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Table 34
Assume that Andrea and Paul can switch between producing wheat and producing beef
at a constant rate.
Minutes Needed to Make 1
Bushel of WheatPound of Beef
Andrea3015
Paul155
Refer to Table 34. Which of the following combinations of wheat and beef could
Andrea produce in one 8hour day?
a. 16 bushels of wheat and 32 pounds of beef
b. 9 bushels of wheat and 25 pounds of beef
c. 7 bushels of wheat and 15 pounds of beef
d. 10 bushels of wheat and 13 pounds of beef
Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of
oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels
of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. If the
two countries do not trade, Cornland will produce and consume 400 bushels of corn and
100 bushels of oats, while Oatland will produce and consume 60 bushels of corn and
400 bushels of oats. If each country made the decision to specialize in producing the
good in which it has a comparative advantage, then the combined yearly output of the
two countries would increase by
a. 280 bushels of corn and 450 bushels of oats.
b. 340 bushels of corn and 500 bushels of oats.
c. 360 bushels of corn and 520 bushels of oats.
d. 360 bushels of corn and 640 bushels of oats.
If the price of natural gas rises, when is the price elasticity of demand likely to be the
highest?
a. immediately after the price increase
b. one month after the price increase
c. three months after the price increase
d. one year after the price increase
Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of
wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of
wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and
consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and
consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated
between the two countries, and Freedonia sends 30 units of corn to Sylvania in
exchange for 30 units of wheat. Sylvania will now be able to consume a maximum of
a. 30 units of corn and 30 units of wheat.
b. 40 units of corn and 30 units of wheat.
c. 40 units of corn and 20 units of wheat.
d. 10 units of corn and 40 units of wheat.
Chad is willing to pay $5.00 to get his first cup of morning latt. He buys a cup from a
vendor selling latt for $3.75 per cup. Chad's consumer surplus is
a. $8.75.
b. $5.00.
c. $3.75.
d. $1.25.
Which of the following would most likely serve as an example of a monopoly?
a. a restaurant in a large city
b. a dry cleaners in a large city
c. a local gas station
d. a local electrical company
Suppose Russia exports sunflower seeds to Ireland and imports coffee from Brazil. This
situation suggests
a. Russia has a comparative advantage over Brazil in producing coffee, and Ireland has
a comparative advantage over Russia in producing sunflower seeds.
b. Russia has a comparative advantage over Ireland in producing sunflower seeds, and
Brazil has a comparative advantage over Russia in producing coffee.
c. Russia has an absolute advantage over Ireland in producing sunflower seeds, and
Brazil has an absolute advantage over Russia in producing coffee.
d. Russia has an absolute advantage over Brazil in producing coffee, and Ireland has an
absolute advantage over Russia in producing sunflower seeds.
Table 710
The following table represents the costs of five possible sellers.
SellerCost
Abby$1,600
Bobby$1,300
Dianne$1,100
Evaline$900
Carlos$800
Refer to Table 710. If the market price is $1,100, the combined total cost of all
participating sellers is
a. $2,800.
b. $2,900.
c. $1,700.
d. $4,000.
Figure 57
Refer to Figure 57. For prices below $5, demand is price
a. elastic, and raising price will increase total revenue.
b. inelastic, and raising price will increase total revenue.
c. elastic, and lowering price will increase total revenue.
d. inelastic, and lowering price will increase total revenue.
Production is efficient if the economy is producing at a point
a. on the production possibilities frontier.
b. outside the production possibilities frontier.
c. on or inside the production possibilities frontier.
d. inside the production possibilities frontier.
In the circularflow diagram, which of the following items flows from households to
firms through the markets for the factors of production?
a. goods and services
b. land, labor, and capital
c. dollars spent on goods and services
d. wages, rent, and profit
Table 33
Production Opportunities
Hours Needed to Make 1 Unit of Number of Units Produced in 40 Hours
Cheese Wine Cheese Wine
England 1 4 40 10
France 5 2 8 20
Refer to Table 33. Which of the following combinations of cheese and wine could
France produce in 40 hours?
a. 2 units of cheese and 20 units of wine
b. 4 units of cheese and 15 units of wine
c. 6 units of cheese and 5 units of wine
d. 8 units of cheese and 20 units of wine
A supply curve slopes upward because
a. as more is produced, total cost of production falls.
b. an increase in input prices increases supply.
c. the quantity supplied of most goods and services increases over time.
d. an increase in price gives producers an incentive to supply a larger quantity.
Figure 427
Panel (a)Panel (b)
Panel (c)Panel (d)
Refer to Figure 427. Which of the four panels represents the market for winter coats as
we progress from winter to spring?
a. Panel (a)
b. Panel (b)
c. Panel (c)
d. Panel (d)
During the early 1920s in Germany, prices
a. doubled annually.
b. doubled monthly.
c. tripled monthly.
d. tripled annually.
In which of the following instances would the deadweight loss of the tax on airline
tickets increase by a factor of 9?
a. The tax on airline tickets increases from $20 per ticket to $60 per ticket.
b. The tax on airline tickets increases from $20 per ticket to $90 per ticket.
c. The tax on airline tickets increases from $15 per ticket to $60 per ticket.
d. The tax on airline tickets increases from $15 per ticket to $135 per ticket.
Figure 915
Refer to Figure 915. A result of the tariff is that, relative to the freetrade situation, the
quantity of saddles imported decreases by
a. Q2Q1.
b. Q3Q2.
c. Q4Q3.
d. Q4Q3 + Q2Q1.
When a country moves away from a free trade position and imposes a tariff on imports,
it causes
a. a decrease in total surplus in the market.
b. a decrease in producer surplus in the market.
c. an increase in consumer surplus in the market.
d. a decrease in revenue to the government.
Macroeconomists study
a. the decisions of individual households and firms.
b. the interaction between households and firms.
c. economywide phenomena.
d. regulations imposed on firms and unions.
Figure 218
Relationship between Price and Restaurant Meals
Refer to Figure 218. The slope of the line containing points A and B is
a. 1/2.
b. 2.
c. 1/2.
d. 2.
When a tax is levied on buyers of a good,
a. government collects too little revenue to justify the tax if the equilibrium quantity of
the good decreases as a result of the tax.
b. there is an increase in the quantity of the good supplied.
c. a wedge is placed between the price buyers pay and the price sellers effectively
receive.
d. the effective price to buyers decreases because the demand curve shifts leftward.
PlayStations and PlayStation games are complementary goods. A technological advance
in the production of PlayStations will
a. increase consumer surplus in the market for PlayStations and decrease producer
surplus in the market for PlayStation games.
b. increase consumer surplus in the market for PlayStations and increase producer
surplus in the market for PlayStation games.
c. decrease consumer surplus in the market for PlayStations and increase producer
surplus in the market for PlayStation games.
d. decrease consumer surplus in the market for PlayStations and decrease producer
surplus in the market for PlayStation games.
What would happen to the equilibrium price and quantity of latts if coffee shops began
using a machine that reduced the amount of labor necessary to produce steamed milk,
which is used to make latts, and scientists discovered that latts cause heart attacks?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would decrease, and the effect on equilibrium quantity would
be ambiguous.
d. The equilibrium quantity would decrease, and the effect on equilibrium price would
be ambiguous.
The marginal seller is the seller
a. for whom the marginal cost of producing one more unit of output is the lowest among
all sellers, and the marginal buyer is the buyer for whom the marginal benefit of one
more unit of the good is the highest among all buyers.
b. who supplies the smallest quantity of the good among all sellers, and the marginal
buyer is the buyer who demands the smallest quantity of the good among all buyers.
c. who would leave the market first if the price were any lower, and the marginal buyer
is the buyer who would leave the market first if the price were any higher.
d. who has the largest producer surplus, and the marginal buyer is the buyer who has the
largest consumer surplus.
Which of the following claims is consistent with the views of mainstream economists?
a. If we increase the rate of inflation from 3 percent to 6 percent, then the rate of
unemployment will temporarily fall.
b. If we increase the rate of inflation from 3 percent to 6 percent, then the rate of
unemployment will temporarily rise.
c. If we increase the rate of inflation from 3 percent to 6 percent, then the rate of
unemployment will permanently fall.
d. If we increase the rate of inflation from 3 percent to 6 percent, then the rate of
unemployment will permanently rise.
The marginal tax rate on labor income for many workers in the United States is almost
a. 30 percent.
b. 40 percent.
c. 50 percent.
d. 65 percent.
Table 338
Assume that England and Spain can switch between producing cheese and producing
bread at a constant rate.
Labor Hours Needed to Make 1 Unit ofNumber of Units Produced in 40 Hours
CheeseBread CheeseBread
England14 4010
Spain48 105
Refer to Table 338. Spain should export
a. cheese and import bread.
b. bread and import cheese.
c. both goods and import neither good.
d. neither good and import both goods.
Table 61
PriceQuantity
DemandedQuantity
Supplied
$2024000
$302000200
$401600400
$501200600
$60800800
$704001000
$8001200
Refer to Table 61. Which of the following price floors would be binding in this
market?
a. $70
b. $60
c. $50
d. $40
For a college student who wishes to calculate the true costs of going to college, the
costs of room and board
a. should be counted in full, regardless of the costs of eating and sleeping elsewhere.
b. should be counted only to the extent that they are more expensive at college than
elsewhere.
c. usually exceed the opportunity cost of going to college.
d. plus the cost of tuition, equals the opportunity cost of going to college.
Figure 22
Refer to Figure 22. If households are sellers in the markets represented by Box D of
this circularflow diagram, then
a. Box D must represent the markets for factors of production.
b. Box C must represent the markets for goods and services.
c. firms are buyers in the markets represented by Box D.
d. All of the above are correct.
Figure 610
Refer to Figure 610. A price floor set at
a. $6 will be binding and will result in a surplus of 10 units.
b. $6 will be binding and will result in a surplus of 6 units.
c. $16 will be binding and will result in a surplus of 10 units.
d. $16 will be binding and will result in a surplus of 4 units.
Both tariffs and import quotas
a. increase the quantity of imports and raise the domestic price of the good.
b. increase the quantity of imports and lower the domestic price of the good.
c. decrease the quantity of imports and raise the domestic price of the good.
d. decrease the quantity of imports and lower the domestic price of the good.
