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1) Figure 7-28
Refer to Figure 7-28. At the quantity Q3,
a.the market is in equilibrium.
b.consumer surplus is maximized.
c.the sum of consumer surplus and producer surplus is maximized.
d.the marginal value to buyers is less than the marginal cost to sellers.
2) On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he
hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers.
Which of the following possibilities is consistent with the property of diminishing
marginal product?
a.The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.
b.The farmer is able to produce 5,400 bushels of wheat when he hires 4 workers.
c.The farmer is able to produce 5,200 bushels of wheat when he hires 4 workers.
d.Any of the above could be correct.
3) Table 7-7
You have four essentially identical extra tickets to the Midwest Regional Sweet 16
game in the men's NCAA basketball tournament. The table shows the willingness to
pay of the four potential buyers in the market for a ticket to the game. You offer to sell
the tickets for $400. How many tickets do you sell, and what is the total consumer
surplus in the market?
a.one ticket; $100
b.two tickets; $100
c.two tickets; $0
d.three tickets; $0
4) Juanita and Shantala run a business that programs and tests cellular phones. Assume
that Juanita and Shantala can switch between programming and testing cellular phones
at a constant rate. The following table applies.
Shantala has an absolute advantage in
a.programming cellular phones and a comparative advantage in programming cellular
phones.
b.programming cellular phones and a comparative advantage in testing cellular phones.
c.testing cellular phones and a comparative advantage in programming cellular phones.
d.testing cellular phones and a comparative advantage in testing cellular phones.
5) Which of the following countries has lower total government tax revenue as a
percentage of GDP than the United States?
a.Canada
b.Germany
c.Sweden
d.Mexico
6)
Which arrow represents the flow of goods and services?
a.A
b.B
c.C
d.D
7) The two characteristics of a competitive market are 1) many buyers and sellers in the
market and 2) the goods offered by the various sellers are highly differentiated.
a.True
b.False
8) Assume that for good X the supply curve for a good is a typical, upward-sloping
straight line, and the demand curve is a typical downward-sloping straight line. If the
good is taxed, and the tax is doubled, the
a.base of the triangle that represents the deadweight loss doubles.
b.height of the triangle that represents the deadweight loss doubles.
c.deadweight loss of the tax quadruples.
d.All of the above are correct.
9) If the government were to limit the release of air pollution produced by a glue
factory to 75 parts per million, the policy would be considered a
a.corrective tax.
b.subsidy.
c.command-and-control policy.
d.market-based policy.
10) A movie theater can increase its profits through price discrimination by charging a
higher price to adults and a lower price to children if
a.adults buy more popcorn than children.
b.the cost of showing a movie to children is less than the cost of showing a movie to
adults.
c.it has some degree of monopoly-pricing power.
d.All of the above are correct.
11) The equilibrium of supply and demand in a market maximizes the total benefits to
buyers and sellers of participating in that market.
a.True
b.False
12) Table 12-12
If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and
Charles would be
a.5 percent and 6.7 percent, respectively.
b.8 percent and 6 percent, respectively.
c.12 percent and 9 percent, respectively.
d.13 percent and 10 percent, respectively.
13) Assume that Brad and Theresa can switch between producing wheat and producing
beef at a constant rate.
What is Brad's opportunity cost of producing one pound of beef?
a.5/6 bushel of wheat
b.6/5 bushels of wheat
c.3/5 bushels of wheat
d.5/3 bushels of wheat
14) Table 12-20
The following table presents the total tax liability for an unmarried taxpayer under four
different tax schedules for the income levels shown.
Which tax schedules are regressive?
a.Tax Schedule A and Tax Schedule B
b.Tax Schedule B and Tax Schedule C
c.Tax Schedule C and Tax Schedule D
d.None of the Tax Schedules are regressive.
15) If the United States threatens to impose a tariff on Colombian coffee if Colombia
does not remove agricultural subsidies, the United States will be
a.better off regardless of how Colombia responds.
b.better off if Colombia removes the subsidies, and will be no worse off if it doesn't.
c.worse off if Colombia doesn't remove the subsidies in response to the threat.
d.worse off regardless of how Colombia responds.
16) The market supply curve
a.is found by vertically adding the individual supply curves.
b.slopes downward.
c.represents the sum of the prices that all the sellers are willing to accept for a given
quantity of the good.
d.represents the sum of the quantities supplied by all the sellers at each price of the
good.
17) Linda's Autoplex performs oil changes on automobiles, light trucks, and sport utility
vehicles. She is a profit maximizing business owner whose firm operates in a
competitive market. The marginal cost of an oil change is $10. The marginal
productivity of the last worker that Linda hired was 1.5 oil changes per hour. What is
the maximum hourly wage that Linda was willing to pay the last worker hired?
a.$10
b.$15
c.$20
d.$30
18) Which of the following is likely to have the most price inelastic demand?
a.tablet computers
b.leather boots
c.lightbulbs
d.optional textbooks
