1) Customers who purchase an audio CD from Sally’s Sounds are charged 20% more
than customers who purchase
the audio CD from the Sally’s Sounds website. This is an example of
a.perfect price discrimination.
b.price discrimination.
c.deadweight loss.
d.socially inefficient output.
2) There is no shortage of scarce resources in a market economy because
a.the government makes shortages illegal.
b.resources are abundant in market economies.
c.prices adjust to eliminate shortages.
d.quantity supplied is always greater than quantity demanded in market economies.
3) Among economic models, the circular-flow diagram is unusual in that it
a.drastically simplifies the real world.
b.features more than one type of market.
c.features flows of dollars.
d.does not involve mathematics.
4) Which of the following scenarios is not consistent with the Laffer curve?
a.The tax rate is very low, and tax revenue is very low.
b.The tax rate is very high, and tax revenue is very low.
c.The tax rate is very high, and tax revenue is very high.
d.The tax rate is moderate (between very high and very low), and tax revenue is
relatively high.
5) Suppose that a college physics experiment goes horribly wrong and releases an
electronic pulse that renders all electronic equipment in the cities of Columbus,
Cleveland and Cincinnati, Ohio permanently useless. No people are hurt, and no
buildings are damaged. After the accident, the wages earned by Ohio workers will
a.increase because the marginal productivities of Ohio workers will increase.
b.decrease because the marginal productivities of Ohio workers will decrease.
c.decrease because the marginal productivities of Ohio workers will increase.
d.increase because the marginal productivities of Ohio workers will decrease.
6) Scenario 18-2
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific
salmon off the coast of Alaska. As part of her business she hires a captain and several
crew members for each boat. In the market for fresh Pacific salmon, there are thousands
of firms like Gertrude’s. While Gertrude usually catches a significant number of fish
each year, her contribution to the entire harvest of salmon is negligible relative to the
size of the market.
Refer to Scenario 18-2. If Gertrude is a price taker in the labor market, she can choose
a.the price at which she will sell the fish she catches.
b.how many crew members she will hire.
c.the wages that she will pay to her crew members.
d.All of the above.
7) Figure 8-5
Suppose that the government imposes a tax of P3 – P1.
The tax causes a reduction in producer
surplus that is represented by area
a.A.
b.C+H.
c.D+H.
d.F.
8) Figure 10-12
Which of the following is an appropriate label for Line 1?
a.social cost
b.social value
c.private cost
d.private value
9) When society gets the most it can from its scarce resources, then the outcome is
called
a.equitable.
b.efficient.
c.normal.
d.efficacious.
10) For a monopoly, marginal revenue is often greater than the price it charges for its
good.
a.True
b.False