1) Tom produces baseball gloves and baseball bats. Steve also produces baseball gloves
and baseball bats, but Tom is better at producing both goods. In this case, trade could
a.benefit both Steve and Tom.
b.benefit Steve, but not Tom.
c.benefit Tom, but not Steve.
d.benefit neither Steve nor Tom.
2) Table 20-7
Refer to Table 20-7. Which of the following is the best overall conclusion to draw
from the data?
a.The most alarming statistic is the lowering of the top income level that defines the
bottom fifth of the income distribution because this indicates that the income
distribution is becoming more unequal.
b.The greatest cause for concern is the increase in the minimum income level that
defines the top fifth of the income distribution because this indicates that the rich have
become richer.
c.The income distribution has been relatively unchanged from 2001 to 2011
d.Both a and b are correct.
3) Table 18-1
Refer to Table 18-1. What is the marginal product of the fourth worker?
a.5
b.7.5
c.8
d.30
4) The area below the price and above the supply curve measures the producer surplus
in a market.
a.True
b.False
5) Which of the following could be the for a good for which an increase in price would
increase revenue?
a.0.3
b.1
c.1.8
d.None of the above could be correct.
6) Suppose a country abandons a no-trade policy in favor of a free-trade policy. If, as a
result, the domestic price of beans increases to equal the world price of beans, then
a.that country becomes an exporter of beans.
b.that country has a comparative advantage in producing beans.
c.at the world price, the quantity of beans supplied in that country exceeds the quantity
of beans demanded in that country.
d.All of the above are correct.
7) Figure 16-5
Which of the graphs depicts a short-run equilibrium that will encourage the entry of
other firms into a monopolistically competitive industry?
a.panel a
b.panel b
c.panel c
d.panel d
8) Other things the same, we’d expect that a job with less pleasant working conditions
pays
a.more; this is known as an efficiency wage.
b.more; this is known as a compensating differential.
c.less; this is known as an efficiency wage.
d.less; this is known as a compensating differential.
9) In the long run the market supply
a.must always be horizontal.
b.could be upward sloping if the cost of production falls as new firms enter the market.
c.could be upward sloping if the cost of production rises as new firms enter the market.
d.could be upward sloping if technological improvements lower the cost of producing
in the market.
10) A rational decision maker takes an action only if the
a.marginal benefit is less than the marginal cost.
b.marginal benefit is greater than the marginal cost.
c.average benefit is greater than the average cost.
d.marginal benefit is greater than both the average cost and the marginal cost.
11) Holding all other factors constant and using the midpoint method, if a candy
manufacturer increases production by 20 percent when the market price of candy
increases from $0.50 to $0.60, then supply is
a.inelastic, since the price elasticity of supply is equal to .91
b.inelastic, since the price elasticity of supply is equal to 1.1
c.elastic, since the price elasticity of supply is equal to 0.91
d.elastic, since the price elasticity of supply is equal to 1.1
12) When firms have agreements among themselves on the quantity to produce and the
price at which to sell output, we refer to their form of organization as a
a.Nash arrangement.
b.cartel.
c.monopolistically competitive oligopoly.
d.perfectly competitive oligopoly.
13) Table 14-14
The following table presents cost and revenue information for Bob‘s bakery production
and sales.
At what quantity will Bob maximize his profit?
a.5 units
b.6 units
c.7 units
d.8 units
14) Suppose that a firm operating in perfectly competitive market sells 50 units of
output. Its total revenues from the sale are $500. Which of the following statements is
correct?
(i)Marginal revenue equals $5.
(ii)Average revenue equals $10.
(iii)Price equals $15.
a.(i) only
b.(ii) only
c.(i) and (ii) only
d.(i), (ii), and (iii)
15) At a price of $1.00, a local coffee shop is willing to supply 100 cinnamon rolls per
day. At a price of $1.20, the coffee shop would be willing to supply 150 cinnamon rolls
per day. Using the midpoint method, the price elasticity of supply is about
a.0.45
b.0.90
c.1.11
d.2.20
16) To say that government intervenes in the economy to promote equality is to say that
government is aiming to
a.create a more fair distribution of income.
b.change the ingredients that are used to bake the economic pie.
c.enlarge the economic pie.
d.All of the above are correct.