: The Market for Thumb Drives) Look at the figure The Market for Thumb
Drives. Assume that PA is the autarky price, PW is the world price, and D and S
represent domestic demand and supply, respectively. The loss of producer surplus when
the market moves from autarky to free trade equals the area:
A) B.
B) B + C + D +E.
C) B + C + D.
D) E.
Figure: PPV
(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue
for a pay-per-view football game on cable TV. Assume that the marginal cost and
average cost are a constant $40. If the cable company practices perfect price
discrimination, producer surplus will be:
A) $180.
B) $100.
C) $40.
D) $0.
(Table: The Production Possibilities for Tractors and Crude Oil) Look at the table The
Production Possibilities for Tractors and Crude Oil. Both the United States and Mexico
will gain from trade if one tractor trades for _____ barrels of oil.
A) 1,500
B) 4,500
C) 6,500
D) 8,500
The price elasticity of demand for milk has been estimated to be somewhere between
0.49 and 0.63. If a new system of feeding and milking cows yields a 15% increase in
the production of milk throughout the country, how will that affect total expenditures on
milk, all other things equal?
A) Total expenditures will remain unchanged.
B) Total expenditures will fall.
C) Total expenditures will rise.
D) The information is insufficient to answer the question.
Figure: PPV
(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue
for a pay-per-view football game on cable TV. Assume that the marginal cost and
average cost are a constant $40. If the cable company is a single-price monopoly and
maximizes profit, producer surplus will be:
A) $0.
B) $45.
C) $70.
D) $90.
Markets work because they allocate sales to the potential sellers who most value the
right to sell a good, as indicated by their ability to produce the good at the lowest cost.
This statement illustrates:
A) producer surplus.
B) consumer surplus.
C) total surplus.
D) deadweight loss.
Figure: City with Two Polluters
(Figure: City with Two Polluters) Look at the figure City with Two Polluters. If the
government wants to limit total pollution to 2,200 tons, it could impose an emissions
tax of _____ on both firms.
A) $100
B) $200
C) $300
D) $400
An increase in wealth will cause the labor supply curve to:
A) shift leftward if leisure is a normal good.
B) slope downward if the substitution effect dominates the income effect.
C) slope upward if leisure is an inferior good.
D) bend backward if the income effect outweighs the substitution effect of a change in
wealth and if leisure is a normal good.
Scenario: Linear Production Possibility Frontier Largetown has a linear production
possibility frontier, and it produces socks and shirts with 80 hours of labor. The table
shows the number of hours of labor necessary to produce one pair of socks or one shirt.
(Scenario: Linear Production Possibility Frontier) Look at the scenario Linear
Production Possibility Frontier. If Largetown decides to devote half of its labor time to
the production of socks and half of the time to the production of shirts, it can produce
_____ shirts and _____ pairs of socks.
A) 10; 20
B) 20; 10
C) 30; 30
D) 0; 30
Figure: Short-Run Costs
(Figure: Short-Run Costs) Look at the figure Short-Run Costs. C is the _____ cost
curve.
A) average total
B) total
C) marginal
D) average variable
To maximize profits, an airline will offer _____ prices to customers with _____
demand.
A) higher; inelastic
B) higher; elastic
C) lower; inelastic
D) the lowest; the least
The student center on campus has burritos, bagels, or burgers for lunch, and they all
cost the same. You love burgers and bagels, but you decide to have a burger today. If
they were out of burgers, you would have bought a bagel. This statement best represents
this economic concept:
A) The real cost of something is what you must give up to get it.
B) “How much” is a decision at the margin.
C) Resources are used to produce something else.
D) There are gains from trade.
Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is:
A) zerothe tickets were free.
B) the price listed on the ticket.
C) whatever Khalil would have done had he not gone to the opera.
D) the price listed on the ticket and whatever Khalil would have done had he not gone
to the opera.
(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume
that fixed costs are $10. What is the average fixed cost of 4 cakes?
A) $48.00
B) $10.00
C) $5.00
D) $2.50
Figure: A Perfectly Competitive Firm in the Short Run
(Figure: A Perfectly Competitive Firm in the Short Run) Look at the figure A Perfectly
Competitive Firm in the Short Run. The firm’s total economic profit at its most
profitable level of output is:
A) 0GHB.
B) EFJS.
C) EGHS.
D) FGLK.
If an excise tax is imposed on beer and collected from the producers, the _____ curve
will shift _____ by the amount of the tax.
A) demand; upward
B) demand; downward
C) supply; upward
D) supply; downward
(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The
total cost of producing 6 bagels is:
A) $0.10.
B) $0.20.
C) $0.80.
D) $0.90.
The ratio of the change in the variable on the vertical axis to the change in the variable
on the horizontal axis, measured between two points on the curve, is the:
A) axis.
B) slope.
C) dependent variable.
D) independent variable.
(Table: Labor and Output) Look at the table Labor and Output. The marginal product of
the fifth worker is:
A) 8.
B) 4.
C) 3.
D) 40.
Table: The Market for Taxi Rides
(Table: The Market for Taxi Rides) Look at the table The Market for Taxi Rides. If a
government quota limit at 7 million rides is imposed on this market, the quota rent that
will accrue to the owner of a taxi medallion will be _____ per ride, but there will be a
total missed opportunity (inefficiency) to consumers and producers of _____ million
rides.
A) $1; 1
B) $2; 2
C) $3; 3
D) $4; 4
(Table: Cost Data) Look at the table Cost Data. The marginal cost of producing the
second purse is:
A) $60.
B) $50.
C) $35.
D) $20.
(Table: Producer Surplus) Look at the table Producer Surplus. If the price of a ticket to
see The Nutty Nutcracker is $75, then Dudley’s producer surplus is:
A) $15.
B) $25.
C) $50.
D) $240.
The most likely reason that the government implements a _____ is because it feels the
price is too high for _____.
A) price ceiling; consumers
B) price floor; consumers
C) price ceiling; producers
D) price floor; producers
Before 2000, investors were reluctant to buy mortgage-backed securities because:
A) economic models predicted that they were bad investments.
B) they were illegal in many states.
C) they could not calculate the risk of losing money on mortgage-backed securities.
D) it was difficult to obtain the foreign currencies that were required for purchasing
them.
A hotel has a capacity of 100 rooms in the short run. Which of the following statements
best describes the short-run elasticity of supply for rooms at this hotel?
A) The supply is elastic at quantities above 100 rooms but inelastic at quantities below
100 rooms.
B) The elasticity of supply is equal to 1 in the short run but infinitely elastic in the long
run.
C) The elasticity of supply is zero in the short run because the short-run supply curve is
vertical.
D) The supply is infinitely elastic in the short run but perfectly inelastic in the long run.