Figure 9-2
Suppose the U.S. government imposes a $0.40 per pound tariff on rice imports. Figure
9-2 shows the impact of this tariff.
Refer to Figure 9-2. The increase in domestic producer surplus as a result of the tariff is
equal to the area
A) C.
B) C + G.
C) A + C + G.
D) C + D + G + H + I.
At a recent company meeting, Ravi Batra, sales manager of Life’s a Beach, a surfboard
producer announced, “We have increased our sales by 13 percent in just 9 months.”
Suppose 9 months ago, its sales amounted to $245,000, what is the value of its sales
today?
A) $31,850
B) $207,638
C) $276,850
D) $359,905
Figure 13-4
Figure 13-4 shows short-run cost and demand curves for a monopolistically competitive
firm in the market for designer watches.
Refer to Figure 13-4.What is the area that represents the total revenue made by the
firm?
A) 0P0aQa
B) 0P1bQa
C) 0P2cQa
D) 0P3dQa
Figure 12-9
Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly
competitive firm.
Refer to Figure 12-9. At price P4, the firm would
A) lose an amount equal to its fixed cost.
B) make a profit.
C) lose an amount less than fixed cost.
D) shut down.
Suppose a decrease in the supply of bottled water results in a decrease in revenue. This
indicates that
A) the demand for bottled water is inelastic in the price range considered.
B) the demand for bottled water is elastic in the price range considered.
C) the supply of bottled water is inelastic in the price range considered.
D) the supply of bottled water is elastic in the price range considered.
Which of the following displays rivalry and excludability in consumption?
A) public goods
B) private goods
C) quasi-public goods
D) common resources
Holding everything else constant, an increase in the price of MP3 players will result in
A) a decrease in the quantity of MP3 players supplied.
B) a decrease in the demand for MP3 players.
C) an increase in the supply of MP3 players.
D) a decrease in the quantity of MP3 players demanded.
Which of the following characterizes the market that Chipotle competes in?
A) All “fast-casual” restaurants face horizontal demand curves.
B) “Fast-casual” restaurants sell identical products.
C) Barriers to entry are low.
D) There are a small number of firms.
Figure 5-13
Figure 5-13 illustrates the market for gasoline before and after the government imposes
a tax to bring about the efficient level of gasoline production.
Refer to Figure 5-13. The efficient equilibrium quantity of gasoline is ________
million gallons per month.
A) 20
B) 32
C) 48
D) 56
Workers in industries protected by tariffs and quotas are likely to support these trade
restrictions because
A) they do not want to offend their employers who want them.
B) politicians lobby to convince workers the restrictions will make them better off.
C) they believe the restrictions will protect their jobs.
D) they don’t understand that the restrictions will threaten their jobs.
Tastes for products such as beer differ. As a result
A) we see countries specializing completely in the production of beer.
B) consumers of beer have difficulty deciding what type of imported beer to buy.
C) the quality of imported beer is less than it could be.
D) different countries may each have a comparative advantage in producing different
types of beer.
Figure 4-4
Refer to Figure 4-4. The figure above represents the market for pecans. Assume that
this is a competitive market. At a price of $3
A) the marginal cost of pecans is greater than the marginal benefit; therefore, output is
inefficiently low.
B) producers should raise the price to $9 in order to sell the quantity demanded of
12,000.
C) the marginal benefit of pecans is greater than the marginal cost; therefore, output is
inefficiently high.
D) the marginal benefit of pecans is greater than the marginal cost; therefore, output is
inefficiently low.
A decrease in the demand for incandescent light bulbs due to changes in consumer
tastes, accompanied by a decrease in the supply of incandescent light bulbs as a result
of government restrictions, will result in
A) a decrease in the equilibrium quantity of incandescent light bulbs and no change in
the equilibrium price.
B) a decrease in the equilibrium price of incandescent light bulbs and no change in the
equilibrium quantity.
C) a decrease in the equilibrium price of incandescent light bulbs; the equilibrium
quantity may increase or decrease.
D) a decrease in the equilibrium quantity of incandescent light bulbs; the equilibrium
price may increase or decrease.
One reason why the average salary of Major League Baseball players is higher than the
average salary of college professors is
A) the careers of most baseball players are much shorter than the careers of most
college professors.
B) the marginal revenue product of baseball players is greater than the marginal
revenue product of college professors.
C) college professors accept lower salaries in exchange for better working conditions.
D) competition among baseball club owners forces player salaries to be much higher
than the players’ marginal revenue products.
In December 2014, the average price of gasoline in the United States was $2.50 per
gallon and consumers bought 7 percent more gasoline than they had during April 2014,
when the average price was $3.60 per gallon. Based on these numbers, what was the
price elasticity of demand for gasoline from April 2014 to December 2014?
A) -0.02
B) -0.19
C) -1.01
D) -2.26
Figure 17-4
Refer to Figure 17-4. Which of the following is true if the wage rate increases from W0
to W1?
A) The income effect is larger than the substitution effect.
B) The substitution effect is larger than the income effect.
C) The income effect and the substitution effect are equal.
D) The supply curve is unit elastic.
Figure 11-8
Refer to Figure 11-8 above to answer the following questions.
a. Identify the curves in the diagram.
A ________
B ________
C ________
b. What is the numerical value of fixed cost when the quantity of output = 10?
c. What is the numerical value of variable cost when the quantity of output = 10?
d. What is the numerical value of total cost when the quantity of output = 10?
e. What is the numerical value of average fixed cost when the quantity of output = 10?
f. What is the numerical value of average total cost when the quantity of output = 10?
g. On the graph, identify the area that represents the total variable cost of production
when the quantity of output = 10.
h. On the graph, identify the area that represents the fixed cost of production when the
quantity of output = 10.
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation.
Refer to Figure 2-4. Consider the following movements:
a. from point V to point W
b. from point W to point Y
c. from point Y to point Z
Which of the movements listed above represents economic growth?
A) a, b, and c
B) b and c only
C) a only
D) b only
The idea that two taxpayers in the same economic circumstances should pay the same
level of taxes is known as the
A) ability-to-pay principle.
B) vertical-equity principle.
C) horizontal-equity principle.
D) benefits-received principle.
The marginal revenue of a monopolistically competitive firm
A) cannot be negative because the price the firm charges will always be greater than
zero.
B) can be negative if the firm charges a high price.
C) can be negative if the firm charges a low price.
D) will equal average revenue.
Wage differentials between occupations can be explained by all of the following except
A) the fact that some occupations require higher levels of human capital than others.
B) the fact that some occupations are more desirable than others.
C) the market power of different employers.
D) the relative differences between demand and supply in various occupations.
Figure 3-1
Refer to Figure 3-1. If the product represented is a normal good, a decrease in income
would be represented by a movement from
A) A to B.
B) B to A.
C) D1 to D2.
D) D2 to D1.
In long-run perfectly competitive equilibrium, which of the following is false?
A) There is efficient, low-cost production at the minimum efficient scale.
B) Economic surplus is maximized.
C) Firms earn economic profit.
D) Economies of scale are exhausted.
The price elasticity of supply of hot dog buns is estimated to be 5. Holding everything
else constant, this means that a 10 percent decrease in the price of hot dog buns will
cause the quantity of hot dog buns supplied to decrease by
A) 5 percent.
B) 15 percent.
C) approximately 25 percent.
D) approximately 5 percent.
If a stock’s dividend is expected to grow at a constant rate of eight percent in the future
and it has just paid a dividend of $1.25 a share, and you have an alternative investment
of equal risk that will earn a 12 percent rate of return, what would you be willing to pay
per share for this stock?
A) $31.25
B) $1.40
C) $1.25
D) $1.12
Table 2-10
Table 2-10 shows the output per day of two pet groomers, Tammi and Horace. They can
either devote their time to grooming dogs or bathing cats.
Refer to Table 2-10. Which of the following statements is true?
A) Horace has an absolute advantage in both tasks.
B) Tammi has an absolute advantage in both tasks.
C) Horace has an absolute advantage in dog grooming and Tammi in cat bathing.
D) Horace has an absolute advantage in cat bathing and Tammi in dog grooming.
A game in which pursuing dominant strategies results in noncooperation that leaves all
parties worse off is a
A) prisoner’s dilemma.
B) cooperative equilibrium.
C) first-price auction.
D) zero-sum game.
A monopolist faces
A) a perfectly elastic demand curve.
B) a perfectly inelastic demand curve.
C) a horizontal demand curve.
D) a downward-sloping demand curve.
If the price of lattes, a normal good you enjoy, falls
A) the income and substitution effects offset each other but the price effect leads you to
buy more lattes.
B) both the income and substitution effects lead you to buy more lattes.
C) the income effect which causes you to increase your latte consumption outweighs
the substitution effect which causes you to reduce your latte consumption, resulting in
more lattes purchased.
D) the substitution effect which causes you to increase your latte consumption
outweighs the income effect which causes you to reduce your latte consumption,
resulting in more lattes purchased.
Figure 4-1
Figure 4-1 shows Arnold’s demand curve for burritos.
Refer to Figure 4-1. What is the total amount that Arnold is willing to pay for 2
burritos?
A) $2.00
B) $4.50
C) $7.50
D) $10.00
Rio Tinto’s incentive to adopt new robotic technology was increased by the high wages
it was having to pay to attract miners and truck drivers. In this instance, Rio Tinto
began using new robotic technology to
A) add capital as a complementary resource for its labor.
B) substitute labor for capital in production.
C) substitute capital for labor in production.
D) add labor as a complementary resource for its capital.
Diminishing marginal product of labor occurs when adding another unit of labor
A) decreases output.
B) changes output by an amount smaller than the output added by the previous unit of
labor.
C) increases output by an amount larger than the output added by the previous unit of
labor.
D) decreases output by an amount smaller than the output added by the previous unit of
labor.
Figure 11-1
Refer to Figure 11-1. The marginal product of the 7th worker is
A)
B) 43.
C)
D) -2.
Table 2-1
Production choices for Tomaso’s Trattoria
Refer to Table 2-1. Assume Tomaso’s Trattoria only produces pizzas and calzones.
Tomaso faces ________ opportunity costs in the production of pizzas and calzones.
A) increasing
B) decreasing
C) constant
D) negative